UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number | 811-10389 | ||||||
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Tax-Managed International Equity Portfolio | |||||||
(Exact Name of registrant as Specified in Charter) | |||||||
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The Eaton Vance Building, 255 State Street, Boston, Massachusetts |
| 02109 | |||||
(Address of Principal Executive Offices) |
| (Zip code) | |||||
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Maureen A. Gemma The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109 | |||||||
(Name and Address of Agent for Services) | |||||||
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Registrant’s telephone number, including area code: | (617) 482-8260 |
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Date of Fiscal Year End | October 31 |
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Date of Reporting Period | October 31, 2008 |
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Item 1. Reports to Stockholders
Tax-Managed International Equity Portfolio as of October 31, 2008
PORTFOLIO OF INVESTMENTS
| Common Stocks — 94.0% | |||||||||||
| Security | Shares | Value | |||||||||
| Automobiles — 2.6% | |||||||||||
| Honda Motor Co., Ltd. | 116,000 | $ | 2,884,386 | ||||||||
| Toyota Motor Corp. | 79,700 | 3,112,358 | |||||||||
| $ | 5,996,744 | ||||||||||
| Beverages — 7.8% | |||||||||||
| Diageo PLC | 607,000 | $ | 9,263,140 | ||||||||
| Fomento Economico Mexicano SA de C.V. ADR | 173,400 | 4,385,286 | |||||||||
| Foster's Group, Ltd. | 685,000 | 2,618,615 | |||||||||
| Heineken Holding N.V. | 45,000 | 1,366,131 | |||||||||
| $ | 17,633,172 | ||||||||||
| Capital Markets — 0.8% | |||||||||||
| Invesco, Ltd. | 115,000 | $ | 1,714,650 | ||||||||
| $ | 1,714,650 | ||||||||||
| Chemicals — 1.8% | |||||||||||
| Agrium, Inc. | 75,000 | $ | 2,848,500 | ||||||||
| BASF AG | 40,000 | 1,320,546 | |||||||||
| $ | 4,169,046 | ||||||||||
| Commercial Banks — 9.3% | |||||||||||
| Banco Bilbao Vizcaya Argentaria SA | 116,700 | $ | 1,354,457 | ||||||||
| Banco Santander Central Hispano SA | 575,000 | 6,218,716 | |||||||||
| Barclays PLC | 306,800 | 879,468 | |||||||||
| BNP Paribas SA | 26,500 | 1,913,335 | |||||||||
| BOC Hong Kong Holdings, Ltd. | 1,600,000 | 1,831,889 | |||||||||
| DBS Group Holdings, Ltd. | 400,000 | 3,053,398 | |||||||||
| Grupo Financiero Banorte SAB de C.V. | 500,000 | 915,873 | |||||||||
| Mitsubishi UFJ Financial Group, Inc. | 769,000 | 4,832,529 | |||||||||
| $ | 20,999,665 | ||||||||||
| Communications Equipment — 1.0% | |||||||||||
| Nokia Oyj | 150,000 | $ | 2,297,729 | ||||||||
| $ | 2,297,729 | ||||||||||
| Construction & Engineering — 1.3% | |||||||||||
| Bouygues SA | 35,000 | $ | 1,490,310 | ||||||||
| Vinci SA | 38,000 | 1,367,519 | |||||||||
| $ | 2,857,829 | ||||||||||
| Security | Shares | Value | |||||||||
| Diversified Financial Services — 1.3% | |||||||||||
| ING Groep N.V. | 310,439 | $ | 2,912,027 | ||||||||
| $ | 2,912,027 | ||||||||||
| Diversified Telecommunication Services — 8.7% | |||||||||||
| Deutsche Telekom AG | 155,000 | $ | 2,274,014 | ||||||||
| France Telecom SA ADR | 300,000 | 7,596,000 | |||||||||
| Koninklijke KPN N.V. | 400,000 | 5,633,277 | |||||||||
| Telefonica SA | 230,000 | 4,258,436 | |||||||||
| $ | 19,761,727 | ||||||||||
| Electric Utilities — 3.1% | |||||||||||
| E.ON AG | 58,020 | $ | 2,174,290 | ||||||||
| E.ON AG ADR | 51,350 | 1,951,300 | |||||||||
| Scottish and Southern Energy PLC | 145,000 | 2,842,251 | |||||||||
| $ | 6,967,841 | ||||||||||
| Electrical Equipment — 1.5% | |||||||||||
| ABB, Ltd. ADR | 255,000 | $ | 3,353,250 | ||||||||
| $ | 3,353,250 | ||||||||||
| Energy Equipment & Services — 1.9% | |||||||||||
| Acergy SA | 300,000 | $ | 2,028,758 | ||||||||
| Fred Olsen Energy ASA | 70,000 | 2,314,250 | |||||||||
| $ | 4,343,008 | ||||||||||
| Food Products — 5.1% | |||||||||||
| Nestle SA | 240,000 | $ | 9,332,878 | ||||||||
| Unilever PLC | 99,000 | 2,224,119 | |||||||||
| $ | 11,556,997 | ||||||||||
| Health Care Providers & Services — 1.0% | |||||||||||
| Fresenius Medical Care AG & Co. KGaA | 52,000 | $ | 2,303,735 | ||||||||
| $ | 2,303,735 | ||||||||||
| Industrial Conglomerates — 1.4% | |||||||||||
| Keppel Corp., Ltd. | 990,000 | $ | 3,086,515 | ||||||||
| $ | 3,086,515 | ||||||||||
| Insurance — 3.9% | |||||||||||
| Aviva PLC | 156,700 | $ | 934,718 | ||||||||
| AXA SA | 152,900 | 2,921,008 | |||||||||
See notes to financial statements
18
Tax-Managed International Equity Portfolio as of October 31, 2008
PORTFOLIO OF INVESTMENTS CONT'D
| Security | Shares | Value | |||||||||
| Insurance (continued) | |||||||||||
| Muenchener Rueckversicherungs-Gesellschaft AG | 21,000 | $ | 2,726,212 | ||||||||
| Tokio Marine Holdings, Inc. | 75,400 | 2,325,780 | |||||||||
| $ | 8,907,718 | ||||||||||
| Machinery — 2.0% | |||||||||||
| Atlas Copco AB, Class B | 286,000 | $ | 2,141,094 | ||||||||
| Komatsu, Ltd. | 160,000 | 1,758,987 | |||||||||
| Vallourec SA | 6,300 | 704,711 | |||||||||
| $ | 4,604,792 | ||||||||||
| Metals & Mining — 4.2% | |||||||||||
| Anglo American PLC ADR | 127,400 | $ | 1,598,870 | ||||||||
| Companhia Vale do Rio Doce ADR | 217,500 | 2,546,925 | |||||||||
| Rio Tinto, Ltd. | 74,400 | 3,848,925 | |||||||||
| Silver Wheaton Corp.(1) | 435,000 | 1,566,000 | |||||||||
| $ | 9,560,720 | ||||||||||
| Multi-Utilities — 4.7% | |||||||||||
| National Grid PLC | 390,000 | $ | 4,393,399 | ||||||||
| RWE AG | 58,000 | 4,754,896 | |||||||||
| Veolia Environnement | 63,400 | 1,571,154 | |||||||||
| $ | 10,719,449 | ||||||||||
| Oil, Gas & Consumable Fuels — 6.9% | |||||||||||
| Addax Petroleum Corp. | 46,600 | $ | 695,926 | ||||||||
| ENI SpA | 75,000 | 1,790,111 | |||||||||
| Petroleo Brasileiro SA ADR | 183,000 | 4,038,810 | |||||||||
| StatoilHydro ASA | 107,720 | 2,166,639 | |||||||||
| Total SA | 128,000 | 7,041,720 | |||||||||
| $ | 15,733,206 | ||||||||||
| Pharmaceuticals — 11.9% | |||||||||||
| AstraZeneca PLC ADR | 129,000 | $ | 5,477,340 | ||||||||
| Novartis AG | 209,500 | 10,633,804 | |||||||||
| Roche Holding AG | 24,400 | 3,731,415 | |||||||||
| Sanofi-Aventis | 88,800 | 5,672,792 | |||||||||
| Shionogi & Co., Ltd. | 94,000 | 1,599,847 | |||||||||
| $ | 27,115,198 | ||||||||||
| Security | Shares | Value | |||||||||
| Software — 3.4% | |||||||||||
| Nintendo Co., Ltd. | 24,000 | $ | 7,711,399 | ||||||||
| $ | 7,711,399 | ||||||||||
| Tobacco — 3.1% | |||||||||||
| British American Tobacco PLC | 253,000 | $ | 6,939,620 | ||||||||
| $ | 6,939,620 | ||||||||||
| Trading Companies & Distributors — 2.4% | |||||||||||
| Mitsubishi Corp. | 330,000 | $ | 5,531,411 | ||||||||
| $ | 5,531,411 | ||||||||||
| Wireless Telecommunication Services — 2.9% | |||||||||||
| Turkcell Iletisim Hizmetleri AS ADR | 395,000 | $ | 4,846,650 | ||||||||
| Vodafone Group PLC ADR | 95,000 | 1,830,650 | |||||||||
| $ | 6,677,300 | ||||||||||
| Total Common Stocks (identified cost $259,923,955) | $ | 213,454,748 | |||||||||
| Short-Term Investments — 6.5% | |||||||||||
| Description | Interest (000's omitted) | Value | |||||||||
| Cash Management Portfolio, 1.90%(2) | $ | 14,692 | $ | 14,691,697 | |||||||
| Total Short-Term Investments (identified cost $14,691,697) | $ | 14,691,697 | |||||||||
| Total Investments — 100.5% (identified cost $274,615,652) | $ | 228,146,445 | |||||||||
| Other Assets, Less Liabilities — (0.5)% | $ | (1,166,588 | ) | ||||||||
| Net Assets — 100.0% | $ | 226,979,857 | |||||||||
ADR - American Depository Receipt
(1) Non-income producing security.
(2) Affiliated investment company available to Eaton Vance portfolios and funds which invests in high quality, U.S. dollar denominated money market instruments. The rate shown is the annualized seven-day yield as of October 31, 2008.
See notes to financial statements
19
Tax-Managed International Equity Portfolio as of October 31, 2008
PORTFOLIO OF INVESTMENTS CONT'D
| Country Concentration of Portfolio | |||||||||||
| Country | Percentage of Net Assets | Value | |||||||||
| United Kingdom | 16.0 | % | $ | 36,383,576 | |||||||
| France | 13.3 | 30,278,549 | |||||||||
| Japan | 13.1 | 29,756,697 | |||||||||
| Switzerland | 11.9 | 27,051,347 | |||||||||
| Germany | 7.7 | 17,504,992 | |||||||||
| United States | 6.5 | 14,691,697 | |||||||||
| Spain | 5.2 | 11,831,609 | |||||||||
| Netherlands | 4.4 | 9,911,435 | |||||||||
| Brazil | 2.9 | 6,585,735 | |||||||||
| Norway | 2.9 | 6,509,647 | |||||||||
| Australia | 2.9 | 6,467,540 | |||||||||
| Singapore | 2.7 | 6,139,913 | |||||||||
| Canada | 2.3 | 5,110,426 | |||||||||
| Mexico | 2.3 | 5,301,159 | |||||||||
| Turkey | 2.1 | 4,846,650 | |||||||||
| Finland | 1.0 | 2,297,729 | |||||||||
| Sweden | 0.9 | 2,141,094 | |||||||||
| Bermuda | 0.8 | 1,714,650 | |||||||||
| Hong Kong | 0.8 | 1,831,889 | |||||||||
| Italy | 0.8 | 1,790,111 | |||||||||
| Total Investments | 100.5 | % | $ | 228,146,445 | |||||||
See notes to financial statements
20
Tax-Managed International Equity Portfolio as of October 31, 2008
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of October 31, 2008
| Assets | |||||||
| Unaffiliated investments, at value (identified cost, $259,923,955) | $ | 213,454,748 | |||||
| Affiliated investment, at value (identified cost, $14,691,697) | 14,691,697 | ||||||
| Receivable for investments sold | 713,490 | ||||||
| Dividends receivable | 569,521 | ||||||
| Interest receivable from affiliated investment | 12,894 | ||||||
| Tax reclaims receivable | 384,441 | ||||||
| Total assets | $ | 229,826,791 | |||||
| Liabilities | |||||||
| Payable for investments purchased | $ | 2,529,137 | |||||
| Payable to affiliate for investment adviser fee | 197,485 | ||||||
| Payable to affiliate for Trustees' fees | 958 | ||||||
| Accrued expenses | 119,354 | ||||||
| Total liabilities | $ | 2,846,934 | |||||
| Net Assets applicable to investors' interest in Portfolio | $ | 226,979,857 | |||||
| Sources of Net Assets | |||||||
| Net proceeds from capital contributions and withdrawals | $ | 273,464,455 | |||||
| Net unrealized depreciation (computed on the basis of identified cost) | (46,484,598 | ) | |||||
| Total | $ | 226,979,857 | |||||
Statement of Operations
For the Year Ended
October 31, 2008
| Investment Income | |||||||
| Dividends (net of foreign taxes, $1,233,004) | $ | 11,214,846 | |||||
| Interest | 232 | ||||||
| Interest income allocated from affiliated investment | 317,552 | ||||||
| Expenses allocated from affiliated investment | (47,150 | ) | |||||
| Total investment income | $ | 11,485,480 | |||||
| Expenses | |||||||
| Investment adviser fee | $ | 3,595,302 | |||||
| Trustees' fees and expenses | 14,320 | ||||||
| Custodian fee | 264,411 | ||||||
| Legal and accounting services | 36,229 | ||||||
| Miscellaneous | 10,535 | ||||||
| Total expenses | $ | 3,920,797 | |||||
| Net investment income | $ | 7,564,683 | |||||
| Realized and Unrealized Gain (Loss) | |||||||
| Net realized gain (loss) — Investment transactions (identified cost basis), net of foreign taxes of $12,921 | $ | (16,982,862 | ) | ||||
| Foreign currency transactions | (1,019,765 | ) | |||||
| Net realized loss | $ | (18,002,627 | ) | ||||
| Change in unrealized appreciation (depreciation) — Investments (identified cost basis) | $ | (205,765,361 | ) | ||||
| Foreign currency | (52,450 | ) | |||||
| Net change in unrealized appreciation (depreciation) | $ | (205,817,811 | ) | ||||
| Net realized and unrealized loss | $ | (223,820,438 | ) | ||||
| Net decrease in net assets from operations | $ | (216,255,755 | ) | ||||
See notes to financial statements
21
Tax-Managed International Equity Portfolio as of October 31, 2008
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
| Increase (Decrease) in Net Assets | Year Ended October 31, 2008 | Year Ended October 31, 2007 | |||||||||
| From operations — Net investment income | $ | 7,564,683 | $ | 7,582,579 | |||||||
| Net realized gain (loss) from investment and foreign currency transactions | (18,002,627 | ) | 11,749,773 | ||||||||
| Net change in unrealized appreciation (depreciation) from investments and foreign currency | (205,817,811 | ) | 80,205,125 | ||||||||
| Net increase (decrease) in net assets from operations | $ | (216,255,755 | ) | $ | 99,537,477 | ||||||
| Capital transactions — Contributions | $ | 112,879,082 | $ | 88,908,570 | |||||||
| Withdrawals | (61,316,483 | ) | (25,049,824 | ) | |||||||
| Net increase in net assets from capital transactions | $ | 51,562,599 | $ | 63,858,746 | |||||||
| Net increase (decrease) in net assets | $ | (164,693,156 | ) | $ | 163,396,223 | ||||||
| Net Assets | |||||||||||
| At beginning of year | $ | 391,673,013 | $ | 228,276,790 | |||||||
| At end of year | $ | 226,979,857 | $ | 391,673,013 | |||||||
See notes to financial statements
22
Tax-Managed International Equity Portfolio as of October 31, 2008
FINANCIAL STATEMENTS CONT'D
Supplementary Data
| Year Ended October 31, | |||||||||||||||||||||||
| 2008 | 2007 | 2006 | 2005 | 2004 | |||||||||||||||||||
| Ratios/Supplemental Data | |||||||||||||||||||||||
| Ratios (As a percentage of average daily net assets): | |||||||||||||||||||||||
| Expenses before custodian fee reduction(1) | 1.09 | % | 1.10 | % | 1.12 | % | 1.16 | % | 1.21 | % | |||||||||||||
| Net investment income | 2.08 | % | 2.51 | %(2) | 1.38 | % | 1.42 | % | 1.24 | % | |||||||||||||
| Portfolio Turnover | 34 | % | 23 | % | 25 | % | 39 | % | 62 | % | |||||||||||||
| Total Return | (48.82 | )% | 36.97 | % | 29.54 | % | 23.36 | % | 15.04 | % | |||||||||||||
| Net assets, end of year (000's omitted) | $ | 226,980 | $ | 391,673 | $ | 228,277 | $ | 151,601 | $ | 132,015 | |||||||||||||
(1) Excludes the effect of custody fee credits, if any, of less than 0.005%.
(2) Includes a dividend resulting from a corporate action equal to 0.96% of average daily net assets.
See notes to financial statements
23
Tax-Managed International Equity Portfolio as of October 31, 2008
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
Tax-Managed International Equity Portfolio (the Portfolio) is a New York trust registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified, open-end management investment company. The Portfolio's investment objective is to achieve 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 Portfolio. At October 31, 2008, Eaton Vance Tax-Managed International Equity Fund and Eaton Vance Tax-Managed Equity Asset Allocation Fund held an interest of 58.1% and 41.8%, respectively, in the Portfolio.
The following is a summary of significant accounting policies of the Portfolio. The policies are in conformity with accounting principles generally accepted in the United States of America.
A Investment Valuation — Equity securities listed on a U.S. securities exchange generally are valued at the last sale price on the day of valuation or, if no sales took place on such date, at the mean between the closing bid and asked prices therefore on the exchange where such securities are principally traded. Equity securities listed on the NASDAQ Global or Global Select Market generally are valued at the NASDAQ official closing price. Unlisted or listed securities for which closing sales prices or closing quotations are not available are valued at the mean between the latest available bid and asked prices or, in the case of preferred equity securities that are not listed or traded in the over-the- counter market, by an independent pricing service. Short-term debt securities with a remaining maturity of sixty days or less are valued at amortized cost, which approximates market value. If short-term debt securities are acquired with a remaining maturity of more than sixty days, they will be valued by a pricing service. The daily valuation of exchange-traded foreign securities generally is determined as of the close of trading on the principal exchange on which such securities trade. Events occurring after the close of trading on foreign exchanges may result in adjustments to the valuation of foreign securities to more accurately reflect their fair value as of the close of regular trading on the New York Stock Exchange. When valuing foreign equity securities that meet certain criteria, the Trustees have approved the use of a fair value service that values such securities to reflect market trading that occurs after the close of the applicable foreign markets of comparable securities or other instruments th at have a strong correlation to the fair-valued securities. Forward foreign currency exchange contracts are generally valued using prices supplied by a pricing vendor or dealers. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by an independent quotation service. The independent service uses a proprietary model to determine the exchange rate. Inputs to the model include reported trades and implied bid/ask spreads. Investments for which valuations or market quotations are not readily available are valued at fair value using methods determined in good faith by or at the direction of the Trustees of the Portfolio considering relevant factors, data and information including the market value of freely tradable securities of the same class in the principal market on which such securities are normally traded.
The Portfolio may invest in Cash Management Portfolio (Cash Management), an affiliated investment company managed by Boston Management and Research (BMR), a subsidiary of Eaton Vance Management (EVM). Cash Management values its investment securities utilizing the amortized cost valuation technique permitted by Rule 2a-7 of the 1940 Act, pursuant to which Cash Management must comply with certain conditions. This technique involves initially valuing a portfolio security at its cost and thereafter assuming a constant amortization to maturity of any discount or premium. If amortized cost is determined not to approximate fair value, Cash Management may value its investment securities based on available market quotations provided by a pricing service.
B Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on investments sold are determined on the basis of identified cost.
C 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 Portfolio is informed of the ex-dividend date. Withholding taxes on foreign dividends and capital gains have been provided for in accordance with the Portfolio's understanding of the applicable countries' tax rules and rates. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount.
D Federal Taxes — The Portfolio has elected to be treated as a partnership for federal tax purposes. No provision is made by the Portfolio for federal or state taxes on any taxable income of the Portfolio because each investor in the Portfolio is ultimately responsible for the payment of any taxes on its share of taxable income. Since at least one of the Portfolio's investors is a regulated investment company that invests all or substantially all of its assets in the Portfolio, the Portfolio normally must satisfy the applicable source of income and diversification
24
Tax-Managed International Equity Portfolio as of October 31, 2008
NOTES TO FINANCIAL STATEMENTS CONT'D
requirements (under the Internal Revenue Code) in order for its investors to satisfy them. The Portfolio will allocate, at least annually among its investors, each investor's distributive share of the Portfolio's net investment income, net realized capital gains and any other items of income, gain, loss, deduction or credit.
In addition to the requirements of the Internal Revenue Code, the Portfolio may also be subject to local taxes on the recognition of capital gains in certain countries. In determining the daily net asset value, the Portfolio estimates the accrual for such taxes, if any, based on the unrealized appreciation on certain portfolio securities and the related tax rates. Tax expense attributable to unrealized appreciation is included in the change in unrealized appreciation (depreciation) on investments. Capital gains taxes on securities sold are included in net realized gain (loss) on investments.
As of October 31, 2008, the Portfolio had no uncertain tax positions that would require financial statement recognition, de-recognition, or disclosure. Each of the Portfolio's federal tax returns filed in the 3-year period ended October 31, 2008 remains subject to examination by the Internal Revenue Service.
E Expense Reduction — State Street Bank and Trust Company (SSBT) serves as custodian of the Portfolio. Pursuant to the custodian agreement, SSBT receives a fee reduced by credits, which are determined based on the average daily cash balance the Portfolio maintains with SSBT. All credit balances, if any, used to reduce the Portfolio's custodian fees are reported as a reduction of expenses in the Statement of Operations.
F Foreign Currency Translation — Investment valuations, other assets, and liabilities initially expressed in foreign currencies are translated each business day into U.S. dollars based upon current exchange rates. Purchases and sales of foreign investment securities and income and expenses denominated in foreign currencies are translated into U.S. dollars based upon currency exchange rates in effect on the respective dates of such transactions. Recognized gains or losses on investment transactions attributable to changes in 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 invest ments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
G Use of Estimates — The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America 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 income and expense during the reporting period. Actual results could differ from those estimates.
H Indemnifications — Under the Portfolio's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Interestholders in the Portfolio are jointly and severally liable for the liabilities and obligations of the Portfolio in the event that the Portfolio fails to satisfy such liabilities and obligations; provided, however, that, to the extent assets are available in the Portfolio, the Portfolio may, under certain circumstances, indemnify interestholders from and against any claim or liability to which such holder may become subject by reason of being or having been an interestholder in t he Portfolio. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred.
2 Investment Adviser Fee and Other Transactions with Affiliates
The investment adviser fee is earned by BMR as compensation for investment advisory services rendered to the Portfolio. The fee is computed at an annual rate of 1.00% of the Portfolio's average daily net assets up to $500 million and at reduced rates as daily net assets exceed that level, and is payable monthly. Pursuant to a sub-advisory agreement, BMR pays Eagle Global Advisors, L.L.C. (Eagle) a portion of its adviser fee for sub-advisory services provided to the Portfolio. The portion of the adviser fee payable by Cash Management on the Portfolio's investment of cash therein is credited against the Portfolio's adviser fee. For the year ended October 31, 2008, the Portfolio's adviser fee totaled $3,640,520 of which $45,218 was allocated from Cash Management and $3,595,302 was paid or accrued directly by the Portfolio. For the year ended October 31, 2008, the adviser fee, including the portion allocated from Cash Management, wa s 1.00% of the Portfolio's average daily net assets.
25
Tax-Managed International Equity Portfolio as of October 31, 2008
NOTES TO FINANCIAL STATEMENTS CONT'D
Except for Trustees of the Portfolio who are not members of EVM's or BMR's organizations, officers and Trustees receive remuneration for their services to the Portfolio out of the investment adviser fee. Trustees of the Portfolio 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, 2008, no significant amounts have been deferred. Certain officers and Trustees of the Portfolio are officers of the above organizations.
3 Purchases and Sales of Investments
Purchases and sales of investments, other than short-term obligations, aggregated $172,866,341 and $121,679,608, respectively, for the year ended October 31, 2008.
4 Federal Income Tax Basis of Investments
The cost and unrealized appreciation (depreciation) of investments of the Portfolio at October 31, 2008, as determined on a federal income tax basis, were as follows:
| Aggregate cost | $ | 275,159,328 | |||||
| Gross unrealized appreciation | $ | 11,675,229 | |||||
| Gross unrealized depreciation | (58,688,112 | ) | |||||
| Net unrealized depreciation | $ | (47,012,883 | ) | ||||
The net unrealized depreciation on foreign currency at October 31, 2008 on a federal income tax basis was $15,391.
5 Line of Credit
The Portfolio participates with other portfolios and funds managed by EVM and its affiliates in a $450 million unsecured line of credit agreement with a group of banks. Borrowings are made by the Portfolio solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to the Portfolio based on its borrowings at an amount above either the Eurodollar rate or Federal Funds 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 portfolios and funds at the end of each quarter. The Portfolio did not have any significant borrowings or allocated fees during the year ended October 31, 2008.
6 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. Certain 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 Portfolio, political or financial instability or diplomatic and other developments which could affect such investments. Foreign securities mar kets, 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.
7 Recently Issued Accounting Pronouncement
In September 2006, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards No. 157 (FAS 157), "Fair Value Measurements". FAS 157 defines fair value, establishes a framework for measuring fair value in accordance with accounting principles generally accepted in the United States of America and expands disclosure about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. As of October 31, 2008, management does not believe the adoption of FAS 157 will impact the amounts reported in the financial statements; however, additional disclosures may be required about the inputs used to develop the measurements of fair value and the effect of certain of the measurements on changes in net assets for the period.
26
Tax-Managed International Equity Portfolio as of October 31, 2008
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Investors of
Tax-Managed International Equity Portfolio:
We have audited the accompanying statement of assets and liabilities of Tax-Managed International Equity Portfolio (the "Portfolio"), including the portfolio of investments, as of October 31, 2008, and the related statement of operations for the year then ended, the statements of changes in net assets for each of the two years in the period then ended, and the supplementary data for each of the five years in the period then ended. These financial statements and supplementary data are the responsibility of the Portfolio's management. Our responsibility is to express an opinion on these financial statements and supplementary data based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and supplementary data are free of material misstatement. The Portfolio is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Portfolio's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles u sed and significant estimates made by management, as well as evaluating the overall financial statement presentation. Our procedures included confirmation of securities owned as of October 31, 2008, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other auditing procedures. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and supplementary data referred to above present fairly, in all material respects, the financial position of Tax-Managed International Equity Portfolio as of October 31, 2008, the results of its operations for the year then ended, the changes in its net assets for each of the two years in the period then ended, and the supplementary data for each of the five years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 15, 2008
27
Eaton Vance Tax-Managed International Equity Fund
Tax-Managed International Equity Portfolio
SPECIAL MEETING OF SHAREHOLDERS (Unaudited)
Eaton Vance Tax-Managed International Equity Fund
The Fund held a Special Meeting of Shareholders on November 14, 2008 to elect Trustees. The results of the vote were as follows:
| Number of Shares | |||||||||||
| Nominee for Trustee | For | Withheld | |||||||||
| Benjamin C. Esty | 15,733,577 | 110,624 | |||||||||
| Thomas E. Faust Jr. | 15,734,789 | 109,412 | |||||||||
| Allen R. Freedman | 15,732,430 | 111,771 | |||||||||
| William H. Park | 15,734,789 | 109,412 | |||||||||
| Ronald A. Pearlman | 15,733,581 | 110,620 | |||||||||
| Helen Frame Peters | 15,732,564 | 111,637 | |||||||||
| Heidi L. Steiger | 15,732,564 | 111,637 | |||||||||
| Lynn A. Stout | 15,733,877 | 110,323 | |||||||||
| Ralph F. Verni | 15,733,131 | 111,070 | |||||||||
Each nominee was also elected a Trustee of Tax-Managed International Equity Portfolio.
Tax-Managed International Equity Portfolio
The Portfolio held a Special Meeting of Interestholders on November 14, 2008 to elect Trustees. The results of the vote were as follows:
| Interest in the Portfolio | |||||||||||
| Nominee for Trustee | For | Withheld | |||||||||
| Benjamin C. Esty | 99 | % | 1 | % | |||||||
| Thomas E. Faust Jr. | 99 | % | 1 | % | |||||||
| Allen R. Freedman | 99 | % | 1 | % | |||||||
| William H. Park | 99 | % | 1 | % | |||||||
| Ronald A. Pearlman | 99 | % | 1 | % | |||||||
| Helen Frame Peters | 99 | % | 1 | % | |||||||
| Heidi L. Steiger | 99 | % | 1 | % | |||||||
| Lynn A. Stout | 99 | % | 1 | % | |||||||
| Ralph F. Verni | 99 | % | 1 | % | |||||||
Results are rounded to the nearest whole number.
28
Eaton Vance Tax-Managed International Equity Fund
BOARD OF TRUSTEES' ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the "1940 Act"), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuance is approved at least annually by the fund's board of trustees, including by a vote of a majority of the trustees who are not "interested persons" of the fund ("Independent Trustees"), cast in person at a meeting called for the purpose of considering such approval.
At a meeting of the Boards of Trustees (each a "Board") of the Eaton Vance group of mutual funds (the "Eaton Vance Funds") held on April 21, 2008, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of the Contract Review Committee of the Board (formerly the Special Committee), which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Contract Review Committee reviewed information furnished for a series of meetings of the Contract Review Committee held in February, March and April 2008. Such information included, among other things, the following:
Information about Fees, Performance and Expenses
• An independent report comparing the advisory and related fees paid by each fund with fees paid by comparable funds;
• An independent report comparing each fund's total expense ratio and its components to comparable funds;
• An independent report comparing the investment performance of each fund to the investment performance of comparable funds over various time periods;
• Data regarding investment performance in comparison to relevant peer groups of funds and appropriate indices;
• Comparative information concerning fees charged by each adviser for managing other mutual funds and institutional accounts using investment strategies and techniques similar to those used in managing the fund;
• Profitability analyses for each adviser with respect to each fund;
Information about Portfolio Management
• Descriptions of the investment management services provided to each fund, including the investment strategies and processes employed, and any changes in portfolio management processes and personnel;
• Information concerning the allocation of brokerage and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through "soft dollar" benefits received in connection with the funds' brokerage, and the implementation of a soft dollar reimbursement program established with respect to the funds;
• Data relating to portfolio turnover rates of each fund;
• The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes;
Information about each Adviser
• Reports detailing the financial results and condition of each adviser;
• Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts;
• Copies of the Codes of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes;
• Copies of or descriptions of each adviser's proxy voting policies and procedures;
• Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates on behalf of the funds (including descriptions of various compliance programs) and their record of compliance with investment policies and restrictions, including policies with respect to market-timing, late trading and selective portfolio disclosure, and with policies on personal securities transactions;
• Descriptions of the business continuity and disaster recovery plans of each adviser and its affiliates;
Other Relevant Information
• Information concerning the nature, cost and character of the administrative and other non-investment management services provided by Eaton Vance Management and its affiliates;
• Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds' administrator; and
• The terms of each advisory agreement.
29
Eaton Vance Tax-Managed International Equity Fund
BOARD OF TRUSTEES' ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT CONT'D
In addition to the information identified above, the Contract Review Committee considered information provided from time to time by each adviser throughout the year at meetings of the Board and its committees. Over the course of the twelve-month period ended April 30, 2008, the Board met eleven times and the Contract Review Committee, the Audit Committee and the Governance Committee, each of which is a Committee comprised solely of Independent Trustees, met twelve, seven and five times, respectively. At such meetings, the Trustees received, among other things, presentations by the portfolio managers and other investment professionals of each adviser relating to the investment performance of each fund and the investment strategies used in pursuing the fund's investment objective. The Portfolio Management Committee and the Compliance Reports and Regulatory Matters Committee are newly established and did not meet during the twelve- month period ended April 30, 2008.
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of advisory agreements. In addition, in cases where the fund's investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
The Contract Review Committee was assisted throughout the contract review process by Goodwin Procter LLP, legal counsel for the Independent Trustees. The members of the Contract Review Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Contract Review Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each advisory and sub-advisory agreement.
Results of the Process
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Contract Review Committee concluded that the continuance of the investment advisory agreement of the Tax-Managed International Equity Portfolio, the portfolio in which the Eaton Vance Tax-Managed International Equity Fund (the "Fund") invests, with Boston Management and Research (the "Adviser"), and the sub-advisory agreement with Eagle Global Advisors, L.L.C. ("Eagle" or the "Sub-adviser") including the fee structures, is in the interests of shareholders and, therefore, the Contract Review Committee recommended to the Board approval of the respective agreements. The Board accepted the recommendation of the Contract Review Committee as well as the factors considered and conclusions reached by the Contract Review Committee with respect to the agreements. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement and the sub-advisory agreement for the Portfolio.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreement and sub-advisory agreement of the Portfolio, the Board evaluated the nature, extent and quality of services provided to the Portfolio by the Adviser and the Sub-adviser.
The Board considered the Adviser's and the Sub-adviser's management capabilities and investment process with respect to the types of investments held by the Portfolio, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Portfolio and whose responsibilities include supervising the Sub-adviser. The Board specifically noted the Adviser's in-house equity research capabilities. The Board also took into account the resources dedicated to portfolio management and other services, including the compensation paid to recruit and retain investment personnel, and the time and attention devoted to the Portfolio by senior management. With respect to the Sub-adviser, the Board took into consideration the resources available to the Sub-adviser in fulfilling its duties under the sub-advisory agreement and the Sub-advis er's experience in managing international equity portfolios, as well as recent changes in personnel.
The Board also reviewed the compliance programs of the Adviser and relevant affiliates thereof, and of the Sub-adviser. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment personnel, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also evaluated the responses of the Adviser and its affiliates to requests from regulatory authorities such as the Securities and Exchange Commission.
The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large family of funds, including the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
30
Eaton Vance Tax-Managed International Equity Fund
BOARD OF TRUSTEES' ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT CONT'D
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser and Sub-adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement and sub-advisory agreement, respectively.
Fund Performance
The Board compared the Fund's investment performance to a relevant universe of similarly managed funds identified by an independent data provider and appropriate benchmark indices. The Board reviewed comparative performance data for the one-, three- and five-year periods ended September 30, 2007 for the Fund. The Board concluded that the performance of the Fund was satisfactory.
Management Fees and Expenses
The Board reviewed contractual investment advisory fee rates, including any administrative fee rates, payable by the Portfolio and the Fund (referred to as "management fees"). As part of its review, the Board considered the management fees and the Fund's total expense ratio for the year ended September 30, 2007, as compared to a group of similarly managed funds selected by an independent data provider.
After reviewing the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services and the Fund's total expense ratio are reasonable.
Profitability
The Board reviewed the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to the Fund, to the Portfolio and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to revenue sharing or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect benefits received by the Adviser and its affiliates in connection with its relationship with the Fund. The Board also concluded that, in light of its role as a sub-adviser not affiliated with the Adviser, the Sub-adviser's profitability in managing the Portfolio was not a material factor.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are reasonable.
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund and Portfolio increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from the economies of scale with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. Based upon the foregoing, the Board concluded that the benefits from economies of scale are currently being shared equitably by the Adviser and its affiliates and the Fund. The Board also concluded that, assuming reasonably foreseeable increases in the assets of the Portfolio, the structure of the advisory fee, which includes breakpoints at several asset levels, can be expected to cause the Adviser and its affiliates and the Fund to continue to share such benefits equitably.
31
Eaton Vance Tax-Managed International Equity Fund
MANAGEMENT AND ORGANIZATION
Fund Management. The Trustees of Eaton Vance Mutual Funds Trust (the Trust) and Tax-Managed International Equity Portfolio (the Portfolio) are responsible for the overall management and supervision of the Trust's and Portfolio's affairs. The Trustees and officers of the Trust and the Portfolio are listed below. Except as indicated, each individual has held the office shown or other offices in the same company for the last five years. Trustees and officers of the Trust and the Portfolio hold indefinite terms of office. The "noninterested Trustees" consist of those Trustees who are not "interested persons" of the Trust and the Portfolio, as that term is defined under the 1940 Act. The business address of each Trustee and officer is The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109. As used below, "EVC" refers to Eaton Vance Corp., "EV" re fers to Eaton Vance, Inc., "EVM" refers to Eaton Vance Management, "BMR" refers to Boston Management and Research, "EVD" refers to Eaton Vance Distributors, Inc., "Parametric" refers to Parametric Portfolio Associates and "Eagle" refers to Eagle Global Advisors, L.L.C. EVC and EV are the corporate parent and trustee, respectively, of EVM and BMR. EVD is the Fund's principal underwriter, the Portfolio's placement agent and a wholly-owned subsidiary of EVC. Each officer affiliated with Eaton Vance may hold a position with other Eaton Vance affiliates that is comparable to his or her position with EVM listed below.
| Name and Date of Birth | Position(s) with the Trust and the Portfolio | Term of Office and Length of Service | Principal Occupation(s) During Past Five Years | Number of Portfolios in Fund Complex Overseen By Trustee(1) | Other Directorships Held | ||||||||||||||||||
| Interested Trustee | |||||||||||||||||||||||
| Thomas E. Faust Jr. 5/31/58 | Trustee and President of the Trust | Trustee since 2007 and President of the Trust since 2002 | Chairman, Chief Executive Officer and President of EVC, Director and President of EV, Chief Executive Officer and President of EVM and BMR, and Director of EVD. Trustee and/or Officer of 173 registered investment companies and 4 private companies managed by EVM or BMR. Mr. Faust is an interested person because of his positions with EVM, BMR, EVD, EVC and EV, which are affiliates of the Trust and Portfolio. | 173 | Director of EVC | ||||||||||||||||||
| Noninterested Trustees | |||||||||||||||||||||||
| Benjamin C. Esty 1/2/63 | Trustee | Since 2005 | Roy and Elizabeth Simmons Professor of Business Administration, Harvard University Graduate School of Business Administration. | 173 | None | ||||||||||||||||||
| Allen R. Freedman 4/3/40 | Trustee | Since 2007 | Former Chairman (2002-2004) and a Director (1983-2004) of Systems & Computer Technology Corp. (provider of software to higher education). Formerly, a Director of Loring Ward International (fund distributor) (2005-2007). Formerly, Chairman and a Director of Indus International, Inc. (provider of enterprise management software to the power generating industry) (2005-2007). | 173 | Director of Assurant, Inc. and Stonemor Partners L.P. (owner and operator of cemeteries) | ||||||||||||||||||
| William H. Park 9/19/47 | Trustee | Since 2003 | Vice Chairman, Commercial Industrial Finance Corp. (specialty finance company) (since 2006). Formerly, President and Chief Executive Officer, Prizm Capital Management, LLC (investment management firm) (2002-2005). | 173 | None | ||||||||||||||||||
| Ronald A. Pearlman 7/10/40 | Trustee | Since 2003 | Professor of Law, Georgetown University Law Center. | 173 | None | ||||||||||||||||||
| Helen Frame Peters 3/22/48 | Trustee | Since 2008 | Professor of Finance, Carroll School of Management, Boston College (since 2003), Adjunct Professor of Finance, Peking University, Beijing, China (since 2005). Formerly, Dean, Carroll School of Management, Boston College (2000-2003). | 173 | Director of Federal Home Loan Bank of Boston (a bank for banks) and BJ's Wholesale Clubs (wholesale club retailer); Trustee of SPDR Index Shares Funds and SPDR Series Trust (exchange traded funds) | ||||||||||||||||||
32
Eaton Vance Tax-Managed International Equity Fund
MANAGEMENT AND ORGANIZATION CONT'D
| Name and Date of Birth | Position(s) with the Trust and the Portfolio | Term of Office and Length of Service | Principal Occupation(s) During Past Five Years | Number of Portfolios in Fund Complex Overseen By Trustee(1) | Other Directorships Held | ||||||||||||||||||
| Noninterested Trustees (continued) | |||||||||||||||||||||||
| Heidi L. Steiger 7/8/53 | Trustee | Since 2007 | Managing Partner, Topridge Associates LLC (global wealth management firm) (since 2008); Senior Advisor (since 2008), President (2005-2008), Lowenhaupt Global Advisors, LLC (global wealth management firm). Formerly, President and Contributing Editor, Worth Magazine (2004-2005). Formerly, Executive Vice President and Global Head of Private Asset Management (and various other positions), Neuberger Berman (investment firm) (1986-2004). | 173 | Director of Nuclear Electric Insurance Ltd. (nuclear insurance provider) and Aviva USA (insurance provider) | ||||||||||||||||||
| Lynn A. Stout 9/14/57 | Trustee | Since 1998 | Paul Hastings Professor of Corporate and Securities Law (since 2006) and Professor of Law (2001-2006), University of California at Los Angeles School of Law. | 173 | None | ||||||||||||||||||
| Ralph F. Verni 1/26/43 | Chairman of the Board and Trustee | Chairman of the Board since 2007 and Trustee since 2005 | Consultant and private investor. | 173 | None | ||||||||||||||||||
Principal Officers who are not Trustees
| Name and Date of Birth | Position(s) with the Trust and the Portfolio | Term of Office and Length of Service | Principal Occupation(s) During Past Five Years | ||||||||||||
| William H. Ahern, Jr. 7/28/59 | Vice President of the Trust | Since 1995 | Vice President of EVM and BMR. Officer of 75 registered investment companies managed by EVM or BMR. | ||||||||||||
| Edward R. Allen, III 7/5/60 | Vice President of the Portfolio | Since 2004 | Senior Partner of Eagle. Officer of 3 registered investment companies managed by EVM or BMR. | ||||||||||||
| John R. Baur 2/10/70 | Vice President of the Trust | Since 2007 | Vice President of EVM and BMR. Previously, attended Johnson Graduate School of Management, Cornell University (2002-2005), and prior thereto he was an Account Team Representative in Singapore for Applied Materials Inc. Officer of 33 registered investment companies managed by EVM or BMR. | ||||||||||||
| Michael A. Cirami 12/24/75 | Vice President of the Trust | Since 2007 | Vice President of EVM and BMR. Previously, attended the University of Rochester William E. Simon Graduate School of Business Administration (2001-2003), and prior thereto he was a Team Leader for the Institutional Services Group for State Street Bank in Luxembourg. Officer of 33 registered investment companies managed by EVM or BMR. | ||||||||||||
| Cynthia J. Clemson 3/2/63 | Vice President of the Trust | Since 2005 | Vice President of EVM and BMR. Officer of 90 registered investment companies managed by EVM or BMR. | ||||||||||||
| Charles B. Gaffney 12/4/72 | Vice President of the Trust | Since 2007 | Vice President of EVM and BMR. Previously, Sector Portfolio Manager and Senior Equity Analyst of Brown Brothers Harriman (1997-2003). Officer of 30 registered investment companies managed by EVM or BMR. | ||||||||||||
| Thomas N. Hunt, III 11/6/64 | Vice President of the Portfolio | Since 2004 | Senior Partner at Eagle. Officer of 3 registered investment companies managed by EVM or BMR. | ||||||||||||
| Christine M. Johnston 11/9/72 | Vice President of the Trust | Since 2007 | Vice President of EVM and BMR. Officer of 35 registered investment companies managed by EVM or BMR. | ||||||||||||
| Aamer Khan 6/7/60 | Vice President of the Trust | Since 2005 | Vice President of EVM and BMR. Officer of 33 registered investment companies managed by EVM or BMR. | ||||||||||||
| Thomas H. Luster 4/8/62 | Vice President of the Trust | Since 2006 | Vice President of EVM and BMR. Officer of 51 registered investment companies managed by EVM or BMR. | ||||||||||||
33
Eaton Vance Tax-Managed International Equity Fund
MANAGEMENT AND ORGANIZATION CONT'D
| Name and Date of Birth | Position(s) with the Trust and the Portfolio | Term of Office and Length of Service | Principal Occupation(s) During Past Five Years | ||||||||||||
| Principal Officers who are not Trustees (continued) | |||||||||||||||
| Robert B. MacIntosh 1/22/57 | Vice President of the Trust | Since 1998 | Vice President of EVM and BMR. Officer of 90 registered investment companies managed by EVM or BMR. | ||||||||||||
| Duncan W. Richardson 10/26/57 | Vice President of the Trust and President of the Portfolio | Vice President of the Trust since 2001 and President of the Portolio since 2002 | Executive Vice President and Chief Equity Investment Officer of EVC, EVM and BMR. Officer of 81 registered investment companies managed by EVM or BMR. | ||||||||||||
| Judith A. Saryan 8/21/54 | Vice President of the Trust | Since 2003 | Vice President of EVM and BMR. Officer of 55 registered investment companies managed by EVM or BMR. | ||||||||||||
| Susan Schiff 3/13/61 | Vice President of the Trust | Since 2002 | Vice President of EVM and BMR. Officer of 36 registered investment companies managed by EVM or BMR. | ||||||||||||
| Thomas Seto 9/27/62 | Vice President of the Trust | Since 2007 | Vice President and Director of Portfolio Management of Parametric. Officer of 31 registered investment companies managed by EVM or BMR. | ||||||||||||
| David M. Stein 5/4/51 | Vice President of the Trust | Since 2007 | Managing Director and Chief Investment Officer of Parametric. Officer of 31 registered investment companies managed by EVM or BMR. | ||||||||||||
| Mark S. Venezia 5/23/49 | Vice President of the Trust | Since 2007 | Vice President of EVM and BMR. Officer of 36 registered investment companies managed by EVM or BMR. | ||||||||||||
| Adam A. Weigold 3/22/75 | Vice President of the Trust | Since 2007 | Vice President of EVM and BMR. Officer of 71 registered investment companies managed by EVM or BMR. | ||||||||||||
| Barbara E. Campbell 6/19/57 | Treasurer | Of the Trust since 2005 and of the Portfolio since 2008(2) | Vice President of EVM and BMR. Officer of 173 registered investment companies managed by EVM or BMR. | ||||||||||||
| Maureen A. Gemma 5/24/60 | Secretary and Chief Legal Officer | Secretary since 2007 and Chief Legal Officer since 2008 | Vice President of EVM and BMR. Officer of 173 registered investment companies managed by EVM or BMR. | ||||||||||||
| Paul M. O'Neil 7/11/53 | Chief Compliance Officer | Since 2004 | Vice President of EVM and BMR. Officer of 173 registered investment companies managed by EVM or BMR. | ||||||||||||
(1) Includes both master and feeder funds in a master-feeder structure.
(2) Prior to 2008, Ms. Campbell served as Assistant Treasurer of the Portfolio since 1998.
The SAI for the Fund includes additional information about the Trustees and officers of the Fund and the Portfolio and can be obtained without charge on Eaton Vance's website at www.eatonvance.com or by calling 1-800-262-1122.
34
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Investment Adviser of Tax-Managed International Equity Portfolio
Boston Management and Research
The Eaton Vance Building
255 State Street
Boston, MA 02109
Sub-Adviser of Tax-Managed International Equity Portfolio
Eagle Global Advisors, L.L.C.
5847 San Felipe, Suite 930
Houston, TX 77057
Administrator of Eaton Vance Tax-Managed International Equity 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
State Street Bank and Trust Company
200 Clarendon Street
Boston, MA 02116
Transfer Agent
PNC Global Investment Servicing
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
Independent Registered Public Accounting Firm
Deloitte & Touche LLP
200 Berkeley Street
Boston, MA 02116-5022
Eaton Vance Tax-Managed International Equity Fund
The Eaton Vance Building
255 State Street
Boston, MA 02109
This report must be preceded or accompanied by a current prospectus. Before investing, investors should consider carefully the Fund's investment objective(s), risks, and charges and expenses. The Fund's current prospectus contains this and other information about the Fund and is available through your financial advisor. Please read the prospectus carefully before you invest or send money. For further information please call 1-800-262-1122.
038-12/08 IGSRC
Item 2. Code of Ethics
The registrant has adopted a code of ethics applicable to its Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. The registrant undertakes to provide a copy of such code of ethics to any person upon request, without charge, by calling 1-800-262-1122.
Item 3. Audit Committee Financial Expert
The registrant’s Board has designated William H. Park, an independent trustee, as its audit committee financial expert. Mr. Park is a certified public accountant who is the Vice Chairman of Commercial Industrial Finance Corp (specialty finance company). Previously, he served as President and Chief Executive Officer of Prizm Capital Management, LLC (investment management firm) and as Executive Vice President and Chief Financial Officer of United Asset Management Corporation (“UAM”) (a holding company owning institutional investment management firms).
Item 4. Principal Accountant Fees and Services
(a)-(d)
The following table presents the aggregate fees billed to the registrant for the registrant’s fiscal years ended October 31, 2007 and October 31, 2008 by the registrant’s principal accountant for professional services rendered for the audit of the registrant’s annual financial statements and fees billed for other services rendered by the principal accountant during such periods.
Fiscal Years Ended |
| 10/31/07 |
| 10/31/08 |
| ||
|
|
|
|
|
| ||
Audit Fees |
| $ | 28,310 |
| $ | 27,335 |
|
|
|
|
|
|
| ||
Audit-Related Fees(1) |
| $ | 0 |
| $ | 0 |
|
|
|
|
|
|
| ||
Tax Fees(2) |
| $ | 6,168 |
| $ | 6,390 |
|
|
|
|
|
|
| ||
All Other Fees(3) |
| $ | 0 |
| $ | 290 |
|
|
|
|
|
|
| ||
Total |
| $ | 34,478 |
| $ | 34,015 |
|
(1) Audit-related fees consist of the aggregate fees billed for assurance and related services that are reasonably related to the performance of the audit of the registrant’s financial statements and are not reported under the category of audit fees.
(2) Tax fees consist of the aggregate fees billed for professional services rendered by the principal accountant relating to tax compliance, tax advice, and tax planning and specifically include fees for tax return preparation and other related tax compliance/planning matters.
(3) All other fees consist of the aggregate fees billed for products and services provided by the registrant’s principal accountant other than audit, audit-related, and tax services.
For the fiscal years ended October 31, 2007 and October 31, 2008, the registrant was billed $35,000 and $40,000, respectively, by D&T the principal accountant for the registrant, for work done in connection with its Rule 17Ad-13 examination of Eaton Vance Management’s assertion that it has maintained an effective internal control structure over sub-transfer agent and registrar functions, such services being pre-approved in accordance with Rule 2-01(c)(7)(ii) of Regulation S-X.
(e)(1) The registrant’s audit committee has adopted policies and procedures relating to the pre-approval of services provided by the registrant’s principal accountant (the “Pre-Approval Policies”). The Pre-Approval Policies establish a framework intended to assist the audit committee in the proper discharge of its pre-approval responsibilities. As a general matter, the Pre-Approval Policies (i) specify certain
types of audit, audit-related, tax, and other services determined to be pre-approved by the audit committee; and (ii) delineate specific procedures governing the mechanics of the pre-approval process, including the approval and monitoring of audit and non-audit service fees. Unless a service is specifically pre-approved under the Pre-Approval Policies, it must be separately pre-approved by the Audit Committee.
The Pre-Approval Policies and the types of audit and non-audit services pre-approved therein must be reviewed and ratified by the registrant’s audit committee at least annually. The registrant’s audit committee maintains full responsibility for the appointment, compensation, and oversight of the work of the registrant’s principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the registrant’s audit committee pursuant to the “de minimis exception” set forth in Rule 2-01 (c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees for audit-related, tax, and other services) billed to the registrant by the registrant’s principal accountant for the registrant’s fiscal year ended October 31, 2007 and the fiscal year ended October 31, 2008; and (ii) the aggregate non-audit fees (i.e., fees for audit related, tax, and other services) billed to the Eaton Vance organization by the registrant’s principal accountant for the same time periods.
Fiscal Years Ended |
| 10/31/07 |
| 10/31/08 |
| ||
|
|
|
|
|
| ||
Registrant |
| $ | 6,168 |
| $ | 6,390 |
|
|
|
|
|
|
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Eaton Vance(1) |
| $ | 286,446 |
| $ | 317,301 |
|
(1) Certain entities that provide ongoing services to the registrant are subsidiaries of Eaton Vance Corp.
(h) The registrant’s audit committee has considered whether the provision by the registrant’s principal accountant of non-audit services to the registrant’s investment adviser and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant that were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is compatible with maintaining the principal accountant’s independence.
Item 5. Audit Committee of Listed registrants
Not required in this filing.
Item 6. Schedule of Investments
Please see schedule of investments contained in the Report to Stockholders included under Item 1 of this Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not required in this filing.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not required in this filing.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not required in this filing.
Item 10. Submission of Matters to a Vote of Security Holders.
No Material Changes.
Item 11. Controls and Procedures
(a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.
(b) There have been no changes in the registrant’s internal controls over financial reporting during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits
(a)(1) |
| Registrant’s Code of Ethics – Not applicable (please see Item 2). |
(a)(2)(i) |
| Treasurer’s Section 302 certification. |
(a)(2)(ii) |
| President’s Section 302 certification. |
(b) |
| Combined Section 906 certification. |
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Tax-Managed International Equity Portfolio
By: | /s/ Duncan W. Richardson |
|
| Duncan W. Richardson |
|
| President |
|
Date: December 15, 2008
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ Barbara E. Campbell |
|
| Barbara E. Campbell |
|
| Treasurer |
|
Date: December 15, 2008
By: | /s/ Duncan W. Richardson |
|
| Duncan W. Richardson |
|
| President |
|
Date: December 15, 2008