<PAGE>
[LOGO] [PHONE]
Annual Report October 31, 1999
EATON VANCE
TAX-MANAGED
[FLAG] EMERGING
GROWTH
FUND
Global Management-Global Distribution
[TAPE CALCULATOR]
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
LETTER TO SHAREHOLDERS
[PHOTO]
James B. Hawkes
President
Eaton Vance Tax-Managed Emerging Growth Fund Class A shares had a total return
of 38.58% during the year ended October 31, 1999. That return was the result of
an increase in net asset value per share (NAV) from $9.46 on October 31, 1998 to
$13.11 on October 31, 1999.(1) Class B shares had a total return of 37.49% for
the same period, the result of an increase in NAV from $9.39 to $12.91.(1)
Class C shares had a total return of 37.25% for the same period, the result of
an increase in NAV from $9.37 to $12.86.(1)
By comparison, the S&P SmallCap 600 Index - a widely recognized, unmanaged index
of small-capitalization stocks - had a total return of 12.05% for the period
from October 31, 1998 to October 31, 1999.(2)
Allaying fears that the record economic expansion would end in a resurgence of
inflation, the U.S. economy posted a 4.8% gain for the quarter ended in
September. Consumer confidence remained high, and the nation's unemployment rate
dropped to 4.1% in October, the lowest rate since the current expansion began in
March 1991.
Nonetheless, the Federal Reserve Board raised the benchmark Federal Funds rate
three times since our last annual report, a total of 0.75% to 5.50%, in an
effort to ward off inflationary pressures. While the economy shows no
significant signs of cooling down, a slowing economy would mitigate inflationary
pressures and reduce the risk of another interest rate hike in the immediate
future.
Encouraged by strong economic growth coupled with little or no inflation, the
major stock indices gained ground in October. The NASDAQ Index, which consists
largely of emerging growth and small-capitalization companies, continued to hit
record highs throughout the year.
As we look ahead, we can certainly anticipate continued volatility in the stock
market. By historical standards, the valuations of many stocks and certain
market sectors are quite extended. Over the long-term, however, we remain
confident of the superior earnings potential of selected small-cap stocks. On
the following pages, portfolio manager Jack Smiley discusses the past 12 months
and offers his outlook for the year ahead.
Sincerely,
/s/ James B. Hawkes
James B. Hawkes
President
November 29, 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 38.58% 37.49% 37.25%
Life of Fund+ 13.76 13.00 12.79
<CAPTION>
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 30.58% 32.49% 36.25%
Life of Fund+ 10.60 11.31 12.79
</TABLE>
+Inception Dates - Class A: 9/25/97; Class B: 9/29/97; Class C:9/29/97
<TABLE>
<CAPTION>
Ten Largest Equity Holdings(4)
- ----------------------------------------------------
<S> <C>
Micrel, Inc. 2.1%
Affiliated Computer Services, Inc., Class A 1.7
Dallas Semiconductor Corp. 1.6
Sapient Corp. 1.6
Diamond Technology Partners 1.5
Pegasus Communications Corp. 1.5
Whittman-Hart, Inc. 1.5
Peregrine Systems, Inc. 1.5
PMC-Sierra, Inc. 1.4
BISYS Group, Inc. (The) 1.4
</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 15.8% of the Fund'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 EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
MANAGEMENT DISCUSSION
AN INTERVIEW WITH EDWARD E. (JACK) SMILEY,
VICE PRESIDENT AND PORTFOLIO MANAGER OF
TAX-MANAGED EMERGING GROWTH FUND
[PHOTO]
EDWARD E. (JACK) SMILEY, CFA
PORTFOLIO MANAGER
Q: JACK, HOW WOULD YOU CHARACTERIZE THE MARKET ENVIRONMENT IN THE LAST TWELVE
MONTHS?
A: The main thing that has happened in the year ended October 31, 1999 is that a
lot of emerging growth companies outperformed large-capitalization stocks.
Many high-quality, large-cap stocks became overvalued, while high-quality,
small-cap stocks were undervalued, and that valuation spread narrowed over
the past year in favor of the small-cap stocks. The bottom line is that it's
the first change we've seen in that direction for two and a half years, and
marks, we think, the beginning of a sustained advance in the small-cap area.
<TABLE>
<CAPTION>
Five Largest Sector Positions+
- ----------------------------------------
By total net assets
<S> <C>
Information Services 13.8%
Electronics - Semiconductors 10.5%
Oil & Gas 7.2%
Business Services 7.2%
Software Services 6.5%
</TABLE>
+ Fund holdings subject to change due to active management. Five largest sector
holdings account for 45.2% of the Fund.
Over the next two years, I think we could continue to see positive returns
from small-cap stocks. That doesn't necessarily mean that large-cap stocks
would have to perform poorly, or underperform. It's just that the relative
valuation of the S&P600* is still very cheap. Small-caps could still easily
be 25 or 30 percent of an investor's portfolio.
Q: HOW DID THE FUND PERFORM AGAINST THE BACKDROP OF A STRONG SMALL-CAP MARKET?
A: The Fund outperformed the S&P600 benchmark* by a good margin this year. As a
growth manager, we were able to continue to position the Fund in technology,
and we had a lot of good semiconductor, semiconductor equipment, and software
names that really helped our performance. That's where a lot of the positive
performance came from. Over the last 12 months, the biggest stocks in the
semiconductor and semiconductor equipment area have been Applied
Microcircuits Corp., Vitesse Semiconductor Corp., PMC-Sierra, Inc., Q-Logic
Corp., Helix Technology Corp., Micrel, Inc., and PRI Automation, Inc. Those
were the big winners; some of those stocks were up 100% over the past 12
months.
Q: WHAT ELSE AFFECTED THE PERFORMANCE OF THE FUND?
A: Another source of strength this year was companies that were taken over.
Abacus Direct Corp. was up 222% over the last 12 months. It was acquired by
DoubleClick, which is a high-quality Internet service provider. We also were
fortunate to own Xomed Surgical Products, Inc., which is a medical products
company that was bought out; Level One Semiconductor was also taken over.
These transactions reaffirm our belief that the acquisition market is
concurring with what we've been saying about valuation - that many of these
companies were attractive for takeover.
*The S&P SmallCap 600 Index is a broad-based, unmanaged market index of 600
small capitalization stocks. It is not possible to invest directly in an Index.
3
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
MANAGEMENT DISCUSSION
Q: YOU MENTIONED THE SEMICONDUCTOR SECTOR EARLIER. WERE THERE ANY OTHER NOTABLE
SECTORS THIS YEAR?
A: Another segment worth noting was medical products technology - we had some
good stocks there. In the biotech area, Human Genome Sciences, Inc. traded
from the mid-30s to the high 80s in the 12-month period. The Fund has also
benefited from Millennium Pharmaceuticals, which we added earlier in the year
and was a big performer for us.
The other sector that has been very strong is what we call
"business-to-business," or "e-commerce." The stocks in the Fund that have
been big winners there have been Sapient Corp., International Integration,
Inc., Diamond Technology Partners, Whittman-Hart, Scient Corp., and Commerce
One, Inc.
Commerce One was just awarded the business-to-business contract from General
Motors, and they will be responsible for integrating all of GM's suppliers,
dealers, and partners in one unified MIS environment. They're an example of a
cutting-edge company that is allowing other companies to utilize the Internet
for fast communications, with a lot of users, on a very sophisticated level.
We believe e-commerce will continue to be a strong theme over the next year.
Q: WHAT IMPACT DOES THE STRONG PERFORMANCE OF SOME OF THESE STOCKS HAVE ON THE
TAX-EFFICIENCY OF THE FUND?
A: Some of the stocks have had very good performance and may be slightly ahead
of themselves in terms of their relative valuation. In a few cases, we've
sold off a little of the positions and taken some of the profit. As a
tax-efficient fund, when valuations get too high, we sometimes trim the
positions because we are able to utilize tax-losses to offset the profits.
For example, the most important event of this 12-month period was when, in
October 1998, the Long Term Capital Management bailout, coupled with the
Russian crisis, caused a severe correction in the stock market. In that
environment, we were able to add to many positions where we had had a high
cost, then we waited 31 days and sold our high cost stocks. So we maintained
our positions while generating some tax-losses for the Fund, which is a
tax-management strategy we have emphasized all along.
Q: WHAT IS YOUR OUTLOOK FOR THE FUND IN THE YEAR AHEAD?
A: We are definitely in a two-tier market in which all of the Internet-related
technology stocks have had a good run, but there are also a lot of
high-quality companies that have been neglected. As always, we are doing
thorough research and trying to find new investments in some of these
out-of-favor areas, such as retail and business services. Our research
approach to stocks is "bottom-up":We try to find the best earnings growth,
coupled with high-quality, within growing industries. The small-cap area has
definitely shown some life this year, relative to other types of stocks, and
we would expect that to continue.
4
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
PERFORMANCE
[GRAPH]
Comparison of Change in Value of a $10,000 Investment in EATON VANCE
TAX-MANAGED EMERGING GROWTH FUND, CLASS A VS. THE STANDARD & POOR'S SMALL
CAP 600 INDEX*
<TABLE>
<CAPTION>
DATE FUND/NAV FUND/MOP S&P 600
<S> <C> <C> <C>
9/30/97 $10,000 $9,428 $10,000
10/31/97 $9,682 $9,128 $9,568
11/30/97 $9,523 $8,978 $9,498
12/31/97 $9,930 $9,363 $9,690
1/31/98 $9,811 $9,250 $9,501
2/28/98 $10,616 $10,009 $10,367
3/31/98 $11,044 $10,412 $10,763
4/30/98 $11,113 $10,478 $10,826
5/31/98 $10,358 $9,766 $10,252
6/30/98 $10,885 $10,262 $10,281
7/31/98 $10,119 $9,541 $9,496
8/31/98 $8,151 $7,685 $7,663
9/30/98 $8,996 $8,482 $8,132
10/31/98 $9,404 $8,866 $8,509
11/30/98 $10,040 $9,466 $8,988
12/31/98 $11,113 $10,478 $9,562
1/31/99 $11,153 $10,515 $9,442
2/28/99 $10,239 $9,653 $8,591
3/31/99 $10,606 $10,000 $8,702
4/30/99 $10,755 $10,141 $9,278
5/31/99 $10,984 $10,356 $9,503
6/30/99 $11,909 $11,228 $10,044
7/31/99 $11,789 $11,115 $9,955
8/31/99 $11,759 $11,087 $9,517
9/30/99 $12,266 $11,565 $9,557
10/31/99 $13,032 $12,287 $9,533
</TABLE>
<TABLE>
<CAPTION>
Performance** Class A Class B Class C
- --------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 38.58% 37.49% 37.25%
Life of Fund+ 13.76 13.00 12.79
<CAPTION>
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
One Year 30.58% 32.49% 36.25%
Life of Fund+ 10.60 11.31 12.79
</TABLE>
+Inception Dates - Class A: 9/25/97; Class B: 9/29/97; Class C:9/29/97
* Source: TowersData, 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.
The chart compares the Fund's total return with that of the S&P Small Cap 600
Index, a broad-based, unmanaged market index of 600 small capitalization
stocks. Returns are calculated by determining the percentage change in net
asset value with all distributions reinvested. The lines on the chart
represent the total returns of a $10,000 hypothetical investment in the Fund
and in the S&P 600 Index. An investment in the Fund's Class B shares on
9/29/97 at net asset value would have grown to $12,910 on October 31, 1999,
$12,510 including applicable CDSC. An investment in the Fund's Class C shares
on 9/29/97 at net asset value would have grown to $12,860 on October 31,
1999. 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 the 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 EMERGING 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 38.58% 38.58% 100.00%
Class B 37.49% 37.49% 100.00%
Class C 37.25% 37.25% 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 13.76% 13.76% 100.00%
Class B 13.00% 13.00% 100.00%
Class C 12.79% 12.79% 100.00%
</TABLE>
*Inception Dates - Class A: 9/25/97; Class B: 9/29/97; Class C:9/29/97
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 EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
PORTFOLIO OF INVESTMENTS
<TABLE>
<S> <C> <C>
COMMON STOCKS -- 96.2%
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
Advertising -- 2.4%
- -----------------------------------------------------------------------
Catalina Marketing Corp.(1) 20,000 $ 1,872,499
Harte-Hanks Communications, Inc. 81,000 1,604,812
Outdoor Systems, Inc.(1) 32,000 1,356,000
- -----------------------------------------------------------------------
$ 4,833,311
- -----------------------------------------------------------------------
Banks - Regional -- 3.0%
- -----------------------------------------------------------------------
City National Corp. 58,000 $ 2,247,500
Cullen/Frost Bankers, Inc. 95,000 2,743,125
Peoples Heritage Finance Group, Inc. 55,000 1,045,000
- -----------------------------------------------------------------------
$ 6,035,625
- -----------------------------------------------------------------------
Banks and Money Services -- 0.9%
- -----------------------------------------------------------------------
Bank United Corp. 47,000 $ 1,833,000
- -----------------------------------------------------------------------
$ 1,833,000
- -----------------------------------------------------------------------
Broadcasting and Cable -- 1.9%
- -----------------------------------------------------------------------
Hispanic Broadcasting Corp.(1) 17,000 $ 1,377,000
Tivo, Inc. 5,000 214,375
Young Broadcasting Corp.(1) 48,000 2,226,000
- -----------------------------------------------------------------------
$ 3,817,375
- -----------------------------------------------------------------------
Broadcasting and Radio -- 1.0%
- -----------------------------------------------------------------------
Entercom Communications Corp.(1) 42,000 $ 2,092,125
Radio Unica Communications 1,600 45,800
- -----------------------------------------------------------------------
$ 2,137,925
- -----------------------------------------------------------------------
Business Products and Services -- 0.8%
- -----------------------------------------------------------------------
CN Maximus, Inc.(1) 72,500 $ 1,681,094
- -----------------------------------------------------------------------
$ 1,681,094
- -----------------------------------------------------------------------
Business Services - Miscellaneous -- 7.2%
- -----------------------------------------------------------------------
Diamond Technology Partners(1) 48,000 $ 3,102,000
Exodus Communications, Inc.(1) 15,000 1,290,000
Iron Mountain, Inc.(1) 50,000 1,512,500
On Assignment, Inc.(1) 49,000 1,408,750
Pegasus Communications Corp.(1) 70,000 2,992,500
Provant, Inc.(1) 73,000 1,286,625
Whittman-Hart, Inc.(1) 77,000 2,959,687
- -----------------------------------------------------------------------
$ 14,552,062
- -----------------------------------------------------------------------
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
Communications Equipment -- 3.7%
- -----------------------------------------------------------------------
Comverse Technology, Inc.(1) 19,000 $ 2,156,500
Ditech Communications Co. 18,000 1,581,750
Pinnacle Holdings, Inc. 57,000 1,368,000
Polycom, Inc. 10,000 500,000
Tekelec 63,000 799,312
Terayon Communications System 24,000 1,050,000
- -----------------------------------------------------------------------
$ 7,455,562
- -----------------------------------------------------------------------
Communications Services -- 0.5%
- -----------------------------------------------------------------------
Sportsline USA, Inc. 27,000 $ 970,312
- -----------------------------------------------------------------------
$ 970,312
- -----------------------------------------------------------------------
Computer Software -- 6.1%
- -----------------------------------------------------------------------
Breakaway Solutions, Inc. 600 $ 31,912
Brio Technology, Inc.(1) 80,000 1,940,000
Crossroads Systems, Inc. 600 42,675
Exchange Applications, Inc.(1) 21,000 572,250
Gadzoox Networks, Inc. 5,700 271,462
HNC Software, Inc.(1) 40,000 1,597,500
International Integration, Inc.(1) 39,000 2,520,375
Micros Systems, Inc. 25,000 1,157,032
National Computer System, Inc. 68,000 2,571,250
Smartdisk Corp. 17,000 931,812
Wind River Systems, Inc. 40,000 817,500
- -----------------------------------------------------------------------
$ 12,453,768
- -----------------------------------------------------------------------
Distribution -- 1.1%
- -----------------------------------------------------------------------
United Stationers(1) 88,000 $ 2,244,000
- -----------------------------------------------------------------------
$ 2,244,000
- -----------------------------------------------------------------------
Drugs -- 2.8%
- -----------------------------------------------------------------------
Human Genome Sciences, Inc.(1) 26,800 $ 2,341,650
Millennium Pharmaceuticals(1) 15,000 1,051,875
Sepracor, Inc.(1) 22,000 1,830,125
Vertex Pharmaceuticals, Inc.(1) 18,000 515,250
- -----------------------------------------------------------------------
$ 5,738,900
- -----------------------------------------------------------------------
Education -- 2.0%
- -----------------------------------------------------------------------
Apollo Group, Inc.(1) 25,500 $ 670,969
Career Education Corp.(1) 23,050 507,100
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
Education (continued)
- -----------------------------------------------------------------------
Devry, Inc.(1) 133,000 $ 2,801,312
- -----------------------------------------------------------------------
$ 3,979,381
- -----------------------------------------------------------------------
Electrical Equipment -- 2.1%
- -----------------------------------------------------------------------
Micrel, Inc.(1) 80,000 $ 4,350,000
- -----------------------------------------------------------------------
$ 4,350,000
- -----------------------------------------------------------------------
Electronics - Semiconductors -- 10.5%
- -----------------------------------------------------------------------
Applied Micro Circuits Corp.(1) 32,600 $ 2,536,687
Cognex Corp.(1) 47,000 1,407,062
Dallas Semiconductor Corp. 55,000 3,238,125
Dupont Photomasks, Inc. 50,000 2,475,000
Helix Technology Corp. 23,725 956,414
Microchip Technology, Inc.(1) 34,000 2,265,250
Millipore Corp. 35,000 1,115,625
PMC-Sierra, Inc.(1) 30,600 2,884,050
Qlogic Corp.(1) 25,000 2,603,125
Vitesse Semiconductor Corp.(1) 40,000 1,835,000
- -----------------------------------------------------------------------
$ 21,316,338
- -----------------------------------------------------------------------
Entertainment -- 2.0%
- -----------------------------------------------------------------------
Cinar Films, Inc., Class B(1) 25,000 $ 434,375
Mandalay Resort Group 55,000 1,024,375
Speedway Motorsports, Inc.(1) 60,000 2,617,500
- -----------------------------------------------------------------------
$ 4,076,250
- -----------------------------------------------------------------------
Financial - Specialty -- 0.5%
- -----------------------------------------------------------------------
Profit Recovery Group International 25,000 $ 1,029,688
- -----------------------------------------------------------------------
$ 1,029,688
- -----------------------------------------------------------------------
Foods -- 0.3%
- -----------------------------------------------------------------------
Lance, Inc. 45,272 $ 546,094
- -----------------------------------------------------------------------
$ 546,094
- -----------------------------------------------------------------------
Furniture and Appliances -- 1.3%
- -----------------------------------------------------------------------
Ethan Allen Interiors, Inc. 75,000 $ 2,667,188
- -----------------------------------------------------------------------
$ 2,667,188
- -----------------------------------------------------------------------
Health Care Services -- 1.1%
- -----------------------------------------------------------------------
Eclipsys Corp.(1) 50,000 $ 793,750
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
Health Care Services (continued)
- -----------------------------------------------------------------------
Resmed, Inc.(1) 43,900 $ 1,520,038
- -----------------------------------------------------------------------
$ 2,313,788
- -----------------------------------------------------------------------
Health Services -- 3.4%
- -----------------------------------------------------------------------
MedQuist, Inc.(1) 60,000 $ 1,920,000
MiniMed, Inc.(1) 33,000 2,501,813
Province Healthcare Co.(1) 53,000 854,625
Renal Care Group, Inc.(1) 85,000 1,583,125
- -----------------------------------------------------------------------
$ 6,859,563
- -----------------------------------------------------------------------
Information Services -- 13.8%
- -----------------------------------------------------------------------
Abacus Direct Corp.(1) 19,000 $ 2,783,500
Acxiom Corp.(1) 45,000 742,500
Affiliated Computer Services, Inc.,
Class A(1) 88,550 3,364,900
BISYS Group, Inc. (The)(1) 55,000 2,805,000
Brocade Communications Systems, Inc.(1) 6,000 1,614,000
Dendrite International(1) 83,000 2,604,125
Hooper Holmes, Inc. 24,000 645,000
IDX Systems Corp.(1) 55,000 1,003,750
Jupiter Communication 33,000 1,134,375
Marimba Software(1) 35,000 997,500
Phoenix Technology Ltd.(1) 25,000 287,500
Quotesmith.Com, Inc. 40,000 330,000
Remedy Corp.(1) 37,000 1,591,000
Sapient Corp.(1) 25,000 3,196,875
Scient Corp. 20,400 2,527,050
Veritas Software Corp.(1) 22,000 2,373,250
- -----------------------------------------------------------------------
$ 28,000,325
- -----------------------------------------------------------------------
Insurance -- 0.6%
- -----------------------------------------------------------------------
Reinsurance Group of America, Inc. 36,375 $ 1,209,469
- -----------------------------------------------------------------------
$ 1,209,469
- -----------------------------------------------------------------------
Investment Services -- 1.8%
- -----------------------------------------------------------------------
PIMCO Advisors Holdings L.P. 53,000 $ 1,838,438
Waddell & Reed Financial, Inc., Class A 80,000 1,920,000
- -----------------------------------------------------------------------
$ 3,758,438
- -----------------------------------------------------------------------
Medical Products -- 2.2%
- -----------------------------------------------------------------------
Haemonetics Corp.(1) 70,000 $ 1,308,125
Medical Manager Corp. 7,312 366,286
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
Medical Products (continued)
- -----------------------------------------------------------------------
Steris Corp.(1) 100,000 $ 1,331,250
Xomed Surgical Products, Inc.(1) 24,000 1,459,500
- -----------------------------------------------------------------------
$ 4,465,161
- -----------------------------------------------------------------------
Metals - Gold -- 0.0%
- -----------------------------------------------------------------------
Steppe Gold Resources, Ltd.(1)(2) 200,000 $ 0
- -----------------------------------------------------------------------
$ 0
- -----------------------------------------------------------------------
Metals - Industrial -- 0.4%
- -----------------------------------------------------------------------
AMT International Mining Corp.(1)(2) 817,200 $ 47,234
Formation Capital Corp.(1)(2) 400,000 87,040
Stillwater Mining Co.(1) 37,000 744,625
- -----------------------------------------------------------------------
$ 878,899
- -----------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 7.2%
- -----------------------------------------------------------------------
Cross Timbers Oil Co. 165,000 $ 1,835,625
Devon Energy Corp. 25,000 971,875
Louis Dreyfus Natural Gas(1) 95,000 1,900,000
Newfield Exploration Co.(1) 85,000 2,502,188
Noble Affiliates, Inc. 68,000 1,721,250
Nuevo Energy Co.(1) 100,000 1,418,750
Santa Fe Snyder Corp.(1) 54,650 471,356
Stone Energy Corp.(1) 33,000 1,604,625
Varco International, Inc.(1) 100,000 1,056,250
Vintage Petroleum, Inc. 100,000 1,087,500
- -----------------------------------------------------------------------
$ 14,569,419
- -----------------------------------------------------------------------
Publishing -- 1.2%
- -----------------------------------------------------------------------
Central Newspapers, Inc., Class A 55,000 $ 2,361,563
- -----------------------------------------------------------------------
$ 2,361,563
- -----------------------------------------------------------------------
Retail - Food and Drug -- 2.7%
- -----------------------------------------------------------------------
Applebees International, Inc. 77,000 $ 2,218,563
Sonic Corp.(1) 66,000 1,848,000
Wild Oats Markets, Inc.(1) 40,000 1,410,000
- -----------------------------------------------------------------------
$ 5,476,563
- -----------------------------------------------------------------------
Retail - Specialty and Apparel -- 3.3%
- -----------------------------------------------------------------------
1-800-Flowers.Com, Inc. 600 $ 7,725
American Eagle Outfitters 22,000 941,875
Bed Bath and Beyond, Inc.(1) 53,700 1,788,881
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
Retail - Specialty and Apparel (continued)
- -----------------------------------------------------------------------
Childrens Place(1) 12,000 $ 312,750
Cutter & Buck, Inc. 21,000 343,875
Emusic.Com, Inc. 22,000 301,125
O'Reilly Automotive, Inc.(1) 22,000 959,750
Talbots, Inc. 10,000 470,625
The Mens Wearhouse, Inc.(1) 73,000 1,601,438
- -----------------------------------------------------------------------
$ 6,728,044
- -----------------------------------------------------------------------
Semiconductor Equipment -- 0.6%
- -----------------------------------------------------------------------
PRI Automation, Inc.(1) 32,000 $ 1,284,000
- -----------------------------------------------------------------------
$ 1,284,000
- -----------------------------------------------------------------------
Software Services -- 6.5%
- -----------------------------------------------------------------------
Advent Software, Inc. 27,000 $ 1,623,375
Akamai Technologies 50 7,259
Art Technology Group, Inc. 700 37,800
Broadbase Software, Inc. 15,000 682,500
Commerce One, Inc. 8,000 1,370,000
Cysive, Inc. 14,000 805,875
Digital Island, Inc.(1) 21,000 1,417,500
E.Piphany, Inc. 12,000 1,032,000
E-Stamp Corp. 600 13,950
Great Plains Software, Inc.(1) 38,000 2,109,000
Peregrine Systems, Inc.(1) 68,000 2,983,500
Proxicom, Inc. 3,200 245,600
Verity, Inc. 9,000 619,875
Vitria Technology, Inc. 3,000 197,813
- -----------------------------------------------------------------------
$ 13,146,047
- -----------------------------------------------------------------------
Solid Waste -- 0.2%
- -----------------------------------------------------------------------
Casella Waste Systems, Inc., Class A(1) 25,000 $ 335,938
- -----------------------------------------------------------------------
$ 335,938
- -----------------------------------------------------------------------
Transportation -- 1.1%
- -----------------------------------------------------------------------
Swift Transportation Co., Inc.(1) 125,000 $ 2,179,688
- -----------------------------------------------------------------------
$ 2,179,688
- -----------------------------------------------------------------------
Total Common Stocks
(identified cost $142,563,623) $195,284,778
- -----------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<S> <C> <C>
PREFERRED STOCKS -- 0.0%
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
Metals - Gold -- 0.0%
- -----------------------------------------------------------------------
Ashanti Goldfields Co., Ltd., Class C(4) 8,889 $ 0
Ashanti Goldfields Co., Ltd., Class D(4) 8,889 0
Ashanti Goldfields Co., Ltd., Class E(4) 8,889 0
- -----------------------------------------------------------------------
$ 0
- -----------------------------------------------------------------------
Total Preferred Stocks
(identified cost $0) $ 0
- -----------------------------------------------------------------------
PRIVATE PLACEMENTS AND SPECIAL WARRANTS -- 0.2%
Metals - Gold -- 0.2%
- -----------------------------------------------------------------------
Nevada Pacific Mining Co.(1)(3)(4) 80,000 $ 56,000
Quincunx Gold Exploration(2)(4) 300,000 57,096
Western Exploration and Development,
Ltd.(1)(4) 600,000 336,000
- -----------------------------------------------------------------------
$ 449,096
- -----------------------------------------------------------------------
Total Private Placements and Special Warrants
(identified cost $679,988) $ 449,096
- -----------------------------------------------------------------------
COMMERCIAL PAPER -- 1.4%
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
Associates Corporation of North America,
5.32%, 11/1/99 $ 2,779 $ 2,779,000
- -----------------------------------------------------------------------
Total Commercial Paper
(at amortized cost $2,779,000) $ 2,779,000
- -----------------------------------------------------------------------
Total Investments -- 97.8%
(identified cost $146,022,611) $198,512,874
- -----------------------------------------------------------------------
Other Assets, Less Liabilities -- 2.2% $ 4,440,651
- -----------------------------------------------------------------------
Net Assets -- 100.0% $202,953,525
- -----------------------------------------------------------------------
</TABLE>
(1) Non-income producing security.
(2) Foreign security.
(3) Restricted security.
(4) Security valued at fair value using methods determined in good faith by or
at the direction of the Trustees.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
EATON VANCE TAX-MANAGED EMERGING 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, $146,022,611) $198,512,874
Cash 1,966
Receivable for investments sold 4,602,393
Receivable for Fund shares sold 1,511,310
Dividends receivable 13,448
Tax reclaim receivable 105
Deferred organization expenses 5,267
- ------------------------------------------------------
TOTAL ASSETS $204,647,363
- ------------------------------------------------------
Liabilities
- ------------------------------------------------------
Payable for investments purchased $ 1,358,032
Payable for Fund shares redeemed 220,319
Payable to affiliate for Trustees' fees 3,814
Accrued expenses 111,673
- ------------------------------------------------------
TOTAL LIABILITIES $ 1,693,838
- ------------------------------------------------------
NET ASSETS $202,953,525
- ------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------
Paid-in capital $161,954,874
Accumulated net realized loss (computed
on the basis of identified cost) (11,491,612)
Net unrealized appreciation (computed on
the basis of identified cost) 52,490,263
- ------------------------------------------------------
TOTAL $202,953,525
- ------------------------------------------------------
Class A Shares
- ------------------------------------------------------
NET ASSETS $ 57,518,104
SHARES OUTSTANDING 4,386,754
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 13.11
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 94.25 of $13.11) $ 13.91
- ------------------------------------------------------
Class B Shares
- ------------------------------------------------------
NET ASSETS $105,948,520
SHARES OUTSTANDING 8,206,703
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 12.91
- ------------------------------------------------------
Class C Shares
- ------------------------------------------------------
NET ASSETS $ 39,486,901
SHARES OUTSTANDING 3,069,816
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 12.86
- ------------------------------------------------------
</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 $ 424,145
Interest 296,280
- -----------------------------------------------------
TOTAL INVESTMENT INCOME $ 720,425
- -----------------------------------------------------
Expenses
- -----------------------------------------------------
Investment adviser fee $ 932,128
Trustees fees and expenses 14,406
Distribution and service fees
Class A 34,198
Class B 681,894
Class C 282,441
Transfer and dividend disbursing agent
fees 181,536
Custodian fee 138,978
Registration fees 98,315
Printing and postage 22,164
Legal and accounting services 20,936
Amortization of organization expenses 2,631
Miscellaneous 8,854
- -----------------------------------------------------
TOTAL EXPENSES $ 2,418,481
- -----------------------------------------------------
NET INVESTMENT LOSS $(1,698,056)
- -----------------------------------------------------
Realized and Unrealized Gain (Loss)
- -----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ (451,901)
Foreign currency transactions 1,398
- -----------------------------------------------------
NET REALIZED LOSS $ (450,503)
- -----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $49,500,381
- -----------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $49,500,381
- -----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $49,049,878
- -----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $47,351,822
- -----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Increase (Decrease) YEAR ENDED YEAR ENDED
IN NET ASSETS OCTOBER 31, 1999 OCTOBER 31, 1998
<S> <C> <C>
- ----------------------------------------------------------------------------
From operations --
Net investment loss $ (1,698,056) $ (757,914)
Net realized loss (450,503) (10,966,248)
Net change in unrealized
appreciation (depreciation) 49,500,381 3,443,625
- ----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 47,351,822 $ (8,280,537)
- ----------------------------------------------------------------------------
Transactions in shares of beneficial
interest
Proceeds from sale of shares
Class A $ 27,988,976 $ 31,916,155
Class B 37,931,704 55,874,763
Class C 18,010,905 21,292,030
Issued in reorganization of Eaton
Vance Worldwide Developing
Resources Fund
Class A 147,201 --
Class B 4,338,847 --
Cost of shares redeemed
Class A (12,227,473) (5,597,177)
Class B (13,801,410) (7,461,062)
Class C (5,918,511) (3,200,764)
- ----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS $ 56,470,239 $ 92,823,945
- ----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 103,822,061 $ 84,543,408
- ----------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------
At beginning of year $ 99,131,464 $ 14,588,056
- ----------------------------------------------------------------------------
AT END OF YEAR $ 202,953,525 $ 99,131,464
- ----------------------------------------------------------------------------
Accumulated net
investment income
included in net assets
- ----------------------------------------------------------------------------
AT END OF YEAR $ -- $ --
- ----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
-----------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------
1999 1998 1997(1)
<S> <C> <C> <C>
- ---------------------------------------------------------------------
Net asset value -- Beginning
of year $ 9.460 $ 9.740 $10.000
- ---------------------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------------------
Net investment income (loss) $(0.053) $(0.040) $ 0.008
Net realized and unrealized
gain (loss) 3.703 (0.240) (0.268)
- ---------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 3.650 $(0.280) $(0.260)
- ---------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $13.110 $ 9.460 $ 9.740
- ---------------------------------------------------------------------
TOTAL RETURN(2) 38.58% (2.87)% (2.60)%
- ---------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------
Net assets, end of year
(000's omitted) $57,518 $28,035 $ 3,925
Ratios (As a percentage of
average daily net assets):
Expenses 1.04% 1.21% 0.63%(3)
Net investment income
(loss) (0.55)% (0.57)% 1.83%(3)
Portfolio Turnover 80% 110% 7%
- ---------------------------------------------------------------------
</TABLE>
(1) For the period from the start of business, September 25, 1997, to
October 31, 1997.
(2) 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.
(3) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
-----------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------
1999 1998 1997(1)
<S> <C> <C> <C>
- ---------------------------------------------------------------------
Net asset value -- Beginning
of year $ 9.390 $ 9.740 $10.000
- ---------------------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------------------
Net investment income (loss) $ (0.128) $(0.090) $ 0.005
Net realized and unrealized
gain (loss) 3.648 (0.260) (0.265)
- ---------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 3.520 $(0.350) $(0.260)
- ---------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 12.910 $ 9.390 $ 9.740
- ---------------------------------------------------------------------
TOTAL RETURN(2) 37.49% (3.59)% (2.60)%
- ---------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------
Net assets, end of year
(000's omitted) $105,949 $52,641 $ 8,613
Ratios (As a percentage of
average daily net assets):
Expenses 1.81% 2.04% 1.37%(3)
Net investment income
(loss) (1.33)% (1.41)% 1.13%(3)
Portfolio Turnover 80% 110% 7%
- ---------------------------------------------------------------------
</TABLE>
(1) For the period from the commencement of offering of Class B shares,
September 29, 1997, to October 31, 1997.
(2) 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.
(3) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
-----------------------------------
YEAR ENDED OCTOBER 31,
-----------------------------------
1999 1998 1997(1)
<S> <C> <C> <C>
- ---------------------------------------------------------------------
Net asset value -- Beginning
of year $ 9.370 $ 9.720 $10.000
- ---------------------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------------------
Net investment income (loss) $(0.135) $(0.092) $ 0.003
Net realized and unrealized
gain (loss) 3.625 (0.258) (0.283)
- ---------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 3.490 $(0.350) $(0.280)
- ---------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $12.860 $ 9.370 $ 9.720
- ---------------------------------------------------------------------
TOTAL RETURN(2) 37.25% (3.60)% (2.80)%
- ---------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------
Net assets, end of year
(000's omitted) $39,487 $18,455 $ 2,051
Ratios (As a percentage of
average daily net assets):
Expenses 1.95% 2.21% 1.56%(3)
Net investment income
(loss) (1.47)% (1.58)% 0.90%(3)
Portfolio Turnover 80% 110% 7%
- ---------------------------------------------------------------------
</TABLE>
(1) For the period from the commencement of offering of Class C shares,
September 29, 1997, to October 31, 1997.
(2) 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.
(3) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
- -------------------------------------------
Eaton Vance Tax-Managed Emerging Growth Fund (the Fund) is registered under
the Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Fund, which is a series of Eaton Vance
Mutual 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 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 7). 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 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, 1999, the Fund, for federal
income tax purposes, had a capital loss carryover of $10,920,013 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,
2007 ($122,804), 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 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 Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization are being amortized on the straight-line basis over
five years.
F 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
16
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
statements and the reported amounts of revenue and expense during the
reporting period. Actual results could differ from those estimates.
G Other -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income is recorded on the
ex-dividend date. However, if the ex-dividend date has passed, certain
dividends from foreign securities are recorded as the Fund is informed of the
ex-dividend date. Interest income is recorded on the accrual basis.
2 Distributions to Shareholders
- -------------------------------------------
It is the present policy of the Fund to make (a) at least one distribution
annually (normally in December) of all or substantially all of the net
investment income and (b) at least one distribution annually of all or
substantially all of the net realized capital gains (reduced by any available
capital loss carryforwards from prior years). Income dividends are declared
separately for each class of shares. Shareholders may reinvest all
distributions in shares of the Fund without a sales charge at the net asset
value per share as of the close of business on the ex-date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be reported in the
financial statements as a return of capital. Differences in the recognition
or classification of income between the financial statements and tax earnings
and profits which result in temporary over distributions for financial
statement purposes only are classified as distributions in excess of net
investment income or accumulated net realized gains. Permanent differences
between book and tax accounting relating to distributions are reclassified to
paid-in capital.
During the year ended October 31, 1999, the Fund reclassified amounts to
reflect a decrease in accumulated net investment loss and paid-in capital of
$1,698,056 due to permanent differences between book and tax accounting for
operating losses. Additionally, $1,398 was reclassified to paid-in capital
from accumulated net realized loss due to permanent differences between book
and tax accounting for capital losses. Net investment loss, net realized loss
on investment transactions 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, 1999, the fee amounted to $932,128.
The Fund was informed that Eaton Vance Distributors, Inc. (EVD), a subsidiary
of EVM and the Fund's principal underwriter, received $89,138 as its portion
of the sales charge on sales of Class A shares for the year ended
October 31, 1999.
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 the 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, 1999, no significant
amounts have been deferred. Certain officers and Trustees of the Fund are
officers of the above organizations.
4 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 $141,594,210
------------------------------------------------------
Gross unrealized appreciation $ 57,802,857
Gross unrealized depreciation (5,884,193)
------------------------------------------------------
NET UNREALIZED APPRECIATION $ 51,918,664
------------------------------------------------------
</TABLE>
17
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
5 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
<S> <C> <C>
-----------------------------------------------------------------
Issued in Reorganization of Eaton Vance
Worldwide Developing Resources Fund 14,140 --
Sales 2,514,498 3,136,112
Redemptions (1,105,997) (574,893)
-----------------------------------------------------------------
NET INCREASE 1,422,641 2,561,219
-----------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------
CLASS B 1999 1998
<S> <C> <C>
-----------------------------------------------------------------
Issued in Reorganization of Eaton Vance
Worldwide Developing Resources Fund 420,838 --
Sales 3,449,811 5,475,478
Redemptions (1,272,063) (751,650)
-----------------------------------------------------------------
NET INCREASE 2,598,586 4,723,828
-----------------------------------------------------------------
<CAPTION>
YEAR ENDED OCTOBER 31,
-----------------------
CLASS C 1999 1998
<S> <C> <C>
-----------------------------------------------------------------
Sales 1,646,502 2,095,183
Redemptions (546,560) (336,223)
-----------------------------------------------------------------
NET INCREASE 1,099,942 1,758,960
-----------------------------------------------------------------
</TABLE>
6 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 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 7) and daily amounts theretofore paid to EVD by each respective class.
The Fund paid or accrued $593,458 and $211,924, for Class B and C shares,
respectively, to or payable to EVD for the year ended October 31, 1999,
representing 0.75% of 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 $3,904,000 and $2,183,000 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 Trust 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 fees paid or accrued for the year ended October 31, 1999
amounted to $34,198, $88,436 and $70,517 for Class A, Class B and Class C
shares, respectively.
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 contingent deferred sales
charge (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 date of redemption or date of purchase.
18
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
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 or clients and may be waived under certain
other limited conditions. 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 $258,000 and $14,000 of CDSC paid by
shareholders of Class B and Class C shares, respectively, during the year
ended October 31, 1999.
8 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.
9 Investment Transactions
- -------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $166,454,290 and $114,873,676, respectively, for the year ended
October 31, 1999.
10 Fund Reorganization
- -------------------------------------------
Effective December 18, 1998, the Fund acquired the net assets of Eaton Vance
Worldwide Developing Resources Fund, pursuant to an Agreement and Plan of
Reorganization dated October 19, 1998. In accordance with the agreement, the
Fund, at closing, issued shares as follows:
<TABLE>
<CAPTION>
NET ASSET
SHARES AGGREGATE VALUE VALUE
CLASS ISSUED OF SHARES ISSUED PER SHARE
<S> <C> <C> <C>
----------------------------------------------
Class A 14,140 $ 147,201 $10.41
Class B 420,838 $4,338,847 $10.31
</TABLE>
The net assets acquired, including unrealized net depreciation at the date of
the transaction, were as follows:
<TABLE>
<CAPTION>
ACQUIRED NET UNREALIZED
FUND ASSETS DEPRECIATION
<S> <C> <C>
--------------------------------------------------------------------
Eaton Vance Worldwide Developing
Resources $4,486,048 $182,370
</TABLE>
Directly after the merger, the combined net assets of the Fund was
$124,064,338. The net asset value of each class was $10.41 and $10.31 for
Class A and Class B, respectively.
11 Restricted Securities
- -------------------------------------------
At October 31, 1999, the Fund owned the following securities (representing
0.03% of net assets) which were restricted as to public resale and not
registered under the Securities Act of 1933 (excluding Rule 144A securities).
The Fund has various registration rights (exercisable under a variety of
circumstances) with respect to these securities. The fair value of these
securities is determined based on valuations provided by brokers when
available, or if not available, they are valued at fair value using methods
determined in good faith by or at the direction of the Trustees.
<TABLE>
<CAPTION>
DATE OF
DESCRIPTION ACQUISITION SHARES/FACE COST FAIR VALUE
<S> <C> <C> <C> <C>
---------------------------------------------------------------------------------------
PRIVATE PLACEMENTS AND SPECIAL WARRANTS
---------------------------------------------------------------------------------------
Nevada Pacific Mining Co. 12/21/98 80,000 $80,000 $ 56,000
</TABLE>
19
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
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, 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 the years ended
October 31, 1999 and 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, 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 present
fairly, in all material respects, the financial position of Eaton Vance
Tax-Managed Emerging Growth Fund at October 31, 1999, 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
20
<PAGE>
EATON VANCE TAX-MANAGED EMERGING GROWTH FUND AS OF OCTOBER 31, 1999
INVESTMENT MANAGEMENT
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
21
<PAGE>
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<PAGE>
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<PAGE>
INVESTMENT ADVISER AND ADMINISTRATOR OF
EATON VANCE TAX-MANAGED EMERGING 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 EMERGING 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.
- --------------------------------------------------------------------------------
130-10/99 MGSRC-10/99
