<PAGE>
[LOGO OF EATON VANCE Mutual Funds [PHOTO OF CALCULATORS AND
APPEARS HERE] 1040 IRS FORM APPEARS HERE]
for People
Who Pay
EATON VANCE
- ---------------- Taxes
Mutual Funds
Annual Report October 31, 1998
EATON VANCE
[PHOTO OF NYSE FLAG
APPEARS HERE] TAX-MANAGED
EMERGING
GROWTH
FUND
[PHOTO OF CALCULATOR TAPE, 1099 FORM,
AND CALCULATOR APPEARS HERE]
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
Letter to Shareholders
[PHOTO OF JAMES B. HAWKES APPEARS HERE]
James B. Hawkes
President
Eaton Vance Tax-Managed Emerging Growth Fund, Class A shares, had a total return
of -2.9% during the year ended October 31, 1998. That return was the result of a
decline in net asset value per share (NAV) from $9.74 on October 31, 1998 to
$9.46 on October 31, 1998.1
Class B shares had a total return of -3.6% for the same period, the result of a
decline in NAV from $9.74 to $9.39.1
Class C shares had a total return of -3.6% for the same period, the result of a
decline in NAV from $9.72 to $9.37.1
By comparison, the S&P 600 SmallCap Index - a widely recognized, unmanaged index
of small capitalization stocks - had a total return of -11.1% for the same
period.2
A slowing global economy and weaker corporate profits led to unprecedented
market volatility...
In 1998, a number of factors have contributed to an investment environment
almost unprecedented in its volatility. The equity markets staged an impressive
rally in the first four months of 1998, followed by a turbulent summer, a sharp
decline in August and September that erased the year's gains, and finally a
near-full recovery in October. Investor confidence, bolstered by the Federal
Reserve Board's interest rate cuts, modest economic growth, and low inflation,
kept stock valuations relatively high. However, the dangers that precipitated
the market's mid-year plunge still lurk on the horizon:
Asian economies, while stabilized, are still not strong; corporate earnings have
been lackluster; and ongoing currency crises in Japan and Brazil continue to
worry the credit markets.
The Fund continues to seek emerging growth opportunities for the tax-conscious
investor...
Investors should remember that, even in uncertain economic times, many smaller
cap companies have continued to generate strong earnings growth. Tax-Managed
Emerging Growth Fund focuses on those opportunities, while pursuing a
tax-efficient strategy aimed at limiting taxable distributions to shareholders.
A tax-managed approach remains an important consideration for many investors,
especially following the failure to lower taxes in the last session of Congress.
While volatility in the stock market can be troubling, Eaton Vance believes
that, as a normal and healthy part of the investment process, market corrections
present good opportunities for long-term investors. Beginning on the following
page, Portfolio Manager Edward Smiley discusses the past 12 months and offers
his outlook for the year ahead.
Sincerely,
/s/ James B. Hawkes
James B. Hawkes
President
November 9, 1998
- --------------------------------------------------------------------------------
Fund Information
as of October 31, 1998
Performance3 Class A Class B Class C
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year -2.9% -3.6% -3.6%
Life of Fund+ -4.9 -5.6 -5.8
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year -8.4% -8.4% -4.6%
Life of Fund+ -9.9 -10.0 -5.8
+Inception Dates - Class A: 9/25/97; Class B: 9/29/97; Class C:9/29/97
Ten Largest Holdings4
- --------------------------------------------------------------------------------
Sofamor Danek Group, Inc. 1.8%
Affiliated Computer Services, Inc. Class A 1.7
Acxiom Corp. 1.6
Vitesse Semiconductor Corp. 1.6
Nova Corp. 1.6
Abacus Direct Corp. 1.6
Sepracor, Inc. 1.6
Comair Holdings, Inc. 1.6
Papa John's International, Inc. 1.5
Jacor Communications, inc. 1.4
1 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
Class B and Class C shares. 2 It is not possible to invest directly in an
Index. 3 Returns are historical and are calculated by determining the
percentage change in net asset value with all distributions reinvested. SEC
returns for Class A reflect the maximum 5.75% sales charge. SEC returns for
Class B reflect the applicable CDSC based on the following schedule: 5% - 1st
and 2nd years; 4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year. SEC
1-Year return for Class C reflects 1% CDSC. 4 Ten largest holdings accounted
for 16.0% of the Fund'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.
2
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
Management Discussion
[PHOTO OF EDWARD SMILEY APPEARS HERE]
Edward (Jack) Smiley
Portfolio Manager
An interview with Edward (Jack) Smiley, portfolio manager of Eaton Vance
Tax-Managed Emerging Growth Fund.
Q:Jack, what effect has the market turbulence of the past year had on
smaller-cap stocks?
A:The market has indeed been volatile in the past year and that has had a
dramatic effect on valuations within the small cap universe. The
price-earnings multiples of small-cap stocks relative to large-cap stocks are
the now cheapest they have been in more than a decade. The discrepancy is
largely the result of a tidal wave of cash into index funds, which has boosted
large-cap stocks while largely neglecting smaller stocks. That suggests much
more value in the small-cap segment of the market and has created the
opportunities we are seeing today.
Q:There are increasing signs of a slowing global economy. How might that affect
smaller stocks?
A:There has historically been little correlation between overall economic growth
and small stock performance. Far more important is the direction of interest
rates, which have tended to decline in a weaker economy. Typically, periods of
declining interest rates have provided a very favorable environment for
smaller stocks. Not surprisingly, the Federal Reserve's decision to lower
interest rates three times was greeted enthusiastically by investors in the
small-cap universe.
Moreover, these companies tend to operate independent of the overall economy.
For example, a software or technology company in a fast-growth phase may
continue to prosper in a recession through innovation or product
breakthroughs. On the other hand, cyclical sectors such as autos, chemicals,
and papers - areas we do not emphasize in the Fund - may be negatively
impacted by an economic downturn.
Q:Technology continued to play a large role in the Fund. What companies have you
found attractive in that sector?
A:Technology will likely continue to be a mainstay of the Fund. Technology
companies are producing the software, information technology, and database
management tools that enable companies to improve their productivity, widen
profit margins, and increase earnings.
Among software manufacturers, Fund holding Veritas Software Corp. produces
enterprise data storage software which enables companies to prevent data loss
and file corruption as well as
- --------------------------------------------------------------------------------
Five Largest Industry Weightings1
- -------------------------------------------------------------
Information Services 17.4%
Health Services 9.5%
Business Svcs. Misc. 5.3%
Oil/Gas Exploration & Production 5.2%
Electronics 4.9%
1 Because the Fund is actively managed, Industry weightings are subject to
change. Five largest sector holdings account for 42.3% of the 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, 1998
Management Discussion Cont'd
back-up data. Elsewhere, Sapient Software Corp. manufactures software that
provides information technology solutions. The company has been working on
products tied to Internet commerce. Finally, IDX Systems Corp. develops office
management systems for independent physicians, managed care facilities, and
other medical practices.
Q:Health services represented another large commitment for the Fund. Where have
you invested among health care companies?
A:The Fund had a wide-ranging exposure to the medical products and health care
services areas. Advances in medical research have created excellent
opportunities in the drug, biotechnology, and medical device industries. At
the same time, a rapidly aging population has improved the prospects for
health care service providers.
In the drug and biotech areas, Sepracor, Inc. was a large Fund investment. The
company develops improved chemical entities (ICEs), which are new versions of
existing drugs, but without the sometimes-harmful side effects. Sepracor has
obtained patents on more than 40 drugs and has reached licensing agreements
with several major pharmaceutical companies.
Among medical device manufacturers, Sofamor-Danek was the Fund's largest
holding. The company is the leading manufacturer of implants used to assist
spinal fusion and has seen a sharp increase in the number of instrumented
procedures. Sofamor has also developed image-guided systems used by physicians
during surgery. The company agreed to a takeover in November by Medtronic,
Inc. Another device maker, MiniMed, Inc., develops metered dosing devices that
provide diabetic patients a steady and more reliable medication flow.
Finally, in the health care delivery area, Renal Care Group, Inc. provides
dialysis and ancillary treatments for patients with kidney disease. The
company's earnings have risen 70% in 1998 due to an increase in the number of
procedures, improved cost controls, and an aggressive acquisition strategy.
Q:You mentioned that smaller companies often thrive on innovation. Could you
give an example?
A:Yes. Abacus Direct Corp. is a good example of a company that has found its
own niche through an innovative marketing effort. As most consumers know, the
retailing industry today is increasingly competitive, with traditional store
retailers competing with catalogs and more recently, Internet-based retailers.
The result is a much more fragmented retail market. Abacus Direct collects
consumers' spending data and compiles that data into an extensive database
that is sold to the retail sector. The Abacus database provides catalog
retailers a good profile of who might be a potential customer. That service
helps retailers more closely target their marketing efforts, thereby improving
results while significantly reducing costs.
Q:Did you have any major holdings among consumer-related companies?
A:Yes. One of the Fund's largest holdings was Papa John's International, Inc.
This pizza restaurant chain has expanded to 1,800 corporate-owned and
franchised stores and continues to pursue an ambitious expansion program. The
company has made quality and fresh ingredients the hallmarks of its food prod-
4
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
MANAGEMENT DISCUSSION CONT'D
ucts and has consistently been voted near the top in consumer pizza surveys.
Q:Jack, looking ahead, what is your outlook for emerging growth stocks in the
coming year?
A:The valuations of smaller stocks are certainly compelling at recent levels.
As I indicated earlier, I'm encouraged by the Fed's recent decision to lower
interest rates. Another positive is the rapid advances in the technology and
medical areas, each well represented in the Fund. These advances tend to have
a more significant impact on smaller companies' revenues and earnings growth
than on their large-cap counterparts.
It is worthwhile to remember that smaller stocks have historically
outperformed most other asset classes over the long-term. We believe that it
is a sound investment strategy to devote a portion of one's assets to this
segment of the market and to maintain a four-to-seven year outlook.
Finally, it is important to note that in a slowing economy, investors look for
companies that are able to maintain relatively strong earnings momentum. That
trait is characteristic of many of the companies in the small-cap, emerging
company universe. These companies typically have their own product cycles,
which are independent of the broad economic cycle, and may, therefore,
represent opportunities at a time when the large cap universe is in retreat.
Given the two-year period of underperformance for this segment of the market,
the group may well be poised for a recovery. I believe that Tax-Managed
Emerging Growth Fund is well-positioned to share in those emerging
opportunities.
Comparison of Change in Value of a $10,000 investment in
Eaton Vance Tax-Managed Emerging Growth Fund, Class A vs.
Standard & Poor's 600 Small Cap Index
[LINE GRAPH APPEARS HERE]
Date Fund/NAV Fund/OP S&P 600 S&P 500
9/30/97 $10,000 $9,428 $10,000 $10,000
10/31/97 $9,682 $9,128 $9,568 $9,669
11/30/97 $9,523 $8,978 $9,498 $10,114
12/31/97 $9,930 $9,363 $9,690 $10,287
1/31/98 $9,811 $9,250 $9,501 $10,405
2/28/98 $10,616 $10,009 $10,367 $11,151
3/31/98 $11,044 $10,412 $10,763 $11,722
4/30/98 $11,113 $10,478 $10,826 $11,843
5/31/98 $10,358 $9,766 $10,252 $11,635
6/30/98 $10,885 $10,262 $10,281 $12,108
7/31/98 $10,119 $9,541 $9,496 $11,983
8/31/98 $8,151 $7,685 $7,663 $10,251
9/30/98 $8,996 $8,482 $8,132 $10,906
10/31/98 $9,404 $8,866 $8,509 $11,797
Performance** Class A Class B Class C
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
One Year -2.9% -3.6% -3.6%
Life of Fund+ -4.9 -5.6 -5.8
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year -8.4% -8.4% -4.6%
Life of Fund+ -9.9 -10.0 -5.8
+Inception Dates - Class A: 9/25/97; Class B: 9/29/97; Class C: 9/29/97
* Source: Towers Data Systems, Bethesda, MD. Investment operations commenced
9/25/97. Index information is available only at month-end; therefore, the line
comparison begins at the next month-end following the commencement of the
Fund's investment operations. Past performance is no guarantee of future
results. Investment return and principal fluctuate so that shares, when
redeemed, may be worth more or less their original cost.
The chart compares the Fund's total return with that of the S&P 600 SmallCap
Index, a broad-based, unmanaged market index of small-capitalization stocks
and the S&P 500 Index, an unmanaged index commonly used as a measure of U.S.
stock market performance. 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 Indices. The Indices` total returns do not reflect
commissions or expenses that would have been incurred if an investor
individually purchased or sold the securities represented in the Indices. It
is not possible to invest directly in an Index. With this report, we are
establishing the S&P 600 SmallCap Index as the Fund's primary benchmark in the
belief that it more accurately reflects the Fund's investment universe than
does the S&P 500 Index. We are including both Indices in this report. An
investment in the Fund's Class B shares on 9/30/97 at net asset value would
have been worth $9,325 on October 31, 1998; $8,859 including applicable CDSC.
An investment in the Fund's Class C shares on 9/30/97 at net asset value would
have been worth $9,305 on October 31, 1998.
**Returns are historical and are calculated by determining the percentage change
in net asset value with all distributions reinvested. SEC returns for Class A
reflect the maximum 5.75% sales charge. SEC returns for Class B reflect the
applicable CDSC based on the following schedule: 5% - 1st and 2nd years; 4% -
3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year. SEC 1-Year return for
Class C reflects 1% CDSC.
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.
5
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
PORTFOLIO OF INVESTMENTS
Common Stocks -- 95.9%
Security Shares Value
- --------------------------------------------------------------------------------
Advertising -- 2.5%
- --------------------------------------------------------------------------------
Catalina Marketing Corp.(1) 14,000 $ 667,625
Harte-Hanks Communications, Inc. 45,900 1,115,944
Outdoor Systems, Inc.(1) 31,000 683,938
- --------------------------------------------------------------------------------
$ 2,467,507
- --------------------------------------------------------------------------------
Banks - Regional -- 4.3%
- --------------------------------------------------------------------------------
City National Corp. 28,000 $ 957,250
Colonial Bancgroup, Inc. (The) 58,600 765,463
Cullen/Frost Bankers, Inc. 20,000 1,065,000
Northfork Bancorp 46,400 922,200
Sovereign Bancorp., Inc. 43,720 573,825
- --------------------------------------------------------------------------------
$ 4,283,738
- --------------------------------------------------------------------------------
Banks and Money Services -- 0.7%
- --------------------------------------------------------------------------------
Bank United Corp. 17,000 $ 677,345
- --------------------------------------------------------------------------------
$ 677,345
- --------------------------------------------------------------------------------
Broadcasting and Cable -- 3.3%
- --------------------------------------------------------------------------------
Emmis Broadcasting Corp., Class A(1) 36,000 $ 1,179,000
Heftel Broadcasting Corp.(1) 16,000 658,000
Jacor Communications, Inc.(1) 26,000 1,429,999
- --------------------------------------------------------------------------------
$ 3,266,999
- --------------------------------------------------------------------------------
Business Products and Services -- 3.0%
- --------------------------------------------------------------------------------
CN Maximus, Inc.(1) 41,000 $ 1,189,000
Gartner Group, Inc., Class A(1) 25,000 496,875
Personnel Group of America, Inc.(1) 61,000 945,500
United Rentals, Inc.(1) 12,300 330,563
- --------------------------------------------------------------------------------
$ 2,961,938
- --------------------------------------------------------------------------------
Business Services - Miscellaneous -- 5.3%
- --------------------------------------------------------------------------------
Boron, LePore & Associates, Inc.(1) 21,000 $ 567,000
Concord EFS, Inc.(1) 22,600 644,100
Corrections Corporation of America(1) 43,300 833,525
Human Genome Sciences, Inc.(1) 20,800 720,200
On Assignment, Inc.(1) 27,700 941,800
Sylvan Learning Systems, Inc.(1) 25,000 771,875
United Road Services, Inc.(1) 51,600 825,600
- --------------------------------------------------------------------------------
$ 5,304,100
- --------------------------------------------------------------------------------
Communications Equipment -- 1.8%
- --------------------------------------------------------------------------------
Comverse Technology, Inc.(1) 26,000 $ 1,196,000
ECI Telecommunications 17,300 573,063
- --------------------------------------------------------------------------------
$ 1,769,063
- --------------------------------------------------------------------------------
Communications Services -- 0.8%
- --------------------------------------------------------------------------------
McLeodUSA, Inc.(1) 22,400 $ 819,000
- --------------------------------------------------------------------------------
$ 819,000
- --------------------------------------------------------------------------------
Computer Software -- 0.9%
- --------------------------------------------------------------------------------
Brio Technology, Inc.(1) 47,200 $ 389,400
International Integration, Inc.(1) 31,700 475,500
- --------------------------------------------------------------------------------
$ 864,900
- --------------------------------------------------------------------------------
Consumer Services -- 1.3%
- --------------------------------------------------------------------------------
Strayer Education, Inc. 37,500 $ 1,275,000
- --------------------------------------------------------------------------------
$ 1,275,000
- --------------------------------------------------------------------------------
Drugs -- 2.3%
- --------------------------------------------------------------------------------
Genzyme Corp., Class A(1) 11,000 $ 462,688
Parexel International Corp.(1) 13,000 286,813
Sepracor, Inc.(1) 22,600 1,550,924
- --------------------------------------------------------------------------------
$ 2,300,425
- --------------------------------------------------------------------------------
Electrical Equipment -- 2.2%
- --------------------------------------------------------------------------------
Level One Communications, Inc.(1) 45,000 $ 1,184,063
Micrel, Inc.(1) 23,700 779,138
Oak Industries, Inc.(1) 8,000 216,500
- --------------------------------------------------------------------------------
$ 2,179,701
- --------------------------------------------------------------------------------
Electronics - Instruments -- 4.9%
- --------------------------------------------------------------------------------
Adtran, Inc.(1) 15,000 $ 380,157
Cognex Corp.(1) 31,000 480,500
Helix Technology Corp. 8,025 91,786
Microchip Technology, Inc.(1) 25,000 676,563
Novellus System, Inc.(1) 7,000 271,688
Sanmina Corp.(1) 30,000 1,230,000
Sipex Corp.(1) 34,400 954,600
Synopsys, Inc.(1) 17,000 769,250
- --------------------------------------------------------------------------------
$ 4,854,544
- --------------------------------------------------------------------------------
See notes to financial statements
6
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Security Shares Value
- --------------------------------------------------------------------------------
Electronics - Semiconductors -- 4.0%
- --------------------------------------------------------------------------------
Dallas Semiconductor Corp. 35,100 $ 1,298,700
Linear Technologies Corp. 10,000 596,250
PMC-Sierra, Inc.(1) 11,000 493,625
Vitesse Semiconductor Corp.(1) 49,200 1,586,699
- --------------------------------------------------------------------------------
$ 3,975,274
- --------------------------------------------------------------------------------
Entertainment -- 1.4%
- --------------------------------------------------------------------------------
MGM Grand, Inc.(1) 16,000 $ 418,000
Speedway Motorsports, Inc.(1) 44,100 926,100
- --------------------------------------------------------------------------------
$ 1,344,100
- --------------------------------------------------------------------------------
Financial - Specialty -- 0.6%
- --------------------------------------------------------------------------------
Enhance Finance Service Group, Inc. 22,200 $ 545,288
- --------------------------------------------------------------------------------
$ 545,288
- --------------------------------------------------------------------------------
Foods -- 1.3%
- --------------------------------------------------------------------------------
Lance, Inc. 65,272 $ 1,248,327
- --------------------------------------------------------------------------------
$ 1,248,327
- --------------------------------------------------------------------------------
Furniture and Appliances -- 0.4%
- --------------------------------------------------------------------------------
Ethan Allen Interiors, Inc. 13,000 $ 446,875
- --------------------------------------------------------------------------------
$ 446,875
- --------------------------------------------------------------------------------
Health Care Services -- 0.7%
- --------------------------------------------------------------------------------
NCS Healthcare, Inc., Class A(1) 39,000 $ 687,375
- --------------------------------------------------------------------------------
$ 687,375
- --------------------------------------------------------------------------------
Health Services -- 9.4%
- --------------------------------------------------------------------------------
American Retirement Corp.(1) 45,400 $ 692,350
Biomatrix, Inc.(1) 17,000 799,000
Compdent Corp.(1) 45,000 534,375
Express Scripts, Inc., Class A(1) 14,500 1,416,469
Health Management Associates, Inc., Class A(1) 38,000 676,875
MedQuist, Inc.(1) 20,000 538,750
MiniMed, Inc.(1) 17,900 993,450
Omnicare, Inc. 21,000 725,813
Renal Care Group, Inc.(1) 34,900 1,016,463
Serologicals Corp.(1) 37,000 837,125
Sunrise Assisted Living, Inc.(1) 26,500 1,141,156
- --------------------------------------------------------------------------------
$ 9,371,826
- --------------------------------------------------------------------------------
Information Services -- 17.4%
- --------------------------------------------------------------------------------
Abacus Direct Corp.(1) 32,000 $ 1,559,999
Acxiom Corp.(1) 64,300 1,615,537
Affiliated Computer Services, Inc., Class A(1) 45,200 1,672,399
Aspect Development, Inc.(1) 27,700 875,148
BISYS Group, Inc. (The)(1) 29,000 1,268,750
Dendrite International(1) 13,000 268,125
Documentum, Inc.(1) 34,000 1,156,000
DST Systems, Inc.(1) 15,800 790,000
IDX Systems Corp.(1) 17,000 720,375
J.D. Edwards, Inc.(1) 24,000 786,000
Keane, Inc.(1) 18,000 598,500
Legato Systems, Inc.(1) 5,800 226,925
Medical Manager Corp.(1) 45,500 1,131,813
New Era of Networks(1) 3,000 147,750
Nova Corp.(1) 54,725 1,580,183
Sapient Corp.(1) 10,000 450,625
Siebel Systems, Inc.(1) 24,000 490,500
SunGard Data Systems, Inc.(1) 23,900 806,625
Veritas Software Corp.(1) 22,000 1,102,750
- --------------------------------------------------------------------------------
$17,248,004
- --------------------------------------------------------------------------------
Insurance -- 3.6%
- --------------------------------------------------------------------------------
Mercury General Corp. 32,000 $ 1,360,000
Mutual Risk Management Ltd. 34,700 1,173,294
Reinsurance Group of America, Inc. 22,100 1,049,750
- --------------------------------------------------------------------------------
$ 3,583,044
- --------------------------------------------------------------------------------
Investment Services -- 2.8%
- --------------------------------------------------------------------------------
Centura Banks, Inc. 19,500 $ 1,345,500
E*Trade Group, Inc.(1) 44,000 792,000
PIMCO Advisors Holdings L.P. 19,600 616,175
- --------------------------------------------------------------------------------
$ 2,753,675
- --------------------------------------------------------------------------------
Lodging and Gaming -- 0.9%
- --------------------------------------------------------------------------------
ResortQuest International, Inc.(1) 40,000 $ 352,500
Rio Hotel and Casino, Inc.(1) 39,000 546,000
- --------------------------------------------------------------------------------
$ 898,500
- --------------------------------------------------------------------------------
Machinery -- 0.7%
- --------------------------------------------------------------------------------
Varco International, Inc.(1) 60,000 $ 648,750
- --------------------------------------------------------------------------------
$ 648,750
- --------------------------------------------------------------------------------
See notes to financial statements
7
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
PORTFOLIO OF INVESTMENTS CONT'D
Security Shares Value
- --------------------------------------------------------------------------------
Medical Products -- 3.4%
- --------------------------------------------------------------------------------
Haemonetics Corp.(1) 39,500 $ 851,719
Ocular Sciences, Inc.(1) 29,700 746,213
Sofamor Danek Group, Inc.(1) 17,800 1,808,924
- --------------------------------------------------------------------------------
$ 3,406,856
- --------------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 5.2%
- --------------------------------------------------------------------------------
Cross Timbers Oil Co. 71,000 $ 1,020,625
Devon Energy Corp. 24,700 836,713
Louis Dreyfus Natural Gas(1) 82,000 1,194,125
Newfield Exploration Co.(1) 54,800 1,332,325
Vintage Petroleum, Inc. 60,000 780,000
- --------------------------------------------------------------------------------
$ 5,163,788
- --------------------------------------------------------------------------------
Publishing -- 1.3%
- --------------------------------------------------------------------------------
Central Newspapers, Inc., Class A 20,200 $ 1,329,413
- --------------------------------------------------------------------------------
$ 1,329,413
- --------------------------------------------------------------------------------
REITS -- 1.2%
- --------------------------------------------------------------------------------
Public Storage, Inc. 43,000 $ 1,147,563
- --------------------------------------------------------------------------------
$ 1,147,563
- --------------------------------------------------------------------------------
Retail - Food and Drug -- 1.5%
- --------------------------------------------------------------------------------
Papa John's International, Inc.(1) 39,700 $ 1,507,360
- --------------------------------------------------------------------------------
$ 1,507,360
- --------------------------------------------------------------------------------
Retail - Specialty and Apparel -- 3.3%
- --------------------------------------------------------------------------------
Bed Bath and Beyond, Inc.(1) 51,700 $ 1,424,981
O'Reilly Automotive, Inc.(1) 19,100 747,288
The Mens Wearhouse, Inc.(1) 47,400 1,149,450
- --------------------------------------------------------------------------------
$ 3,321,719
- --------------------------------------------------------------------------------
Semiconductor Equipment -- 0.7%
- --------------------------------------------------------------------------------
PRI Automation, Inc.(1) 40,000 $ 692,500
- --------------------------------------------------------------------------------
$ 692,500
- --------------------------------------------------------------------------------
Transportation -- 2.8%
- --------------------------------------------------------------------------------
Comair Holdings, Inc. 47,000 $ 1,545,124
Swift Transportation Co., Inc.(1) 55,000 1,215,159
- --------------------------------------------------------------------------------
$ 2,760,283
- --------------------------------------------------------------------------------
Total Common Stocks
(identified cost $92,114,898) $95,104,780
- --------------------------------------------------------------------------------
Commercial Paper -- 4.6%
Face Amount
Security (000 omitted) Value
- --------------------------------------------------------------------------------
General Electric Capital Co., 5.69%,
11/2/98 $4,567 $ 4,566,278
- --------------------------------------------------------------------------------
Total Commercial Paper
(identified cost $4,566,278) $ 4,566,278
- --------------------------------------------------------------------------------
Total Investments -- 100.5%
(identified cost $96,681,176) $99,671,058
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities -- (0.5)% (539,594)
- --------------------------------------------------------------------------------
Net Assets -- 100.0% $99,131,464
- --------------------------------------------------------------------------------
(1) Non-income producing security.
See notes to financial statements
8
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of October 31, 1998
Assets
- --------------------------------------------------------------------------------
Investments at value, (identified cost, $96,681,176) $ 99,671,058
Cash 2,900
Receivable for investments sold 1,584,479
Receivable for Fund shares sold 1,194,658
Dividends receivable 40,946
Deferred organization expenses 7,898
- --------------------------------------------------------------------------------
Total assets $102,501,939
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for investments purchased $ 2,970,499
Payable for Fund shares redeemed 298,787
Other accrued expenses 101,189
- --------------------------------------------------------------------------------
Total liabilities $ 3,370,475
- --------------------------------------------------------------------------------
Net Assets $ 99,131,464
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Paid-in capital $107,181,293
Accumulated net realized loss (computed on the basis
of identified cost) (11,039,711)
Net unrealized appreciation (computed on the basis
of identified cost) 2,989,882
- --------------------------------------------------------------------------------
Total $ 99,131,464
- --------------------------------------------------------------------------------
Class A Shares
- --------------------------------------------------------------------------------
Net Assets $ 28,035,076
Shares Outstanding 2,964,113
Net Asset Value and Redemption Price Per Share
(net assets divided by shares of beneficial interest
outstanding) $ 9.46
Maximum Offering Price Per Share
(100 divided by 94.25 of $9.46) $ 10.04
- --------------------------------------------------------------------------------
Class B Shares
- --------------------------------------------------------------------------------
Net Assets $ 52,641,258
Shares Outstanding 5,608,117
Net Asset Value, Offering Price and Redemption Price
Per Share
(net assets divided by shares of beneficial interest
outstanding) $ 9.39
- --------------------------------------------------------------------------------
Class C Shares
- --------------------------------------------------------------------------------
Net Assets $ 18,455,130
Shares Outstanding 1,969,874
Net Asset Value, Offering Price and Redemption Price
Per Share
(net assets divided by shares of beneficial interest
outstanding) $ 9.37
- --------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price of Class A shares is reduced.
Statement of Operations
For the Year Ended
October 31, 1998
Investment Income
- --------------------------------------------------------------------------------
Dividends $ 170,037
Interest 227,498
- --------------------------------------------------------------------------------
Total investment income $ 397,535
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Investment adviser fee $ 390,191
Trustees fees and expenses 3,736
Distribution and service fees
Class A 871
Class B 289,052
Class C 110,895
Custodian fee 144,620
Transfer and dividend disbursing agent fees 86,055
Registration fees 43,298
Legal and accounting services 36,322
Printing and postage 30,372
Amortization of organization expenses 1,995
Miscellaneous 18,042
- --------------------------------------------------------------------------------
Total expenses $ 1,155,449
- --------------------------------------------------------------------------------
Net investment loss $ (757,914)
- --------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $(10,966,248)
- --------------------------------------------------------------------------------
Net realized loss $(10,966,248)
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 3,443,625
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $ 3,443,625
- --------------------------------------------------------------------------------
Net realized and unrealized loss $ (7,522,623)
- --------------------------------------------------------------------------------
Net decrease in net assets from operations $ (8,280,537)
- --------------------------------------------------------------------------------
See notes to financial statements
9
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
Increase (Decrease) Year Ended Period Ended
in Net Assets October 31, 1998 October 31, 1997(1)
- --------------------------------------------------------------------------------
From operations --
Net investment income (loss) $ (757,914) $ 8,149
Net realized loss (10,966,248) (73,463)
Net change in unrealized
appreciation (depreciation) 3,443,625 (453,743)
- --------------------------------------------------------------------------------
Net decrease in net assets
from operations $ (8,280,537) $ (519,057)
- --------------------------------------------------------------------------------
Transactions in shares of
beneficial interest --
Proceeds from sale of shares
Class A $ 31,916,155 $ 4,869,539
Class B 55,874,763 8,974,780
Class C 21,292,030 2,116,676
Cost of shares redeemed
Class A (5,597,177) (816,967)
Class B (7,461,062) (36,915)
Class C (3,200,764) --
- --------------------------------------------------------------------------------
Net increase in net assets from Fund
share transactions $ 92,823,945 $15,107,113
- --------------------------------------------------------------------------------
Net increase in net assets $ 84,543,408 $14,588,056
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of year $ 14,588,056 $ --
- --------------------------------------------------------------------------------
At end of year $ 99,131,464 $14,588,056
- --------------------------------------------------------------------------------
Accumulated undistributed
net investment income
(loss) included in net assets
- --------------------------------------------------------------------------------
At end of year $ -- $ 8,149
- --------------------------------------------------------------------------------
(1) 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, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Year Ended Period Ended
October 31, 1998 October 31, 1997
---------------------------------- ----------------------------------------
Class A Class B Class C Class A(1) Class B(2) Class C(2)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- Beginning of year $ 9.740 $ 9.740 $ 9.720 $ 10.000 $ 10.000 $ 10.000
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ (0.040) $ (0.090) $ (0.092) $ 0.008 $ 0.005 $ 0.003
Net realized and unrealized loss (0.240) (0.260) (0.258) (0.268) (0.265) (0.283)
- ------------------------------------------------------------------------------------------------------------------------------------
Net loss from operations $ (0.280) $ (0.350) $ (0.350) $ (0.260) $ (0.260) $ (0.280)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 9.460 $ 9.390 $ 9.370 $ 9.740 $ 9.740 $ 9.720
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return(3) (2.87)% (3.59)% (3.60)% (2.60)% (2.60)% (2.80)%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's omitted) $ 28,035 $ 52,641 $ 18,455 $ 3,925 $ 8,613 $ 2,051
Ratios (As a percentage of average daily net assets):
Expenses 1.21% 2.04% 2.21% 0.63%(4) 1.37%(4) 1.56%(4)
Net investment income (loss) (0.57)% (1.41)% (1.58)% 1.83%(4) 1.13%(4) 0.90%(4)
Portfolio Turnover 110% 110% 110% 7% 7% 7%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) For the period from the start of business, September 25, 1997, to October
31, 1997.
(2) For the period from the commencement of offerings of Class B and Class C
shares, September 29, 1997, to October 31, 1997.
(3) 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 reinvested at the
net asset value on the reinvestment date. Total return is not computed on an
annualized basis.
(4) Annualized.
See notes to financial statements
11
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
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 Funds 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 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 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, 1998, the Fund, for
federal income tax purposes, had a capital loss carryover of $10,797,209
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,
2006 ($10,740,877) and on October 31, 2005 ($56,332).
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.
12
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
F 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. During the year ended October 31, 1998, the
Fund has reclassified amounts to reflect a decrease in accumulated net
investment loss and paid-in capital of $749,765 due to permanent differences
between book and tax accounting for net operating loss carryovers and
distributions to shareholders. Net investment loss, net realized loss and
net assets were not affected by these reclassifications.
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 year ended October 31, 1998, the fee amounted to $390,191. Except
for 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 year ended October 31, 1998, no significant
amounts have been deferred. Certain officers and Trustees of the Fund are
officers and directors/trustees of EVM. Eaton Vance Distributors, Inc.
(EVD), a subsidiary of EVM and the Fund's principal underwriter, received
$113,598 as its portion of the sales charge on sales of Class A shares for
the year ended October 31, 1998.
4 Federal Income Tax Basis of Investments
- --------------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at October 31, 1998, as computed on a federal income tax
basis, are as follows:
Aggregate cost $ 96,923,678
-------------------------------------------------------------------------
Gross unrealized appreciation $ 8,451,502
Gross unrealized depreciation (5,704,122)
-------------------------------------------------------------------------
Net unrealized appreciation $ 2,747,380
-------------------------------------------------------------------------
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:
Year Ended October 31,
------------------------------------
Class A 1998 1997(1)
-------------------------------------------------------------------------
Sales 3,136,112 483,988
Redemptions (574,893) (81,094)
-------------------------------------------------------------------------
Net increase 2,561,219 402,894
-------------------------------------------------------------------------
(1)For the period from the start of business, September 25, 1997, to
October 31, 1997.
13
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
Year Ended October 31,
---------------------------------
Class B 1998 1997(2)
- --------------------------------------------------------------------------------
Sales 5,475,478 887,994
Redemptions (751,650) (3,705)
- --------------------------------------------------------------------------------
Net increase 4,723,828 884,289
- --------------------------------------------------------------------------------
(2) For the period from the commencement of offering of Class B shares,
September 29, 1997, to October 31, 1997.
Year Ended October 31,
---------------------------------
Class C 1998 1997(3)
- --------------------------------------------------------------------------------
Sales 2,095,183 210,914
Redemptions (336,223) --
- --------------------------------------------------------------------------------
Net increase 1,758,960 210,914
- --------------------------------------------------------------------------------
(3) For the period from the commencement of offering of Class C shares,
September 29, 1997, to October 31, 1997.
6 Distribution and Service Plans
- --------------------------------------------------------------------------------
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 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 paid or accrued service fees to or
payable to EVD for the year ended October 31, 1998, in the amount of $871
for Class A.
The Fund has also adopted distribution plans ("Class B Plan" and "Class C
Plan", collectively, 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) interest 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 year ended
October 31, 1998, the Fund paid or accrued $256,424 and $83,171, to or
payable to EVD representing 0.75% of average daily net assets of Class B and
Class C shares, respectively. At October 31, 1998, the amount of Uncovered
Distribution Charges of EVD calculated under the Plans was approximately
$2,514,000 and $1,259,000 for Class B and Class C shares, respectively.
In addition, the Plans authorize the Fund to make payments of service fees
to EVD, 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. Under the Class C Plan, EVD
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, EVD 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 year ended October 31, 1998, in the amount of
$32,628 and $27,724 for Class B and Class C shares, respectively. 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.
14
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
NOTES TO FINANCIAL STATEMENTS CONT'D
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 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 received on Class B and Class C
redemptions are paid to EVD to reduce the amount of Uncovered Distribution
Charges calculated under the Class B and Class C Plans, respectively (see
Note 6). CDSC received on Class B and Class C redemptions when no Uncovered
Distribution Charges exist for the respective classes will be retained by
the Fund. EVD received approximately $69,000 and $10,000 of CDSC paid by
shareholders of Class B and Class C shares, respectively, during the year
ended October 31, 1998.
8 Line of Credit
- --------------------------------------------------------------------------------
The Fund participates with other funds and portfolios managed by EVM and its
affiliates in a $80 million, ($130 million effective November 12, 1998)
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 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 year ended October 31, 1998.
9 Investment Transactions
- --------------------------------------------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $153,545,897 and $64,530,003, respectively, for the year ended
October 31, 1998.
10 Subsequent Event
- --------------------------------------------------------------------------------
On October 19, 1998, the Board of Trustees of the Trust approved a merger
plan whose terms provide that the Fund acquire substantially all of the
assets and liabilities of Worldwide Developing Resources Portfolio. The
transaction will occur after the close of business December 18, 1998.
15
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
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, 1998, the related statement of operations for the
year then ended, and the statements of changes in net assets and the financial
highlights for the year ended October 31, 1998, and 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 audits.
We conducted our audits 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, 1998, 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 audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Eaton Vance Tax-
Managed Emerging Growth Fund at October 31, 1998, the results of its operations,
the changes in its net assets and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 4, 1998
16
<PAGE>
Eaton Vance Tax-Managed Emerging Growth Fund as of October 31, 1998
INVESTMENT MANAGEMENT
Eaton Vance Tax-Managed Emerging Growth Fund
Officers Independent Trustees
James B. Hawkes Jessica M. Bibliowicz
President and Trustee President and Chief Operating Officer,
John A. Levin & Company
William H. Ahern, Jr. Director, Baker, Fentress & Company
Vice President
Donald R. Dwight
Thomas J. Fetter President, Dwight Partners, Inc.
Vice President
Samuel L. Hayes, III
Robert B. MacIntosh Jacob H. Schiff Professor of Investment Banking,
Vice President Emeritus, Harvard University Graduate School of
Business Administration
Michael B. Terry
Vice President Norton H. Reamer
Chairman and Chief Executive Officer,
James L. O'Connor United Asset Management Corporation
Treasurer
Lynn A. Stout
Alan R. Dynner Professor of Law,
Secretary Georgetown University Law Center
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
17
<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
Independent Auditors
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
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-12/98
