<PAGE>
[LOGO OF EATON VANCE APPEARS HERE] [PHOTO OF PHONE, CALCULATOR
AND TAX FORM APPEARS HERE]
Annual Report October 31, 1997
[PHOTO OF NYSE FLAG
AND BUILDING FRONT
APPEARS HERE]
E A T O N V A N C E
TAX-MANAGED
EMERGING
GROWTH
FUND
Global Management-Global Distribution
[PHOTO OF 1099-FORM
AND CALCULATOR TAPE &
CALCULATOR APPEARS HERE]
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
LETTER TO SHAREHOLDERS
[PHOTO OF M. DOZIER GARDNER APPEARS HERE]
M. Dozier Gardner, President
I am pleased to welcome shareholders of Eaton Vance Tax-Managed Emerging Growth
Fund with this inaugural shareholder report. In the opening month of the Fund's
operations, the market climate was unusually volatile. Currency concerns in
Asia, combined with already-high valuations, brought about significant market
fluctuations. Stock prices of large and small companies in general fell. For
example, the S&P 500 Index - an unmanaged index of U.S. common stocks - declined
3.3% during October./1/ As the Fund was in its "start-up" phase during October
and making its initial investments, the market's volatility provided an
opportunity to initiate new positions at attractive prices.
Investors maintained a strong appetite for equities in 1997...
Investors funneled a record amount of assets into the equity markets during the
past year. According to Dow Jones, 45 million households owned equity mutual
funds in November, 1997, worth a staggering $2.5 trillion. The massive scale of
that investment - aimed at boosting savings, providing for retirement, and
funding college education - shows a continuing confidence that equities
represent the best way to build wealth for the future.
Emerging growth companies poised to post strong earnings growth...
According to Commerce Department figures, smaller companies have become
responsible in recent years for a larger share of our nation's job creation.
These emerging growth companies typically enjoy earnings growth rates well above
those of the wider market. Because stock prices tend to follow earnings, we
believe these companies have the potential to provide above-average, long-term
returns.
The Tax-Managed approach seeks to improve investors' after-tax returns...
As impressive as recent personal savings trends are, the fact remains that taxes
continue to take a heavy toll on the average investor. Even the most determined
savers can see the value of their investments dwindle when faced with taxes on
capital gains and dividends. While the Taxpayer Relief Act of 1997 slightly
lowered capital gains rates, taxes still pose a challenge for growth-minded
investors.
We believe that the combination of focusing on emerging growth companies
together with a tax-managed approach is a sound strategy for wealth-building. In
the pages that follow, portfolio manager Edward "Jack" Smiley discusses this
investment discipline and offers an overview of Eaton Vance Tax-Managed Emerging
Growth Portfolio.
Sincerely,
/s/ M. Dozier Gardner
M. Dozier Gardner
President
December 9, 1997
- --------------------------------------------------------------------------------
Fund Information
as of October 31, 1997
<TABLE>
<CAPTION>
Performance/2/
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C>
Life of Fund *(9/25/97); **(9/29/97)
Class A* -2.6%
Class B** -2.6
Class C** -2.8
- --------------------------------------------------------------------------------
<CAPTION>
SEC Average Annual Total Returns (including applicable sales charge)
- --------------------------------------------------------------------------------
<S> <C>
Life of Fund *(9/25/97);**(9/29/97)
Class A* -8.2%
Class B** -7.5
Class C** -3.8
- --------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Ten Largest Holdings/3/
- --------------------------------------------------------------------------------
<S> <C>
PeopleSoft, Inc. 1.5%
Emmis Broadcasting Corp., Cl. A 1.5
Baan Co. NV 1.4
Outdoor Systems, Inc. 1.4
Camco International, Inc. 1.3
Anadarko Petroleum Corp. 1.3
BMCSoftware, Inc. 1.3
Cambridge Technology Partners, Inc. 1.3
Health Management Associates, Inc. 1.3
Jacor Communications, Inc. 1.3
</TABLE>
/1/ It is not possible to invest directly in an average or Index.
/2/ Returns are calculated by determining the percentage change in net asset
value with all distributions reinvested. SEC return for A shares reflects
maximum 5.75% sales charge; for B shares, SEC return reflects applicable
contingent deferred sales charge (CDSC) based on the following schedule: 5%-
1st year; 5%-2nd year; 4%-3rd year; 3%-4th year; 2%-5th year; 1%-6th year;
for C shares, SEC return reflects applicable 1% CDSC.
/3/ Ten largest holdings account for 13.6% of the Portfolio's investments,
determined by dividing the total market value of the holdings by the total
net assets of the Portfolio. Holdings are subject to change.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
2
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
Management Discussion
[PHOTO OF EDWARD SMILEY APPEARS HERE]
Edward Smiley, Portfolio Manager
An interview with Edward Smiley, portfolio manager of Eaton Vance Tax-Managed
Emerging Growth Fund.
Q: Jack, how have you structured the Fund in its initial months of operation?
A: We have pursued a dual strategy for Tax-Managed Emerging Growth Fund.
First, as the name implies, this is a growth fund, with an emphasis on
small-cap and mid-cap companies that we view as the likely industry leaders
of tomorrow. I've targeted a universe of companies that have a revenue base
below $1.5 billion, but that demonstrate rapid sales growth. I prefer
companies with profit margins in excess of 15% and the ability to post
superior earnings growth relative to their industry competitors.
The other part of our strategy is tax-related. The Fund is pursuing an
approach that seeks to limit tax liabilities, including reducing the
realization and distribution of capital gains as well as the distribution
of income dividends to shareholders. This combination of investing for
growth while working to limit tax liabilities can be a useful strategy in a
period of economic expansion but continued high taxes.
Q: Could you discuss briefly some of the strategies you're using to reduce tax
liabilities?
A: Certainly. First, with respect to capital gains, we take a long-term
approach to our investments. Many other growth funds may buy and sell
repeatedly over short-term periods and, in so doing, chalk up short-term
capital gains. The tax liabilities incurred by such practices tend to
dramatically reduce the after-tax returns to shareholders. Put simply, we
take a position as investors, not traders.
By assuming a buy-and-hold outlook, we tend to ignore the short-term blips
caused by emotions and one-time events, and focus instead on the growth
characteristics of well-positioned companies. In short, we're willing to
wait for companies to reach their full potential. This long-term approach
sharply reduces portfolio turnover - generally keeping it below 10%
annually on stocks with gains - while limiting the distribution of capital
gains.
Q: Surely, there are times when you must sell. Do you have a distinct sell
discipline?
A: Yes. When sales are necessary, we seek to sell securities that will qualify
for capital gains treatment, assuring a more favorable tax
Five Largest Sector Weightings/1/
- --------------------------------------------------------------------------------
By total net assets
<TABLE>
<S> <C>
Information Services 19.4%
Health Services 10.4%
Oil, Gas Exploration 8.0%
Computer Software 4.2%
Electronics 4.0%
</TABLE>
How Taxes Hurt Returns
Hypothetical Example of a Growth Investment/2/
<TABLE>
<CAPTION>
Pre-Tax Tax After-Tax
Return Rate Returns
<S> <C> <C> <C>
Dividends & Short-Term Gains 4.0% 39.6% 2.4
Long-Term Gains 6.0% 20.0% 4.8%
- ---------------------------------------------------------------------
Unrealized Gains 2.0% 0.0% 2.0%
Total Return/3/ 12.0% 9.2%
- ---------------------------------------------------------------------
23% of Total Return Lost to Taxes!
</TABLE>
/1/ Because the Portfolio is actively managed, sector weightings are subject to
change.
/2/ Source: Eaton Vance. This chart is for illustrative purposes only and uses
the highest applicable federal tax rates. State taxes and taxes due upon
redemption are not considered. The chart is not meant to represent or imply
returns from any particular mutual fund.
/3/ The hypothetical 12% return is not meant to represent or imply returns from
any particular mutual fund.
- --------------------------------------------------------------------------------
Mutual fund shares are not insured by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are
subject to investment risks, including possible loss of principal invested.
- --------------------------------------------------------------------------------
3
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
MANAGEMENT DISCUSSION CONT'D
treatment for shareholders. And when we sell appreciated securities, we
sell those with the highest cost basis first, once again limiting the
extent of our capital gain liabilities.
Q: You also indicated that you seek to limit income distributed to
shareholders. What is your strategy in that area?
A: The law dictates that income from securities must be passed along to
shareholders and taxed as ordinary income. That can not only create an
unwanted tax burden for shareholders, but also can severely complicate tax
planning.
Because the Portfolio focuses solely on emerging small and mid-cap
companies, we are largely able to avoid income distributions. Typically,
because these companies are in the early stages of growth, they rarely pay
dividends. Instead, dividends are reinvested into the business. Many of the
companies in our investment universe require continuing investments in
technology to maintain competitive advantages and improve productivity.
That reinvestment tends to add value over time while limiting the impact of
tax-inefficient dividends on shareholders.
Q: In which industries did you concentrate the Fund's investments?
A: While the Fund is very well diversified across many industry sectors, there
are some areas that provide unusual opportunities for smaller, emerging
companies. Information services, health services, energy, and computer
software constituted the largest sector weightings in the Fund. Smaller
companies have managed to carve out highly profitable niches in areas like
information and health care. These are service industries in which small
companies can offer a high degree of value-added. Elsewhere, computer
software has long been a sector in which entrepreneurship has thrived. And
in the energy area, energy service and supply companies as well as
selected, smaller exploration companies have managed to do well in a period
of weak oil prices.
Q: Could you discuss some of the Fund's holdings in these sectors?
A: Yes. Software is a rapidly growing sector, with many opportunities among
emerging companies. Two of the Fund's largest holdings are PeopleSoft, Inc.
and Baan Co., NV. Both of these companies operate in a software niche
called enterprise resource planning (ERP). ERP links the diverse parts of
an enterprise to a common technology platform. That has become increasingly
necessary in recent years as different departments within companies have
begun using a wider array of technology equipment. In using this ERP
software, a company can integrate the various components of its business:
in effect, making certain that manufacturing, human resources, vendors,
inventory, and finance are all talking to one another with respect to a
given project.
Q: What are some other major areas?
A: Another interesting theme has been among media companies, including radio
broadcasting companies such as Emmis Broadcasting Corp., Jacor
Communications, Inc. and A.H. Belo, Corp. Radio has become a much more
attractive outlet for advertisers in recent years. While television
advertising rates have skyrocketed and audiences have become increasingly
fragmented by the addition of cable offerings, radio rates remain
affordable.
In addition, following a wave of mergers in recent years, major radio
companies can offer advertisers a wider audience. While it falls short of
television's pull-through capabilities, radio represents a cost-effective
marketing tool for many companies. Another media holding, Outdoor Systems,
produces outdoor advertising that can be very effectively teamed with radio
campaigns.
4
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
MANAGEMENT DISCUSSION CONT'D
Q: Health care has also been another large concentration. What have you
focused on there?
A: We have exposure to a number of health care trends, including the graying
of America and the growing biotech industry. In the continuing care area,
the Fund has an investment in Sunrise Assisted Living, Inc. The company is
a developer of projects nationwide that provide housing and assisted living
facilities for elderly citizens. Many seniors are able to live
independently but may require modest, periodic medical attention. These
facilities have become increasingly popular as a housing and health care
alternative for an aging population.
In the biotech sector, the Fund owns Genzyme Corp. Genzyme has been a
leader in several forms of gene therapy treatment, including that for
Gaucher disease, a debilitating disorder caused by defective genes.
Q: Does the smaller size of the companies in your universe represent a
competitive advantage in some instances?
A: Yes. Because of their size and versatility, smaller, emerging companies can
sometimes fill a market niche or adapt to changing industry trends more
quickly than larger companies. For example, Strayer Education, Inc. and
Sylvan Learning Systems, Inc. are two companies that have taken advantage
of a changing educational environment. Strayer operates schools in the
Washington, D.C. area, with a focus on technical fields such as computer
programming. Students emerge from Strayer with associate degrees, better
prepared for the job market.
In another educational niche, Sylvan Learning Systems, Inc. provides
supplemental and remedial educational services in addition to administering
professional tests. Like Strayer, Sylvan has identified an area of the
educational market where it can provide much needed services, and has been
able to add incrementally over time to the breadth and quality of those
services. Both of these companies have benefited from the ability to
respond quickly to changes within a fairly large industry.
Q: Jack, what is your outlook for the coming year?
A: In my view, with a likely investment climate of continued moderate growth
and low inflation, the outlook for emerging growth companies appears good.
Given the outperformance of the large-cap, blue chip stocks in recent
years, a good case can be made that smaller companies have some catching-up
to do. Interestingly, that is true not only of traditional growth areas
like technology and biotech, but of a wide range of industries across the
economy.
With our bottom-up, company-by-company approach, we continue to look for
those companies that we believe will be the leaders of tomorrow. Together
with our tax-managed strategies, we believe that the Fund is
well-positioned to provide excellent after-tax returns to shareholders.
5
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
Comparison of Change in Value of a $10,000 Investment in the Fund vs. the
Standard & Poor's 500 Index
From Sept. 25, 1997 through Oct. 31, 1997
<TABLE>
<CAPTION>
Date Fund/NAV Fund/Off Pr S&P 500
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
3/31/96 $10,000 $9,422 $10,000
4/30/96 $10,282 $9,687 $10,134
5/31/96 $10,503 $9,896 $10,366
6/30/96 $10,543 $9,934 $10,448
7/31/96 $10,050 $9,469 $9,970
8/31/96 $10,342 $9,744 $10,157
9/30/96 $10,956 $10,322 $10,768
10/31/96 $11,237 $10,588 $11,050
11/30/96 $12,042 $11,346 $11,860
12/31/96 $11,831 $11,147 $11,665
1/31/97 $12,525 $11,801 $12,380
2/28/97 $12,435 $11,716 $12,453
3/31/97 $12,052 $11,355 $11,979
4/30/97 $12,676 $11,943 $12,679
5/31/97 $13,471 $12,692 $13,422
6/30/97 $14,090 $13,275 $14,066
7/31/97 $15,227 $14,346 $15,165
8/31/97 $14,583 $13,739 $14,294
9/30/97 $15,378 $14,489 $15,118
10/31/97 $14,816 $13,959 $14,597
</TABLE>
Comparison of Change in Value of a $10,000 Investment in the Fund vs. the
Standard & Poor's 500 Index
From Sept. 29, 1997, through Oct. 31, 1997
<TABLE>
<CAPTION>
Date Fund/NAV Fund/Off Pr S&P 500
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
3/31/96 $10,000 $14,138 $10,000
4/30/96 $10,272 $14,138 $10,134
5/31/96 $10,503 $14,138 $10,366
6/30/96 $10,543 $14,138 $10,448
7/31/96 $10,040 $14,138 $9,970
8/31/96 $10,332 $14,138 $10,157
9/30/96 $10,936 $14,138 $10,768
10/31/96 $11,217 $14,138 $11,050
11/30/96 $12,002 $14,138 $11,860
12/31/96 $11,781 $14,138 $11,665
1/31/97 $12,465 $14,138 $12,380
2/28/97 $12,374 $14,138 $12,453
3/31/97 $11,992 $14,138 $11,979
4/30/97 $12,596 $14,138 $12,679
5/31/97 $13,360 $14,138 $13,422
6/30/97 $13,954 $14,138 $14,066
7/31/97 $15,060 $14,138 $15,165
8/31/97 $14,416 $14,138 $14,294
9/30/97 $15,191 $14,138 $15,118
10/31/97 $14,638 $14,138 $14,597
</TABLE>
Comparison of Change in Value of a $10,000 Investment in the Fund vs. the
Standard & Poor's 500 Index
From Sept. 29, 1997, through Oct. 31, 1997
<TABLE>
<CAPTION>
Date Fund/NAV S&P 500
- --------------------------------------------------------------
<S> <C> <C>
8/31/96 $10,000 $10,000
9/30/96 $10,584 $10,602
10/31/96 $10,856 $10,878
11/30/96 $11,621 $11,677
12/31/96 $11,390 $11,484
1/31/97 $12,044 $12,188
2/28/97 $11,954 $12,260
3/31/97 $11,571 $11,794
4/30/97 $12,165 $12,483
5/31/97 $12,920 $13,214
6/30/97 $13,494 $13,848
7/31/97 $14,562 $14,930
8/31/97 $13,927 $14,073
9/30/97 $14,673 $14,884
10/31/97 $14,129 $14,371
</TABLE>
Performance+
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
Life of Fund (Class A: 9/25/97);(Classes B- and C: 9/29/97)
<S> <C>
Class A -2.6%
Class B -2.6
Class C -2.8
<CAPTION>
SEC Average Annual Total Returns (including applicable sales charge)
- --------------------------------------------------------------------------------
Life of Fund (Class A: 9/25/97);(Classes B- and C: 9/29/97)
<S> <C>
Class A -8.2%
Class B -7.5
Class C -3.8
- --------------------------------------------------------------------------------
</TABLE>
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced
on 9/25/97 for Class A shares, and on 9/29/97 for Class B and Class C
shares. Index information is only available at month-end; therefore, the
line comparison begins at the next month-end following the commencement of
the Fund's investment operations.
The chart compares the Fund's total return with that of the S&P 500 Stock
Index, a broad-based, unmanaged market index of common stocks. Returns are
calculated by determining the percentage change in net asset value (NAV)
with all distributions reinvested. The lines on the chart represent the
total returns of $10,000 hypothetical investments in the Fund and the
Index. The Index's total return does not reflect commissions or expenses
that would have been incurred if an investor individually purchased or sold
the securities represented in the Index. It is not possible to invest
directly in an Index.
** For Class A, this figure represents the Fund's performance including the
Fund's maximum 5.75% sales charge. For Class B and Class C, this figure
represents the Fund's performance including the Fund's applicable
contingent deferred sales charge (CDSC).
+ Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC returns reflect
applicable sales charges.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less their original cost.
6
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
PORTFOLIO OF INVESTMENTS
Common Stocks-- 93.3%
<TABLE>
<CAPTION>
Security Shares Value
- --------------------------------------------------------------------------------
<S> <S> <C>
Advertising -- 1.9%
- --------------------------------------------------------------------------------
Catalina Marketing Corp.* 1,800 $ 82,238
Outdoor Systems, Inc.* 6,400 196,800
- --------------------------------------------------------------------------------
$ 279,038
- --------------------------------------------------------------------------------
Banks - Regional -- 1.7%
- --------------------------------------------------------------------------------
Colonial Bancgroup, Inc. 4,400 $ 130,625
Sovereign Bancorp, Inc. 6,800 120,700
- --------------------------------------------------------------------------------
$ 251,325
- --------------------------------------------------------------------------------
Banks and Money Services -- 0.9%
- --------------------------------------------------------------------------------
Bank United Corp., Class A 3,000 $ 126,000
- --------------------------------------------------------------------------------
$ 126,000
- --------------------------------------------------------------------------------
Broadcasting and Cable -- 3.6%
- --------------------------------------------------------------------------------
Emmis Broadcasting Corp., Class A* 4,800 $ 212,400
Jacor Communications, Inc.* 4,400 184,250
Sinclair Broadcast Group, Class A* 3,500 127,750
- --------------------------------------------------------------------------------
$ 524,400
- --------------------------------------------------------------------------------
Building Materials -- 1.1%
- --------------------------------------------------------------------------------
Texas Industries, Inc. 3,300 $ 156,544
- --------------------------------------------------------------------------------
$ 156,544
- --------------------------------------------------------------------------------
Business Products and Services -- 2.2%
- --------------------------------------------------------------------------------
CN Maximus, Inc.* 1,900 $ 53,200
Gartner Group, Inc.-Class A* 4,400 124,300
Personnel Group of America, Inc.* 4,100 142,219
- --------------------------------------------------------------------------------
$ 319,719
- --------------------------------------------------------------------------------
Business Services - Miscellaneous -- 3.3%
- --------------------------------------------------------------------------------
Agouron Pharmaceuticals, Inc.* 1,000 $ 45,625
Human Genome Sciences, Inc.* 1,800 73,800
Learning Tree International* 3,700 128,575
Medicis Pharmaceutical, Inc.-Class A* 1,400 67,375
Sylvan Learning Systems, Inc.* 4,000 168,500
- --------------------------------------------------------------------------------
$ 483,875
- --------------------------------------------------------------------------------
Communications Equipment -- 3.1%
- --------------------------------------------------------------------------------
Comverse Technology, Inc.* 4,200 $ 173,250
Davox Corp.* 4,900 175,175
ECI Telecommunications* 3,600 99,450
- --------------------------------------------------------------------------------
$ 447,875
- --------------------------------------------------------------------------------
Communications Services -- 0.8%
- --------------------------------------------------------------------------------
Nextel Communications, Inc.* 3,300 $ 86,625
Transition Systems, Inc.* 1,600 32,400
- --------------------------------------------------------------------------------
$ 119,025
- --------------------------------------------------------------------------------
Computer Software -- 4.2%
- --------------------------------------------------------------------------------
BMC Software, Inc.* 3,200 $ 193,200
HNC Software, Inc.* 2,750 101,750
PeopleSoft, Inc.* 3,500 219,504
Security Dynamics Technology, Inc.* 3,100 105,013
- --------------------------------------------------------------------------------
$ 619,467
- --------------------------------------------------------------------------------
Consumer Services -- 0.5%
- --------------------------------------------------------------------------------
Strayer Education, Inc. 1,600 $ 76,400
- --------------------------------------------------------------------------------
76,400
- --------------------------------------------------------------------------------
Drugs -- 5.0%
- --------------------------------------------------------------------------------
Curative Health Services, Inc.* 3,200 $ 96,400
Elan Corp., PLC ADR* 3,400 169,575
Genzyme Corp.* 7,100 61,238
Genzyme Corp. Class A* 5,000 136,875
Parexel International Corp. 3,700 133,663
Quintiles Transnational Corp. 1,400 101,500
Vertex Pharmaceuticals, Inc.* 1,100 32,450
- --------------------------------------------------------------------------------
$ 731,701
- --------------------------------------------------------------------------------
Electrical Equipment -- 1.2%
- --------------------------------------------------------------------------------
Level One Communications, Inc.* 4,000 $ 180,000
- --------------------------------------------------------------------------------
$ 180,000
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
7
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Security Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Electronics - Instruments -- 4.0%
- --------------------------------------------------------------------------------
Altera Corp.* 3,250 $ 144,219
Microchip Technology, Inc.* 3,600 143,550
Sanmina Corp.* 1,900 142,025
Vitesse Semiconductor Corp. 3,500 151,813
- --------------------------------------------------------------------------------
$ 581,607
- --------------------------------------------------------------------------------
Electronics - Semiconductors -- 1.2%
- --------------------------------------------------------------------------------
Linear Technology Corp. 2,700 $ 169,763
- --------------------------------------------------------------------------------
$ 169,763
- --------------------------------------------------------------------------------
Entertainment -- 1.2%
- --------------------------------------------------------------------------------
MGM Grand, Inc.* 4,000 $ 175,500
- --------------------------------------------------------------------------------
$ 175,500
- --------------------------------------------------------------------------------
Financial - Miscellaneous -- 0.7%
- --------------------------------------------------------------------------------
Capital One Financial Corp. 2,200 $ 100,375
- --------------------------------------------------------------------------------
$ 100,375
- --------------------------------------------------------------------------------
Health Services -- 10.4%
- --------------------------------------------------------------------------------
American Retirement Corp.* 6,900 $ 134,119
Bioreliance Corp.* 3,500 77,875
Concentra Managed Care, Inc.* 5,000 163,125
Express Scripts, Inc., Class A* 3,000 169,125
Health Management Associates, Inc. Class A* 7,600 185,250
MiniMed, Inc.* 2,400 93,600
National Surgery Centers, Inc.* 6,900 172,500
Omnicare, Inc. 3,200 89,000
Pediatrix Medical Group, Inc.* 2,400 101,400
PhyCor, Inc.* 1,900 43,819
Renal Care Group, Inc. 3,600 120,600
Sunrise Assisted Living, Inc.* 4,300 159,638
- --------------------------------------------------------------------------------
$1,510,051
- --------------------------------------------------------------------------------
Information Services -- 19.4%
- --------------------------------------------------------------------------------
Acxiom Corp.* 6,700 $ 110,131
Affiliated Computer Services, Inc. Class A* 7,300 183,413
Aspect Development, Inc.* 2,650 123,888
Aspen Technologies, Inc.* 3,500 131,688
Baan Co. NV* 3,000 210,375
Cambridge Technology Partners, Inc.* 5,100 186,150
CCC Information Services Group* 5,500 102,438
Documentum, Inc.* 1,700 50,788
FIserv, Inc.* 3,800 170,050
Harbinger, Corp.* 1,300 $ 38,675
IDX Systems Corp.* 4,500 151,875
J.D. Edwards, Inc.* 3,400 115,600
Manugistics Group, Inc.* 3,500 124,688
National Data Corp. 3,800 140,363
Netscape Communications Corp.* 1,700 55,888
Nova Corp.* 6,000 161,250
Paychex, Inc. 4,800 183,000
Pegasystems, Inc.* 4,200 76,650
SunGard Data Systems, Inc. 6,800 160,650
Symantec* 4,800 105,000
Vantive Corp.* 4,700 118,675
Veritas Software Corp. 3,000 124,875
- --------------------------------------------------------------------------------
$2,826,110
- --------------------------------------------------------------------------------
Insurance -- 2.9%
- --------------------------------------------------------------------------------
Frontier Insurance Group, Inc. 2,800 $ 94,325
HCC Insurance Holdings, Inc. 3,700 86,488
Mercury General Corp. 2,700 114,581
Mutual Risk Management Ltd. 5,000 129,688
- --------------------------------------------------------------------------------
$ 425,082
- --------------------------------------------------------------------------------
Investment Services -- 3.1%
- --------------------------------------------------------------------------------
Centura Banks, Inc. 3,000 $173,625
Crescent Real Estate Equitable Co. 1,300 46,800
PMI Group, Inc. 1,900 114,831
The Money Store, Inc. 4,300 122,013
- --------------------------------------------------------------------------------
$457,269
- --------------------------------------------------------------------------------
Machinery -- 2.9%
- --------------------------------------------------------------------------------
Camco International, Inc. 2,700 $195,075
Ionics, Inc.* 2,200 84,288
Varco International, Inc.* 2,300 140,156
- --------------------------------------------------------------------------------
$419,519
- --------------------------------------------------------------------------------
Medical Products -- 2.8%
- --------------------------------------------------------------------------------
Arterial Vascular Engineering, Inc.* 700 $ 37,188
Guidant Corp. 2,800 161,000
Heartstream, Inc.* 1,850 19,194
Invacare Corp. 2,700 62,100
Sofamor Danek Group, Inc.* 1,900 130,863
- --------------------------------------------------------------------------------
$410,345
- --------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
8
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
Security Shares Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Oil and Gas - Exploration and Production -- 8.0%
- --------------------------------------------------------------------------------
Anadarko Petroleum Corp.* 2,650 $ 194,113
Apache Corp.* 4,200 176,400
Cross Timbers Oil Co. 4,900 130,769
Devon Energy Corp. 3,300 147,675
Louis Dreyfus Natural Gas* 6,640 146,910
Newfield Exploration Co.* 4,700 127,488
Triton Energy Ltd.* 3,800 148,675
Vintage Petroleum, Inc. 4,100 93,788
- --------------------------------------------------------------------------------
$ 1,165,818
- --------------------------------------------------------------------------------
Publishing -- 1.2%
- --------------------------------------------------------------------------------
A.H. Belo Corp.* 3,200 $ 151,200
CMP Media Inc., Class A* 1,250 23,125
- --------------------------------------------------------------------------------
$ 174,325
- --------------------------------------------------------------------------------
Retail - Food and Drug -- 1.0%
- --------------------------------------------------------------------------------
Papa John's International, Inc.* 4,200 $ 124,163
Starbucks Corp.* 800 26,400
- --------------------------------------------------------------------------------
$ 150,563
- --------------------------------------------------------------------------------
Retail - Specialty and Apparel -- 2.5%
- --------------------------------------------------------------------------------
Bed Bath and Beyond, Inc.* 5,400 $ 171,450
Polo Ralph Lauren Corp., Class A* 3,250 84,500
The Mens Wearhouse, Inc.* 2,700 104,625
- --------------------------------------------------------------------------------
$ 360,575
- --------------------------------------------------------------------------------
Specialty Chemicals and Materials -- 0.0%
- --------------------------------------------------------------------------------
Millipore Corp. 100 $ 3,913
- --------------------------------------------------------------------------------
$ 3,913
- --------------------------------------------------------------------------------
Telephone Utilities -- 1.5%
- --------------------------------------------------------------------------------
ACC Corp.* 3,000 $ 118,875
Pacific Gateway Exchange, Inc.* 2,600 99,450
- --------------------------------------------------------------------------------
$ 218,325
- --------------------------------------------------------------------------------
Transportation -- 1.0%
- --------------------------------------------------------------------------------
Comair Holdings, Inc. 4,000 $ 147,000
- --------------------------------------------------------------------------------
$ 147,000
- --------------------------------------------------------------------------------
Total Common Stocks
(identified cost $14,065,252) $13,611,509
- --------------------------------------------------------------------------------
</TABLE>
Mortgage Pass-Throughs -- 23.9%
<TABLE>
<CAPTION>
Face Amount
Security (000 omitted) Value
- --------------------------------------------------------------------------------
<S> <C> <C>
Federal Home Loan Bank, 5.63%, 11/3/97 $3,488 $ 3,486,909
- --------------------------------------------------------------------------------
Total Mortgage Pass-Throughs
(identified cost $3,486,909) $ 3,486,909
- --------------------------------------------------------------------------------
Total Investments -- 117.2%
(identified cost $17,552,161) $17,098,418
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities -- (17.2)% (2,510,362)
- --------------------------------------------------------------------------------
Net Assets -- 100.0% $14,588,056
- --------------------------------------------------------------------------------
</TABLE>
* Non-income producing security.
See notes to financial statements
9
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of October 31, 1997
Assets
- --------------------------------------------------------------------------------
<S> <C>
Investments at value (Note 1A), (identified cost, $17,552,161) $ 17,098,418
Cash 20
Receivable for investments sold 51,498
Receivable for Fund shares sold 701,285
Dividends and interest receivable 2,751
Deferred organization expense (Note 1D) 9,893
- --------------------------------------------------------------------------------
Total assets $ 17,863,865
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for investments purchased $ 1,964,525
Payable for Fund shares redeemed 1,285,155
Payable to affiliate for shareholder services (Note 6) 154
Accrued expenses 25,975
- --------------------------------------------------------------------------------
Total liabilities $ 3,275,809
- --------------------------------------------------------------------------------
Net Assets $ 14,588,056
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Paid-in capital $ 15,107,113
Accumulated net realized loss on investments
(computed on the basis of identified cost) (73,463)
Accumulated undistributed net investment income 8,149
Net unrealized depreciation of investments (computed
on the basis of identified cost) (453,743)
- --------------------------------------------------------------------------------
Total $ 14,588,056
- --------------------------------------------------------------------------------
Net Asset Value and Redemption Price Per Share
- --------------------------------------------------------------------------------
Class A Shares
Net Asset Value per share (Note 5)
($3,924,653 / 402,894 Participating shares
outstanding) $ 9.74
- --------------------------------------------------------------------------------
Class B Shares
Net Asset Value per share (Notes 5 and 7)
($8,612,619 / 884,289 Participating shares
outstanding) $ 9.74
- --------------------------------------------------------------------------------
Class C Shares
Net Asset Value per share (Notes 5 and 7)
($2,050,784 / 210,914 Participating shares
outstanding) $ 9.72
- --------------------------------------------------------------------------------
Computation of Offering Price
- --------------------------------------------------------------------------------
Class A Shares
Offering Price per share (100 / 94.25 of $9.74) $ 10.33
- --------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price is reduced.
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Period Ended
October 31, 1997 *
Investment Income (Note 1G)
- --------------------------------------------------------------------------------
<S> <C>
Dividend income $ 2,286
Interest income 13,098
- --------------------------------------------------------------------------------
Total income $ 15,384
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Investment Adviser fee (Note 3) $ 3,602
Distribution and service fees (Note 6)
Class B 2,603
Class C 615
Printing and postage 255
Amortization of organization expenses (Note 1D) 107
Legal and accounting services 43
Miscellaneous 10
- --------------------------------------------------------------------------------
Total expenses $ 7,235
- --------------------------------------------------------------------------------
Net investment income $ 8,149
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ (73,463)
- --------------------------------------------------------------------------------
Net realized loss on investments $ (73,463)
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investment transactions $ (453,743)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $ (453,743)
- --------------------------------------------------------------------------------
Net realized and unrealized loss on investments $ (527,206)
- --------------------------------------------------------------------------------
Net decrease in net assets from operations $ (519,057)
- --------------------------------------------------------------------------------
</TABLE>
* For the period from the start of business, September 25, 1997, to
October 31, 1997.
See notes to financial statements
10
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
FINANCIAL STATEMENTS CONT'D
Statement of Changes in Net Assets
<TABLE>
<CAPTION>
Increase (Decrease) For the Period Ended
in Net Assets October 31, 1997 *
- --------------------------------------------------------------------------------
<S> <C>
From operations --
Net investment income $ 8,149
Net realized loss on investments (73,463)
Net change in unrealized appreciation
(depreciation)
of investments (453,743)
- --------------------------------------------------------------------------------
Net decrease in net assets from operations $ (519,057)
- --------------------------------------------------------------------------------
Transactions in shares of beneficial interest (Note 5) --
Proceeds from sale of shares
Class A $ 4,869,539
Class B 8,974,780
Class C 2,116,676
Cost of shares redeemed
Class A (816,967)
Class B (36,915)
- --------------------------------------------------------------------------------
Net increase in net assets from Fund
share transactions $ 15,107,113
- --------------------------------------------------------------------------------
Net increase in net assets $ 14,588,056
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $ --
- --------------------------------------------------------------------------------
At end of period $ 14,588,056
- --------------------------------------------------------------------------------
Accumulated undistributed
net investment income
included in net assets
- --------------------------------------------------------------------------------
At end of period $ 8,149
- --------------------------------------------------------------------------------
</TABLE>
* For the period from the start of business, September 25, 1997, to October 31,
1997.
See notes to financial statements
11
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Period Ended October 31, 1997
------------------------------------------------------------
Class A* Class B** Class C**
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value -- Beginning of period $ 10.000 $10.000 $10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.008 $ 0.005 $ 0.003
Net realized and unrealized loss on investments (0.268) (0.265) (0.283)
- ------------------------------------------------------------------------------------------------------------------------------------
Net loss from operations $ (0.260) $(0.260) (0.280)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of period $ 9.740 $ 9.740 $ 9.720
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(1) (2.60)% (2.60)% (2.80)%
- ------------------------------------------------------------------------------------------------------------------------------------
Portfolio Turnover 7.00% 7.00% 7.00%
- ------------------------------------------------------------------------------------------------------------------------------------
Average Commission Rate(2) $ 0.0600 $0.0600 $0.0600
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 3,925 $ 8,613 $ 2,051
Ratio of net expenses to average daily net assets 0.63%+ 1.37%+ 1.56%+
Ratio of net investment income to average daily net assets 1.83%+ 1.13%+ 0.90%+
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, September 25, 1997, to
October 31, 1997.
** For the period from the commencement of offerings of Class B and Class C
shares, September 29, 1997, to October 31, 1997.
(1) Total return is calculated assuming a purchase at the net asset value on the
first day and a sale at the net asset value on the last day of each period
reported. Dividends and distributions, if any, are assumed to be reinvested
at the net asset value on the ex-date. Total return is not computed on an
annualized basis.
(2) Average commission rate paid is computed by dividing the total dollar amount
of commissions paid during the fiscal year by the total number of shares
purchased and sold during the fiscal year for which commissions were
charged.
See notes to financial statements
12
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
----------------------------------------------------------------------------
Eaton Vance Tax-Managed Emerging Growth Fund (the Fund) is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund, which is a series of Eaton Vance
Mutual Fund Trust (the Trust), seeks to provide long-term after-tax returns
by investing in a diversified portfolio of equity securities of emerging
growth companies. The Declaration of Trust permits the Trustees to issue
interests in the Fund. The Fund has three classes of shares. Class A shares
are sold at the effective public offering price, which price is based on the
effective net asset value per share plus the applicable sales charge. Class
B and Class C shares are sold at net asset value and are subject to a
contingent deferred sales charge (see Note 7). All classes of shares have
equal rights to assets and voting privileges. Realized and unrealized gains
and losses and net investment income, other than class specific expenses,
are allocated daily to each class of shares based on the relative net assets
of each class to the total net assets of the Fund. Each class of shares
differs in its distribution plan and certain other class specific expenses.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A Investment Valuations -- Marketable securities, including options, that
are listed on foreign or U.S. securities exchanges or in the NASDAQ National
Market System are valued at closing sale prices, on the exchange where such
securities are principally traded. Futures positions on securities or
currencies are generally valued at closing settlement prices. Unlisted or
listed securities for which closing sale prices are not available are valued
at the mean between the latest bid and asked prices. Short-term debt
securities with a remaining maturity of 60 days or less are valued at
amortized cost, which approximates value. Other fixed income and debt
securities, including listed securities and securities for which price
quotations are available, will normally be valued on the basis of valuations
furnished by a pricing service. Investments for which valuations or market
quotations are unavailable are valued at fair value using methods determined
in good faith by or at the direction of the Trustees.
B Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including
any net realized gain on investments. Accordingly, no provision for federal
income or excise tax is necessary. At October 31, 1997, the Fund, for
federal income tax purposes, had a capital loss carryover of $56,332 which
will reduce the taxable income arising from future net realized gain on
investments, if any, to the extent permitted by the Internal Revenue Code
and thus will reduce the amount of distributions to shareholders which would
otherwise be necessary to relieve the Fund of any liability for federal
income or excise tax. Such capital loss carryover will expire on October 31,
2005.
C Futures Contracts -- Upon the entering of a financial futures contract,
the Fund is required to deposit either in cash or securities an amount
("initial margin") equal to a certain percentage of the purchase price
indicated in the financial futures contract. Subsequent payments are made or
received by the Fund ("margin maintenance") each day, dependent on daily
fluctuations in the value of the underlying security, and are recorded for
book purposes as unrealized gains or losses by the Fund. The Fund's
investment in financial futures contracts is designed to hedge against
anticipated future changes in price of current or anticipated Fund
positions. Should prices move unexpectedly, the Fund may not achieve the
anticipated benefits of the financial futures contracts and may realize a
loss.
D Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization are being amortized on the straight-line basis over
five years.
E Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
F Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian to the Fund. Pursuant to the custodian agreement, IBT receives a
fee reduced by credits which are determined based on the average cash
13
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
balances the Fund maintains with IBT. All significant credit balances used
to reduce the Fund's custodian fees are reported as a reduction of operating
expenses on the Statement of Operations.
G Other -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income is recorded on the
ex-dividend date. However, if the ex-dividend date has passed, certain
dividends from foreign securities are recorded as the Fund is informed of
the ex-dividend date. Interest income is recorded on the accrual basis.
2 Distributions to Shareholders
----------------------------------------------------------------------------
It is the present policy of the Fund to make (a) at least one distribution
annually (normally in December) of all or substantially all of the net
investment income and (b) at least one distribution annually of all or
substantially all of the net realized capital gains (reduced by any
available capital loss carryforwards from prior years). Income dividends are
declared separately for each class of shares. Shareholders may reinvest all
distributions in shares of the Fund without a sales charge at the net asset
value per share as of the close of business on the ex-date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be reported in the
financial statements as a return of capital. Differences in the recognition
or classification of income between the financial statements and tax
earnings and profits which result in temporary over distributions for
financial statement purposes only are classified as distributions in excess
of net investment income or accumulated net realized gains. Permanent
differences between book and tax accounting relating to distributions are
reclassified to paid-in capital.
3 Investment Adviser Fee and Other Transactions with Affiliates
----------------------------------------------------------------------------
The investment adviser fee is earned by Eaton Vance Management (EVM) as
compensation for management and investment advisory services rendered to the
Fund. EVM receives a monthly advisory fee in the amount of 5/96th of 1%
(equal to 0.625% annually) of the average daily net assets of the Fund up to
$500 million, and at reduced rates as daily net assets exceed that level.
For the period ended October 31, 1997 the fee amounted to $3,602. Except as
to Trustees of the Fund who are not members of EVM's organization, officers
and Trustees receive remuneration for their services to the Fund out of such
investment adviser fee. Trustees of the Fund who are not affiliated with the
Investment Adviser may elect to defer receipt of all or a percentage of
their annual fees in accordance with the terms of the Trustees Deferred
Compensation Plan. For the period ended October 31, 1997, no significant
amounts have been deferred. Certain officers and Trustees of the Fund are
officers and directors/trustees of EVM.
4 Federal Income Tax Basis of Investments
----------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at October 31, 1997, as computed on a federal income tax
basis, are as follows:
<TABLE>
<S> <C>
Aggregate cost $ 17,552,161
----------------------------------------------------------------------------
Gross unrealized appreciation $ 186,304
Gross unrealized depreciation (640,047)
----------------------------------------------------------------------------
Net unrealized depreciation $ (453,743)
----------------------------------------------------------------------------
</TABLE>
5 Shares of Beneficial Interest
----------------------------------------------------------------------------
The Declaration of the Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
Class A Period Ended October 31, 1997 *
----------------------------------------------------------------------------
<S> <C>
Sales 483,988
Redemptions (81,094)
----------------------------------------------------------------------------
Net increase 402,894
----------------------------------------------------------------------------
</TABLE>
* For the period from the start of business, September 25, 1997, to
October 31, 1997.
<TABLE>
<CAPTION>
Class B Period Ended October 31, 1997 **
----------------------------------------------------------------------------
<S> <C>
Sales 887,994
Redemptions (3,705)
----------------------------------------------------------------------------
Net increase 884,289
----------------------------------------------------------------------------
</TABLE>
** For the period from the commencement of offering of Class B shares,
September 29, 1997, to October 31, 1997.
14
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
<TABLE>
<CAPTION>
Class C Period Ended October 31, 1997 ***
----------------------------------------------------------------------------
<S> <C>
Sales 210,914
Redemptions --
----------------------------------------------------------------------------
Net increase 210,914
----------------------------------------------------------------------------
</TABLE>
***For the period from the commencement of offering of Class C shares,
September 29, 1997, to October 31, 1997.
6 Distribution and Service Fees
----------------------------------------------------------------------------
The Fund has adopted a Service Plan for the Fund's Class A shares (the
"Class A Plan") that is designed to meet the service fee requirements of the
sales charge rule of the National Association of Securities Dealers, Inc.
The Class A Plan provides that the Fund may make service fee payments for
personal services and/or the maintenance of shareholder accounts to the
Principal Underwriter, financial service firms ("Authorized Firms") and
other persons in amounts not exceeding 0.25% of average daily net assets for
Class A shares for any fiscal year. The Trustees have initially implemented
the Class A Plan by authorizing Class A to make quarterly service fee
payments to the Principal Underwriter and Authorized Firms in amounts not
expected to exceed 0.25% of the average daily net assets for any fiscal year
which is based on the value of Class A shares sold by such persons and
remaining outstanding for at least twelve months. The Fund expects to begin
accruing for Class A service fees during the quarter ending December 31,
1998.
The Fund has also adopted distribution plans (Class B and Class C Plan, the
Plans) pursuant to Rule 12b-1 under the Investment Company Act of 1940. The
Plans, which are approved annually, require the Fund to pay the Principal
Underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal to 1/365 of
0.75% of the Fund's Class B and Class C daily net assets, for providing
ongoing distribution services and facilities to the Fund. The Fund will
automatically discontinue payments to EVD during any period in which there
are no outstanding Uncovered Distribution Charges, which are equivalent to
the sum of (i) 5% and 6.25% of the aggregate amount received by the Fund for
Class B and Class C shares sold, respectively, plus (ii) distribution fees
calculated by applying the rate of 1% over the prevailing prime rate to the
outstanding balance of Uncovered Distribution Charges due EVD, of each
respective class reduced by the aggregate amount of contingent deferred
sales charges (see Note 7) and daily amounts theretofore paid to EVD by each
respective class.
The amount payable to EVD with respect to each day is accrued on such day as
a liability of the Fund and, accordingly, reduces the Fund's net assets. For
the period ended October 31, 1997, the Fund paid or accrued $2,603 and $461,
to or payable to EVD representing 0.75% (annualized) of average daily net
assets of Class B and Class C shares, respectively. At October 31, 1997, the
amount of Uncovered Distribution Charges of EVD calculated under the Plans
was approximately $415,000 and $122,000 for Class B and Class C shares,
respectively.
In addition, Class B and Class C Plans authorize the Fund to make payments
of service fees to the Principal Underwriter, Authorized Firms, and other
persons in amounts not exceeding 0.25% of their average daily net assets for
each fiscal year. Service fee payments are made for personal services and/or
the maintenance of shareholder accounts. Under the Class B Plan, this fee is
paid quarterly in arrears based on the value of Class B shares sold by such
persons and remaining outstanding for at least twelve months. Class B
expects to begin accruing for its service fees during the quarter ending
December 31, 1998. Under the Class C Plan, the Principal Underwriter
currently expects to pay to an Authorized Firm (a) a service fee (except on
exchange transactions and reinvestments) at the time of sale equal to 0.25%
of the purchase price of the Class C shares sold by such Firm and (b)
monthly service fees approximately equivalent to 1/12 of 0.25% of the value
of Class C shares sold by such Firm and remaining outstanding for at least
one year. During the first year after a purchase of Class C shares, the
Principal Underwriter will retain the service fee as reimbursement for the
service fee payment made to Authorized Firms at the time of sale. The Fund
paid or accrued service fees to or payable to EVD for the period ended
October 31, 1997 in the amount of $154 for Class C. Service fees are
separate and distinct from the sales commissions and distribution fees
payable by the Fund to EVD, and as such are not subject to automatic
discontinuance when there are no outstanding Uncovered Distribution Charges
of EVD.
7 Contingent Deferred Sales Charge
----------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) may be imposed on certain Class A
shares redeemed within 12 months of purchase. A CDSC is imposed on any
redemption of Class B shares made within six years of purchase. A CDSC is
imposed on any redemption of Class C shares made within one year of
purchase. Generally, the CDSC is based on the lower of the net asset value
at date of redemption or date of purchase. No charge is levied on shares
acquired by reinvestment of dividends. Class A
15
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
shares may be subject to a 1% CDSC if redeemed within 12 months of purchase
(depending on the circumstances of purchase). For Class B the CDSC is
imposed at declining rates that begin at 5% in the case of redemptions in
the first and second year after purchase, declining one percentage point
each subsequent year. Class C shares will be subject to a 1% CDSC if
redeemed within 12 months of purchase.
No CDSC is levied on shares which have been sold to EVM or its affiliates or
to their respective employees. CDSC charges are paid to EVD to reduce the
amount of Uncovered Distribution Charges calculated under the Class B and
Class C Distribution Plans. CDSC received when no Uncovered Distribution
Charges exist will be retained by the Fund. EVD received approximately $400
of CDSC paid by shareholders of Class B shares during the period ended
October 31, 1997. There was no CDSC paid by shareholders of Class A and
Class C shares during the period ended October 31, 1997.
8 Line of Credit
----------------------------------------------------------------------------
The Fund participates with other funds and portfolios managed by EVM and its
affiliates in a $100 million unsecured line of credit agreement with a group
of banks. The Fund may temporarily borrow from the line of credit to satisfy
redemption requests or settle investment transactions. Interest is charged
to each fund or portfolio based on its borrowings at an amount above the
banks' Eurodollar rate or federal funds advanced funding rate. In addition,
a fee computed at an annual rate of 0.10% on the daily unused portion of the
line of credit is allocated among the participating funds and portfolios at
the end of each quarter. The Fund did not have any significant borrowings or
allocated fees during the period ended October 31, 1997.
9 Investment Transactions
----------------------------------------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $14,500,040 and $360,762, respectively, for the period ended
October 31, 1997.
16
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders
of Eaton Vance Tax-Managed
Emerging Growth Fund
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Eaton Vance Tax-Managed Emerging Growth Fund
(the Fund) as of October 31, 1997, and the related statement of operations, the
statement of changes in net assets and the financial highlights for the period
from the start of business, September 25, 1997, to October 31, 1997. These
financial statements and financial highlights are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. Our procedures included confirmation of
securities owned as of October 31, 1997 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other
auditing procedures. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights, referred to
above, present fairly, in all material respects, the financial position of Eaton
Vance Tax-Managed Emerging Growth Fund at October 31, 1997, the results of its
operations, the changes in its net assets and its financial highlights for the
period from the start of business, September 25, 1997, to October 31, 1997 in
conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 5, 1997
17
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1997
INVESTMENT MANAGEMENT
Eaton Vance Tax-Managed Emerging Growth Fund
Officers
M. Dozier Gardner
President and Trustee
James B. Hawkes
Vice President and Trustee
William H. Ahern, Jr.
Vice President
Thomas J. Fetter
Vice President
Michael B. Terry
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment Banking,
Harvard University Graduate School of
Business Administration
Norton H. Reamer
President and Director, United Asset
Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
18
<PAGE>
This Page Intentionally Left Blank
<PAGE>
Investment Adviser and Administrator of Eaton Vance
Tax-Managed Emerging Growth Fund
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617)482-8260
Custodian
Investors Bank & Trust Company
200 Clarendon Street,16th Floor
Boston, MA 02116
Transfer Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
Eaton Vance
Tax-Managed Emerging Growth Fund
24 Federal Street
Boston, MA 02110
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its sales charges and
expenses. Please read the prospectus carefully before you invest or send money.
- --------------------------------------------------------------------------------
MGSRC-12/97
