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 | 811-10597 | |||||||
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Tax-Managed Mid-Cap Core Portfolio | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
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The Eaton Vance Building, 255 State Street, Boston, Massachusetts |
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(Address of principal executive offices) |
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Maureen A. Gemma | ||||||||
(Name and address of agent for service) | ||||||||
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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, 2007 |
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Item 1. Reports to Stockholders
Tax-Managed Mid-Cap Core Portfolio as of October 31, 2007
PORTFOLIO OF INVESTMENTS
Common Stocks — 99.2% | |||||||||||
Security | Shares | Value | |||||||||
Air Freight & Logistics — 2.1% | |||||||||||
C.H. Robinson Worldwide, Inc. | 18,200 | $ | 908,544 | ||||||||
Expeditors International of Washington, Inc. | 28,300 | 1,433,395 | |||||||||
$ | 2,341,939 | ||||||||||
Airlines — 0.6% | |||||||||||
SkyWest, Inc. | 26,000 | $ | 709,540 | ||||||||
$ | 709,540 | ||||||||||
Auto Components — 0.7% | |||||||||||
BorgWarner, Inc. | 7,000 | $ | 739,970 | ||||||||
$ | 739,970 | ||||||||||
Automobiles — 1.1% | |||||||||||
Thor Industries, Inc. | 25,000 | $ | 1,200,000 | ||||||||
$ | 1,200,000 | ||||||||||
Capital Markets — 6.9% | |||||||||||
Affiliated Managers Group(1) | 18,800 | $ | 2,473,140 | ||||||||
Federated Investors, Inc., Class B | 19,000 | 817,000 | |||||||||
Nuveen Investments, Class A | 21,000 | 1,360,800 | |||||||||
Raymond James Financial, Corp. | 42,000 | 1,564,500 | |||||||||
SEI Investments Co. | 44,600 | 1,410,252 | |||||||||
$ | 7,625,692 | ||||||||||
Chemicals — 2.6% | |||||||||||
Albemarle Corp. | 35,200 | $ | 1,681,152 | ||||||||
RPM International, Inc. | 56,000 | 1,200,080 | |||||||||
$ | 2,881,232 | ||||||||||
Commercial Banks — 3.5% | |||||||||||
City National Corp. | 22,000 | $ | 1,487,200 | ||||||||
Cullen/Frost Bankers, Inc. | 31,700 | 1,685,806 | |||||||||
TCF Financial Corp. | 32,000 | 728,640 | |||||||||
$ | 3,901,646 | ||||||||||
Commercial Services & Supplies — 1.3% | |||||||||||
FTI Consulting, Inc.(1) | 27,000 | $ | 1,466,100 | ||||||||
$ | 1,466,100 |
Security | Shares | Value | |||||||||
Computer Peripherals — 1.2% | |||||||||||
Diebold, Inc. | 31,500 | $ | 1,317,960 | ||||||||
$ | 1,317,960 | ||||||||||
Construction & Engineering — 2.6% | |||||||||||
Jacobs Engineering Group(1) | 33,000 | $ | 2,875,950 | ||||||||
$ | 2,875,950 | ||||||||||
Construction Materials — 1.1% | |||||||||||
Martin Marietta Materials | 9,000 | $ | 1,164,150 | ||||||||
$ | 1,164,150 | ||||||||||
Containers & Packaging — 1.1% | |||||||||||
Sonoco Products Co. | 40,300 | $ | 1,246,076 | ||||||||
$ | 1,246,076 | ||||||||||
Diversified Consumer Services — 1.5% | |||||||||||
Apollo Group, Inc., Class A(1) | 21,500 | $ | 1,704,090 | ||||||||
$ | 1,704,090 | ||||||||||
Electric Utilities — 1.5% | |||||||||||
DPL, Inc. | 56,600 | $ | 1,643,664 | ||||||||
$ | 1,643,664 | ||||||||||
Electrical Equipment — 2.9% | |||||||||||
AMETEK, Inc. | 42,000 | $ | 1,974,000 | ||||||||
Hubbell, Inc., Class B | 23,000 | 1,265,000 | |||||||||
$ | 3,239,000 | ||||||||||
Electronic Equipment & Instruments — 3.8% | |||||||||||
Amphenol Corp., Class A | 55,000 | $ | 2,434,850 | ||||||||
National Instruments Corp. | 55,000 | 1,784,200 | |||||||||
$ | 4,219,050 | ||||||||||
Energy Equipment & Services — 4.8% | |||||||||||
FMC Technologies, Inc.(1) | 58,000 | $ | 3,516,540 | ||||||||
Grant Prideco, Inc.(1) | 36,000 | 1,769,760 | |||||||||
$ | 5,286,300 |
See notes to financial statements
17
Tax-Managed Mid-Cap Core Portfolio as of October 31, 2007
PORTFOLIO OF INVESTMENTS CONT'D
Security | Shares | Value | |||||||||
Food & Staples Retailing — 1.1% | |||||||||||
Ruddick Corp. | 36,000 | $ | 1,224,000 | ||||||||
$ | 1,224,000 | ||||||||||
Food Products — 2.2% | |||||||||||
Corn Products International, Inc. | 26,000 | $ | 1,106,040 | ||||||||
Hormel Foods Corp. | 35,000 | 1,276,800 | |||||||||
$ | 2,382,840 | ||||||||||
Gas Utilities — 4.7% | |||||||||||
AGL Resources, Inc. | 41,100 | $ | 1,624,683 | ||||||||
Piedmont Natural Gas Co. | 61,200 | 1,562,436 | |||||||||
Questar Corp. | 34,000 | 1,940,720 | |||||||||
$ | 5,127,839 | ||||||||||
Health Care Equipment & Supplies — 8.9% | |||||||||||
Beckman Coulter, Inc. | 11,400 | $ | 807,348 | ||||||||
Bard (C.R.), Inc. | 15,800 | 1,321,038 | |||||||||
DENTSPLY International, Inc. | 45,800 | 1,899,784 | |||||||||
Mentor Corp. | 34,000 | 1,447,380 | |||||||||
Respironics, Inc.(1) | 48,500 | 2,427,910 | |||||||||
Varian Medical Systems, Inc.(1) | 39,000 | 1,902,030 | |||||||||
$ | 9,805,490 | ||||||||||
Health Care Providers & Services — 2.8% | |||||||||||
Henry Schein, Inc.(1) | 25,000 | $ | 1,497,500 | ||||||||
Owens & Minor, Inc. | 38,000 | 1,540,520 | |||||||||
$ | 3,038,020 | ||||||||||
Hotels, Restaurants & Leisure — 3.2% | |||||||||||
Applebee's International, Inc. | 43,000 | $ | 1,089,620 | ||||||||
International Speedway Corp., Class A | 18,500 | 821,955 | |||||||||
Sonic Corp.(1) | 63,850 | 1,582,203 | |||||||||
$ | 3,493,778 | ||||||||||
Household Durables — 1.5% | |||||||||||
Harman International Industries | 11,000 | $ | 926,200 | ||||||||
Mohawk Industries, Inc.(1) | 8,500 | 725,390 | |||||||||
$ | 1,651,590 |
Security | Shares | Value | |||||||||
Insurance — 2.8% | |||||||||||
HCC Insurance Holdings, Inc. | 39,000 | $ | 1,165,710 | ||||||||
Markel Corp.(1) | 2,300 | 1,249,406 | |||||||||
Protective Life Corp. | 16,700 | 715,929 | |||||||||
$ | 3,131,045 | ||||||||||
IT Services — 1.8% | |||||||||||
Cognizant Technology Solutions Corp.(1) | 22,000 | $ | 912,120 | ||||||||
Fiserv, Inc.(1) | 20,200 | 1,119,080 | |||||||||
$ | 2,031,200 | ||||||||||
Life Sciences Tools & Services — 0.5% | |||||||||||
Pharmaceutical Product Development | 12,500 | $ | 528,000 | ||||||||
$ | 528,000 | ||||||||||
Machinery — 3.9% | |||||||||||
Donaldson Co., Inc. | 35,000 | $ | 1,500,100 | ||||||||
Dover Corp. | 30,300 | 1,393,800 | |||||||||
Graco, Inc. | 36,200 | 1,424,832 | |||||||||
$ | 4,318,732 | ||||||||||
Media — 1.7% | |||||||||||
Washington Post Co., Class B | 2,200 | $ | 1,867,800 | ||||||||
$ | 1,867,800 | ||||||||||
Metals & Mining — 1.1% | |||||||||||
Reliance Steel & Aluminum Co. | 20,000 | $ | 1,167,000 | ||||||||
$ | 1,167,000 | ||||||||||
Multiline Retail — 0.7% | |||||||||||
Family Dollar Stores | 30,000 | �� | $ | 760,500 | |||||||
$ | 760,500 | ||||||||||
Multi-Utilities — 2.8% | |||||||||||
NSTAR | 40,000 | $ | 1,406,400 | ||||||||
OGE Energy Corp. | 42,300 | 1,620,090 | |||||||||
$ | 3,026,490 | ||||||||||
Office Electronics — 1.3% | |||||||||||
Zebra Technologies Corp., Class A(1) | 36,275 | $ | 1,417,990 | ||||||||
$ | 1,417,990 |
See notes to financial statements
18
Tax-Managed Mid-Cap Core Portfolio as of October 31, 2007
PORTFOLIO OF INVESTMENTS CONT'D
Security | Shares | Value | |||||||||
Oil, Gas & Consumable Fuels — 3.8% | |||||||||||
Holly Corp. | 35,000 | $ | 2,198,000 | ||||||||
Peabody Energy Corp. | 20,000 | 1,115,000 | |||||||||
Pogo Producing Co. | 15,000 | 893,400 | |||||||||
$ | 4,206,400 | ||||||||||
Personal Products — 1.7% | |||||||||||
Alberto-Culver Co. | 72,000 | $ | 1,871,280 | ||||||||
$ | 1,871,280 | ||||||||||
Real Estate Investment Trusts (REITs) — 1.2% | |||||||||||
Developers Diversified Realty | 25,300 | $ | 1,275,120 | ||||||||
$ | 1,275,120 | ||||||||||
Semiconductors & Semiconductor Equipment — 1.3% | |||||||||||
Microchip Technology, Inc. | 42,050 | $ | 1,394,798 | ||||||||
$ | 1,394,798 | ||||||||||
Software — 5.6% | |||||||||||
ANSYS, Inc.(1) | 42,200 | $ | 1,637,782 | ||||||||
Citrix Systems, Inc.(1) | 42,500 | 1,827,075 | |||||||||
Fair Isaac, Inc. | 11,000 | 417,120 | |||||||||
Jack Henry & Associates, Inc. | 78,500 | 2,293,770 | |||||||||
$ | 6,175,747 | ||||||||||
Specialty Retail — 2.4% | |||||||||||
O'Reilly Automotive, Inc.(1) | 45,000 | $ | 1,485,900 | ||||||||
Ross Stores, Inc. | 41,500 | 1,121,330 | |||||||||
$ | 2,607,230 | ||||||||||
Tobacco — 1.9% | |||||||||||
Universal Corp., VA | 43,000 | $ | 2,095,820 | ||||||||
$ | 2,095,820 |
Security | Shares | Value | |||||||||
Trading Companies & Distributors — 1.0% | |||||||||||
MSC Industrial Direct Co., Class A | 23,000 | $ | 1,120,330 | ||||||||
$ | 1,120,330 | ||||||||||
Total Common Stocks (identified cost $79,349,483) | $ | 109,281,398 | |||||||||
Total Investments — 99.2% (identified cost $79,349,483) | $ | 109,281,398 | |||||||||
Other Assets, Less Liabilities — 0.8% | $ | 883,209 | |||||||||
Net Assets — 100.0% | $ | 110,164,607 |
(1) Non-income producing security.
See notes to financial statements
19
Tax-Managed Mid-Cap Core Portfolio as of October 31, 2007
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of October 31, 2007
Assets | |||||||
Investments, at value (identified cost, $79,349,483) | $ | 109,281,398 | |||||
Cash | 1,087,820 | ||||||
Dividends and interest receivable | 77,303 | ||||||
Total assets | $ | 110,446,521 | |||||
Liabilities | |||||||
Payable for investments purchased | $ | 151,077 | |||||
Payable to affiliate for investment advisory fee | 72,219 | ||||||
Payable to affiliate for Trustees' fees | 835 | ||||||
Other accrued expenses | 57,783 | ||||||
Total liabilities | $ | 281,914 | |||||
Net Assets applicable to investors' interest in Portfolio | $ | 110,164,607 | |||||
Sources of Net Assets | |||||||
Net proceeds from capital contributions and withdrawals | $ | 80,232,692 | |||||
Net unrealized appreciation (computed on the basis of identified cost) | 29,931,915 | ||||||
Total | $ | 110,164,607 |
Statement of Operations
For the Year Ended
October 31, 2007
Investment Income | |||||||
Dividends | $ | 1,336,644 | |||||
Interest | 29,751 | ||||||
Total investment income | $ | 1,366,395 | |||||
Expenses | |||||||
Investment adviser fee | $ | 834,737 | |||||
Trustees' fees and expenses | 8,306 | ||||||
Custodian fee | 58,846 | ||||||
Legal and accounting services | 30,727 | ||||||
Miscellaneous | 4,728 | ||||||
Total expenses | $ | 937,344 | |||||
Deduct — Reduction of investment adviser fee | $ | 2,403 | |||||
Total expense reductions | $ | 2,403 | |||||
Net expenses | $ | 934,941 | |||||
Net investment income | $ | 431,454 | |||||
Realized and Unrealized Gain (Loss) | |||||||
Net realized gain (loss) — Investment transactions (identified cost basis) | $ | 8,082,328 | |||||
Net realized gain | $ | 8,082,328 | |||||
Change in unrealized appreciation (depreciation) — Investments (identified cost basis) | $ | 8,326,667 | |||||
Net change in unrealized appreciation (depreciation) | $ | 8,326,667 | |||||
Net realized and unrealized gain | $ | 16,408,995 | |||||
Net increase in net assets from operations | $ | 16,840,449 |
See notes to financial statements
20
Tax-Managed Mid-Cap Core Portfolio as of October 31, 2007
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Year Ended October 31, 2007 | Year Ended October 31, 2006 | |||||||||
From operations — Net investment income | $ | 431,454 | $ | 261,470 | |||||||
Net realized gain from investment transactions | 8,082,328 | 4,855,443 | |||||||||
Net change in unrealized appreciation (depreciation) of investments | 8,326,667 | 6,129,045 | |||||||||
Net increase in net assets from operations | $ | 16,840,449 | $ | 11,245,958 | |||||||
Capital transactions — Contributions | $ | 8,454,067 | $ | 16,793,678 | |||||||
Withdrawals | (13,006,661 | ) | (6,253,468 | ) | |||||||
Net increase (decrease) in net assets from capital transactions | $ | (4,552,594 | ) | $ | 10,540,210 | ||||||
Net increase in net assets | $ | 12,287,855 | $ | 21,786,168 | |||||||
Net Assets | |||||||||||
At beginning of year | $ | 97,876,752 | $ | 76,090,584 | |||||||
At end of year | $ | 110,164,607 | $ | 97,876,752 |
See notes to financial statements
21
Tax-Managed Mid-Cap Core Portfolio as of October 31, 2007
FINANCIAL STATEMENTS CONT'D
Supplementary Data
Year Ended October 31, | |||||||||||||||||||||||
2007 | 2006 | 2005 | 2004 | 2003 | |||||||||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||
Ratios (As a percentage of average daily net assets): | |||||||||||||||||||||||
Expenses(1) | 0.90 | % | 0.91 | % | 0.91 | % | 0.93 | % | 0.99 | % | |||||||||||||
Net investment income (loss) | 0.41 | % | 0.29 | % | (0.11 | )% | (0.15 | )% | (0.22 | )% | |||||||||||||
Portfolio Turnover | 38 | % | 55 | % | 53 | % | 42 | % | 50 | % | |||||||||||||
Total Return | 17.79 | % | 13.85 | % | 10.54 | % | 6.43 | % | 25.97 | % | |||||||||||||
Net assets, end of year (000's omitted) | $ | 110,165 | $ | 97,877 | $ | 76,091 | $ | 67,130 | $ | 46,112 |
(1) The investment adviser waived a portion of its investment advisory fee (equal to less than 0.01% of average daily net assets for each of the years ended October 31, 2007, 2006, 2005, and 2004). A portion of the waiver was borne by the sub-adviser.
See notes to financial statements
22
Tax-Managed Mid-Cap Core Portfolio as of October 31, 2007
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
Tax-Managed Mid-Cap Core Portfolio (the Portfolio) is registered under the Investment Company Act of 1940, as amended (the 1940 Act), as a diversified open-end management investment company. The Portfolio, which was organized as a trust under the laws of the State of New York on December 10, 2001, seeks to achieve long-term, after-tax returns by investing in a diversified portfolio of common stocks of mid-cap companies. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At October 31, 2007, the Eaton Vance Tax-Managed Mid-Cap Core Fund and the Eaton Vance Tax-Managed Equity Asset Allocation Fund held 35.5% and 64.5% interests in the Portfolio, respectively. The following is a summary of significant accounting policies followed by the Portfolio in the prepa ration of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.
A Investment Valuation — 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 official NASDAQ 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. Exchange-traded options are valued at the last sale price for the day of valuation as quoted on the principal exchange or board of trade on which the options are traded or, in the absence of sales on such date, at the mean between the latest bid and asked prices therefore. Futures positions on securities and currencies generally are valued at closing settlement prices. Short-term debt securities with a remaining maturity of 60 days or less are valued at amortized cost. If short-term debt securities are acquired with a remaining maturity of more than 60 days, they will be valued by a pricing service. 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. Foreign securities and currencies are valued in U.S. dollars, based on foreign currency exchange rate quotations supplied by an independent quotation service. The daily valuation of exchange-traded foreign securities generally is deter mined 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 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 that have a strong correlation to the fair-valued securities. Investments held by the Portfolio 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 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.
B Income — Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities. Interest income is recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount.
C 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 requirements (under the Internal Revenue Code) in order for its investors to satisfy them. The Portfolio will allocate, at least annually a mong 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.
D 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.
23
Tax-Managed Mid-Cap Core Portfolio as of October 31, 2007
NOTES TO FINANCIAL STATEMENTS CONT'D
E 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.
F Investment Transactions — Investment transactions for financial statement purposes are accounted for on a trade date basis. Realized gains and losses on securities sold are determined on the basis of identified cost.
G 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 Boston Management and Research (BMR), a subsidiary of Eaton Vance Management (EVM), as compensation for management and investment advisory services rendered to the Portfolio. Pursuant to the investment advisory agreement, BMR receives a monthly fee at the annual rate of 0.80% of the Portfolio's average daily net assets up to $500 million and at reduced rates as daily net assets exceed that level. For the year ended October 31, 2007, the Portfolio's investment advisory fee totaled $834,737. Pursuant to a sub-advisory agreement, BMR has delegated the investment management of the Portfolio to Atlanta Capital. BMR pays Atlanta Capital a monthly fee for sub-advisory services provided to the Portfolio equal to 0.55% per annum of the average daily net assets up to $500 million and at reduced rates as daily net assets exceed that level. BMR and Atlanta Capital have agreed to reduce their respectiv e investment advisory fee by an amount equal to that portion of commissions paid to broker dealers in execution of Portfolio transactions that is consideration for third-party research services. For the year ended October 31, 2007, BMR waived $2,403 of its advisory fee. Atlanta Capital, in turn, waived $2,403 of its sub-advisory fee. Except for the 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 such investment adviser fee and sub-adviser fees. Certain officers and Trustees of the Portfolio are officers of the above organizations. Trustees of the Portfolio who are not affiliated with BMR 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, 2007, no significant amounts have been deferred. Certain officer s and Trustees of the Fund and of the Portfolio are officers of the above organizations.
3 Investment Transactions
Purchases and sales of investments, other than short-term obligations, aggregated $39,689,849 and $43,097,323, respectively, for the year ended October 31, 2007.
4 Federal Income Tax Basis of Unrealized Appreciation (Depreciation)
The cost and unrealized appreciation (depreciation) in value of the investments owned at October 31, 2007, as determined on a federal income tax basis, were as follows:
Aggregate cost | $ | 79,414,305 | |||||
Gross unrealized appreciation | $ | 30,256,505 | |||||
Gross unrealized depreciation | (389,412 | ) | |||||
Net unrealized appreciation | $ | 29,867,093 |
5 Financial Instruments
The Portfolio may trade in financial instruments with off-balance sheet risk in the normal course of its investing activities to assist in managing exposure to various market risks. These financial instruments may include written options and financial futures contracts and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the investment the Portfolio has in particular classes of financial instruments and does not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. The
24
Tax-Managed Mid-Cap Core Portfolio as of October 31, 2007
NOTES TO FINANCIAL STATEMENTS CONT'D
Portfolio did not have any open obligations under these financial instruments at October 31, 2007.
6 Line of Credit
The Portfolio participates with other portfolios and funds managed by EVM and its affiliates in a $200 million unsecured line of credit agreement with a group of banks. Borrowings will be made by the Portfolio solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to each 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 0.07% 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, 2007.
7 Recently Issued Accounting Pronouncements
In June 2006, the Financial Accounting Standards Board (FASB) issued FASB Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes – an interpretation of FASB Statement No. 109". FIN 48 clarifies the accounting for uncertainty in income taxes recognized in accordance with FASB Statement No. 109, "Accounting for Income Taxes". This interpretation prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. FIN 48 is effective on the last business day of the first required financial reporting period for fiscal years beginning after December 15, 2006. Management is currently evaluating the impact of applying the various provisions of FIN 48.
In September 2006, the FASB 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 generally accepted accounting principles and expands disclosure about fair value measurements. FAS 157 is effective for fiscal years beginning after November 15, 2007. Management is currently evaluating the impact the adoption of FAS 157 will have on the Portfolio's financial statement disclosures.
25
Tax-Managed Mid-Cap Core Portfolio as of October 31, 2007
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Trustees and Investors of
Tax-Managed Mid-Cap Core Portfolio:
We have audited the accompanying statement of assets and liabilities of Tax-Managed Mid-Cap Core Portfolio (the "Portfolio"), including the portfolio of investments, as of October 31, 2007, 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 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 used 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, 2007, by correspondence with the custodian and brokers; when 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 Mid-Cap Core Portfolio as of October 31, 2007, 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 14, 2007
26
Eaton Vance Tax-Managed Mid-Cap Core Fund
BOARD OF TRUSTEES' ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENTS
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 23, 2007, 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 Special Committee of the Board, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Special Committee reviewed information furnished for a series of meetings of the Special Committee held in February, March and April 2007. 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;
• 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.
In addition to the information identified above, the Special 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
27
Eaton Vance Tax-Managed Mid-Cap Core Fund
BOARD OF TRUSTEES' ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENTS CONT'D
April 30, 2007, the Board met ten times and the Special Committee, the Audit Committee and the Governance Committee, each of which is a Committee comprised solely of Independent Trustees, met twelve, fourteen and eight 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.
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 Special Committee was assisted throughout the contract review process by Goodwin Procter LLP, legal counsel for the Independent Trustees. The members of the Special 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 Special 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 Special Committee concluded that the continuance of the investment advisory agreement of the Tax-Managed Mid-Cap Core Portfolio (the "Portfolio"), the portfolio in which the Eaton Vance Tax-Managed Mid-Cap Core Fund (the "Fund") invests, with Boston Management and Research (the "Adviser"), and the sub-advisory agreement with Atlanta Capital Management (the "Sub-adviser"), including their fee structures, is in the interests of shareholders and, therefore, the Special Committee recommended to the Board approval of the respective agreements. The Board accepted the recommendation of the Special Committee as well as the factors considered and conclusions reached by the Special Committee with respect to the agreements. Accordingly, the Board, including a majority of the Independent T rustees, 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 agreements 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 account the resources available to the Sub-adviser in fulfilling its duties under the sub-advisory agreement and the Sub-adviser's e xperience in managing equity portfolios.
The Board reviewed the compliance programs of the Adviser and relevant affiliates thereof, including 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 and the National Association of Securities Dealers.
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.
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.
28
Eaton Vance Tax-Managed Mid-Cap Core Fund
BOARD OF TRUSTEES' ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENTS CONT'D
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- and three-year periods ended September 30, 2006 for the Fund. The Board noted that action was taken during 2006 to improve the performance of the Fund and concluded that such actions were effective.
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 collectively as "management fees"). As part of its review, the Board considered the management fees (including administrative fees) and the Fund's total expense ratio for the one-year period ended September 30, 2006, as compared to a group of similarly managed funds selected by an independent data provider. The Board considered the fact that the Adviser waived fees and/or paid expenses for the Fund and had agreed to waive fees and/or pay expenses in an additional amount for the next three years.
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, including the Sub-adviser, in providing investment advisory and administrative services to the Portfolio, the Fund 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 Portfolio and the Fund, including the benefits of research services that may be available to the Adviser or Sub-adviser as a result of securities transactions effected for the Portfolio and other advisory clients.
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, including the Sub-adviser, 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 the 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 Adv iser 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.
29
Eaton Vance Tax-Managed Mid-Cap Core Fund
MANAGEMENT AND ORGANIZATION
Fund Management. The Trustees of Eaton Vance Mutual Funds Trust (the Trust) and Tax-Managed Mid-Cap Core 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" refers to Eaton Vance, Inc., "EVM" refers to Eaton Vance Management, "BMR" refers to Boston Management and Research, "Parametric" refers to Parametric Portfolio Associates, "EVD" refers to Eaton Vance Distributors, Inc. and "Atlanta Capital" refers to Atlanta Capital Management Company, LLC. 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 EVM. 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, President of the Trust and Vice President of the Portfolio | Trustee since 2007, President of the Trust since 2002 and Vice President of the Portfolio since 2001 | Chairman, Chief Executive Officer and President of EVC, President of EV, Chief Executive Officer and President of EVM and BMR, and Director of EVD. Trustee and/or Officer of 176 registered investment companies and 5 private investment companies in the Eaton Vance Fund Complex. Mr. Faust is an interested person because of his positions with EVM, BMR, EVC and EV which are affiliates of the Trust and the Portfolio. | 176 | Director of EVC | ||||||||||||||||||
Noninterested Trustee(s) | |||||||||||||||||||||||
Benjamin C. Esty 1/2/63 | Trustee | Since 2005 | Roy and Elizabeth Simmons Professor of Business Administration, Harvard University Graduate School of Business Administration (since 2003). Formerly, Associate Professor, Harvard University Graduate School of Business Administration (2000-2003). | 176 | None | ||||||||||||||||||
Allen R. Freedman 4/3/40 | Trustee | Since 2007 | Former Chairman and Chief Executive Officer of Assurant, Inc. (insurance provider) (1978-2000). Formerly, a Director of Loring Ward International (fund distributor) (2005-2007). | 175 | 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). | 176 | None | ||||||||||||||||||
Ronald A. Pearlman 7/10/40 | Trustee | Since 2003 | Professor of Law, Georgetown University Law Center. | 176 | None | ||||||||||||||||||
Norton H. Reamer 9/21/35 | Trustee | Trustee of the Trust since 1986 and of the Portfolio since 2001 | President, Chief Executive Officer and a Director of Asset Management Finance Corp. (a specialty finance company serving the investment management industry) (since October 2003). President, Unicorn Corporation (an investment and financial advisory services company) (since September 2000). Formerly, Chairman and Chief Operating Officer, Hellman, Jordan Management Co., Inc. (an investment management company) (2000-2003). Formerly, Advisory Director of Berkshire Capital Corporation (investment banking firm) (2002-2003). | 176 | None | ||||||||||||||||||
30
Eaton Vance Tax-Managed Mid-Cap Core 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 Trustee(s) (continued) | |||||||||||||||||||||||
Heidi L. Steiger 7/8/53 | Trustee | Since 2007 | President, Lowenhaupt Global Advisors, LLC (global wealth management firm) (since 2005); Formerly, President and Contributing Editor, Worth Magazine (2004); 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 | Trustee of the Trust since 1998 and of the Portfolio since 2001 | Paul Hastings Professor of Corporate and Securities Law, University of California at Los Angeles School of Law. | 176 | 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. | 176 | 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 74 registered investment companies managed by EVM or BMR. | ||||||||||||
William O. Bell, IV 7/26/73 | Vice President of the Portfolio | Since 2005 | Vice President of Atlanta Capital. Officer of 2 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 89 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 29 registered investment companies managed by EVM or BMR. | ||||||||||||
William R. Hackney, III 4/12/48 | Vice President of the Portfolio | Since 2001 | Managing Partner and member of the Executive Committee of Atlanta Capital. Officer of 3 registered investment companies managed by EVM or BMR. | ||||||||||||
Marilyn Robinson Irvin 6/17/58 | Vice President of the Portfolio | Since 2005 | Senior Vice President and Principal of Atlanta Capital. Officer of 2 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 34 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 32 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 48 registered investment companies managed by EVM or BMR. | ||||||||||||
Michael R. Mach 7/15/47 | Vice President of the Trust | Since 1999 | Vice President of EVM and BMR. Officer of 54 registered investment companies managed by EVM or BMR. | ||||||||||||
Robert B. MacIntosh 1/22/57 | Vice President of the Trust | Since 1998 | Vice President of EVM and BMR. Officer of 89 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 Portfolio since 2007 | Executive Vice President and Chief Equity Investment Officer of EVC, EVM and BMR. Officer of 80 registered investment companies managed by EVM or BMR. | ||||||||||||
31
Eaton Vance Tax-Managed Mid-Cap Core 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) | |||||||||||||||
Walter A. Row, III 7/20/57 | Vice President of the Trust | Since 2001 | Director of Equity Research and a Vice President of EVM and BMR. Officer of 38 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 53 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 35 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 30 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 30 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 35 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 70 registered investment companies managed by EVM or BMR. | ||||||||||||
Barbara E. Campbell 6/19/57 | Treasurer of the Trust | Since 2005 | Vice President of EVM and BMR. Officer of 176 registered investment companies managed by EVM or BMR. | ||||||||||||
Maureen A. Gemma 5/24/60 | Secretary | Since 2007 | Deputy Chief Legal Officer and Vice President of EVM and BMR. Officer of 176 registered investment companies managed by EVM or BMR. | ||||||||||||
Michelle A. Green 8/25/69 | Treasurer of the Portfolio | Since 2002 | Vice President of EVM and BMR. Officer of 68 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 176 registered investment companies managed by EVM or BMR. | ||||||||||||
(1) Includes both master and feeder funds in a master-feeder structure.
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 by calling 1-800-225-6265.
32
Investment Adviser of Tax-Managed Mid-Cap Core Portfolio
Boston Management and Research
The Eaton Vance Building
255 State Street
Boston, MA 02109
Sub-Adviser of Tax-Managed Mid-Cap Core Portfolio
Atlanta Capital Management Company LLC
1349 West Peachtree Street
Suite 1600
Atlanta, GA 30309
Administrator of Eaton Vance Tax-Managed Mid-Cap Core 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
PFPC Inc.
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 Mid-Cap Core 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, 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 1-800-225-6265.
1301-12/07 TMMCCSRC
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 and Norton H. Reamer, each an independent trustee, as its audit committee financial experts. 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). Mr. Reamer is the President, Chief Executive Officer and a Director of Asset Management Finance Corp. (a specialty finance company serving the investment management industry) and is President of Unicorn Corporation (an investment and financial advisory services company). Formerly, Mr. Reamer was Chairman and Chief Operating Officer of Hellman, Jordan Management Co., Inc. (an investment management company) and Advisory Director of Berkshire Capital Corporation (an investment banking firm), Chairman of the Board of UAM and Chairman, President and Director of the UAM Funds (mutual funds).
Item 4. Principal Accountant Fees and Services
(a)-(d)
The following table presents the aggregate fees billed to the registrant for the fiscal years ended October 31, 2006 and October 31, 2007 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 those periods.
Fiscal Years Ended |
| 10/31/2006 |
| 10/31/2007 |
| ||
|
|
|
|
|
| ||
Audit Fees |
| $ | 21,290 |
| $ | 23,790 |
|
|
|
|
|
|
| ||
Audit-Related Fees(1) |
| $ | 0 |
| $ | 0 |
|
|
|
|
|
|
| ||
Tax Fees(2) |
| $ | 5,470 |
| $ | 5,961 |
|
|
|
|
|
|
| ||
All Other Fees(3) |
| $ | 0 |
| $ | 0 |
|
|
|
|
|
|
| ||
Total |
| $ | 26,760 |
| $ | 29,751 |
|
(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 tax related 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.
(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 years ended October 31, 2006 and October 31, 2007; 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 |
| 10/31/2006 |
| 10/31/2007 |
| ||
|
|
|
|
|
| ||
Registrant |
| $ | 5,470 |
| $ | 5,961 |
|
|
|
|
|
|
| ||
Eaton Vance(1) |
| $ | 83,600 |
| $ | 286,446 |
|
(1)Certain subsidiaries of Eaton Vance Corp. provide ongoing services to the registrant.
(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 Mid-Cap Core Portfolio
By: | /s/ Duncan W. Richardson |
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| Duncan W. Richardson | |||
| President | |||
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Date: | December 11, 2007 |
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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/ Michelle A. Green |
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| Michelle A. Green | |||
| Treasurer | |||
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| December 11, 2007 |
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By: | /s/ Duncan W. Richardson |
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| Duncan W. Richardson | |||
| President | |||
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Date: | December 11, 2007 | |||