[EATON VANCE LOGO]
Mutual Funds
for People
Who Pay
Taxes
EATON VANCE
TAX-MANAGED
INTERNATIONAL
GROWTH
FUND
Semi-Annual Report April 30, 1998
Eaton Vance Tax-Managed International Growth Fund as of April 30, 1998
INVESTMENT UPDATE
[PHOTO OF ARMIN J. LANG, PORTFOLIO MANAGER]
Investment Environment
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The International Markets
* While the U.S. market has delivered outstanding returns in recent years,
the developed markets in Europe, Asia, and the United Kingdom have lagged
significantly. For example, while the S&P 500 Index returned 20.2%
average annual total returns for the five years ended December 31, 1997,
Morgan Stanley Capital International's Europe, Australasia, Far East
Index (EAFE) posted an average annual return of just 11.7%.1 Historical
patterns suggest that the international markets can be expected to narrow
that gap in coming years.
* European companies have only recently embarked on a campaign to improve
shareholder values. In its early stages, the trend includes the same
aggressive cost-cutting, merger activity, stock buybacks, and
improvements in productivity that have characterized U.S. companies over
the past decade.
* After soaring to the 39,000 level in 1989, Japan's Nikkei average has
remained in a relatively narrow trading range in the 1990s in response to
a continuing, stagnant domestic economy.1 Many Japanese export companies,
however, have continued to fare well and remain among the best-known
brand names in the world.
The Fund
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Performance Since Inception
* The Fund's Class A, Class B, and Class C shares each had a total return
of -1.7% during the brief period from the beginning of operations on
April 22, 1998 through April 30, 1998.2
The Fund's Investment Approach
* The Fund's investment universe consists of high-quality, large-cap growth
companies within 21 developed markets outside the U.S. At April 30, 1998,
around 51% of the Portfolio's investments were in Europe, with 20% in the
United Kingdom, and another 22% in Japan.
* After an initial quantitative screen for liquidity, valuation and growth
trends, the Portfolio applies in-depth industry research and bottom-up
company analysis to develop a list of candidates for purchase. The
Portfolio focuses especially on companies with long-term quality growth
prospects.
* The Portfolio is managed for tax-efficiency, seeking to provide
attractive, long-term, after-tax returns. Toward that end, the Portfolio
seeks investment returns in the form of capital appreciation rather than
income, emphasizes low turnover, and employs a sell discipline that
minimizes capital gains.
Some Representative Holdings
* Philips Electronics NV is a Dutch global conglomerate with operations in
consumer products -- such as lighting, software and communications - and
professional products, including plastics, semiconductors and medical
systems. The company enjoyed 51% earnings growth in the first quarter of
1998.
* Nokia Corp. is a Finnish manufacturer of telecom systems and equipment.
Its core businesses include operator-driven infrastructure and consumer-
driven mobile telephony. Nokia's newest Communicator model offers
enhanced voice, data and messaging capabilities, as well as access to
Internet and database services.
* Japan's Sony Corp. is among the world's leading manufacturers of consumer
electronics equipment. The company also has major operations in filmed
entertainment, recorded music, and image-based software. In the most
recent quarter, Sony's earnings surged 64.5%. Despite a slow Japanese
economy, Sony continued to benefit from strong foreign demand for its
products and, incrementally, from a declining yen.
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Fund Information
as of April 30, 1998
Performance 3 Class A Class B Class C
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Cumulative Total Returns (at net asset value)
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Life of Fund+ -1.7% -1.7% -1.7%
SEC Cumulative Total Returns (including sales charge or applicable CDSC)
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Life of Fund+ -7.4% -6.6% -2.7%
+ Inception Date - 4/22/98
Ten Largest Holdings 4 By total net assets
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Rohm Company 2.7%
Sony Corp. 1.6
Novartis AG 1.5
HSBC Holdings, PLC 1.5
Roche Holdings AG 1.4
Nokia Corp. 1.4
Axa Company 1.4
Nestle 1.4
Ericsson AB 1.4
Commerzbank AG 1.4
1 It is not possible to invest directly in an Index.
2 These returns do not include the 5.75% maximum sales charge for the
Fund's Class A shares or the applicable contingent deferred sales charges
(CDSC) for the Fund's Class B and Class C shares.
3 Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC cumulative total
returns for Class A reflect 5.75% sales charge; for Class B, returns
reflect applicable CDSC based on the following schedule: 5%-1st and 2nd
years; 4%-3rd year; 3%-4th year; 2%-5th year; 1%-6th year; for Class C,
return reflects one-year 1% CDSC.
4 Based on market value as of 4/30/98. Ten largest holdings represent 15.7%
of the Portfolio's investments. 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.
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.
<TABLE>
<CAPTION>
Eaton Vance Tax-Managed International Growth Fund as of April 30, 1998
PORTFOLIO OF INVESTMENTS
(Expressed in United States Dollars)
Common Stocks -- 98.3%
Security Shares Value
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<S> <C> <C>
Auto & Parts -- 4.1%
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Bridgestone Corp. 2,000 $ 45,784
Honda Motor Co Ltd. 1,000 36,384
Toyota Motor Co. 2,000 52,302
Volkswagen AG 50 39,888
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$174,358
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Banks and Money Services (Foreign) -- 11.2%
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ABN Amro Holdings 1,750 $ 42,685
Anglo Irish Bank Corp. PLC 2,100 28,956
Banco Popular Espanola 600 49,292
Bank of Scotland 3,500 43,272
Commerzbank AG 1,500 57,948
Dexia 400 48,485
HSBC Holdings PLC 2,000 62,311
Lloyds TSB Group PLC 3,500 52,588
UBS (Schw. Bank Gesellschaft) 25 40,334
Vontobel Holding AG 40 49,683
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$475,554
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Broadcasting and Cable -- 1.1%
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Nippon Television Network 150 $ 44,457
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$ 44,457
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Beverages -- 1.0%
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Scottish Newcastle Breweries 2,800 $ 42,539
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$ 42,539
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Business Products & Services -- 3.4%
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Dai Nippon Printing Co. Ltd. 3,000 $ 51,165
Rentokil Initial 7,000 45,703
Sap AG 100 48,262
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$145,130
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Chemicals -- 1.4%
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Air Liquide 100 $ 18,482
Sumitomo Bakelite Co. Ltd. 6,000 41,751
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$ 60,233
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Communications Equipment -- 11.0%
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Ericsson AB 1,100 $ 58,089
Nichicon Corp. 4,000 43,661
Nokia Oyj-A 900 60,424
Omron Corp. 3,000 47,072
Rohm Co. 1,000 112,791
Sagem SA 80 51,948
Siebe PLC 2,000 45,536
Siemens AG 800 46,895
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$466,416
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Communications Services -- 8.0%
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Cable & Wireless 4,000 $ 46,071
Hong Kong Telecom 20,000 37,436
Mannesmann AG 60 47,699
Portugal Telecom 700 37,684
Telecom Italia Mobile 6,000 34,417
Telecom Italia SPA 7,500 56,574
Telefonica 900 37,620
Vodafone Group PLC 4,000 43,979
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$341,480
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Construction -- 1.7%
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Leighton Holdings Ltd. 10,000 $ 38,201
Volker Wessels Stevin 1,050 35,033
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$ 73,234
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Consumer Goods -- 20.1%
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Aiwa Co. Ltd. 1,400 $ 41,918
Astra AB, Class B 2,000 39,865
Christian Dior SA 300 40,709
Fuji Photo Film 1,000 35,702
Glaxco Wellcome PLC 1,500 42,539
Konica Corp. 10,000 46,087
Nestle 30 58,297
Novartis AG 40 65,760
Novo Nordisk A/S - B 200 32,495
Philips Electronics NV 500 44,123
Roche Holding AG - Genusschein 60 60,922
Sankyo Co. Ltd 2,000 49,725
SEB Group 300 46,953
Smithkline Beecham PLC 3,000 35,859
Sony Corp. 800 66,765
Takeda Chemical Industries Ltd. 2,000 57,305
Unilever PLC 4,500 47,988
Zeneca Group PLC 1,000 43,192
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$856,204
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Data Processing -- 1.1%
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Canon Inc. 2,000 $ 47,451
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$ 47,451
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Distribution -- 0.9%
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International Muller NV 1,050 $ 36,438
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$ 36,438
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Industrial Equipment -- 0.9%
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Morgan Crucible Co. PLC 5,000 $ 37,774
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$ 37,774
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Insurance -- 7.9%
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Allianz AG Holding 150 $ 48,151
ASR Verzekeringsgroep 500 40,702
AXA Company 500 58,775
Ckag Colonia Konzern AG 350 44,941
Prudential Corp. 3,500 49,687
Schweizer Rueckversicherung 20 44,207
Scor SA 800 49,391
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$335,854
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Financial Services -- 4.6%
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Abbey National 2,000 $ 37,600
Acom Co. Ltd. 800 42,388
ING Groep NV 300 19,528
Julius Baer Holdings 20 55,292
Promise Co. Ltd. 800 40,750
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$195,558
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Machinery -- 1.9%
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Smiths Industries 3,000 $ 43,845
Technip SA 300 38,162
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$ 82,007
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Merchandising -- 3.1%
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Colruyt SA 80 $ 48,704
Promodes 100 48,235
Woolworths Ltd. 10,000 34,478
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$131,417
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Miscellaneous -- 1.1%
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Nitto Denko Corp. 3,000 $ 45,935
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$ 45,935
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Multi-Industry -- 3.7%
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Hutchison Whampoa 6,000 $ 37,101
IFIL Finanz Di Partecipazoni 7,000 34,950
Orkla As A-Aksjer 350 41,554
Tomkins PLC 7,300 43,079
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$156,684
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Oil and Gas - Exploration and Production -- 4.9%
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British Petroleum Co. PLC 3,000 $ 47,461
Eni SPA 8,000 53,675
Repsol SA 900 49,390
Royal Dutch Petroleum Co. 1,000 55,277
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$205,803
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Paper/Paper Products -- 1.2%
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Mayr-Melnhof 750 $ 51,969
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$ 51,969
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Real Estate -- 0.8%
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Metroplex Berhad 125,000 $ 34,448
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$ 34,448
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Utilities -- 3.2%
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Reunies Electrobel & Tractebel 400 $ 47,890
Scottish Power PLC 4,000 36,813
Veba AG 800 52,969
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$137,672
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Total Common Stocks
(identified cost $4,227,444) $4,178,615
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Preferred Stocks -- 1.7%
Security Shares Value
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Retail - Specialty and Apparel -- 0.6%
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Hugo Boss 15 $ 24,285
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$ 24,285
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Consumer Goods -- 1.1%
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Fresenius 200 $ 48,234
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$ 48,234
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Total Preferred Stocks
(identified cost $73,450) $ 72,519
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Total Investments
(identified cost $4,300,894) $4,251,134
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Country Concentration of Investments
Percentage of
Country Investments Value
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Australia 1.7% $ 72,679
Austria 1.2% 51,969
Belgium 3.7% 157,516
Denmark 0.8% 32,495
Finland 1.4% 60,424
France 9.4% 401,140
Germany 10.8% 459,272
Hong Kong 1.8% 74,537
Ireland 0.7% 28,956
Italy 4.2% 179,616
Japan 22.3% 949,393
Malaysia 0.8% 34,448
Netherlands 6.4% 273,786
Norway 1.0% 41,554
Portugal 0.9% 37,684
Spain 3.2% 136,302
Sweden 2.3% 97,954
Switzerland 7.4% 313,573
United Kingdom 19.9% 847,836
See notes to financial statements
</TABLE>
Eaton Vance Tax-Managed International Growth Fund as of April 30, 1998
FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
As of April 30, 1998 (Unaudited)
(Expressed in United States Dollars)
Assets
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<S> <C>
Investments, at value (Note 1A)
(identified cost, $4,300,894) $ 4,251,134
Cash 1,034,032
Receivable for open forward foreign currency contracts (Note 11) 683
Receivable for Fund shares sold 829,241
Dividends receivable 1,738
Tax reclaim receivable 421
Deferred organization expense (Note 1G) 55,226
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Total assets $6,172,475
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Liabilities
- -------------------------------------------------------------------------------
Payable for securities purchased $1,112,476
Accrued organization expense 55,500
Payable to Investment Adviser (Note 4) 457
Accrued expenses 239
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Total liabilities $1,168,672
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Net Assets for 508,796 shares of beneficial interest outstanding $5,003,803
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Sources of Net Assets
- -------------------------------------------------------------------------------
Paid-in capital $5,053,491
Accumulated undistributed net investment income 1,193
Net unrealized depreciation of investments
(computed on the basis of identified cost) (50,881)
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Total $5,003,803
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Class A Shares
- -------------------------------------------------------------------------------
Net Assets $3,494,073
Shares Outstanding 355,271
Net Asset Value and Redemption Price Per Share
(net assets / shares of beneficial interest outstanding) $9.83
Offering Price Per Share
(100 / 94.25 of net assets value per share) $10.43
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Class B Shares
- -------------------------------------------------------------------------------
Net Assets $1,184,399
Shares Outstanding 120,443
Net Asset Value, Offering Price and
Redemption Price Per Share (Note 6)
(net assets / shares of beneficial interest outstanding) $ 9.83
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Class C Shares
- -------------------------------------------------------------------------------
Net Assets $ 325,331
Shares Outstanding 33,082
Net Asset Value, Offering Price and
Redemption Price Per Share (Note 6)
(net assets / shares of beneficial interest outstanding) $ 9.83
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On sales of $50,000 or more, the offering price of Class A shares is reduced.
</TABLE>
<TABLE>
<CAPTION>
Statement of Operations
For the Period Ended
April 30, 1998 * (Unaudited)
(Expressed in United States Dollars)
Investment Income (Note 1B)
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<S> <C>
Income (net of foreign taxes $382) --
Dividends $ 2,163
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Total income $ 2,163
- -------------------------------------------------------------------------------
Expenses-
Investment Adviser fee (Note 4) $ 688
Distribution and Service fees (Note 5)
Class B 74
Class C 28
Amortization of organization expenses (Note 1G) 274
Legal and accounting services 67
Printing and postage 34
Registration fees 28
Miscellaneous 8
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Total expenses $ 1,201
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Deduct --
Preliminary waiver of Investment Adviser fee $ 231
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Net expenses $ 970
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Net investment income $ 1,193
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Realized and Unrealized Gain (Loss) on Investments
- -------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) (49,760)
Foreign currency and forward foreign currency exchange
contract transactions (1,121)
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Net change in unrealized appreciation (depreciation)
of investments $ (50,881)
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Net change in realized and unrealized gain on investments $ (50,881)
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Net decrease in net assets from operations $ (49,688)
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* For the period from the start of business April 22, 1998 to April 30, 1998.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Statement of Changes in Net Assets (Expressed in United States Dollars)
For the Period
Ended
Increase (Decrease) April 30, 1998*
in Net Assets (Unaudited)
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<S> <C>
From operations --
Net investment income $ 1,193
Net change in unrealized appreciation (depreciation)
of investments (50,881)
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Net decrease in net assets from operations $ (49,688)
- -------------------------------------------------------------------------------
Transactions in shares of beneficial interest (Note 3) --
Proceeds from sale of shares
Class A $3,540,578
Class B 1,186,438
Class C 326,475
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Net increase in net assets from
Fund share transactions $5,053,491
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Net increase in net assets $5,003,803
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Net Assets
- -------------------------------------------------------------------------------
At beginning of period --
- -------------------------------------------------------------------------------
At end of period $5,003,803
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Accumulated undistributed
net investment income
included in net assets
- -------------------------------------------------------------------------------
At end of period $ 1,193
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* For the period from the start of business April 22, 1998 to April 30, 1998.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Financial Highlights (Expressed in United States Dollars)
For the Period Ended April 30,1998 (Unaudited)
- -------------------------------------------------------------------------------
Class A* Class B* Class C*
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Net asset value -- Beginning of period $10.000 $10.000 $10.000
- -------------------------------------------------------------------------------
Income (loss) from operations
- -------------------------------------------------------------------------------
Net investment income $0.004++ $0.002++ $0.002++
Net realized and unrealized gain (loss)
on investments (0.174) (0.172) (0.172)
- -------------------------------------------------------------------------------
Total income (loss) from operations (0.170) (0.170) (0.170)
- -------------------------------------------------------------------------------
Net asset value -- End of period $9.830 $9.830 $9.830
- -------------------------------------------------------------------------------
Total Return (1) (1.7)% (1.7)% (1.7)%
- -------------------------------------------------------------------------------
Ratios/Supplemental Data **
- -------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $3,494 $1,184 $325
Ratio of net expenses to average net assets 1.26%+ 2.01%+ 2.26%+
Ratio of net investment income to
average net assets 1.87%+ 1.16%+ 1.03%+
Portfolio Turnover 0% 0% 0%
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** For the period ended April 30,1998, the operating expenses of the Fund reflect a
preliminary waiver of the investment adviser fee. Had such action not been taken,
net investment income per share and the ratios would have been as follows:
Ratios (As a percentage of average net assets)
Expenses 1.52%+ 2.68%+ 2.87%+
Net investment income 1.61%+ 0.49%+ 0.42%+
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Net investment income per share $0.003 $0.001 $0.001
- -------------------------------------------------------------------------------
+ Computed on an annualized basis.
++ Computed using average shares outstanding.
* For the period from the start of business April 22, 1998 to April 30, 1998.
(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 payable date. Total
return is not computed on an annualized basis.
See notes to financial statements
</TABLE>
Eaton Vance Tax-Managed International Growth Fund as of April 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Expressed in United States Dollars)
1 Significant Accounting Policies
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Eaton Vance Tax-Managed International Growth Fund (the Fund) is a series of
Eaton Vance Mutual Funds Trust (the Trust). The Trust is an entity of the
type commonly known as a Massachusetts business trust and is registered under
the Investment Company Act of 1940 as a diversified open-end management
investment company. 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. 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 obligations with a remaining maturity
of sixty 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 methods determined in good faith by or at the direction of the
Trustees.
B Income -- Dividend income is recorded on the ex-dividend date for dividends
received in cash and/or securities. 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.
C Income Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code available 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. Withholding taxes on foreign dividends and
capital gains have been provided for in accordance with the Fund's
understanding of the applicable countries' tax rules and rates.
D Foreign Currency Translation -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing on
the respective dates of such transactions. Recognized gains or losses on
investment transactions attributable to foreign currency exchange rates are
recorded for financial statement purposes as net realized gains and losses on
investments. That portion of unrealized gains and losses on investments that
result from fluctuations in foreign currency exchange rates are not
separately disclosed.
E Forward Foreign Currency Exchange Contracts -- The Fund may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date. Risks may arise
upon entering these contracts from the potential inability of counterparties
to meet the terms of their contracts and from movements in the value of a
foreign currency relative to the U.S. dollar. The Fund will enter into
forward contracts for hedging purposes as well as non-hedging purposes. The
forward foreign currency exchange contracts are adjusted by the daily
exchange rate of the underlying currency and any gains or losses are recorded
for financial statement purposes as unrealized until such time as the
contracts have been closed or offset.
F Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Fund. Pursuant to the custodian agreement, IBT receives a
fee reduced by credits which are determined based on the average daily cash
balances the Fund maintains with IBT. All significant credit balances used to
reduce the Fund's custodian fees are reported as a reduction of expenses on
the Statement of Operations.
G Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization are being amortized on the straight-line basis over
five years.
H Use of Estimates -- The preparation of the 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 expenses during the reporting period. Actual results
could differ from those estimates.
I Interim Financial Information -- The interim financial statements relating
to April 30, 1998 and for the period April 22, 1998 to April 30, 1998 have
not been audited by independent certified public accountants, but in the
opinion of the Fund's management, reflect all adjustments, consisting only of
normal recurring adjustments necessary for the fair presentation of the
financial statements.
2 Distributions to Shareholders
- --------------------------------------------------------------------------
It is the present policy of the Fund to make at least one distribution
annually (normally in December) of all or substantially all of its net
investment income and at least one distribution annually of all or
substantially all of its net realized capital gains. Distributions are paid
in the form of additional shares of the Fund or, at the election of the
shareholder, in cash. Shareholders may reinvest distributions in shares of
the Fund at the net asset value as of the close of business on the ex-
dividend 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
overdistributions for financial statement purposes 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 Shares of Beneficial Interest
- --------------------------------------------------------------------------
The Fund's Declaration of 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:
Period Ended April 30,1998 (Unaudited)
- ---------------------------------------------------------------------
Class A Class B Class C
- ---------------------------------------------------------------------
Sales 355,271 120,443 33,082
- ---------------------------------------------------------------------
Net Increase 355,271 120,443 33,082
- ---------------------------------------------------------------------
4 Investment Adviser Fee and Other Transactions with Affiliates
- --------------------------------------------------------------------------
Eaton Vance Management (EVM) earns an investment adviser fee as compensation
for management and investment advisory services rendered to the Fund. The fee
is computed at the monthly rate of 1/12 of 1% (1.00% per annum) of the Fund's
average daily net assets up to $500 million and at reduced rates as daily net
assets exceed that level. For the period ended April 30, 1998, the effective
annual rate, based on average daily net assets was 1.00%. EVM voluntarily
waived $231 of its investment advisory fee.
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. Certain of the officers and Trustees of the
Fund are officers and directors/trustees of the above organization.
Trustees of the Fund that are not affiliated with the Investment Advisor
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 April 30, 1998, no significant amounts have
been deferred.
5 Distribution and Service Fees
- --------------------------------------------------------------------------
The Fund has adopted a Service Plan (the Class A Plan) 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 Class A may make
service fee payments for personal services and /or the maintenance of
shareholder accounts to the principal underwriter, Eaton Vance Distributors,
Inc. (EVD), financial service firms (Authorized Firms) and other persons in
amounts not exceeding .25% of its average daily net assets for any fiscal
year. The Trustees have initially implemented the Plan by authorizing Class A
to make quarterly service fee payments to EVD and Authorized Firms in amounts
not expected to exceed .25% of the average daily net assets for any fiscal
year based on the value of Class A shares sold by such persons and remaining
outstanding for at least twelve months. Class A expects to begin making
service fee payments during the quarter ending June 30, 1999.
In addition, the Fund has also adopted compensation-type Distribution Plans
(Class B Plan and Class C Plan) pursuant to Rule 12b-1 under the Investment
Company Act of 1940 for the Fund's Class B and C shares. Under such Plans,
Class B and Class C each pays the principal underwriter, Eaton Vance
Distributors, Inc. (EVD), amounts equal to 1/365 of .75% of its daily net
assets for providing ongoing distribution services and facilities to the
respective classes. The Fund's Class B and C shares 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% of Class B sales and 6.25% of Class C sales of the aggregate amount
received by the Fund for each share sold, plus (ii) distribution fees
calculated by applying the rate of 1% over the prevailing prime rate to the
outstanding balance of Uncovered Distribution Charges of EVD reduced by the
aggregate amount of contingent deferred sales charges (Note 6) and amounts
theretofore paid to EVD. The amount payable to EVD with respect to each day
is accrued on such day as a liability of Class B and Class C and,
accordingly, reduces the net assets of each such Class. For the period ended
April 30, 1998, Class B and C shares paid $74 and $21, respectively, to EVD
representing .75% of the average daily net assets of each Class,
respectively. At April 30, 1998, the amount of Uncovered Distribution Charges
of EVD calculated under the Class B and Class C Plans were approximately
$49,000 and $20,000, respectively.
The Class B and Class C Plans also authorize each Class to make service fee
payments for personal services and/or the maintenance of shareholder accounts
to the Principal Underwriter, Authorized Firms and other persons in amounts
not exceeding .25% of its average daily net assets for any fiscal year. The
Trustees have initially implemented the Class B Plan by authorizing Class B
to make quarterly service fee payments to the Principal Underwriter and
Authorized Firms in amounts not expected to exceed .25% of Class B's average
daily net assets for any fiscal year based on the value of Class B shares
sold by such persons and remaining outstanding for at least twelve months.
The Trustees have initially implemented the Class C Plan by authorizing Class
C to make payments of service fees to the Principal Underwriter and
Authorized Firms in amounts not expected to exceed .25% of Class C's average
daily net assets for any fiscal year. For the period ended April 30, 1998,
Class C paid or accrued service fees payable to EVD in the amount of $7.
Class B expects to begin making service fee payments during the quarter
ending June 30, 1999.
6 Contingent Deferred Sales Charge
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Class B and Class C shares are each subject to a contingent deferred sales
charge (CDSC). A CDSC is imposed on any redemption of Class B shares made
within six years of purchase. A CDSC of 1% is imposed on any redemption of
Class C shares made within one year of purchase. Generally, the CDSC is based
upon the lower of the net asset value at the date of redemption or date of
purchase. No charge is levied on Class B and Class C shares acquired by
reinvestment of dividends or capital gains distributions. The Class B 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. No CDSC is levied on Class B and Class C shares which have
been sold to EVD or its affiliates or to their respective employees or
clients. CDSC charges are paid to EVD to reduce the amount of Uncovered
Distribution Charges calculated under Class B's and Class C's Distribution
Plans (see Note 5). CDSC charges received when no Uncovered Distribution
Charges exist will be credited to the Fund. No CDSC charges were received by
EVD for the period ended April 30, 1998.
7 Investment Transactions
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Purchases and sales of investments, other than U.S. Government Securities and
short-term obligations, aggregated $4,300,894 and $0, respectively.
8 Federal Income Tax Basis of Investments
- --------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in value of the investment
securities owned at April 30, 1998, as computed on a federal income tax
basis, are as follows:
Aggregate cost $4,300,894
- -------------------------------------------
Gross unrealized appreciation $ 43,279
Gross unrealized depreciation $ (93,039)
- -------------------------------------------
Net unrealized depreciation $ (49,760)
- -------------------------------------------
9 Line of Credit
- --------------------------------------------------------------------------
The Fund participates with other funds and portfolios managed by BMR and 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 Eurodollar rate or federal funds rate. In addition, a fee computed at an
annual rate of .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.
10 Risks Associated with Foreign Investments
- --------------------------------------------------------------------------
Investing in securities issued by companies whose principal business
activities are outside the United States may involve significant risks not
present in domestic investments. For example, there is generally less
publicly available information about foreign companies, particularly those
not subject to the disclosure and reporting requirements of the U.S.
securities laws. Foreign issuers are generally not bound by uniform
accounting, auditing, and financial reporting requirements and standards of
practice comparable to those applicable to domestic issuers. Investments in
foreign securities also involve the risk of possible adverse changes in
investment or exchange control regulations, expropriation or confiscatory
taxation, limitation on the removal of funds or other assets of the Fund,
political or financial instability or diplomatic and other developments which
could affect such investments. Foreign stock markets, while growing in volume
and sophistication, are generally not as developed as those in the United
States, and securities of some foreign issuers (particularly those located in
developing countries) may be less liquid and more volatile than securities of
comparable U.S. companies. In general, there is less overall governmental
supervision and regulation of foreign securities markets, broker-dealers and
issuers than in the United States.
11 Financial Instruments
- --------------------------------------------------------------------------
The Fund regularly trades in financial instruments with off-balance sheet
risk in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include forward
foreign currency exchange contracts and may involve, to a varying degree,
elements of risk in excess of the amounts recognized for financial statement
purposes. The notional or contractual amounts of these instruments represent
the investment the Fund has in particular classes of financial instruments
and does not necessarily represent the amounts potentially subject to risk.
The measurement of the risks associated with these instruments is meaningful
only when all related and offsetting transactions are considered.
A summary of obligations under these financial instruments at April 30, 1998
is as follows:
Forward Foreign Currency Exchange Contracts
- --------------------------------------------------------------------------
Purchases
- --------------------------------------------------------------------------
Net
Unrealized
Settlement Deliver Appreciation/
Date In Exchange For (in U.S. dollars) Depreciation
- --------------------------------------------------------------------------
5/14/98 Belgian Franc $ 30,322 $ 67
5/06/98 Swiss Franc 22,184 15
5/05/98 German Deutsche Mark 69,916 162
5/04/98 Danish Krone 16,218 5
5/06/98 Finnish Marka 18,895 52
5/29/98 French Franc 22,984 15
5/07/98 Great Britain Pound 86,601 270
5/04/98 Hong Kong Dollar 37,647 (19)
5/07/98 Italian Lira 16,501 17
5/07/98 Japanese Yen 50,992 48
5/08/98 Malaysian Ringlet 13,772 (28)
5/05/98 Netherlands Guilder 34,053 49
5/05/98 Norwegian Krone 23,811 30
- --------------------------------------------------------------------------
$443,896 $683
- --------------------------------------------------------------------------
Eaton Vance Tax-Managed International Growth Fund as of April 30, 1998
INVESTMENT MANAGEMENT
Eaton Vance Tax-Managed International 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
Chairman and Chief Executive Officer,
United Asset Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
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Investment Adviser and Administrator of
Eaton Vance Tax-Managed International 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 International 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 distribution
plan, sales charges and expenses. Please read the prospectus carefully
before you invest or send money.
IGSRC-6/98
