<PAGE>
[EATON VANCE LOGO] [PICTURE OF EIFFEL TOWER]
Annual Report October 31, 1999
[PICTURE OF BUILDING] EATON VANCE
TAX-MANAGED
INTERNATIONAL
GROWTH
FUND
Global Management-Global Distribution
[PICTURE OF STADIUM]
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
- --------------------------------------------------------------------------------
[PHOTO]
James B. Hawkes
President
Eaton Vance Tax-Managed International Growth Fund, Class A shares, had a total
return of 37.56% during the year ended October 31, 1999. That return was the
result of an increase in net asset value per share (NAV) from $8.84 on October
31, 1998 to $12.16 on October 31, 1999.(1) Class B shares had a total return of
36.55% for the same period, the result of an increase in NAV from $8.81 to
$12.03.(1) Class C shares had a total return of 36.36% for the same period, the
result of an increase in NAV from $8.80 to $12.00.(1)
By comparison, the Morgan Stanley Capital International Europe, Australasia, and
Far East Index (EAFE) - a broad-based, unmanaged market index of international
stocks - had a total return of 23.03% between October 31, 1998 and October 31,
1999.(2)
ENCOURAGING GROWTH CHARACTERIZED THE EUROPEAN AND JAPANESE MARKETS OVER THE PAST
YEAR ...
Europe today presents interesting parallels to the United States a decade or so
ago: corporate restructurings and merger activity, combined with a healthy
economy, have paved the way for a period of strong earnings growth and rising
stock prices.
The European Monetary Union should facilitate business and may boost growth
rates by as much as 0.5% of Gross Domestic Product, according to some experts.
Meanwhile, Japan has staged a comeback few could have envisioned only a year
ago.
THE CYCLICAL NATURE OF THE MARKETS MAY LEAD TO A SWING IN FAVOR OF INTERNATIONAL
EQUITIES ...
Overseas markets have offered exceptional investment opportunities and a
historical record of superior returns. At Eaton Vance, we believe that an
investor who allocates between international investments and those in the U.S.
markets can help reduce overall portfolio volatility, while increasing potential
returns. On the following pages, portfolio manager Armin Lang discusses the
international equity markets' performance over the past 12 months and offers his
outlook for the future.
Sincerely,
/s/ James B. Hawkes
James B. Hawkes
President
December 12, 1999
- --------------------------------------------------------------------------------
FUND INFORMATION
AS OF OCTOBER 31, 1999
<TABLE>
<CAPTION>
PERFORMANCE(3) CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 37.56% 36.55% 36.36%
Life of Fund+ 13.64 12.84 12.66
<CAPTION>
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 29.64% 31.55% 35.36%
Life of Fund+ 9.32 9.75 12.66
</TABLE>
+Inception Dates - Class A: 4/22/98; Class B: 4/22/98; Class C:4/22/98
<TABLE>
<CAPTION>
TEN LARGEST EQUITY HOLDINGS(4)
- ---------------------------------------------
<S> <C>
Kingston Communication (Hull) PLC 2.1%
Rentokil Initial 1.8
NTT Mobile Communication Network, Inc. 1.7
Elan Corp., PLC ADR 1.5
Nokia Oyj 1.5
Sankyo Co. Ltd. 1.4
Schweizer Rueckversicherung 1.3
Aegon NV 1.3
Mih Ltd. 1.3
Nomura Securities Co. Ltd. 1.3
</TABLE>
(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 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 equity
holdings accounted for 15.2% of the Portfolio's net assets. 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.
- --------------------------------------------------------------------------------
2
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
AN INTERVIEW WITH ARMIN J. LANG, PORTFOLIO MANAGER OF TAX-MANAGED INTERNATIONAL
GROWTH FUND
[PHOTO]
Armin J. Lang
Portfolio Manager
Q: ARMIN, CAN YOU GIVE US AN OVERVIEW OF THE INTERNATIONAL MARKETS OVER THE LAST
TWELVE MONTHS?
A: The international markets this past year were similar to the U.S. market ten
years ago. Europe and Japan in the late 1990s are very much comparable to the
United States in the late 1980s. A year ago, the Japanese market, in
particular, had everything going for it: restructuring had started, and there
was very decent economic growth, which translated into good growth for
companies.
However, whereas in Europe this kind of growth is visible, in Japan there was
a lot of doubt a year ago as to the validity of Japan's comeback. The average
weighting in Japan for international portfolios was approximately 10%,
whereas we started out at around 20%, which helped the Fund's performance
this year. Now the growth has become more visible in Japan as well - growth
is evident across the board, and restructuring plans appear everywhere. After
a decade of underperformance, Japan was just ripe for a turnaround. It's the
biggest surprise of the year, at least to a lot of people. And we were able
to participate.
Q: THE FUND ENJOYED VERY STRONG RETURNS THIS YEAR. WAS THERE ANY ONE FACTOR THAT
CONTRIBUTED TO ITS PERFORMANCE?
A: While there wasn't one big "home-run" stock, there were many successful
stories for the Fund this year. We have been very consistent in our
management style since we started the Fund: of the stocks we bought a year
and a half ago, we still own the vast majority of them. Our
market-capitalization approach has been focused on large-capitalization
stocks, which have performed very well for us. Regional distribution is still
about 50% Europe, 20% UK, and 20% Japan. We believe our consistency aided our
performance a great deal.
Q: WHAT WERE SOME OF THE BIG STORIES OVER THE PAST YEAR?
A: We've seen a couple of interesting trends. One has been the emergence of
telecommunications across the globe as one of the dominant growth industries.
That includes not only the
GLOBAL WEIGHTINGS+
- --------------------------------------------------------------------------------
By total net assets
[CHART]
<TABLE>
<S> <C>
Other 11.9%
Asia 22.5%
United Kingdom 21.1%
Continental Europe 43.9%
</TABLE>
FIVE LARGEST SECTOR POSITIONS+
- --------------------------------------------------------------------------------
By total net assets
[CHART]
<TABLE>
<S> <C>
Telecommunication 16.8%
Drugs 9.5%
Banking 8.7%
Insurance 5.6%
Financial Services 5.1%
</TABLE>
+ Global weightings and fund sector holdings are subject to change due to active
management. Five largest sector holdings account for 45.7% of the Fund.
3
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
old telephone companies like British Telecom, but also the second tier -
extremely fast-growing telecom companies like Energis and
Kingston Communication, which were two of the Fund's top holdings as of
October 31, 1999. They're growing extremely quickly, and the stocks have been
very attractively priced. The second story has been one of accelerating
growth. If you look at the stocks the Fund owns, the majority of them have
not only very good growth numbers, but also have demonstrated accelerating
growth rates at a reasonable price. Kingston and Elan were good examples of
this.
Another surprise this year was that a lot of the companies viewed as "richly
valued," that is to say, overpriced, continued to excel. A prime example is
Nokia, which a year ago wasn't viewed as an inexpensive stock, but it
continued to deliver and was at an all-time high in early December of this
year. It's still not a low-priced stock, but it could continue to accelerate
earnings growth. We might be able to look back five years from now and say
that Nokia stock was relatively inexpensive back in 1999.
Q: THERE HAS BEEN SIGNIFICANT TAKEOVER ACTIVITY IN THE EUROPEAN MARKETS IN THE
LAST YEAR. HOW WAS THE FUND AFFECTED?
A: We had our share of takeovers this year, which tells me that we are on the
right track. It indicates that we aren't the only ones identifying great
growth opportunities at reasonable prices. In the telecommunications sector,
Telecom Italia was taken over by its domestic rival Olivetti, and Vodafone is
in talks to merge with Mannesmann. In retail, the French company Carrefour
Supermarche acquired Promodes, another supermarket retailer. Clearly, others
have discovered the value of these companies; fortunately it was after we
did. There has been so much takeover activity, especially in Europe, and the
deals seem to get bigger and bigger each time - there seems to be no upside
limit to these buyouts. The way these mergers are constructed now is very
different from the way they were ten years ago. No one is safe - there isn't
a company so big that it is not a potential takeover target.
Q: DOES THE FUND'S STRONG PERFORMANCE THIS YEAR HAVE ANY AFFECT ON THE
INVESTMENT GOAL OF TAX-EFFICIENCY?
A: We've been able this year to provide strong returns combined with
tax-efficiency. It's worth emphasizing that there won't be any capital gains
this year to dilute total returns. We're happy to put the money where it
belongs, in the shareholders' pockets. We manage the Fund to have low
turnover, with the goal of always being as tax-efficient as possible.
Q: WHAT CAN WE EXPECT IN THE INTERNATIONAL MARKETS IN THE FUTURE?
A: Since the Fund expects to hold investments for five-to-ten years, I would
hesitate to comment on any short-term developments. But as we said earlier,
if you go back and look at the U.S. economy and equity market 10 years ago,
you can find a lot of parallels in Europe and Japan today.
The U.S. and international markets historically move in long cycles. We have
recently seen a long, very successful cycle in U.S. equities over the last
decade. The question is: What now over the next decade? I think a case can be
made for U.S. equities underperforming international stocks by a wide margin.
The outperformance over the last 10 years has been about 300% for U.S.
large-cap stocks versus international large-cap stocks. If even some of that
trend reverses, international equity funds would appear to be the place to
be. Going forward, international stocks have many attractive attributes:
great growth, decent valuation, low inflation in the majority of economies,
and low bond yields - all very appealing over the long-term.
4
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PERFORMANCE
- --------------------------------------------------------------------------------
[GRAPH]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE TAX-MANAGED
INTERNATIONAL GROWTH FUND, CLASS A VS. THE EUROPE, AUSTRALASIA & FAR EAST INDEX*
<TABLE>
<CAPTION>
Date Fund/NAV Fund/MOP EAFE
<S> <C> <C> <C>
4/30/98 $10,000 $9,425 $10,000
5/31/98 $9,990 $9,415 $9,954
6/30/98 $9,949 $9,377 $10,031
7/31/98 $10,102 $9,521 $10,135
8/31/98 $8,861 $8,351 $8,882
9/30/98 $8,433 $7,948 $8,612
10/31/98 $8,993 $8,476 $9,512
11/30/98 $9,552 $9,003 $10,002
12/31/98 $9,766 $9,204 $10,399
1/31/99 $9,512 $8,965 $10,370
2/28/99 $9,359 $8,821 $10,126
3/31/99 $9,908 $9,338 $10,551
4/30/99 $10,234 $9,645 $10,981
5/31/99 $9,939 $9,367 $10,417
6/30/99 $10,661 $10,048 $10,826
7/31/99 $11,200 $10,556 $11,150
8/31/99 $11,587 $10,920 $11,194
9/30/99 $11,811 $11,131 $11,309
10/31/99 $12,370 $11,659 $11,735
</TABLE>
[GRAPH]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE TAX-MANAGED
INTERNATIONAL GROWTH FUND, CLASS B VS. THE EUROPE, AUSTRALASIA & FAR EAST INDEX*
<TABLE>
<CAPTION>
Date Fund/NAV EAFE
<S> <C> <C>
4/30/98 $10,000 $10,000
5/31/98 $9,980 $9,954
6/30/98 $9,929 $10,031
7/31/98 $10,081 $10,135
8/31/98 $8,840 $8,882
9/30/98 $8,403 $8,612
10/31/98 $8,962 $9,512
11/30/98 $9,512 $10,002
12/31/98 $9,725 $10,399
1/31/99 $9,461 $10,370
2/28/99 $9,298 $10,126
3/31/99 $9,837 $10,551
4/30/99 $10,153 $10,981
5/31/99 $9,868 $10,417
6/30/99 $10,570 $10,826
7/31/99 $11,109 $11,150
8/31/99 $11,475 $11,194
9/30/99 $11,689 $11,309
10/31/99 $12,238 $11,735
</TABLE>
[GRAPH]
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE TAX-MANAGED
INTERNATIONAL GROWTH FUND, CLASS C VS. THE EUROPE, AUSTRALASIA & FAR EAST INDEX*
<TABLE>
<CAPTION>
Date Fund/NAV EAFE
<S> <C> <C>
4/30/98 $10,000 $10,000
5/31/98 $9,969 $9,954
6/30/98 $9,929 $10,031
7/31/98 $10,071 $10,135
8/31/98 $8,830 $8,882
9/30/98 $8,393 $8,612
10/31/98 $8,952 $9,512
11/30/98 $9,502 $10,002
12/31/98 $9,705 $10,399
1/31/99 $9,440 $10,370
2/28/99 $9,288 $10,126
3/31/99 $9,817 $10,551
4/30/99 $10,132 $10,981
5/31/99 $9,837 $10,417
6/30/99 $10,539 $10,826
7/31/99 $11,078 $11,150
8/31/99 $11,434 $11,194
9/30/99 $11,648 $11,309
10/31/99 $12,208 $11,735
</TABLE>
<TABLE>
<CAPTION>
PERFORMANCE+ CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 37.56% 36.55% 36.36%
Life of Fund+ 13.64 12.84 12.66
<CAPTION>
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 29.64% 31.55% 35.36%
Life of Fund+ 9.32 9.75 12.66
</TABLE>
+Inception Dates - Class A: 4/22/98; Class B: 4/22/98; Class C:4/22/98
* Source: TowersData, Bethesda, MD. Investment operations commenced 4/22/98.
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.
The chart compares the Fund's total return with that of the Morgan Stanley
Capital International Europe, Australasia, and Far East Index (EAFE), a
broad-based, unmanaged market index of international stocks. Returns are
calculated by determining the percentage change in net asset value (NAV) with
all distributions reinvested. The Index's returns use net dividends which
reflect the deduction of withholding taxes. The lines on the chart represent
the total returns of $10,000 hypothetical investments in the Fund and the EAFE
Index. The Index's total returns do not reflect any commissions or expenses
that would have been incurred if an investor individually purchased or sold
the securities represented in the Index. It is not possible to invest directly
in an Index.
+ 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
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 than their original cost.
5
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
- --------------------------------------------------------------------------------
PERFORMANCE
- --------------------------------------------------------------------------------
AFTER-TAX PERFORMANCE
AS OF OCTOBER 31, 1999
The table below sets forth the Fund's pre-tax and after-tax performance.
After-tax performance reflects the impact of federal income taxes on Fund
distributions of dividends and capital gains, while pre-tax performance does
not. Because the objective of the Fund is to provide long-term, after-tax
returns to shareholders, it is important for investors to know the effect of
taxes on the Fund's return.
- --------------------------------------------------------------------------------
PRE-TAX AND AFTER-TAX AVERAGE ANNUAL RETURNS
AT NET ASSET VALUE FOR THE PERIOD ENDED OCTOBER 31, 1999
<TABLE>
<CAPTION>
1 YEAR PRE-TAX AFTER-TAX TAX-EFFICIENCY
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A 37.56% 37.56% 100.00%
Class B 36.55% 36.55% 100.00%
Class C 36.36% 36.36% 100.00%
<CAPTION>
LIFE OF FUND* PRE-TAX AFTER-TAX TAX-EFFICIENCY
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Class A 13.64% 13.64% 100.00%
Class B 12.84% 12.84% 100.00%
Class C 12.66% 12.66% 100.00%
</TABLE>
*Inception Dates - Class A: 4/22/98; Class B: 4/22/98; Class C:4/22/98
Source:TowersData, Bethesda, Md
- --------------------------------------------------------------------------------
Pre-tax returns are calculated by determining the percentage change in net asset
value with all distributions reinvested in Fund shares. After-tax returns are
calculated similarly, except that distributions are reduced by federal income
taxes before reinvestment.
The highest historical federal tax rates (currently 39.6% for dividends and 20%
for capital gains) are used. The after-tax calculations do not take into account
state or local taxes or the federal alternative minimum tax. If an investor
sells Fund shares, any realized gains will be subject to taxes not reflected in
the after-tax returns shown above.
The performance does not include the effects of the Class A shares initial
sales charge (5.75% maximum) or any applicable contingent deferred sales
charge (5.00% maximum for Class B shares and 1% for Class C shares redeemed
in the first year).
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.
The after-tax returns shown above are not applicable to shares held in
tax-deferred accounts (such as IRA or 401(k) accounts)and shares held by
non-taxable entities (such as qualified pension plans and charities).
6
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
PORTFOLIO OF INVESTMENTS
<TABLE>
<S> <C> <C>
COMMON STOCKS -- 94.2%
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Aerospace and Defense -- 0.6%
- ----------------------------------------------------------------------
Aerospatiale Matra 16,000 $ 390,168
- ----------------------------------------------------------------------
$ 390,168
- ----------------------------------------------------------------------
Airlines -- 0.2%
- ----------------------------------------------------------------------
Societe Airline France(1) 10,000 $ 166,074
- ----------------------------------------------------------------------
$ 166,074
- ----------------------------------------------------------------------
Appliances and Household Durables -- 1.6%
- ----------------------------------------------------------------------
Aiwa Co. Ltd. 25,400 $ 618,206
Sony Corp. 3,000 467,420
- ----------------------------------------------------------------------
$ 1,085,626
- ----------------------------------------------------------------------
Auto and Parts -- 1.5%
- ----------------------------------------------------------------------
Bridgestone Corp. 18,000 $ 495,017
Labinal 4,200 537,259
- ----------------------------------------------------------------------
$ 1,032,276
- ----------------------------------------------------------------------
Automobiles -- 1.8%
- ----------------------------------------------------------------------
Honda Motor Co. Ltd. 10,000 $ 421,617
Toyota Motor Co. 23,000 795,611
- ----------------------------------------------------------------------
$ 1,217,228
- ----------------------------------------------------------------------
Banking -- 8.7%
- ----------------------------------------------------------------------
ABN Amro Holdings 27,142 $ 655,881
Allied Irish Banks PLC 52,660 659,334
Banco Popular Espanola 1,000 67,270
Banco Santander Central Hispano 18,000 186,738
Bank of Scotland 33,248 414,085
Bank of Tokyo Mitsubishi Ltd. (The) 45,000 745,113
Commerzbank AG 12,000 457,229
Dexia 3,100 436,627
HSBC Holdings PLC 22,465 276,655
Lloyds TSB Group PLC 59,460 820,546
National Australia Bank Ltd. 16,407 253,040
Svenska Handelbanken "A" 37,200 514,773
UBS (Schw. Bank Gesellschaft) 1,000 291,068
Vontobel Holding AG 110 186,979
- ----------------------------------------------------------------------
$ 5,965,338
- ----------------------------------------------------------------------
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Broadcasting and Cable -- 2.0%
- ----------------------------------------------------------------------
Mih Ltd. 20,000 $ 895,000
Primacom AG - ADR 19,500 516,750
- ----------------------------------------------------------------------
$ 1,411,750
- ----------------------------------------------------------------------
Broadcasting and Publishing -- 1.2%
- ----------------------------------------------------------------------
Nippon Television Network 900 $ 810,655
- ----------------------------------------------------------------------
$ 810,655
- ----------------------------------------------------------------------
Business and Public Services -- 3.8%
- ----------------------------------------------------------------------
Dai Nippon Printing Co. Ltd. 35,000 $ 637,553
Rentokil Initial 370,000 1,232,480
Sap AG 1,110 412,086
Tas Groep NV(1) 103,342 337,817
- ----------------------------------------------------------------------
$ 2,619,936
- ----------------------------------------------------------------------
Chemicals -- 0.9%
- ----------------------------------------------------------------------
Sumitomo Bakelite Co. Ltd. 66,000 $ 650,767
- ----------------------------------------------------------------------
$ 650,767
- ----------------------------------------------------------------------
Computer Services -- 1.9%
- ----------------------------------------------------------------------
Dolmen Computer Applications 800 $ 15,312
Internet Capital Group, Inc. 6,000 698,250
Ixl Enterprises, Inc. 15,000 627,187
- ----------------------------------------------------------------------
$ 1,340,749
- ----------------------------------------------------------------------
Construction and Housing -- 1.7%
- ----------------------------------------------------------------------
Leighton Holdings Ltd. 110,000 $ 399,587
Volker Wessels Stevin 45,471 774,272
- ----------------------------------------------------------------------
$ 1,173,859
- ----------------------------------------------------------------------
Data Processing and Reproduction -- 1.1%
- ----------------------------------------------------------------------
Canon, Inc. 26,000 $ 734,956
- ----------------------------------------------------------------------
$ 734,956
- ----------------------------------------------------------------------
Drugs -- 9.5%
- ----------------------------------------------------------------------
Astrazeneca PLC 11,540 $ 519,800
Elan Corp., PLC ADR 40,000 1,030,000
Glaxo Wellcome PLC 25,433 749,525
Novartis AG 350 523,725
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Drugs (continued)
- ----------------------------------------------------------------------
Novo Nordisk A/S-B 4,500 $ 539,593
Roche Holding AG 45 540,461
Sankyo Co. Ltd. 33,000 939,153
Sepracor, Inc.(1) 6,000 499,125
Smithkline Beecham PLC 40,268 518,034
Takeda Chemical Industries Ltd. 12,000 688,770
- ----------------------------------------------------------------------
$ 6,548,186
- ----------------------------------------------------------------------
Electrical and Electronics -- 1.7%
- ----------------------------------------------------------------------
Philips Electonics 1,380 $ 141,425
Sagem SA 2,500 763,361
Siemens AG 3,000 269,765
- ----------------------------------------------------------------------
$ 1,174,551
- ----------------------------------------------------------------------
Electronic Components - Instruments -- 1.9%
- ----------------------------------------------------------------------
Invensys PLC 171,629 $ 843,470
Rohm Co. 2,000 447,489
- ----------------------------------------------------------------------
$ 1,290,959
- ----------------------------------------------------------------------
Energy Sources -- 1.5%
- ----------------------------------------------------------------------
BP Amoco PLC 51,556 $ 494,688
Eni SPA 37,000 217,438
Royal Dutch Petroleum Co. 6,000 358,404
- ----------------------------------------------------------------------
$ 1,070,530
- ----------------------------------------------------------------------
Engineering and Building -- 0.3%
- ----------------------------------------------------------------------
Technip SA 1,950 $ 197,791
- ----------------------------------------------------------------------
$ 197,791
- ----------------------------------------------------------------------
Financial Services -- 5.1%
- ----------------------------------------------------------------------
Abbey National 40,000 $ 780,412
Acom Co. Ltd. 5,000 546,186
ING Groep NV 8,216 484,298
Julius Baer Holdings 50 150,456
Nomura Securities Co. Ltd. 54,000 890,514
Promise Co. Ltd. 10,200 684,170
- ----------------------------------------------------------------------
$ 3,536,036
- ----------------------------------------------------------------------
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Food and Household Products -- 3.1%
- ----------------------------------------------------------------------
Nestle 400 $ 771,805
Parmalat Finanziaria SPA 600,000 786,433
Unilever PLC 60,000 554,733
- ----------------------------------------------------------------------
$ 2,112,971
- ----------------------------------------------------------------------
Industrial Automation -- 1.2%
- ----------------------------------------------------------------------
Jot Automation Group Oyi 166,200 $ 855,995
- ----------------------------------------------------------------------
$ 855,995
- ----------------------------------------------------------------------
Insurance -- 5.6%
- ----------------------------------------------------------------------
Aegon NV 10,053 $ 925,644
Allianz AG Holding 2,000 608,587
ASR Verzekeringsgroep 2,050 129,501
AXA Colonia Konzern AG 3,200 326,261
AXA Company 4,600 648,382
Prudential Corp. 12,000 187,949
Schweizer Rueckversicherung 450 933,255
Scor SA 1,500 74,891
- ----------------------------------------------------------------------
$ 3,834,470
- ----------------------------------------------------------------------
Leisure and Tourism -- 2.4%
- ----------------------------------------------------------------------
Northern Leisure PLC 350,000 $ 881,574
Tabcorp Holdings Ltd. 120,000 760,171
- ----------------------------------------------------------------------
$ 1,641,745
- ----------------------------------------------------------------------
Machinery -- 0.6%
- ----------------------------------------------------------------------
Buderus 26,000 $ 437,258
- ----------------------------------------------------------------------
$ 437,258
- ----------------------------------------------------------------------
Medical Products -- 0.8%
- ----------------------------------------------------------------------
Qiagen NV 10,000 $ 533,750
- ----------------------------------------------------------------------
$ 533,750
- ----------------------------------------------------------------------
Merchandising -- 1.3%
- ----------------------------------------------------------------------
Autobacs Seven Co. Ltd. 14,800 $ 734,611
Woolworths Ltd. 41,063 139,483
- ----------------------------------------------------------------------
$ 874,094
- ----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Miscellaneous Materials and Commodities -- 0.6%
- ----------------------------------------------------------------------
Mayr-Melnhof 3,306 $ 147,164
Nitto Denko Corp. 7,000 276,351
- ----------------------------------------------------------------------
$ 423,515
- ----------------------------------------------------------------------
Multi-Industry -- 1.2%
- ----------------------------------------------------------------------
Hutchison Whampoa 13,000 $ 130,510
International Muller NV 16,022 301,449
Orkla As A-Aksjer(1) 10,000 139,586
Orkla As A-Rights 11,400 13,648
Tomkins PLC 77,159 259,234
- ----------------------------------------------------------------------
$ 844,427
- ----------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 0.4%
- ----------------------------------------------------------------------
Repsol SA 12,600 $ 259,580
- ----------------------------------------------------------------------
$ 259,580
- ----------------------------------------------------------------------
Photo Equipment and Supplies -- 1.2%
- ----------------------------------------------------------------------
Fuji Photo Film 25,000 $ 802,510
- ----------------------------------------------------------------------
$ 802,510
- ----------------------------------------------------------------------
Publishing -- 0.1%
- ----------------------------------------------------------------------
Agora GDR 5,000 $ 50,375
- ----------------------------------------------------------------------
$ 50,375
- ----------------------------------------------------------------------
Real Estate -- 0.1%
- ----------------------------------------------------------------------
Fastighets AB Balder 150 $ 1,784
Metroplex Berhad 225,000 61,579
- ----------------------------------------------------------------------
$ 63,363
- ----------------------------------------------------------------------
Retail -- 1.0%
- ----------------------------------------------------------------------
Carrefour Supermarche 1,200 $ 221,992
Christian Dior SA 12 2,147
JJB Sports PLC 60,000 455,350
- ----------------------------------------------------------------------
$ 679,489
- ----------------------------------------------------------------------
Retail - Food and Drug -- 1.2%
- ----------------------------------------------------------------------
Colruyt SA 8,000 $ 438,098
Pizzaexpress PLC 28,000 369,859
- ----------------------------------------------------------------------
$ 807,957
- ----------------------------------------------------------------------
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Software Services -- 2.0%
- ----------------------------------------------------------------------
Akamai Technologies 100 $ 14,519
Digital Island, Inc.(1) 10,000 675,000
Liberate Technologies(1) 10,000 681,250
- ----------------------------------------------------------------------
$ 1,370,769
- ----------------------------------------------------------------------
Telecommunication Equipment -- 1.4%
- ----------------------------------------------------------------------
Nokia Oyj 8,700 $ 995,021
- ----------------------------------------------------------------------
$ 995,021
- ----------------------------------------------------------------------
Telecommunications -- 16.8%
- ----------------------------------------------------------------------
British Telecommunications PLC 35,439 $ 642,287
Cable and Wireless Optus Ltd.(1) 100,000 228,791
Cable and Wireless HKT, Ltd. 63,696 145,518
Eircom PLC 75,000 312,965
Energis (1) 25,000 796,657
France Telecom SA 9,000 868,892
Global Crossing Ltd. 20,000 692,500
Kingston Comm (Hull) PLC 200,000 1,453,837
Mannesmann AG 1,900 298,565
NTT Mobile Communication Network, Inc. 45 1,194,423
Portugal Telecom 4,900 218,377
Sonera Group PLC ADR 5,000 600,178
Swisscom AG 2,500 762,125
Tele Danmark 5,000 303,309
Telecommunication Danmark ADR 12,000 362,250
Telecom Italia Mobile 100,000 625,930
Telecom Italia Spa RNC 33,500 290,533
Telefonica 18,726 307,841
Vodafone Group PLC 180,495 841,135
Versatel Telecom International - ADR 50,000 631,250
- ----------------------------------------------------------------------
$11,577,363
- ----------------------------------------------------------------------
Transportation -- 3.5%
- ----------------------------------------------------------------------
East Japan Railway Co. 130 $ 795,995
Firstgroup PLC 210,000 851,135
Mitsui O.S.K. Lines Ltd. 354,000 770,008
- ----------------------------------------------------------------------
$ 2,417,138
- ----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Utilities - Electrical and Gas -- 2.7%
- ----------------------------------------------------------------------
Endesa SA 40,000 $ 800,097
Reunies Electrobel & Tractebel 2,000 349,386
Scottish Power PLC 60,000 555,281
Veba AG 2,500 135,066
- ----------------------------------------------------------------------
$ 1,839,830
- ----------------------------------------------------------------------
Total Common Stocks
(identified cost $53,343,442) $64,839,055
- ----------------------------------------------------------------------
PREFERRED STOCKS -- 1.6%
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Construction and Housing -- 0.5%
- ----------------------------------------------------------------------
Dyckerhoff 12,570 $ 376,552
- ----------------------------------------------------------------------
$ 376,552
- ----------------------------------------------------------------------
Health and Personal Care -- 1.1%
- ----------------------------------------------------------------------
Fresenius 4,500 $ 735,507
- ----------------------------------------------------------------------
$ 735,507
- ----------------------------------------------------------------------
Total Preferred Stocks
(identified cost $1,124,882) $ 1,112,059
- ----------------------------------------------------------------------
WARRANTS -- 0.0%
SECURITY SHARES VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Entertainment -- 0.0%
- ----------------------------------------------------------------------
Northern Leisure PLC(1) 21,000 $ 13,956
- ----------------------------------------------------------------------
$ 13,956
- ----------------------------------------------------------------------
Multi-Industry -- 0.0%
- ----------------------------------------------------------------------
IFIL Finanz Di Partecipazoni(1) 350 $ 18
- ----------------------------------------------------------------------
$ 18
- ----------------------------------------------------------------------
Total Warrants
(identified cost $0) $ 13,974
- ----------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 3.6%
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- ----------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
5.16%, 11/1/99 $ 2,447 $ 2,447,000
- ----------------------------------------------------------------------
Total Short-Term Investments
(at amortized cost, $2,447,000) $ 2,447,000
- ----------------------------------------------------------------------
Total Investments -- 99.4%
(identified cost $56,915,324) $68,412,088
- ----------------------------------------------------------------------
Other Assets, Less Liabilities -- 0.6% $ 388,871
- ----------------------------------------------------------------------
Net Assets -- 100.0% $68,800,959
- ----------------------------------------------------------------------
</TABLE>
ADR - American Depositary Receipt
GDR - Global Depository Receipt
(1) Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
COUNTRY CONCENTRATION OF PORTFOLIO
<TABLE>
<CAPTION>
PERCENTAGE
COUNTRY OF NET ASSETS VALUE
<S> <C> <C>
- --------------------------------------------------------------------
Australia 2.6% $ 1,781,072
Austria 0.2% 147,164
Belgium 1.2% 802,797
Denmark 1.7% 1,205,152
Finland 3.6% 2,451,194
France 6.3% 4,307,584
Germany 6.6% 4,573,625
Hong Kong 0.4% 276,029
Ireland 2.9% 2,002,299
Italy 2.8% 1,920,352
Japan 22.0% 15,147,097
Malaysia 0.1% 61,579
Netherlands 9.0% 6,168,690
Norway 0.2% 153,234
Poland 0.1% 50,375
Portugal 0.3% 218,376
Spain 2.3% 1,621,526
Sweden 0.7% 516,557
Switzerland 6.0% 4,159,874
United Kingdom 21.1% 14,512,681
United States 5.7% 3,887,831
--------- -----------
Total Common Stocks, Preferred Stocks,
and Warrants 95.8% $65,965,088
Short-Term Investments 3.6% $ 2,447,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF OCTOBER 31, 1999
<S> <C>
Assets
- -----------------------------------------------------
Investments, at value
(identified cost, $56,915,324) $68,412,088
Cash 4,392
Foreign currency, at value (identified
cost $1,599) 1,584
Receivable for investments sold 236,614
Receivable for Fund shares sold 1,194,713
Dividends receivable 37,469
Tax reclaim receivable 15,584
Deferred organization expenses 45,647
- -----------------------------------------------------
TOTAL ASSETS $69,948,091
- -----------------------------------------------------
Liabilities
- -----------------------------------------------------
Payable for investments purchased $ 1,002,581
Payable for Fund shares redeemed 81,613
Accrued expenses 62,938
- -----------------------------------------------------
TOTAL LIABILITIES $ 1,147,132
- -----------------------------------------------------
NET ASSETS $68,800,959
- -----------------------------------------------------
Sources of Net Assets
- -----------------------------------------------------
Paid-in capital $57,608,852
Accumulated net realized loss (computed
on the basis of identified cost) (155,504)
Accumulated net investment loss (149,163)
Net unrealized appreciation (computed on
the basis of identified cost) 11,496,774
- -----------------------------------------------------
TOTAL $68,800,959
- -----------------------------------------------------
Class A Shares
- -----------------------------------------------------
NET ASSETS $27,832,667
SHARES OUTSTANDING 2,287,957
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 12.16
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 94.25 of $12.16) $ 12.90
- -----------------------------------------------------
Class B Shares
- -----------------------------------------------------
NET ASSETS $26,498,112
SHARES OUTSTANDING 2,202,847
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 12.03
- -----------------------------------------------------
Class C Shares
- -----------------------------------------------------
NET ASSETS $14,470,180
SHARES OUTSTANDING 1,205,987
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 12.00
- -----------------------------------------------------
</TABLE>
On sales of $50,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
OCTOBER 31, 1999
<S> <C>
Investment Income
- -----------------------------------------------------
Dividends (net of foreign taxes,
$69,718) $ 566,837
Interest 182,656
- -----------------------------------------------------
TOTAL INVESTMENT INCOME $ 749,493
- -----------------------------------------------------
Expenses
- -----------------------------------------------------
Investment adviser fee $ 384,881
Trustees fees and expenses 1,374
Distribution and service fees
Class A 5,808
Class B 130,681
Class C 76,427
Custodian fee 121,654
Transfer and dividend disbursing agent
fees 47,609
Registration fees 39,608
Legal and accounting services 22,958
Amortization of organization expenses 12,204
Printing and postage 9,953
Miscellaneous 19,909
- -----------------------------------------------------
TOTAL EXPENSES $ 873,066
- -----------------------------------------------------
NET INVESTMENT LOSS $ (123,573)
- -----------------------------------------------------
Realized and Unrealized Gain (Loss)
- -----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ (5,417)
Foreign currency transactions (597)
- -----------------------------------------------------
NET REALIZED LOSS $ (6,014)
- -----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $13,265,926
Foreign currency (5,297)
- -----------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $13,260,629
- -----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $13,254,615
- -----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $13,131,042
- -----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED PERIOD ENDED
IN NET ASSETS OCTOBER 31, 1999 OCTOBER 31, 1998(1)
<S> <C> <C>
- -------------------------------------------------------------------------------
From operations --
Net investment loss $ (123,573) $ (37,720)
Net realized loss (6,014) (146,432)
Net change in unrealized
appreciation (depreciation) 13,260,629 (1,763,855)
- -------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 13,131,042 $ (1,948,007)
- -------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $ 19,812,005 $ 9,619,827
Class B 14,226,821 11,302,337
Class C 9,320,792 5,803,262
Cost of shares redeemed
Class A (3,770,105) (2,408,094)
Class B (2,957,284) (578,409)
Class C (1,845,706) (907,522)
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS $ 34,786,523 $ 22,831,401
- -------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 47,917,565 $ 20,883,394
- -------------------------------------------------------------------------------
Net Assets
- -------------------------------------------------------------------------------
At beginning of year $ 20,883,394 $ --
- -------------------------------------------------------------------------------
AT END OF YEAR $ 68,800,959 $ 20,883,394
- -------------------------------------------------------------------------------
Accumulated net
investment loss included
in net assets
- -------------------------------------------------------------------------------
AT END OF YEAR $ (149,163) $ (36,912)
- -------------------------------------------------------------------------------
</TABLE>
(1) For the period from the start of business, April 22, 1998, to October 31,
1998.
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------
1999(1) 1998(1)(2)
<S> <C> <C>
- ---------------------------------------------------------------
Net asset value -- Beginning
of year $ 8.840 $10.000
- ---------------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------------
Net investment income $ 0.016 $ 0.012
Net realized and unrealized
gain (loss) 3.304 (1.172)
- ---------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 3.320 $(1.160)
- ---------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $12.160 $ 8.840
- ---------------------------------------------------------------
TOTAL RETURN(3) 37.56% (11.60)%
- ---------------------------------------------------------------
Ratios/Supplemental Data+
- ---------------------------------------------------------------
Net assets, end of year
(000's omitted) $27,833 $ 6,659
Ratios (As a percentage of
average daily net assets):
Net expenses 1.73% 1.97%(4)
Net expenses after
custodian fee reduction 1.73% 1.95%(4)
Net investment income 0.15% 0.25%(4)
Portfolio Turnover 60% 14%
- ---------------------------------------------------------------
+ The operating expenses of the Fund may reflect a reduction
of the investment adviser fee, an allocation of expenses to
the Investment Adviser, or both. Had such actions not been
taken, the ratios and net investment income (loss) per share
would have been as follows:
Ratios (As a percentage of
average daily net assets):
Expenses 2.20%(4)
Expenses after custodian
fee reduction 2.18%(4)
Net investment income 0.02%(4)
Net investment income per
share $ 0.001
- ---------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding
(2) For the period from the start of business, April 22, 1998, to October 31,
1998.
(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
14
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
-------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------
1999(1) 1998(1)(2)
<S> <C> <C>
- ---------------------------------------------------------------
Net asset value -- Beginning
of year $ 8.810 $10.000
- ---------------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------------
Net investment loss $(0.055) $(0.039)
Net realized and unrealized
gain (loss) 3.275 (1.151)
- ---------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 3.220 $(1.190)
- ---------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $12.030 $ 8.810
- ---------------------------------------------------------------
TOTAL RETURN(3) 36.55% (11.90)%
- ---------------------------------------------------------------
Ratios/Supplemental Data+
- ---------------------------------------------------------------
Net assets, end of year (000's
omitted) $26,498 $ 9,808
Ratios (As a percentage of
average daily net assets)
Net expenses 2.53% 2.72%(4)
Net expenses after
custodian fee reduction 2.53% 2.70%(4)
Net investment loss (0.53)% (0.80)%(4)
Portfolio Turnover 60% 14%
- ---------------------------------------------------------------
+ The operating expenses of the Fund may reflect a reduction of
the investment adviser fee, an allocation of expenses to the
Investment Adviser, or both. Had such actions not been
taken, the ratios and net investment income (loss) per share
would have been as follows:
Ratios (As a percentage of
average daily net assets)
Expenses 2.95%(4)
Expenses after custodian
fee reduction 2.93%(4)
Net investment loss (1.03)%(4)
Net investment loss per share $(0.050)
- ---------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(2) For the period from the start of business, April 22, 1998, to October 31,
1998.
(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
15
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
-------------------------------
YEAR ENDED OCTOBER 31,
-------------------------------
1999(1) 1998(1)(2)
<S> <C> <C>
- ---------------------------------------------------------------
Net asset value -- Beginning
of year $ 8.800 $10.000
- ---------------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------------
Net investment loss $(0.080) $(0.055)
Net realized and unrealized
gain (loss) 3.280 (1.145)
- ---------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 3.200 $(1.200)
- ---------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $12.000 $ 8.800
- ---------------------------------------------------------------
TOTAL RETURN(3) 36.36% (12.00)%
- ---------------------------------------------------------------
Ratios/Supplemental Data+
- ---------------------------------------------------------------
Net assets, end of year (000's
omitted) $14,470 $ 4,416
Ratios (As a percentage of
average daily net assets):
Net expenses 2.71% 2.97%(4)
Net expenses after
custodian fee reduction 2.71% 2.95%(4)
Net investment loss (0.78)% (1.15)%(4)
Portfolio Turnover 60% 14%
- ---------------------------------------------------------------
+ The operating expenses of the Fund may reflect a reduction
of the investment adviser fee, an allocation of expenses to
the Investment Adviser, or both. Had such actions not been
taken, the ratios and net investment income (loss) per share
would have been as follows:
Ratios (As a percentage of
average daily net assets):
Expenses 3.20%(4)
Expenses after custodian
fee reduction 3.18%(4)
Net investment loss (1.38)%(4)
Net investment loss per share $(0.066)
- ---------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(2) For the period from the start of business, April 22, 1998, to October 31,
1998.
(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
16
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
- -------------------------------------------
Eaton Vance Tax-Managed International Growth Fund (the Fund) 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 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 foreign equity securities. The Declaration of
Trust permits the Trustees to issue interests in the Fund. The Fund offers
three classes of shares. Class A shares are generally sold subject to a sales
charge imposed at time of purchase. Class B and Class C shares are sold at
net asset value and are subject to a contingent deferred sales charge (see
Note 6). Each class represents a pro rata interest in the Fund, but votes
separately on class-specific matters and (as noted below) is subject to
different expenses. 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 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. Interest income is recorded on the accrual
basis.
C Income 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. Withholding taxes on foreign dividends and
capital gains have been provided for in accordance with the Fund's
understanding of the applicable country's tax rules and rates. At
October 31, 1999, the Fund, for federal income tax purposes, had a capital
loss carryover of $125,361 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.
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
to the Fund. Pursuant to the custodian agreement, IBT receives a fee reduced
by credits which are determined based on the average cash balances the Fund
maintains with IBT. All significant credit
17
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
balances used to reduce the Fund's custodian fees are reported as a reduction
of total expenses in 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 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.
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 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:
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------
CLASS A 1999 1998(1)
<S> <C> <C>
----------------------------------------------------------------
Sales 1,904,157 993,335
Redemptions (369,243) (240,292)
----------------------------------------------------------------
NET INCREASE 1,534,914 753,043
----------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------
CLASS B 1999 1998(1)
<S> <C> <C>
----------------------------------------------------------------
Sales 1,385,517 1,177,721
Redemptions (295,860) (64,531)
----------------------------------------------------------------
NET INCREASE 1,089,657 1,113,190
----------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
----------------------
CLASS C 1999 1998(1)
<S> <C> <C>
----------------------------------------------------------------
Sales 887,282 602,832
Redemptions (183,061) (101,066)
----------------------------------------------------------------
NET INCREASE 704,221 501,766
----------------------------------------------------------------
</TABLE>
(1) For the period from the start of business, April 22, 1998, to October 31,
1998
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 year ended October 31, 1999 the
effective annual rate, based on average daily net assets, was 1.00%.
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 officers and Trustees of the Fund are
officers of the above organization. Eaton Vance Distributors, Inc. (EVD), a
subsidiary of EVM and the Fund's principal underwriter, received $46,269 as
its portion of the sales charge on sales of Class A shares for the year ended
October 31, 1999.
18
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
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, 1999, no significant amounts have been deferred.
5 Distribution and Service Plans
- -------------------------------------------
The Fund has in effect distribution plans for Class B (Class B Plan) and
Class C (Class C Plan) pursuant to Rule 12b-1 under the Investment Company
Act of 1940 and a service plan for Class A shares (Class A Plan)
(collectively, the Plans). The Class B and Class C Plans require the Fund to
pay EVD amounts equal to 1/365 of 0.75% of the Fund's average daily net
assets attributable to Class B and Class C shares 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 the
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 of EVD of each respective class
reduced by the aggregate amount of contingent deferred sales charges (see
Note 6) and daily amounts theretofore paid to EVD by each respective class.
The Fund paid or accrued $121,193 and $57,320 for Class B, and Class C
shares, respectively, to or payable to EVD for the year ended October 31,
1999, representing 0.75% of the average daily net assets for Class B and
Class C shares. At October 31, 1999, the amount of Uncovered Distribution
Charges EVD calculated under the Plans was approximately $1,050,000 and
$830,000 for Class B and Class C shares, respectively.
The Plans authorize the Fund to make payments of service fees to EVD,
investment dealers and other persons in amounts not exceeding 0.25% of the
Fund's average daily net assets attributable to Class A, Class B, and Class C
shares for each fiscal year. The Trustees initially implemented the Plans by
authorizing the Fund to make quarterly payments of service fees to EVD and
investment dealers equal to 0.25% per annum of the Fund's average daily net
assets attributable to Class A and Class B shares based on the value of Fund
shares sold by such persons and remaining outstanding for at least one year.
On October 4, 1999, the Trustees approved service fee payments equal to 0.25%
per annum of the Fund's average daily net assets attributable to Class A and
Class B shares for any fiscal year on shares of the Fund sold on or after
October 12, 1999. The Class C Plan permits the Fund to make monthly payments
of service fees in amounts not expected to exceed 0.25% of the Fund's average
daily net assets attributable to Class C shares for any fiscal year. Service
fee payments will be made for personal services and/or the maintenance of
shareholder accounts. 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. Service fee payments for the year
ended October 31, 1999 amounted to $5,808, $9,488, and $19,107 for Class A,
Class B and Class C shares, respectively.
6 Contingent Deferred Sales Charge
- -------------------------------------------
Class B and Class C shares are each subject to a contingent deferred sales
charge (CDSC). A CDSC generally is imposed on redemptions of Class B shares
made within six years of purchase and on redemptions of Class C shares made
within one year of purchase.
Generally, the CDSC is based on 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 and may be waived under certain other limited
conditions. CDSC received on Class B and C redemptions are paid to EVD to
reduce the amount of Uncovered Distribution Charges calculated under the
Class B's and Class C's Distribution Plans (see Note 5). CDSC charges
received on Class B and C redemptions when no Uncovered Distribution Charges
exist for the respective classes will be credited to the Fund. EVD received
approximately $32,000 and $5,000 of CDSC paid by shareholders of Class B and
Class C shares, respectively, during the year ended October 31, 1999.
7 Investment Transactions
- -------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $55,110,810 and $22,716,068, respectively, for the year ended
October 31, 1999.
19
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
8 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investment securities at October 31, 1999, as computed on a federal income
tax basis, were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $57,371,712
-----------------------------------------------------
Gross unrealized appreciation $12,025,267
Gross unrealized depreciation (996,590)
-----------------------------------------------------
NET UNREALIZED APPRECIATION $11,028,677
-----------------------------------------------------
</TABLE>
9 Line of Credit
- -------------------------------------------
The Fund participates with other funds and portfolios managed by EVM and its
affiliates in a $120 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 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, 1999.
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.
20
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS
OF EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND:
- ---------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Eaton Vance Tax-Managed International Growth
Fund (the Fund) as of October 31, 1999, the related statement of operations for
the year then ended, the statements of changes in net assets for the years ended
October 31, 1999 and 1998 and the financial highlights for each of the years in
the two-year period ended October 31, 1999. 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, 1999 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, referred to
above, present fairly in all material respects, the financial position of Eaton
Vance Tax-Managed International Growth Fund at October 31, 1999, and 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 3, 1999
21
<PAGE>
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND AS OF OCTOBER 31, 1999
INVESTMENT MANAGEMENT
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND
Officers
James B. Hawkes
President and Trustee
William H. Ahern, Jr.
Vice President
Thomas J. Fetter
Vice President
Armin Lang
Vice President
Robert B. MacIntosh
Vice President
Edward E. Smiley, Jr.
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University Graduate
School of Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
22
<PAGE>
INVESTMENT ADVISER AND ADMINISTRATOR OF EATON VANCE
TAX-MANAGED INTERNATIONAL GROWTH FUND
Eaton Vance Management
The Eaton Vance Building
255 State Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
EATON VANCE DISTRIBUTORS, INC.
The Eaton Vance Building
255 State Street
Boston, MA 02109
(617) 482-8260
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
PFPC GLOBAL FUND SERVICES
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
200 Berkeley Street
Boston, MA 02116-5022
EATON VANCE TAX-MANAGED INTERNATIONAL GROWTH FUND
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
- --------------------------------------------------------------------------------
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.
- --------------------------------------------------------------------------------
038-10/99 IGSRC-10/99
