Edgar Filing: EATON VANCE CORP

Equity

Fixed Income

Large-Cap Growth

Mid-Large Cap

Intermediate Duration

Responsible

Short Duration

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)

Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended October 31, 2017

Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____________ to ____________

Commission File Number 1-8100

EATON VANCE CORP.

(Exact name of registrant as specified in its charter)

Maryland		04-2718215
(State or other jurisdiction of		(I.R.S. Employer Identification No.)
incorporation or organization)

	Two International Place, Boston, Massachusetts 02110
	(Address of principal executive offices) (zip code)

	(617) 482-8260
	(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Non-Voting Common Stock

($0.00390625 par value per share)

New York Stock Exchange

(Title of each class)

(Name of each exchange on which registered)

Securities registered pursuant to Section 12(g) of the Act: None.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x No ¨

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	x	Accelerated filer	¨
Non-accelerated filer	¨ (Do not check if a smaller reporting company)	Smaller reporting company	¨
Emerging growth company	¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

Aggregate market value of Non-Voting Common Stock held by non-affiliates of the Registrant, based on the closing price of $42.93 on April 30, 2017 on the New York Stock Exchange was $4,746,912,227. Calculation of holdings by non-affiliates is based upon the assumption, for these purposes only, that executive officers, directors, and persons holding 5 percent or more of the registrant’s Non-Voting Common Stock are affiliates.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the close of the latest practicable date.

Class:	Outstanding at October 31, 2017
Non-Voting Common Stock, $0.00390625 par value		118,077,872
Voting Common Stock, $0.00390625 par value		442,932

Eaton Vance Corp.

Form 10-K

For the Fiscal Year Ended October 31, 2017

Index

Required Information		Page Number Reference

Part I
Item 1.	Business	3
Item 1A.	Risk Factors	19
Item 1B.	Unresolved Staff Comments	27
Item 2.	Properties	27
Item 3.	Legal Proceedings	27
Item 4.	Mine Safety Disclosures	27

Part II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	28
Item 6.	Selected Financial Data	30
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	63
Item 8.	Financial Statements and Supplementary Data	65
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	128
Item 9A.	Controls and Procedures	128
Item 9B.	Other Information	130

Part III
Item 10.	Directors, Executive Officers and Corporate Governance	131
Item 11.	Executive Compensation	138
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	166
Item 13.	Certain Relationships and Related Transactions, and Director Independence	171
Item 14.	Principal Accountant Fees and Services	172

Part IV
Item 15.	Exhibits and Financial Statement Schedules	173
Item 16.	Form 10-K Summary	182
Signatures		183

PART I

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K for Eaton Vance Corp. (Eaton Vance or the Company) includes statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding our expectations, intentions or strategies regarding the future. All statements, other than statements of historical facts, included in this Annual Report on Form 10-K regarding our financial position, business strategy and other plans and objectives for future operations are forward-looking statements. The terms “may,” “will,” “could,” “anticipate,” “plan,” “continue,” “project,” “intend,” “estimate,” “believe,” “expect” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such words. Although we believe that the assumptions and expectations reflected in such forward-looking statements are reasonable, we can give no assurance that they will prove to be correct or that we will take any actions that may now be planned. Certain important factors that could cause actual results to differ materially from our expectations are disclosed in Item 1A “Risk Factors” of this Annual Report on Form 10-K. All subsequent written or oral forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by such factors. We disclaim any intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Item 1. Business

General

Our principal business is managing investment funds and providing investment management and advisory services to high-net-worth individuals and institutions. Our core strategy is to develop and sustain management expertise across a range of investment disciplines and to offer leading investment products and services through multiple distribution channels. In executing this strategy, we have developed broadly diversified investment management capabilities and a highly functional marketing, distribution and customer service organization. We measure our success as a Company based on investment performance delivered, reputation in the marketplace, progress achieving strategic objectives, employee development and satisfaction, business and financial results, and shareholder value created.

We conduct our investment management and advisory business through wholly- and majority-owned investment affiliates, which include: Eaton Vance Management, Parametric Portfolio Associates LLC (Parametric), Atlanta Capital Management Company, LLC (Atlanta Capital) and Calvert Research and Management (Calvert). We also offer investment management advisory services through minority-owned Hexavest Inc. (Hexavest).

Through Eaton Vance Management, Atlanta Capital, Calvert and other affiliates, we manage active equity, income and alternative strategies across a range of investment styles and asset classes, including U.S. and global equities, floating-rate bank loans, municipal bonds, global income, high-yield and investment grade bonds. Through Parametric, we manage a range of engineered alpha strategies, including systematic equity, systematic alternatives and managed options strategies. Through Parametric, we also provide portfolio implementation and overlay services, including tax-managed and non-tax-managed Custom Core equity strategies, centralized portfolio management of multi-manager portfolios and customized exposure management services. We also oversee the management of, and distribute, investment funds sub-advised by

unaffiliated third-party managers, including global, emerging market and regional equity and asset allocation strategies.

Our breadth of investment management capabilities supports a wide range of products and services offered to fund shareholders, retail managed account investors, institutional investors and high-net-worth clients. Our equity strategies encompass a diversity of investment objectives, risk profiles, income levels and geographic representation. Our income investment strategies cover a broad duration, geographic representation and credit quality range and encompass both taxable and tax-free investments. We also offer a range of alternative investment strategies, including commodity- and currency-based investments and a spectrum of absolute return strategies. Although we manage and distribute a wide range of investment products and services, we operate in one business segment, namely as an investment adviser to funds and separate accounts. As of October 31, 2017, we had $422.3 billion in consolidated assets under management.

We distribute our funds and retail managed accounts principally through financial intermediaries. We have broad market reach, with distribution partners including national and regional broker-dealers, independent broker-dealers, registered investment advisors, banks and insurance companies. We support these distribution partners with a team of approximately 120 sales professionals covering U.S. and international markets.

We also commit significant resources to serving institutional and high-net-worth clients who access investment management services on a direct basis and through investment consultants. Through our wholly- and majority-owned affiliates and consolidated subsidiaries, we manage investments for a broad range of clients in the institutional and high-net-worth marketplace in the U.S. and internationally, including corporations, sovereign wealth funds, endowments, foundations, family offices and public and private employee retirement plans.

Company History

We have been in the investment management business for over 90 years, tracing our history to two Boston-based investment managers: Eaton & Howard, formed in 1924, and Vance, Sanders & Company, organized in 1934. Eaton & Howard, Vance Sanders, Inc. (renamed Eaton Vance Management, Inc. in June 1984 and reorganized as Eaton Vance Management in October 1990) was formed upon the acquisition of Eaton & Howard, Incorporated by Vance, Sanders & Company, Inc. on April 30, 1979. Following the 1979 merger of these predecessor organizations to form Eaton Vance, our managed assets consisted primarily of open-end mutual funds marketed to U.S. retail investors under the Eaton Vance brand and investment counsel services offered directly to high-net-worth and institutional investors. Over the ensuing years, we have expanded our product and distribution efforts to include closed-end, private and offshore funds, retail managed accounts, a broad array of investment strategies and services for institutional and high-net-worth investors, and, most recently, NextShares^TM exchange-traded managed funds (NextShares).

Our long-term growth strategy focuses on developing and growing market-leading investment franchises and expanding our product distribution reach into new channels and geographic markets. The development of leading investment franchises may be achieved either organically or through acquisitions. Recent strategic acquisitions include the purchase of substantially all of the business assets of Calvert Investment Management, Inc. (Calvert Investments) in December 2016, Parametric’s fiscal 2013 purchase of The Clifton Group Investment Management Company (Clifton), and our fiscal 2012 purchase of a 49 percent interest in Hexavest.

On December 30, 2016, Calvert, a newly formed Eaton Vance subsidiary, completed the purchase of substantially all of the business assets of Calvert Investments. Founded in 1976, Calvert Investments became a pioneer in responsible investing in 1982 by launching the first mutual fund to avoid investing in companies

doing business in apartheid-era South Africa. At acquisition, Calvert had $11.9 billion of assets under management. Of this, $2.1 billion was previously included in the Company’s consolidated managed assets because Atlanta Capital is sub-adviser to one of the Calvert-sponsored mutual funds (Calvert Funds). The total managed assets of Calvert, including assets sub-advised by other Eaton Vance affiliates, have grown to $12.9 billion at October 31, 2017.

The fiscal 2012 purchase of Clifton, which now operates as Parametric’s Minneapolis investment center, provided Parametric with a market-leading position in futures- and options-based portfolio implementation services and risk-management strategies. Managed assets of Parametric’s Minneapolis investment center have grown from $34.8 billion at purchase in December 2012 to $98.3 billion on October 31, 2017.

In fiscal 2012, we expanded our global equity offerings by acquiring a 49 percent interest in Hexavest, a Montreal-based investment adviser, and became Hexavest’s exclusive distribution partner in all markets outside Canada. Hexavest’s assets under management have grown from $11.0 billion at purchase in August 2012 to $16.0 billion on October 31, 2017.

Investment Managers and Distributors

We conduct our investment management business through Eaton Vance Management, Parametric, Atlanta Capital, Calvert and other direct and indirect subsidiaries, including Boston Management and Research (BMR), Eaton Vance Investment Counsel (EVIC), Eaton Vance Advisers (Ireland) Limited (EVAI), Eaton Vance Management (International) Limited (EVMI), Eaton Vance Advisers International Ltd. (EVAIL) and Eaton Vance Trust Company (EVTC), together encompassing a broad range of investment management capabilities and investment styles. Eaton Vance Management, Parametric, Atlanta Capital, Calvert, BMR, EVIC, EVMI and EVAIL are all registered with the U.S. Securities and Exchange Commission (SEC) as investment advisers under the Investment Advisers Act of 1940 (the Advisers Act). EVAI is registered under the Central Bank of Ireland and provides management services to the Eaton Vance International (Ireland) Funds Plc. EVTC, a trust company, is exempt from registration under the Advisers Act.

Eaton Vance Distributors, Inc. (EVD), a wholly-owned broker-dealer registered under the Securities Exchange Act of 1934 (the Exchange Act), markets and sells the Eaton Vance-, Parametric- and Calvert-branded funds and retail managed accounts. EVMI, a wholly-owned financial services company registered under the Financial Services and Market Act in the United Kingdom, markets our products and services in Europe and certain other international markets. Eaton Vance Management International (Asia) Pte. Ltd. (EVMIA) is a wholly-owned financial services company that markets our products and services in the Asia Pacific region. EVMIA is registered with the Monetary Authority of Singapore and holds a Capital Markets Services License for Fund Management, Dealing in Securities, Trading in Futures Contracts and Leveraged Foreign Exchange Trading. EVMIA also operates under the Singapore Companies Act as overseen by the Accounting and Corporate Regulatory Authority in Singapore. Eaton Vance Asia Pacific, Ltd. (Eaton Vance Asia Pacific), a wholly-owned subsidiary of the Company, opened a Tokyo office in fiscal 2017 to provide relationship management and client service support to clients in Japan and other parts of Asia. Eaton Vance Australia Pty. Ltd., a wholly-owned company registered as an Australian propriety company with the Australian Securities and Investment Commission, markets our products and services in Australia.

We are headquartered in Boston, Massachusetts and also maintain offices in Atlanta, Georgia; Minneapolis, Minnesota; New York, New York; Seattle, Washington; Washington, District of Columbia; Westport, Connecticut; London, England; Singapore; Sydney, Australia; and Tokyo, Japan. Our sales representatives operate throughout the United States and in the United Kingdom, Europe, Asia, Australia and Latin America. We are represented in the Middle East through an agreement with a third-party distributor.

Recent Developments

We are pursuing five primary strategic priorities to support our long-term growth. Those priorities are: (1) capitalizing on our investment performance leadership and distribution strengths to grow sales and gain market share in actively managed investment strategies; (2) extending the success we have had with our Custom Beta lineup of rules-based separately managed accounts; (3) becoming a more global company by building our investment and distribution capabilities outside the United States; (4) positioning NextShares to become the vehicle of choice for investors in actively managed funds in the U.S; and (5) leveraging our Calvert acquisition to lead the growth of responsible investing;.

As of October 31, 2017, we had 68 U.S. mutual funds rated four or five stars by Morningstar™ for at least one class of shares, including 30 funds rated five stars for at least one class of shares. Although actively managed strategies as a whole are losing share to passive investments, we believe that top-performing active strategies can continue to grow, particularly in asset classes where the competition versus passive alternatives is less acute. In fiscal 2017, net flows into our active strategies totaled $9.3 billion.

In fiscal 2017, we continued to experience strong growth in our Custom Beta strategies, which include the Parametric Custom Core equity and Eaton Vance laddered municipal and corporate bond separate account offerings to the retail and high-net-worth markets. Compared to index mutual funds and exchange-traded funds, rules-based separately managed accounts can provide clients with greater ability to tailor their market exposures to achieve better tax outcomes and to reflect client-specified responsible investing criteria and desired portfolio tilts and exclusions. In fiscal 2017, net inflows into our Custom Beta strategies offered as retail managed accounts and high-net-worth separate accounts totaled $17.9 billion.

Outside the United States, the Company continues to expand investment staff and commit additional client service and distribution resources to support business growth. On February 1, 2017, Eaton Vance Asia Pacific opened a Tokyo-based representative office to provide relationship management and client service support to clients in Japan and other parts of Asia. In fiscal 2017, the Company’s net inflows from clients outside the United States totaled $5.1 billion.

Over the past several years, the Company has committed significant resources toward achieving commercial success of its NextShares fund structure. In fiscal 2017, NextShares continued to progress toward broad market availability. As of the end of fiscal 2017, eight NextShares funds from three different fund families were available in the marketplace. On November 20, 2017, together with UBS Financial Services Inc., we announced the availability of NextShares through the UBS brokerage platforms and UBS Strategic Advisor, a non-discretionary advisory program, which the Company believes will stimulate growth in NextShares managed assets beginning in fiscal 2018.

On December 30, 2016, we completed the purchase of substantially all of the business assets of Calvert Investments. The Calvert Funds are one of the largest and most diversified families of responsibly invested mutual funds, encompassing actively and passively managed equity, fixed income and asset allocation strategies managed in accordance with the Calvert Principles for Responsible Investment (Calvert Principles) or other responsible investment criteria. Responsible investing is a leading trend in asset management, appealing to the growing universe of investors who seek both financial returns and positive societal impact from their investments. The Calvert Funds are now being offered through EVD, with greatly expanded market reach.

In developments related to Hexavest, Eaton Vance has elected to maintain the Company’s ownership interest at 49 percent. On December 11, 2017, we notified the employee-owners of Hexavest that we would not be

exercising our option to purchase an additional 26 percent interest under the terms of the option agreement entered into when we acquired our Hexavest position in 2012. After careful review, we concluded that Hexavest’s current ownership and governance model are most conducive to their business and investment success at this time. We will continue to work with Hexavest as a major shareholder and as Hexavest’s exclusive distribution partner for non-Canadian markets.

Investment Management Capabilities

We provide investment management and advisory services to retail, high-net-worth and institutional investors through funds and separately managed accounts across a broad range of investment mandates. The following table sets forth consolidated assets under management by investment mandate for the dates indicated:

Consolidated Assets under Management by Investment Mandate⁽¹⁾

	October 31,
(in millions)	2017		% of Total			2016		% of Total			2015		% of Total
Equity⁽²⁾⁽³⁾	$	113,472		27	%	$	89,981		27	%	$	89,890		29	%
Fixed income⁽³⁾⁽⁴⁾		70,797		17	%		60,607		18	%		52,465		17	%
Floating-rate income⁽³⁾		38,819		9	%		32,107		10	%		35,534		11	%
Alternative⁽³⁾		12,637		3	%		10,687		3	%		10,289		3	%
Portfolio implementation		99,615		23	%		71,426		21	%		59,487		19	%
Exposure management		86,976		21	%		71,572		21	%		63,689		21	%
Total	$	422,316		100	%	$	336,380		100	%	$	311,354		100	%

⁽¹⁾

Consolidated Eaton Vance Corp. See table on page 40 for managed assets and flows of 49 percent-owned Hexavest Inc., which are not included in the table above.

⁽²⁾

Includes balanced and multi-asset mandates.

⁽³⁾

In fiscal 2017, the Company reclassified certain managed assets among investment mandates. Prior years' amounts have been revised for comparability purposes. The reclassification does not affect total consolidated assets under management for any period.

⁽⁴⁾

Includes cash management mandates.

Eaton Vance Investment Affiliates

Our principal investment affiliates, Eaton Vance Management, Parametric, Calvert, Atlanta Capital and Hexavest, offer a range of distinctive strategies. Investment approaches include bottom-up and top-down fundamental active management, rules-based systematic alpha investing, implementation of passive strategies and responsible investing. This broad diversification provides us the opportunity to address a wide range of investor needs and to offer products and services suited for various market environments.

History dating to 1924 | AUM: $164.3 billion¹

Fundamental active managers: In-depth fundamental analysis is the primary basis for our investment decision-making across a broad range of equity, income and alternative strategies.

Equity	Multi-Asset	Taxable Fixed Income	Floating-Rate Income
Dividend/Global Dividend	Asset Allocation	Cash Management	Floating-Rate Loan
Emerging/Frontier Markets	Balanced	Core Bond/Core Plus
Equity Option	Global Diversified Income	Emerging-Markets Debt	Tax-Exempt Fixed Income
Global Developed		High Yield	Active Trading
Global Small-Cap	Alternative	Inflation-Linked	Floating-Rate Municipals
Health Care	Commodity	Investment-Grade Corporate	High Yield
International Developed	Currency	Laddered Corporate	Laddered Investing
International Small-Cap	Global Macro	Mortgage-Backed Securities	National
Large-Cap Core	Hedged Equity	Multisector	State Specific
Large-Cap Growth	Multi-Strategy Absolute Return	Preferred Securities
Large-Cap Value	Multi-Strategy Absolute Return	Short Duration
Multi-Cap Growth		Taxable Municipal
Real Estate
Small-Cap
Small/Mid-Cap
Tax-Managed

¹Includes managed assets of Eaton Vance Investment Counsel, Eaton Vance Trust Company and Boston Management and Research.

Founded in 1987 | AUM: $224.9 billion

Quantitative, systematic investment managers: Leading systematic asset management delivering elevated, transparent, repeatable outcomes by bringing clarity and accessibility to investment science.

Equity	Options	Alternative	Implementation
Emerging Markets	Absolute Return	Commodity	Centralized Portfolio Management
Global	Covered Call/DeltaShift	Defensive Equity/Volatility Risk Premium	Centralized Portfolio Management
International	Dynamic Hedged Equity	Defensive Equity/Volatility Risk Premium	Custom Core^TM
Responsible	Put Selling		Customized Exposure Management
Tax-Managed		Income	Customized Exposure Management
U.S.		Dividend Income	Policy Overlay Services
		Enhanced Income

History dating to 1976* | AUM: $10.7 billion

Global leaders in Responsible Investing: Actively and passively managed U.S. and international equity, fixed income and asset allocation strategies.

Equity	Indexed Equity	Floating-Rate Income	Tax-Exempt Fixed Income
Large-Cap	International	Floating-Rate Loan	Responsible Municipal
Mid-Cap	U.S. Large-Cap Core
Small-Cap	U.S. Large-Cap Growth	Taxable Fixed Income	Thematic
International	U.S. Large-Cap Value	Short Duration/Ultra-Short	Global Water
International Small/Mid-Cap	U.S. Mid-Cap	Core/Core Plus	Global Energy Solutions
		Long Duration
Alternative	Multi-Asset	Green Bond
Absolute-Return Bond	Balanced	High Yield
	Asset Allocation

On December 30, 2016, Calvert Research and Management, a newly formed Eaton Vance subsidiary, completed its acquisition of substantially all of the business assets of Calvert Investment Management, Inc., which was founded in 1976 and launched in 1982 the first mutual fund to avoid investing in companies doing business in apartheid-era South Africa.

Founded in 1969 | AUM: $22.4 billion

Specialists in high-quality investing: Actively managed high-quality U.S. stock and bond portfolios constructed using bottom-up fundamental analysis.

Founded in 2004 | AUM: $16.0 billion²

Top-down global managers: Global equities strategies combining fundamental research and proprietary quantitative models.

Eaton Vance holds a 49 percent interest in Hexavest Inc. Other than Eaton Vance-sponsored vehicles for which Hexavest is advisor or subadvisor, the managed assets of Hexavest are not included in Eaton Vance consolidated totals.

The following third-party organizations provide investment management services as sub-advisers to certain Eaton Vance- and Calvert-sponsored mutual funds and portfolios:

Investment Vehicles

Our consolidated assets under management are broadly diversified by distribution channel and investment vehicle. The following table sets forth our consolidated assets under management by investment vehicle for the dates identified:

Consolidated Assets under Management by Investment Vehicle⁽¹⁾

	October 31,
			% of					% of					% of
(in millions)	2017		Total			2016		Total			2015		Total
Open-end funds⁽²⁾	$	97,601		23	%	$	74,721		22	%	$	74,838		24	%
Closed-end funds⁽³⁾		24,816		6	%		23,571		7	%		24,449		8	%
Private funds⁽⁴⁾		34,436		8	%		27,430		8	%		26,647		8	%
Institutional separate accounts		159,986		38	%		136,451		41	%		119,987		39	%
High-net-worth separate accounts		39,715		9	%		25,806		8	%		24,516		8	%
Retail managed accounts		65,762		16	%		48,401		14	%		40,917		13	%
Total	$	422,316		100	%	$	336,380		100	%	$	311,354		100	%

⁽¹⁾

Consolidated Eaton Vance Corp. See table on page 40 for managed assets and flows of 49 percent-owned Hexavest Inc., which are not included in the table above.

⁽²⁾

Includes assets in NextShares funds.

⁽³⁾

Includes unit investment trusts.

⁽⁴⁾

Includes privately offered equity, fixed income and floating-rate income funds and collateralized loan obligation entities.

Open-end Funds

As of October 31, 2017, our open-end fund lineup included equity funds, state and national municipal income funds, taxable fixed income and cash management funds, floating-rate bank loan funds, alternative funds and multi-asset funds sold to U.S. and non-U.S. investors.

Our family of equity funds includes a broad range of active strategies, managed both with and without consideration of shareholder tax effects, as well as Calvert-sponsored index funds.

Our equity funds managed for pre-tax returns include large-cap, multi-cap and small-cap funds in value, core and growth styles, dividend and global dividend income funds, international, global, emerging markets, healthcare and real estate funds. Also included in the category are multi-assets funds that generally hold both equities and income securities. Assets under management in non-tax-managed equity funds totaled $32.6 billion on October 31, 2017.

We are a leading sponsor of equity funds managed for after-tax returns, with $8.0 billion in open-end tax-managed equity fund assets under management on October 31, 2017. Our tax-managed equity funds encompass a variety of equity styles and market caps, including large-cap core, large-cap value, multi-cap growth, small-cap, international, emerging markets, global dividend income, global small-cap and equity asset allocation.

The Calvert equity index funds include large-cap core, growth and value, mid-cap and international strategies, as well as global energy and water funds. Managed assets in Calvert equity index funds totaled $1.8 billion on October 31, 2017.

Our family of municipal income mutual funds is one of the broadest in the industry, with 13 national and 18 state-specific funds in 16 different states. As of October 31, 2017, we managed $10.4 billion in open-end municipal income fund assets.

Our taxable fixed income and cash management funds utilize our investment management capabilities in a broad range of fixed income mandates, including mortgage-backed securities, high-grade bond, high-yield bond, multi-sector bond, short- and ultra-short duration income, and cash instruments. Assets under management in open-end taxable income funds totaled $16.7 billion on October 31, 2017.

Since introducing our first floating-rate bank loan fund, Eaton Vance Floating-Rate Advantage Fund, in 1989, we have consistently ranked as one of the largest managers of retail bank loan funds. Assets under management in open-end floating-rate bank loan funds totaled $20.2 billion on October 31, 2017.

The alternative category includes a range of absolute return strategies, as well as commodity- and currency-linked investments. We currently offer four absolute return funds in the U.S. and a global macro strategy that we sell to fund investors outside of the United States. Assets under management in open-end alternative funds totaled $9.7 billion on October 31, 2017.

The U.S. Charitable Gift Trust and its pooled income funds are designed to simplify the process of donating to qualified charities and to provide professional management of pools of donated assets. Assets under management in U.S. Charitable Gift Trust and its pooled income funds, which are included in fund assets under management as described above, totaled $567.1 million at October 31, 2017.

Our Ireland- and Cayman Island-domiciled open-end funds offer a range of investment strategies to non-U.S. investors. At October 31, 2017, managed assets in funds sold outside the U.S., which are included in fund assets under management as described above, totaled $2.3 billion.

As of October 31, 2017, 68 of our U.S. mutual funds were rated 4 or 5 stars by Morningstar^TM for at least one class of shares, including 30 five-star rated funds. A good source of performance-related information for our funds is our website, www.eatonvance.com. On our website, investors can also obtain other current information about our product offerings, including investment objective and principal investment policies, portfolio characteristics, expenses and Morningstar ratings.

Closed-end Funds

Our family of closed-end funds includes municipal bond, domestic and global equity, bank loan, multi-sector income and taxable income funds, three of which are term trusts. As of October 31, 2017, we managed $24.8 billion in closed-end fund assets and ranked as the third largest manager of exchange-listed closed-end funds in the U.S. according to Strategic Insight, a fund industry data provider.

Private Funds

The private fund category includes privately offered equity funds designed to meet the diversification and tax-management needs of qualifying high-net-worth investors. We are recognized as a market leader for these types of privately offered equity funds, with $18.1 billion in assets under management as of October 31, 2017. Also included in private funds are equity, floating-rate bank loan and fixed income funds offered to institutional investors. Assets under management in these funds, which include cash instrument entities, collective trusts, leveraged and unleveraged loan funds, and collateralized loan obligation (CLO) entities, totaled $16.4 billion as of October 31, 2017, including $1.5 billion of assets in CLO entities.

Institutional Separate Accounts

We serve a broad range of clients in the institutional marketplace, both in the U.S. and internationally, including government, corporate and union retirement plans, endowments and foundations, nuclear decommissioning trusts and asbestos litigation trusts, sovereign wealth funds and investment funds sponsored by others for which we serve as a sub-adviser. Our diversity of capabilities allows us to offer domestic and international institutional investors a broad spectrum of equity, fixed and floating-rate income and alternative strategies, as well as portfolio implementation and exposure management services. Our broad expertise provides us the opportunity to customize solutions to help meet our clients’ complex investment needs.

We have used EVTC, a non-depository trust company, as a platform to launch a series of commingled funds tailored to meet the needs of smaller institutional clients. The trust company also enables us to participate in qualified plan commingled investment platforms offered in the broker-dealer channel. In addition to management services, EVTC provides certain custody services and has obtained regulatory approval to provide institutional trustee services.

Institutional separate account assets under management totaled $160.0 billion at October 31, 2017.

High-net-worth Separate Accounts

We offer high-net-worth and family office clients personalized investment counseling services through EVIC. At EVIC, investment counselors work directly with clients to establish long-term financial programs and implement strategies designed for achieving their objectives. The Company has been in this business since the founding of Eaton and Howard in 1924.

Also included in high-net-worth separate accounts are Custom Core equity portfolios managed by Parametric for family offices and high-net-worth individuals. Parametric’s objective in managing these accounts is generally to match the returns of a client-specified equity benchmark and add incremental returns on an after-tax basis and/or to reflect the investment restrictions and exposure tilts specified by the client. Parametric’s offerings for the high-net-worth and family office market also include investment programs that utilize option overlay strategies to help clients customize their risk and return profiles through the use of disciplined options strategies.

High-net-worth separate account assets under management totaled $39.7 billion at October 31, 2017, $35.0 billion of which were managed by Parametric and $4.7 billion of which were managed by EVIC.

Retail Managed Accounts

Retail managed accounts are separate accounts managed for individual investors offered through the retail intermediary distribution channel. We entered this business in the 1990s, offering Eaton Vance Management-managed municipal bond separate accounts, and later expanded our offerings with the addition of Atlanta Capital and Parametric-managed account strategies. Our entry into the retail managed account business

allowed us to leverage the strengths of our retail marketing organization and our relationships with major distributors. We now participate in over 50 retail managed account broker-dealer programs.

Included in our retail managed account offerings is our Custom Beta suite of separately managed account strategies, which encompasses Parametric Custom Core equity and Eaton Vance Management laddered municipal bond and corporate bond strategies. The Custom Beta suite offers clients the benefits of passive investing and the ability to customize their investment portfolios to fit their personal preferences and investment objectives. According to Cerulli Associates, an investment research firm, Eaton Vance ranked as the third-largest manager of retail managed account assets as of September 30, 2017. Our retail managed account assets under management totaled $65.8 billion at October 31, 2017.

Investment Management and Related Services

Our direct and indirect wholly-owned subsidiaries Eaton Vance Management and BMR are investment advisers to all Eaton Vance- and Parametric-branded funds, and Calvert is investment adviser to the Calvert funds. Although the specifics of our fund advisory agreements vary, the basic terms are similar. Pursuant to the advisory agreements, Eaton Vance Management, BMR or Calvert provides overall investment management services to each internally advised fund, subject, in the case of funds that are registered under the Investment Company Act of 1940 (1940 Act) (Registered Funds), to the supervision of each fund’s board of trustees or directors (together, trustees) in accordance with the fund’s investment objectives and policies. Parametric, Atlanta Capital, Hexavest and unaffiliated advisory firms act as sub-adviser to Eaton Vance Management, BMR or Calvert for certain funds.

Eaton Vance Management provides administrative services, including personnel and facilities, necessary for the operation of all Eaton Vance- and Parametric-branded funds, and Calvert provides such services for the Calvert Funds, subject to the oversight of each fund’s board of trustees. These services are provided under comprehensive management agreements with certain funds that also include investment advisory services and through separate administrative services agreements with other funds as discussed below. Administrative services include recordkeeping, preparing and filing documents required to comply with federal and state securities laws, legal, fund administration and compliance services, supervising the activities of the funds’ custodians and transfer agents, providing assistance in connection with the funds’ shareholder meetings and other administrative services, including providing office space and office facilities, equipment and personnel that may be necessary for managing and administering the business affairs of the funds. Each agreement remains in effect indefinitely, subject, in the case of Registered Funds, to annual approval by each fund’s board of trustees. The funds generally bear all expenses associated with their operation and the issuance and redemption or repurchase of their securities, except for the compensation of trustees and officers of the fund who are employed by us. Under some circumstances, particularly in connection with the introduction of new funds, Eaton Vance Management, BMR or Calvert may waive a portion of its management fee and/or pay some expenses of the fund.

For Registered Funds, a majority of the independent trustees (i.e., those unaffiliated with us or any adviser controlled by us and deemed non-interested under the 1940 Act) must review and approve the investment advisory and administrative agreements annually. The fund trustees generally may terminate these agreements upon 30 to 60 days’ notice without penalty. Shareholders of Registered Funds generally must approve amendments to the investment advisory agreements.

Eaton Vance Management has entered into an investment advisory and administrative agreement with The U.S. Charitable Gift Trust. In addition, The U.S. Charitable Gift Trust and its pooled income funds have

distribution agreements with EVD that provide for reimbursement of the costs of fundraising and servicing donor accounts.

Either Eaton Vance Management, Parametric, Atlanta Capital, Calvert, BMR or EVIC has entered into an investment advisory agreement for each separately managed account and retail managed account program that sets forth the account’s investment objectives and fee schedule, and provides for management of assets in the account in accordance with the stated investment objectives. Our separate account portfolio managers may assist clients in formulating investment strategies.

EVTC is the trustee for each collective investment trust and is responsible for designing and implementing each trust’s investment program or overseeing sub-advisers managing each trust’s investment portfolio. As trustee, EVTC also provides certain administrative and accounting services to each trust. For services provided under each trust’s declaration of trust, EVTC receives a monthly fee based on the average daily net assets of the trust.

Investment counselors and separate account portfolio managers employed by our subsidiaries make investment decisions for the separate accounts we manage, tailoring portfolios to the needs of particular clients. We generally receive investment advisory fees for separate accounts quarterly, based on the value of the assets managed on a particular date, such as the first or last calendar day of a quarter, or, in some instances, on the average assets for the period. These advisory contracts are generally terminable upon 30 to 60 days’ notice without penalty.

The following table shows our management fees earned for the fiscal years ended October 31, 2017, 2016 and 2015:

	Years Ended October 31,
(in thousands)	2017		2016		2015
Investment advisory fees –
Funds	$	862,178	$	760,137	$	804,209
Separate accounts		390,688		342,097		331,075
Administrative fees – funds		65,275		48,964		61,582
Total	$	1,318,141	$	1,151,198	$	1,196,866

Marketing and Distribution of Investment Products

We market and distribute shares of Eaton Vance-, Parametric- and Calvert-branded funds domestically through EVD. EVD sells fund shares through a network of financial intermediaries, including national and regional broker-dealers, banks, registered investment advisors, insurance companies and financial planning firms. The Eaton Vance International (Ireland) Funds Plc. are Undertakings for Collective Investments in Transferable Securities (UCITS) funds domiciled in Ireland and sold by EVMI through certain intermediaries, and in some cases directly, to investors who are citizens of the United Kingdom, member nations of the European Union and other countries outside the United States. The Eaton Vance International (Cayman Islands) Funds are Cayman Island-domiciled funds sold by EVD and EVMI through intermediaries to non-U.S. investors.

Although the firms in our domestic retail distribution network have each entered into selling agreements with EVD, these agreements (which generally are terminable by either party) do not legally obligate the firms to sell any specific amount of our investment products. EVD currently maintains a sales force of approximately 120 external

and internal wholesalers who work closely with financial advisors in the retail distribution network to assist in placing Eaton Vance-, Parametric- and Calvert-branded funds.

Certain sponsored mutual funds have adopted distribution plans as permitted by the 1940 Act that provide for the fund to pay EVD distribution fees for the sale and distribution of shares and service fees for personal and/or shareholder account services (12b-1 fees). Each distribution plan and distribution agreement with EVD for the Registered Funds is initially approved and its subsequent continuance must be approved annually by the board of trustees of the respective funds, including a majority of the independent trustees.

EVD makes payments to financial intermediaries that provide marketing support, shareholder recordkeeping and transaction processing, and/or administrative services to the Eaton Vance-, Parametric- and Calvert-branded mutual funds and, in some cases, include some or all of our funds in preferred or specialized selling programs. Payments are typically based on fund net assets, fund sales and/or number of accounts attributable to that financial intermediary. Registered Funds may pay all or a portion of shareholder recordkeeping and transaction processing and/or administrative services provided to their shareholders. Financial intermediaries also may receive payments from EVD in connection with educational or due diligence meetings that include information concerning our funds.

EVD currently sells Eaton Vance-, Parametric- and Calvert-branded mutual funds under six primary pricing structures: front-end load commission (Class A); level-load commission (Class C); Calvert Variable Products, Inc. pricing (Class F); institutional no-load (Class I, Class R6, Class Y and Institutional Class, referred to herein as Class I); retail no-load (Investor Class and Advisers Class, referred to herein as Class N); and retirement plan level-load (Class R).

For Class A shares, the shareholder may be required to pay a sales charge to the selling broker-dealer of up to five percent and an underwriting commission to EVD of up to 75 basis points of the dollar value of the shares sold. Under certain conditions, we waive the sales load on Class A shares and the shares are sold at net asset value. EVD generally receives (and then pays to authorized firms after one year) a distribution and service fee of up to 30 basis points of average net assets annually on Class A shares. In recent years, a growing percentage of the Company’s sales of Class A shares have been made on a load-waived basis through various fee-based programs. EVD does not receive underwriting commissions on such sales.

For Class C shares, the shareholder pays no front-end commissions but may be subject to a contingent deferred sales charge on redemptions made within the first twelve months of purchase. EVD pays a commission and the projected first year service fees to the dealer at the time of sale. The fund makes monthly distribution plan and service fee payments to EVD at an annual rate of up to 75 basis points and 25 basis points, respectively, of average net assets of the Class. EVD retains the distribution and service fees paid to EVD for the first twelve months and pays the distribution and service fees to the dealer after one year.

Class I shares are offered at net asset value and are not subject to any sales charges, underwriter commissions, distribution fees or service fees. For designated Class I shares, a minimum investment of $250,000 or higher is normally required. Designated Institutional Class shares are normally subject to a minimum investment of $50,000. Sales of R6 shares are limited to participating retirement plans and certain other investors.

Class N shares are offered at net asset value and are not subject to any sales charges or underwriter commissions. EVD receives (and then pays to authorized firms after one year) combined distribution and service fees of 25 basis points of average net assets annually.

Class R shares are offered at net asset value with no front-end sales charge. The Company receives, and then generally pays to dealers, distribution fees of 25 basis points and service fees of 25 basis points of average net assets annually.

We also sponsor unregistered equity funds that are privately placed by EVD, as placement agent, and by various sub-agents to whom EVD and the subscribing shareholders make sales commission payments. The privately placed equity funds are managed by Eaton Vance Management and BMR.

The marketing and distribution of investment strategies to institutional and high-net-worth clients is subsidiary-specific. Eaton Vance Management has institutional sales, consultant relations and client service teams dedicated to supporting the U.S. marketing and sales of strategies managed by Eaton Vance Management, Calvert and Hexavest. Hexavest maintains its own marketing and distribution team to service institutional clients in Canada. Parametric and Atlanta Capital each maintain subsidiary-specific marketing and distribution teams to sell their respective investment strategies to U.S.-based institutions and high-net-worth investors. Parametric also maintains a dedicated institutional marketing and distribution team focused on the Australian and New Zealand markets. EVMI is otherwise responsible for the institutional marketing and distribution of all Eaton Vance Management-, Parametric-, Atlanta Capital-, Calvert- and Hexavest-advised strategies to institutions outside of North America.

During the fiscal year ended October 31, 2017, there were no customers that provided over 10 percent of our total revenue.

Regulation

Eaton Vance Management, Parametric, Atlanta Capital, Calvert, BMR, EVIC, EVMI and EVAIL are each registered with the SEC under the Advisers Act. The Advisers Act imposes numerous obligations on registered investment advisers, including fiduciary duties, recordkeeping requirements, operational requirements and disclosure obligations. Most Eaton Vance-, Parametric- and Calvert-branded funds are registered with the SEC under the 1940 Act. The 1940 Act imposes additional obligations on fund advisers, including governance, compliance, reporting and fiduciary obligations relating to the management of funds. Except for privately offered funds exempt from registration, each U.S. fund is also required to make notice filings with most states and U.S. territories where it is offered for sale. Virtually all aspects of our investment management business in the U.S. are subject to various federal and state laws and regulations. These laws and regulations are primarily intended to benefit shareholders of the funds and separate account clients and generally grant supervisory agencies and bodies broad administrative powers, including the power to limit or restrict us from carrying on our investment management business in the event we fail to comply with such laws and regulations. In such event, the possible sanctions that may be imposed include the suspension of individual employees, limitations on Eaton Vance Management, Parametric, Atlanta Capital, Calvert, BMR, EVIC, EVMI and EVAIL engaging in the investment management business for specified periods of time, the revocation of any such company’s registration as an investment adviser, and other censures or fines.

Under a final rule and interpretive guidance issued by the Financial Stability Oversight Council (FSOC) in April 2012, certain non-bank financial companies have been designated for the Federal Reserve’s supervision as systemically important financial institutions (SIFIs). Additional non-bank financial companies, which may include large asset management companies such as us, may be designated as SIFIs in the future. If the Company were designated a SIFI, it would be subject to enhanced prudential measures, which could include capital and liquidity requirements, leverage limits, enhanced public disclosures and risk management requirements, annual stress testing by the Federal Reserve, credit exposure and concentration limits, supervisory and other requirements. These heightened

regulatory obligations could, individually or in the aggregate, adversely impact the Company’s business and operations.

Eaton Vance Management, Parametric and BMR are registered with the Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) as Commodity Pool Operators and Commodity Trading Advisors; other subsidiaries of the Company claim exemptions from registration. In August 2013, the CFTC adopted rules for operators of registered mutual funds that are subject to registration as Commodity Pool Operators generally allowing such commodity pools to comply with SEC disclosure, reporting and recordkeeping rules as the means of complying with CFTC’s similar requirements. These CFTC rules do not, however, relieve registered Commodity Pool Operators from compliance with applicable anti-fraud provisions as well as certain performance reporting and recordkeeping requirements. The Company may incur ongoing costs associated with monitoring compliance with these requirements, including, but not limited to, CFTC and NFA registration and exemption obligations and the periodic reporting requirements of Commodity Pool Operators and Commodity Trading Advisors.

Our mutual funds, privately offered funds and separate accounts that trade CFTC-regulated instruments are also regulated by the CFTC. In the event that Eaton Vance Management, Parametric or BMR fails to comply with applicable requirements, the CFTC may suspend or revoke its registration, prohibit it from trading or doing business with registered entities, impose civil penalties, require restitution and seek fines or imprisonment for criminal violations. In the event that the Eaton Vance clients that trade CFTC-regulated instruments fail to comply with requirements applicable to their trading, they would be subject to the foregoing remedies excluding suspension of license (provided they are not registered). In addition, to the extent any of the entities trade on a futures exchange or Swap Execution Facility, they would be subject to possible sanction for any violation of the facility’s rules.

EVTC is registered as a non-depository Maine Trust Company and is subject to regulation by the State of Maine Bureau of Financial Institutions (Bureau of Financial Institutions). EVTC is subject to certain capital requirements, as determined by the Examination Division of the Bureau of Financial Institutions. At periodic intervals, regulators from the Bureau of Financial Institutions examine the Company’s and EVTC’s financial condition as part of their legally prescribed oversight function. There were no violations by EVTC of these capital requirements in fiscal 2017 or prior years.

EVD is registered as a broker-dealer under the Exchange Act and is subject to regulation by the Financial Industry Regulatory Authority (FINRA), the SEC and other federal and state agencies. EVD is subject to the SEC’s net capital rule designed to enforce minimum standards regarding the general financial condition and liquidity of broker-dealers. Under certain circumstances, this rule may limit our ability to make withdrawals of capital and receive dividends from EVD. EVD’s regulatory net capital consistently exceeded minimum net capital requirements during fiscal 2017. The securities industry is one of the most highly regulated in the United States, and failure to comply with related laws and regulations can result in the revocation of broker-dealer licenses, the imposition of censures or fines, and the suspension or expulsion from the securities business of a firm, its officers or employees.

EVMI has the permission of the Financial Conduct Authority (FCA) to conduct a regulated business in the United Kingdom. EVMI’s primary business purpose is to distribute our investment products in Europe and certain other international markets. Under the Financial Services and Markets Act of the United Kingdom, EVMI is subject to certain liquidity and capital requirements. Such requirements may limit our ability to make withdrawals of capital from EVMI. In addition, failure to comply with such requirements could jeopardize EVMI’s approval to conduct business in the United Kingdom. There were no violations by EVMI of the liquidity and capital requirements in fiscal 2017 or prior years.

EVAI has the permission of the Central Bank of Ireland to conduct its business of providing management services to the Eaton Vance International (Ireland) Funds Plc. EVAI is subject to certain liquidity and capital requirements. Such requirements may limit our ability to make withdrawals of capital from EVAI. There were no violations by EVAI of the liquidity and capital requirements in fiscal 2017 or prior years.

EVMIA has the permission of the Accounting and Corporate Regulatory Authority (ACRA) to conduct a regulated business in Singapore. Under the Monetary Authority of Singapore, EVMIA is subject to certain liquidity and capital requirements. Such requirements may limit our ability to make withdrawals of capital from EVMIA. There were no violations by EVMIA of the liquidity and capital requirements in fiscal 2017 or prior years.

EVAIL obtained authorization from the FCA on August 22, 2017 to become a Full Scope Alternative Investment Fund Manager (AIFM). Effective November 1, 2017, EVAIL acts as a sub-investment manager to Alternative Investment Funds (AIFs), Undertakings for Collective Investment in Transferable Securities (UCITS), funds registered under the 1940 Act and separately managed accounts. Under the Financial Services and Markets Act of the United Kingdom, EVAIL is subject to certain liquidity and capital requirements. Such requirements may limit our ability to make withdrawals of capital from EVAIL. In addition, failure to comply with such requirements could jeopardize EVAIL’s approval to conduct business in the United Kingdom. There were no violations by EVAIL of the liquidity and capital requirements in fiscal 2017.

Our officers, directors and employees may from time to time own securities that are held by one or more of the funds and separate accounts we manage. Our internal policies with respect to individual investments by investment professionals and other employees with access to investment information require prior clearance of most types of transactions and reporting of all securities transactions, and restrict certain transactions to help avoid the possibility of conflicts of interest. All employees are required to comply with all prospectus restrictions and limitations on purchases, sales or exchanges of our mutual fund shares and to pre-clear purchases and sales of shares of our closed-end funds.

Geographic Information

Certain financial information about the Company’s geographic areas is contained in Note 24 of our Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K.

Competition

The investment management business is a highly competitive global industry and we are subject to substantial competition in each of our principal product categories and distribution channels. There are few barriers to entry for new firms and consolidation within the industry continues to alter the competitive landscape. According to the Investment Company Institute, there were approximately 850 investment managers at the end of calendar 2016 that competed in the U.S. mutual fund market. We compete with these firms, many of which have substantially greater resources, on the basis of investment performance, diversity of products, distribution capability, scope and quality of service, fees charged, reputation and the ability to develop new investment strategies and products to meet the changing needs of investors.

In recent years, investor demand for passive investment strategies employed by index mutual funds and index exchange-traded funds (ETFs) has outpaced the demand for higher-fee actively-managed investment strategies. Across many asset classes, actively-managed strategies as a whole are experiencing net outflows. While our Custom Beta lineup of rules-based separate managed accounts, Calvert index funds and other passive strategies are positioned to benefit from market demand for passive investment strategies, a large majority of our management fee revenue is derived from active strategies. The continuing shift in market

demand toward index funds and other passive strategies reduces opportunities for active managers and may accelerate fee compression.

In the retail fund channel, we compete with other mutual fund management, distribution and service companies that distribute through affiliated and unaffiliated sales forces, broker-dealers and direct sales to the public. According to the Investment Company Institute, at the end of calendar 2016 there were over 9,500 open-end registered funds of varying sizes and investment objectives whose shares were being offered to the public in the United States. We rely primarily on intermediaries to distribute our products and pursue sales relationships with all types of intermediaries to broaden our distribution network. A failure to maintain strong relationships with intermediaries that distribute our products in the retail fund channel could adversely affect our gross and net sales, assets under management, revenue and financial condition.

We are also subject to substantial competition in the retail managed account channel from other investment management firms. Sponsors of retail managed account programs limit the number of approved managers within their programs and firms compete based on investment performance and other considerations to win and maintain positions in these programs.

In the high-net-worth and institutional separate account channels, we compete with other investment management firms based on the breadth of product offerings, investment performance, strength of reputation, price and the scope and quality of client service.

Employees

On October 31, 2017, we and our controlled subsidiaries had 1,638 full-time and part-time employees. On October 31, 2016, the comparable number was 1,510.

Available Information

We make available free of charge our Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports filed or furnished pursuant to Section 13 and 15(d) of the Exchange Act as soon as reasonably practicable after such filing has been made with the SEC. Reports may be viewed and obtained on our website at www.eatonvance.com, or by calling Investor Relations at 617-482-8260. We have included our website address in this Annual Report on Form 10-K as inactive textual reference only. Information on our website is not incorporated by reference into this Annual Report on Form 10-K.

The public may read and copy any of the materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. Information on the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains an Internet site that contains reports, proxies and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov.

Item 1A. Risk Factors

We are subject to substantial competition in all aspects of our investment management business. Our funds and separate accounts compete against a large number of investment products and services sold to the public by investment management companies, investment dealers, banks, insurance companies and others. Many institutions we compete with have greater financial resources than us and there are few barriers to entry. We compete with these firms on the basis of investment performance, diversity of products, distribution capability, scope and quality of services, reputation and the ability to develop new investment strategies and

products to meet the changing needs of investors. To the extent that current or potential customers decide to invest in products sponsored by our competitors, the sales of our products as well as our market share, revenue and net income could decline. Our actively managed investment strategies compete not only against other active strategies, but also against similarly positioned index strategies. The continuing shift in market demand toward index funds and other passive strategies reduces opportunities for active managers and may accelerate fee compression. To the extent that trend continues, our business could be adversely affected.

The investment management industry is highly competitive and investment management customers are increasingly fee sensitive. In the event that competitors charge lower fees for substantially similar products, we may be forced to compete on the basis of price in order to attract and retain customers. Rules and regulations applicable to registered investment companies provide, in substance, that each investment advisory agreement between a fund and its investment adviser continues in effect from year to year only if its continuation is approved at least annually by the fund’s board of trustees. Periodic review of fund advisory agreements could result in a reduction in the Company’s advisory fee revenues from funds. Fee reductions on existing or future business and/or the impact of evolving industry fee structures could have an adverse impact on our future revenue and profitability.

The inability to access clients through intermediaries could have a material adverse effect on our business. Our ability to market investment products is highly dependent on access to the various distribution systems of national and regional securities dealer firms, which generally offer competing products that could limit the distribution of our investment products. There can be no assurance that we will be able to retain access to these intermediaries. The inability to have such access could have a material adverse effect on our business. To the extent that existing or potential customers, including securities broker-dealers, decide to invest in or broaden distribution relationships with our competitors, the sales of our products as well as our market share, revenue and net income could decline. Certain intermediaries with which we conduct business charge the Company fees to maintain access to their distribution networks. If we choose not to pay such fees, our ability to distribute through those intermediaries would be limited.

Our investment advisory agreements are subject to termination on short notice or non-renewal. We derive almost all of our revenue from management fees, distribution income and service fees received from managed funds and separate accounts. As a result, we are dependent upon management contracts, administrative contracts, distribution contracts, underwriting contracts or service contracts under which these fees are paid. Generally, these contracts are terminable upon 30 to 60 days’ notice without penalty. If any of these contracts are terminated, not renewed, or amended to reduce fees, our financial results could be adversely affected.

Our assets under management, which impact revenue, are subject to significant fluctuations. Our major sources of revenue, including investment advisory, administrative, distribution and service fees, are generally calculated as percentages of assets under management. Fee rates for our investment products generally vary by investment mandate (e.g., equity, fixed income, floating-rate income, alternative, portfolio implementation or exposure management services) and vehicle (e.g., fund or separate account). An adverse change in asset mix by mandate or vehicle, independent of our level of assets under management, may result in a decrease in our overall average effective fee rate, thereby reducing our revenue and net income. Any decrease in the level of our assets under management generally would also reduce our revenue and net income. Assets under management could decrease due to, among other things, a decline in securities prices, a decline in the sales of our investment products, an increase in open-end fund redemptions or client withdrawals, repurchases of or other reductions in closed-end fund shares outstanding, or reductions in leverage used by investment vehicles. Adverse market conditions and/or lack of investor confidence in the financial markets could lead to a decrease in investor risk tolerance. A decrease in investor risk tolerance could result in investors withdrawing from

markets or decreasing their rate of investment, thereby reducing our overall assets under management and adversely affecting our revenue, earnings and growth prospects. Changes in investor risk tolerance could also result in investor allocation away from higher-fee products to lower-fee products, which could adversely affect our revenue and earnings. Our overall assets under management may not change in tandem with overall market conditions, as changes in our total assets under management may lag improvements or declines in the market based upon product mix and investment performance.

We could be adversely affected by changes in tax laws. Currently proposed and future changes in U.S. tax policy may affect us to a greater degree than many of our competitors because we manage significant assets in funds and separate accounts with an after-tax return objective. In addition, the currently proposed reduction in the federal tax rate for corporations may lower the carrying value of our deferred tax assets due to change in future tax rates.

Exposure to additional tax liabilities could have a material impact on our financial condition, results of operations and/or liquidity. Tax authorities may disagree with certain positions we take and assess additional taxes. We regularly assess the likely outcomes of these audits in order to determine the appropriateness of our tax provision. However, there can be no assurance that we will accurately predict the outcomes of these audits, and the actual outcomes of these audits could have a material impact on our financial statements. We are subject to ongoing tax audits in various jurisdictions, including several states. Changes in tax laws or tax rulings could materially impact our effective tax rate.

Poor investment performance of our products could affect our sales or reduce the amount of assets under management, negatively impacting revenue and net income. Investment performance is critical to our success. Poor investment performance on an absolute basis or as compared to third-party benchmarks or competitor products could lead to a decrease in sales and stimulate higher redemptions, thereby lowering the amount of assets under management and reducing the investment advisory fees we earn. A decline in investment performance of any investment franchise could have a material adverse effect on the level of assets under management, revenue and net income of that franchise. Past or present performance in the investment products we manage is not indicative of future performance.

Our clients can withdraw the assets we manage on short notice, making our future client and revenue base unpredictable. Our open-end fund clients generally may redeem their investments in these funds each business day without prior notice. While not subject to daily redemption, closed-end funds that we manage may shrink in size due to repurchases of shares in open-market transactions or pursuant to tender offers, or in connection with distributions in excess of realized returns. Institutional and individual separate account clients can terminate their relationships with us generally at any time. In a declining stock market, the pace of open-end fund redemptions could accelerate. Poor performance relative to other asset management firms can result in decreased purchases of open-end fund shares, increased redemptions of open-end fund shares, and the loss of institutional or individual separate accounts. The decrease in revenue that could result from any of these events could have a material adverse effect on our business.

We could be impacted by counterparty or client defaults. As we have seen in periods of significant market volatility, the deteriorating financial condition of one financial institution may materially and adversely impact the performance of others. We, and the funds and accounts we manage, have exposure to many different counterparties, and routinely execute transactions with counterparties across the financial industry. We, and the funds and accounts we manage, may be exposed to credit, operational or other risk in the event of a default by a counterparty or client, or in the event of other unrelated systemic market failures.

Our success depends on key personnel and our financial performance could be negatively affected by the loss of their services. Our success depends upon our ability to attract, retain and motivate qualified portfolio managers, analysts, investment counselors, sales and management personnel and other key professionals, including our executive officers. Our key employees generally do not have employment contracts and may voluntarily terminate their employment at any time. Certain senior executives and the non-employee members of our Board of Directors are subject to our mandatory retirement policy at age 65 and age 74, respectively. The loss of the services of key personnel or our failure to attract replacement or additional qualified personnel could negatively affect our financial performance. An increase in compensation to attract or retain personnel could result in a decrease in net income.

Our expenses are subject to fluctuations that could materially affect our operating results. Our results of operations are dependent on our level of expenses, which can vary significantly from period to period. Our expenses may fluctuate as a result of, among other things, variations in the level of compensation, expenses incurred to support distribution of our investment products, expenses incurred to develop new products and franchises, expenses incurred to enhance our infrastructure (including technology and compliance) and impairments of intangible assets or goodwill. Increases in our level of expenses, or our inability to reduce our level of expenses when necessary, could materially affect our operating results.

Our business is subject to operational risk. In the management and administration of funds and client accounts, we are subject to the risk that we commit errors that cause the Company to incur financial losses and damage our reputation. Because they involve large numbers of accounts and operate at generally low fee rates, our portfolio implementation and exposure management services businesses may be particularly susceptible to losses from operational or trading errors.

Our reputation could be damaged. We have built a reputation of high integrity, prudent investment management and superior client service. Our reputation is extremely important to our success. Any damage to our reputation could result in client withdrawals from funds or separate accounts that are advised by us and ultimately impede our ability to attract and retain key personnel. The loss of either client relationships or key personnel due to damage to our reputation could reduce the amount of assets under management and cause us to suffer a loss in revenue or a reduction in net income.

Success of our NextShares initiative is highly uncertain. In recent years, the Company has devoted substantial resources to the development of NextShares, a new type of actively managed fund designed to provide better performance for investors. The Company made progress advancing its NextShares initiative in fiscal 2017, and expects to continue the staged introduction of NextShares in fiscal 2018. Broad market adoption and commercial success requires the development of expanded distribution, the launch of NextShares by other fund sponsors and acceptance by market participants, which cannot be assured.

Support provided to new products may reduce fee income, increase expenses and expose us to potential loss on invested capital. We may support the development of new investment products by waiving all or a portion of the fees we receive for managing such products, by subsidizing expenses or by making seed capital investments. Seed investments in new products utilize Company capital that would otherwise be available for general corporate purposes and expose us to capital losses to the extent that realized investment losses are not offset by hedging gains. The risk of loss may be greater for seed capital investments that are not hedged, or if an intended hedge does not perform as expected. Failure to have or devote sufficient capital to support new products could have an adverse impact on our future growth.

We may need to raise additional capital or refinance existing debt in the future, and resources may not be available to us in sufficient amounts or on acceptable terms. Significant future demands on our capital include contractual obligations to service our debt, satisfy the terms of non-cancelable operating leases and purchase non-controlling interests in our majority-owned subsidiaries as described more fully in Contractual Obligations in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of this Annual Report on Form 10-K and in Note 10 in Item 8 of this Annual Report on Form 10-K. Although we believe our existing liquid assets, cash flows from operations and borrowing capacity under our credit facility are sufficient to meet our current and forecasted operating cash needs, our ability to satisfy our long-term contractual obligations may be dependent on our ability to access capital markets. Our ability to access capital markets efficiently depends on a number of factors, including the state of global credit and equity markets, interest rates, credit spreads and our credit ratings. If we are unable to access capital markets to issue new debt, refinance existing debt or sell shares of our Non-Voting Common Stock as needed, or if we are unable to obtain such financing on acceptable terms, our business could be adversely impacted.

We could be subject to losses and reputational harm if we, or our agents, fail to properly safeguard sensitive and confidential information or as a result of cyber attacks. We are dependent on the effectiveness of our information and cyber security policies, procedures and capabilities to protect our computer and telecommunications systems and the data that resides in or is transmitted through such systems. As part of our normal operations, we maintain and transmit confidential information about our clients and employees as well as proprietary information relating to our business operations. We maintain a system of internal controls designed to provide reasonable assurance that fraudulent activity, including misappropriation of assets, fraudulent financial reporting and unauthorized access to sensitive or confidential data, is either prevented or detected on a timely basis. Nevertheless, all technology systems remain vulnerable to unauthorized access and may be corrupted by cyber attacks, computer viruses or other malicious software code, the nature of which threats are constantly evolving and becoming increasingly sophisticated. In addition, authorized persons could inadvertently or intentionally release confidential or proprietary information. Although we take precautions to password protect and encrypt our mobile electronic hardware, if such hardware is stolen, misplaced or left unattended, it may become vulnerable to hacking or other unauthorized use, creating a possible security risk and resulting in potentially costly actions by us. Breach or other failure of our technology systems, including those of third parties with which we do business, or failure to timely and effectively identify and respond to any such breach or failure, could result in the loss of valuable information, liability for stolen assets or information, remediation costs to repair damage caused by the incident, additional security costs to mitigate against future incidents and litigation costs resulting from the incident. Moreover, loss of confidential customer identification information could harm our reputation, result in the termination of contracts by our existing customers and subject us to liability under laws that protect confidential personal data, resulting in increased costs or loss of revenues. Recent well-publicized security breaches at other companies have led to enhanced government and regulatory scrutiny of the measures taken by companies to protect against cyber attacks, and may in the future result in heightened cyber security requirements, including additional regulatory expectations for oversight of vendors and service providers.

Failure to maintain adequate infrastructure could impede our productivity and ability to support business growth. Our infrastructure, including our technological capacity, data centers and office space, is vital to the operations and competitiveness of our business. The failure to maintain an infrastructure commensurate with the size and scope of our business, including any expansion, could impede our productivity and growth, which could result in a decline in our earnings.

Failure to maintain adequate business continuity plans could have a material adverse impact on us and our products. Significant portions of our business operations and those of our critical third-party service providers are concentrated in a few geographic areas, including Boston, Massachusetts and Seattle, Washington. Critical

operations that are geographically concentrated in Boston and/or Seattle include trading operations, information technology, fund administration, and custody and portfolio accounting services for the Company’s products. Should we, or any of our critical service providers, experience a significant local or regional disaster or other business continuity problem, our continued success will depend in part on the safety and availability of our personnel, our office facilities, and the proper functioning of our computer, telecommunication and other related systems and operations. The failure by us, or any of our critical service providers, to maintain updated adequate business continuity plans, including backup facilities, could impede our ability to operate in the event of a disruption, which could cause our earnings to decline. We have developed various backup systems and contingency plans but we cannot be assured that they will be adequate in all circumstances that could arise or that material interruptions and disruptions will not occur. In addition, we rely to varying degrees on outside vendors for disaster contingency support, and we cannot be assured that these vendors will be able to perform in an adequate and timely manner. If we, or any of our critical service providers, are unable to respond adequately to such an event in a timely manner, we may be unable to continue our business operations, which could lead to a damaged reputation and loss of customers that results in a decrease in assets under management, lower revenues and reduced net income.

We pursue growth in the United States and abroad in part through acquisitions, which exposes us to risks inherent in assimilating new operations, expanding into new jurisdictions and executing on new development opportunities. Our growth strategy is based in part on the selective development or acquisition of asset management or related businesses that we believe will add value to our business and generate positive net returns. This strategy may not be effective, and failure to successfully develop and implement such a strategy may decrease earnings and harm the Company’s competitive position in the investment management industry. We cannot guarantee that we will identify and consummate any such transactions on acceptable terms or have sufficient resources to accomplish such a strategy. In addition, any strategic transaction can involve a number of risks, including additional demands on our staff; unanticipated problems regarding integration of operating facilities, technologies and new employees; and the existence of liabilities or contingencies not disclosed to or otherwise known by us prior to closing a transaction. As a result, the Company may not be able to realize all of the benefits that it hoped to achieve from such transactions. In addition, we may be required to spend additional time or money on integration that would otherwise be spent on the development and expansion of our business and services.

Expansion into international markets and the introduction of new products and/or services increases our operational, regulatory and other risks. We continue to increase our product offerings and international business activities. As a result of such expansion, we face increased operational, regulatory, compliance and reputational risks. The failure of our compliance and internal control systems to properly mitigate such additional risks, or of our operating infrastructure to support such expansion, could result in operational failures and regulatory fines or sanctions. Our operations in the United Kingdom, the European Economic Area, Australia and Singapore are subject to significant compliance, disclosure and other obligations. We incur additional costs to satisfy the requirements of the European Union Directive on Undertakings for Collective Investments in Transferable Securities, the Alternative Investment Fund Managers Directive and the Markets in Financial Instruments Directive (which is to be replaced, as described below) (together, the Directives). The Directives may also limit our operating flexibility and impact our ability to expand in European markets. Activity in international markets also exposes us to fluctuations in currency exchange rates, which may adversely affect the U.S. dollar value of revenues, expenses and assets associated with our business activities outside the United States. Actual and anticipated changes in current exchange rates may also adversely affect international demand for our investment products and services, most of which represent investments primarily in U.S. dollar-based assets. Because certain of our costs to support international business activities are based in local currencies, the profitability of such activities in U.S. dollar terms may be adversely affected by a weakening of the U.S. dollar versus other currencies in which we derive significant revenues.

Legal and regulatory developments affecting the investment industry could increase our regulatory costs and/or reduce our revenues. Our business is subject to complex and extensive regulation by various regulatory authorities in jurisdictions around the world. This regulatory environment may be altered without notice by new laws or regulations, revisions to existing regulations or new interpretations or guidance. Global financial regulatory reform initiatives may result in more stringent regulation, and changes in laws or regulations and their application to us could have a material adverse impact on our business, our profitability and mode of operations. In recent years, regulators in both the United States and abroad have increased oversight of the financial sector of the economy. Some of the newly adopted and proposed regulations are focused directly on the investment management industry, while others are more broadly focused, but impact our industry. It is uncertain how regulatory trends will be affected by current and future political developments.

Under a final rule and interpretive guidance issued by FSOC in April 2012, certain non-bank financial institutions have been designated for the Federal Reserve’s supervision as SIFIs. Additional non-bank financial companies, which may include large asset management companies such as us, may be designated as SIFIs in the future. If we are designated a SIFI, we would be subject to enhanced prudential measures, which could include capital and liquidity requirements, leverage limits, enhanced public disclosures and risk management requirements, annual stress testing by the Federal Reserve, credit exposure and concentration limits, supervisory and other requirements. These heightened regulatory obligations could, individually or in the aggregate, adversely impact our business and operations.

The regulation of derivatives markets has undergone substantial change in recent years and such change may continue. In particular, the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), and regulations proposed to be promulgated thereunder require many derivatives to be cleared and traded on an exchange, expand entity registration requirements, impose business conduct requirements on counterparties, and impose other regulatory requirements that will continue to change derivative markets as regulations are implemented. Additional regulation of the derivatives markets may make the use of derivatives more costly, may limit the availability or reduce the liquidity of derivatives, and may impose limits or restrictions on the counterparties to derivative transactions.

Certain of our subsidiaries are required to file quarterly reports on Form PF for private funds they manage, pursuant to systemic risk reporting requirements adopted by the SEC. These filings require significant investments in people and systems to ensure timely and accurate reporting. Further investment will be necessary in the coming years as we implement rules adopted by the SEC in 2016 that amended Form ADV and established Form N-PORT to require additional reporting for the separate accounts and Registered Funds we manage, respectively.

As of December 24, 2016, all securitization transactions became subject to risk retention rules, requiring the Company to hold interests equal to at least 5 percent of the credit risk of the assets of any new CLO entities that we manage (unless the CLO entity invests only in certain qualifying loans) and limiting the Company’s ability to sell or hedge those interests. The new mandatory risk retention requirement for CLO entities may result in the Company having to invest money to launch new CLO entities that would otherwise be available for other uses. Such investments would also subject the Company to exposure to the underlying performance of the assets of the CLO entities and could have an adverse impact on our results of operations or financial condition.

In 2016, the U.S. Department of Labor (DOL) began introducing changes to definitions and rules relating to fiduciaries serving holders of qualified retirement accounts. Full implementation has been delayed, and may be further delayed, during which time additional revisions may be made to the definitions and rules relating to fiduciaries. If adopted as currently proposed, the DOL’s changes may materially impact how advice can be provided to retirement account holders in 401(k) plans, individual retirement accounts and other qualified retirement programs. We may need to modify our interactions or limit distribution to retirement plans, which could negatively affect our results of operations. Our revenues and expenses may also be adversely affected by the new rule adopted in 2016 by the SEC to address liquidity risk management by registered open-end funds and the new rule proposed in 2015 to address use of derivatives by registered open-end and closed-end funds. These rules could limit investment opportunities for certain funds we manage and increase our management and administration costs.

In Europe, effective January 3, 2018, the revised Markets in Financial Instruments Directive (MiFID II Directive) and the Markets in Financial Instruments Regulation (MiFIR) (collectively, MiFID II) will replace the existing Markets in Financial Instruments Directive and apply throughout the European Union and member states of the European Economic Area. Implementation of MiFID II will significantly affect both the structure and operation of the European Union financial markets and, as such, there will be direct and indirect effects on the Company’s operations in the European Economic Area. Some of the main changes introduced by this new regime include: (i) enhancing business conduct and governance requirements; (ii) broadening the scope of pre- and post-trade transparency; (iii) enhancing disclosure requirements; (iv) increasing transaction reporting requirements; (v) revising the relationship between client commissions and investment research services; and (vi) further regulating trading revenue. Compliance with MiFID II will increase costs and affect the manner in which our businesses obtain investment research services.

The ultimate impact of the United Kingdom’s exit from the European Union (Brexit) on the Company’s business operations in the United Kingdom and Europe is still unknown and will vary depending on the terms of the impending separation agreement. Ongoing changes in the European Union’s regulatory framework applicable to the Company’s operations, including Brexit as well as any other changes in the composition of the European Union’s member states, may add complexity to the Company’s global operations and impose additional risks.

All of these new and developing laws and regulations will likely result in greater compliance and administrative burdens on us, increasing our expenses.

Our business is subject to risk from regulatory investigation, potential securities laws, liability and litigation. We are subject to federal securities laws, state laws regarding securities fraud, other federal and state laws and rules, and regulations of certain regulatory, self-regulatory and other organizations, including, among others, the SEC, FINRA, the CFTC, the NFA, the FCA and the New York Stock Exchange. While we have focused significant attention and resources on the development and implementation of compliance policies, procedures and practices, non-compliance with applicable laws, rules or regulations, either in the United States or abroad, or our inability to adapt to a complex and ever-changing regulatory environment could result

in sanctions against us, which could adversely affect our reputation, business, revenue and earnings. From time to time, various claims or potential claims against us arise in the ordinary course of business, including employment-related claims. We carry insurance in amounts and under terms that we believe are appropriate. We cannot guarantee that our insurance will cover most liabilities and losses to which we may be exposed, or that our insurance policies will continue to be available at acceptable terms and fees. Certain insurance coverage may not be available or may be prohibitively expensive in future periods. As our insurance policies come up for renewal, we may need to assume higher deductibles or pay higher premiums, which would increase our expenses and reduce our net income.

Our Non-Voting Common Stock lacks voting rights. Our Non-Voting Common Stock has no voting rights under any circumstances. All voting power resides with our Voting Common Stock, all shares of which are held by officers of the Company and our subsidiaries and deposited in a voting trust (the Voting Trust) in exchange for Voting Trust Receipts. As of October 31, 2017, there were 23 holders of Voting Trust Receipts representing Voting Common Stock, each holder of which is a Voting Trustee of the Voting Trust. Holders of Non-Voting Common Stock should understand that such ownership interests have no ability to vote in the election of the Company’s Board of Directors or otherwise to influence the Company’s management and strategic direction.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We conduct our principal operations through leased offices located in Boston, Massachusetts; Atlanta, Georgia; Minneapolis, Minnesota; New York, New York; Seattle, Washington; Washington, District of Columbia; Westport, Connecticut; London, England; Singapore; Sydney, Australia; and Tokyo, Japan. For more information, please see Note 20 of our Notes to Consolidated Financial Statements contained in Item 8 of this Annual Report on Form 10-K.

Item 3. Legal Proceedings

We are party to various legal proceedings that are incidental to our business. We believe these legal proceedings will not have a material effect on our consolidated financial condition, results of operations or cash flows.

Item 4. Mine Safety Disclosures

Not applicable.

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Price Range of Non-Voting Common Stock, Dividend History and Policy

Our Voting Common Stock, $0.00390625 par value, is not publicly traded, and was held as of October 31, 2017 by 23 Voting Trustees pursuant to the Voting Trust described in Item 12 hereof, which Item is incorporated herein by reference. Dividends on our Voting Common Stock are paid quarterly and are equal to the dividends paid on our Non-Voting Common Stock (see below).

Our Non-Voting Common Stock, $0.00390625 par value, is listed on the New York Stock Exchange under the symbol EV. The approximate number of registered holders of record of our Non-Voting Common Stock at October 31, 2017 was 803. The high and low common stock sales prices and dividends declared per share were as follows for the periods indicated:

	Fiscal 2017						Fiscal 2016
	High Price		Low Price		Dividends Per Share		High Price		Low Price		Dividends Per Share
Quarter Ended:
January 31	$	44.00	$	34.44	$	0.280	$	38.15	$	26.64	$	0.265
April 30	$	47.83	$	41.40	$	0.280	$	36.41	$	26.44	$	0.265
July 31	$	50.10	$	42.65	$	0.280	$	37.94	$	32.97	$	0.265
October 31	$	52.36	$	45.06	$	0.310	$	40.36	$	34.96	$	0.280

We currently expect to declare and pay quarterly dividends on our Voting and Non-Voting Common Stock that are comparable to those declared in the fourth quarter of fiscal 2017.

Performance Graph

The following graph compares the cumulative total shareholder return on our Non-Voting Common Stock for the period from November 1, 2012 through October 31, 2017 to that of the Morningstar Financial Services Sector Index and the Standard & Poor’s 500 Stock Index (S&P 500 Index) over the same period. The comparison assumes $100 was invested on October 31, 2012 in our Non-Voting Common Stock and the compared indices at the closing price on that day and assumes reinvestments of all dividends paid over the period.

Comparison of Five-Year Cumulative Total Shareholder Return

Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The table below sets forth information regarding purchases by the Company of our Non-Voting Common Stock on a monthly basis during the fourth quarter of fiscal 2017:

					(c)		(d)
	(a)				Total Number of		Maximum Number
	Total		(b)		Shares Purchased		of Shares That May
	Number of		Average		as Part of Publicly		Yet Be Purchased
	Shares		Price Paid		Announced Plans		Under the Plans
Period	Purchased		Per Share		or Programs⁽¹⁾		or Programs
August 1, 2017 through August 31, 2017		117,469	$	46.88		117,469		6,484,920
September 1, 2017 through September 30, 2017		416,000	$	47.24		416,000		6,068,920
October 1, 2017 through October 31, 2017		15,962	$	50.44		15,962		6,052,958
Total		549,431	$	47.26		549,431		6,052,958

⁽¹⁾

We announced a share repurchase program on January 11, 2017, which authorized the repurchase of up to 8,000,000 shares of our Non-Voting Common Stock in the open market and in private transactions in accordance with applicable securities laws. This repurchase program is not subject to an expiration date.

Item 6. Selected Financial Data

The following table contains selected financial data for the last five years. This data should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in Item 7 and our Consolidated Financial Statements and Notes to Consolidated Financial Statements included in Item 8 of this Annual Report on Form 10-K.

Financial Highlights

	For the Years Ended October 31,
(in thousands, except per share data)	2017		2016		2015		2014		2013

Income Statement Data:
Total revenue	$	1,529,010	$	1,342,860	$	1,403,563	$	1,450,294	$	1,357,503
Operating Income⁽¹⁾		482,758		414,268		400,447		519,857		453,007
Net income⁽¹⁾		306,373		264,757		238,191		321,164		230,426
Net income attributable to non-controlling and other beneficial interests⁽²⁾		24,242		23,450		7,892		16,848		36,585
Net income attributable to Eaton Vance Corp. shareholders⁽¹⁾		282,131		241,307		230,299		304,316		193,841
Adjusted net income attributable to Eaton Vance Corp. shareholders⁽³⁾		288,187		242,908		274,990		309,627		262,942

Balance Sheet Data:
Total assets⁽⁴⁾⁽⁵⁾	$	2,330,901	$	1,730,382	$	2,113,737	$	1,856,814	$	2,403,473
Debt⁽⁵⁾⁽⁶⁾		618,843		571,773		571,077		570,382		569,723
Redeemable non-controlling interests (temporary equity)		250,823		109,028		88,913		107,466		74,856
Total Eaton Vance Corp. shareholders' equity		1,011,396		703,789		620,231		655,176		669,784
Non-redeemable non-controlling interests		864		786		1,725		2,305		1,755
Total permanent equity		1,012,260		704,575		621,956		657,481		671,539

Per Share Data:
Earnings per share:
Basic	$	2.54	$	2.20	$	2.00	$	2.55	$	1.60
Diluted		2.42		2.12		1.92		2.44		1.53
Adjusted diluted⁽³⁾		2.48		2.13		2.29		2.48		2.08
Cash dividends declared		1.150		1.075		1.015		0.910		1.820

⁽¹⁾

Operating income, net income and net income attributable to Eaton Vance Corp. shareholders reflect a one-time payment of $73.0 million to terminate service and additional compensation arrangements in place with a major distribution partner for certain Eaton Vance closed-end funds in fiscal 2015.

⁽²⁾

Net income attributable to non-controlling and other beneficial interests reflects an increase (decrease) of $0.5 million, $0.2 million, $(0.2) million, $5.3 million and $24.3 million in the estimated redemption value of redeemable non-controlling interests in our majority-owned subsidiaries in fiscal 2017, 2016, 2015, 2014 and 2013, respectively. Net income attributable to non-controlling and other beneficial interests also includes net income (loss) of $9.8 million, $(5.8) million, $(4.1) million and $(8.5) million, respectively, in fiscal 2016, 2015, 2014 and 2013 related to certain consolidated collateralized loan obligation (CLO) entities and borne by other beneficial interest holders of these consolidated CLO entities. There were no other beneficial interest holders of the warehousing phase CLO entity consolidated by the Company at the end of fiscal 2017.

⁽³⁾

Although the Company reports its financial results in accordance with U.S. generally accepted accounting principles (U.S. GAAP), management believes that certain non-U.S. GAAP financial measures, specifically, adjusted net income attributable to Eaton Vance Corp. shareholders and

adjusted earnings per diluted share, while not a substitute for U.S. GAAP financial measures, may be effective indicators of the Company’s performance over time. Non-U.S. GAAP financial measures should not be construed to be superior to U.S. GAAP measures. In calculating these non-U.S. GAAP financial measures, net income attributable to Eaton Vance Corp. shareholders and earnings per diluted share are adjusted to exclude items management deems non-operating or non-recurring in nature or otherwise outside the ordinary course of business. These adjustments may include the add back of adjustments made in connection with changes in the estimated redemption value of non-controlling interests in our affiliates redeemable at other than fair value (non-controlling interest value adjustments) and, when applicable, other items such as closed-end fund structuring fees, special dividends, costs associated with retiring debt and tax settlements. Management and our Board of Directors, as well as certain of our outside investors, consider these adjusted numbers a measure of the Company’s underlying operating performance. Management believes adjusted net income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted share are important indicators of our operations because they exclude items that may not be indicative of, or are unrelated to, our core operating results, and may provide a useful baseline for analyzing trends in our underlying business. Our use of these adjusted numbers, including reconciliations of net income attributable to Eaton Vance Corp. shareholders to adjusted net income attributable to Eaton Vance Corp. shareholders and earnings per diluted share to adjusted earnings per diluted share, is discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 of this Annual Report on Form 10-K.

⁽⁴⁾

Total assets on October 31, 2017, 2015, 2014 and 2013 include $31.3 million, $467.1 million, $156.5 million and $728.1 million of assets held by consolidated CLO entities, respectively. The Company did not consolidate any CLO entities as of October 31, 2016.

⁽⁵⁾

In fiscal 2017, the Company adopted Accounting Standard Update 2015-03, which requires certain debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability. Total assets and debt were each reduced by $2.2 million, $2.7 million, $3.3 million and $3.8 million as of October 31, 2016, 2015, 2014 and 2013, respectively, to reflect the reclassification of debt issuance costs from other assets to debt.

⁽⁶⁾

In fiscal 2017, the Company issued $300 million of 3.5 percent Senior Notes due April 2027 and used the net proceeds from the issuance to redeem the remaining $250 million aggregate principal amount of its 6.5 percent Senior Notes due October 2017 (2017 Senior Notes). The Company recognized a loss on extinguishment of debt totaling $5.4 million in conjunction with the retirement in fiscal 2017. In fiscal 2013, the Company tendered for and repurchased $250 million of its 2017 Senior Notes and issued $325 million of 3.625 percent Senior Notes due June 2023. The Company recognized a loss on extinguishment of debt totaling $53.0 million in conjunction with the repurchase in fiscal 2013.

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Through Eaton Vance Management, Atlanta Capital, Calvert and our other affiliates, we manage active equity, income and alternative strategies across a range of investment styles and asset classes, including U.S. and global equities, floating-rate bank loans, municipal bonds, global income, high-yield and investment grade bonds. Through Parametric, we manage a range of engineered alpha strategies, including systematic equity, systematic alternatives and managed options strategies. Through Parametric, we also provide portfolio implementation and overlay services, including tax-managed and non-tax-managed Custom Core equity strategies, centralized portfolio management of multi-manager portfolios and customized exposure management services. We also oversee the management of, and distribute, investment funds sub-advised by

unaffiliated third-party managers, including global, emerging market and regional equity and asset allocation strategies.

We also commit significant resources to serving institutional and high-net-worth clients who access investment management services on a direct basis and through investment consultants. Through our wholly-owned affiliates and consolidated subsidiaries, we manage investments for a broad range of clients in the institutional and high-net-worth marketplace in the U.S. and internationally, including corporations, sovereign wealth funds, endowments, foundations, family offices and public and private employee retirement plans.

Our revenue is derived primarily from management, distribution and service fees received from Eaton Vance-, Parametric- and Calvert-branded funds and management fees received from separate accounts. Our fees are based primarily on the value of the investment portfolios we manage and fluctuate with changes in the total value and mix of assets under management. As a matter of course, investors in our sponsored open-end funds and separate accounts have the ability to redeem their investments at any time, without prior notice, and there are no material restrictions that would prevent them from doing so. Our major expenses are employee compensation, distribution-related expenses, service fee expense, facilities expense and information technology expense.

Our discussion and analysis of our financial condition, results of operations and cash flows is based upon our Consolidated Financial Statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to goodwill and intangible assets, income taxes, investments and stock-based compensation. We base our estimates on historical experience and on various assumptions that we believe to be reasonable under current circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates.

Business Developments

Please see “Recent Developments” within Item 1, “Business,” of this Annual Report on Form 10-K for a summary of recent developments in our business.

Consolidated Assets under Management

Prevailing equity and income market conditions and investor sentiment affect the sales and redemptions of our investment products, managed asset levels, operating results and the recoverability of our investments. During fiscal 2017, the S&P 500 Index, a broad measure of U.S. equity market performance, had total returns of 22.0 percent and the MSCI Emerging Market Index, a broad measure of emerging market equity performance, had total returns of 24.0 percent. Over the same period, the Barclays U.S. Aggregate Bond Index, a broad measure of U.S. bond market performance, had total returns of 0.8 percent.

Consolidated assets under management of $422.3 billion on October 31, 2017 increased $85.9 billion, or 26 percent, from the $336.4 billion of consolidated assets under management on October 31, 2016. The year-over-year increase in consolidated assets under management reflects net inflows of $37.8 billion, market appreciation in managed assets of $38.2 billion, and $9.9 billion of new managed assets gained in the acquisition of the business assets of Calvert Investment Management, Inc. (Calvert Investments). Consolidated net inflows of $37.8 billion in fiscal 2017 represent 11 percent internal growth in managed assets (consolidated net inflows divided by beginning of period consolidated assets under management). For comparison, the Company had consolidated net inflows of $19.3 billion and $16.7 billion in fiscal 2016 and 2015, respectively, representing 6 percent internal growth in managed assets in both fiscal 2016 and 2015. Average consolidated assets under management of $382.4 billion for the year ended October 31, 2017 increased $61.5 billion, or 19 percent, from the $320.9 billion of average consolidated assets under management for the fiscal year ended October 31, 2016.

The following tables summarize our consolidated assets under management by investment mandate, investment vehicle and investment affiliate as of October 31, 2017, 2016 and 2015. Within the investment mandate table, the “Portfolio implementation” category consists of Parametric’s Custom Core equity strategies and centralized portfolio management services, and the “Exposure management” category consists of Parametric’s futures- and options-based customized exposure management services.

Consolidated Assets under Management by Investment Mandate ⁽¹⁾

	October 31,															2017			2016
			% of					% of					% of			vs.			vs.
(in millions)	2017		Total			2016		Total			2015		Total			2016			2015
Equity⁽²⁾⁽³⁾	$	113,472		27	%	$	89,981		27	%	$	89,890		29	%		26	%		0	%
Fixed income⁽³⁾⁽⁴⁾		70,797		17	%		60,607		18	%		52,465		17	%		17	%		16	%
Floating-rate income⁽³⁾		38,819		9	%		32,107		10	%		35,534		11	%		21	%		-10	%
Alternative⁽³⁾		12,637		3	%		10,687		3	%		10,289		3	%		18	%		4	%
Portfolio implementation		99,615		23	%		71,426		21	%		59,487		19	%		39	%		20	%
Exposure management		86,976		21	%		71,572		21	%		63,689		21	%		22	%		12	%
Total	$	422,316		100	%	$	336,380		100	%	$	311,354		100	%		26	%		8	%

⁽¹⁾

Consolidated Eaton Vance Corp. See table on page 40 for directly managed assets and flows of 49 percent-owned Hexavest Inc., which are not included in the table above.

⁽²⁾

Includes balanced and multi-asset mandates.

⁽³⁾

⁽⁴⁾

Includes cash management mandates.

Equity assets under management included $38.1 billion, $31.4 billion and $31.7 billion of assets managed for after-tax returns on October 31, 2017, 2016 and 2015, respectively. Portfolio implementation assets under management included $70.2 billion, $48.5 billion and $40.0 billion of assets managed for after-tax returns on October 31, 2017, 2016 and 2015, respectively. Fixed income assets included $40.6 billion, $36.1 billion and $30.3 billion of municipal income assets on October 31, 2017, 2016 and 2015, respectively.

Consolidated Assets under Management by Investment Vehicle⁽¹⁾

	October 31,															2017			2016
			% of					% of					% of			vs.			vs.
(in millions)	2017		Total			2016		Total			2015		Total			2016			2015
Open-end funds⁽²⁾	$	97,601		23	%	$	74,721		22	%	$	74,838		24	%		31	%		0	%
Closed-end funds⁽³⁾		24,816		6	%		23,571		7	%		24,449		8	%		5	%		-4	%
Private funds⁽⁴⁾		34,436		8	%		27,430		8	%		26,647		8	%		26	%		3	%
Institutional separate accounts		159,986		38	%		136,451		41	%		119,987		39	%		17	%		14	%
High-net-worth separate accounts		39,715		9	%		25,806		8	%		24,516		8	%		54	%		5	%
Retail managed accounts		65,762		16	%		48,401		14	%		40,917		13	%		36	%		18	%
Total	$	422,316		100	%	$	336,380		100	%	$	311,354		100	%		26	%		8	%

⁽¹⁾

Consolidated Eaton Vance Corp. See table on page 40 for directly managed assets and flows of 49 percent-owned Hexavest Inc., which are not included in the table above.

⁽²⁾

Includes assets in NextShares funds.

⁽³⁾

Includes unit investment trusts.

⁽⁴⁾

Includes privately offered equity, fixed income and floating-rate income funds and collateralized loan obligation (CLO) entities.

The following table summarizes our assets under management by investment affiliate as of October 31, 2017, 2016 and 2015:

Consolidated Assets under Management by Investment Affiliate⁽¹⁾

							2017			2016
	October 31,						vs.			vs.
(in millions)	2017		2016		2015		2016			2015
Eaton Vance Management⁽²⁾⁽³⁾	$	164,257	$	143,918	$	141,514		14	%		2	%
Parametric⁽³⁾		224,941		173,981		152,413		29	%		14	%
Atlanta Capital⁽³⁾⁽⁴⁾		22,379		18,481		17,427		21	%		6	%
Calvert Research and Management⁽⁴⁾		10,739		-		-		NM⁽⁵⁾			NM
Total	$	422,316	$	336,380	$	311,354		26	%		8	%

⁽¹⁾

Consolidated Eaton Vance Corp. See table on page 40 for directly managed assets and flows of 49 percent-owned Hexavest Inc., which are not included in the table above.

⁽²⁾

Includes managed assets of Eaton Vance-sponsored funds and separate accounts managed by Hexavest and unaffiliated third-party advisers under Eaton Vance supervision.

⁽³⁾

In fiscal 2017, the Company reclassified certain managed assets among investment affiliates. Prior years' amounts have been revised for comparability purposes. The reclassification does not affect total consolidated assets under management for any period.

⁽⁴⁾

Consistent with the Company's policies for reporting the managed assets and flows of investment portfolios for which multiple Eaton Vance affiliates have management responsibilities, the managed assets of Atlanta Capital indicated above include the assets of Calvert Equity Portfolio, for which Atlanta Capital serves as sub-adviser. The total managed assets of Calvert, including assets sub-advised by other Eaton Vance affiliates, were $12.9 billion as of October 31, 2017.

⁽⁵⁾

Not meaningful (NM).

Consolidated average assets under management presented in the following tables are derived by averaging the beginning and ending assets of each month over the period. The tables are intended to provide information useful in the analysis of our asset-based revenue and distribution expenses. Separate account management fees are generally calculated as a percentage of either beginning, average or ending quarterly assets. Fund management, distribution and service fees, as well as certain expenses, are generally calculated as a percentage of average daily assets.

Consolidated Average Assets under Management by Investment Mandate⁽¹⁾⁽²⁾

							2017			2016
	October 31,						vs.			vs.
(in millions)	2017		2016		2015		2016			2015
Equity⁽³⁾⁽⁴⁾	$	103,660	$	88,711	$	93,264		17	%		-5	%
Fixed income⁽⁴⁾⁽⁵⁾		66,405		56,339		49,361		18	%		14	%
Floating-rate income⁽⁴⁾		36,107		32,759		38,151		10	%		-14	%
Alternative⁽⁴⁾		11,419		10,105		10,722		13	%		-6	%
Portfolio implementation		86,257		65,766		52,703		31	%		25	%
Exposure management⁽²⁾		78,544		67,180		59,569		17	%		13	%
Total	$	382,392	$	320,860	$	303,770		19	%		6	%

⁽¹⁾

Consolidated Eaton Vance Corp. See table on page 40 for directly managed assets and flows of 49 percent-owned Hexavest Inc., which are not included in the table above.

⁽²⁾

Reported consolidated average assets under management exclude certain client positions in exposure management mandates identified as transitory in nature.

⁽³⁾

Includes balanced and multi-asset mandates.

⁽⁴⁾

⁽⁵⁾

Includes cash management mandates.

Consolidated Average Assets under Management by Investment Vehicle⁽¹⁾⁽²⁾

							2017			2016
	October 31,						vs.			vs.
(in millions)	2017		2016		2015		2016			2015
Open-end funds⁽³⁾	$	90,332	$	72,910	$	79,109		24	%		-8	%
Closed-end funds⁽⁴⁾		24,148		23,736		24,956		2	%		-5	%
Private funds⁽⁵⁾		30,669		26,832		26,141		14	%		3	%
Institutional separate accounts⁽²⁾		146,835		128,033		112,309		15	%		14	%
High-net-worth separate accounts		33,190		24,873		23,472		33	%		6	%
Retail managed accounts		57,218		44,476		37,783		29	%		18	%
Total	$	382,392	$	320,860	$	303,770		19	%		6	%

⁽¹⁾

Consolidated Eaton Vance Corp. See table on page 40 for directly managed assets and flows of 49 percent-owned Hexavest Inc., which are not included in the table above.

⁽²⁾

Reported consolidated average assets under management exclude certain client positions in exposure management mandates identified as transitory in nature.

⁽³⁾

Includes assets in NextShares funds.

⁽⁴⁾

Includes assets in unit investment trusts.

⁽⁵⁾

Includes assets in privately offered equity, fixed income and floating-rate income funds and CLO entities.

Consolidated net inflows of $37.8 billion during fiscal 2017 represent 11 percent internal growth in managed assets (consolidated net inflows divided by beginning of period consolidated assets under management). For comparison, the Company had consolidated net inflows of $19.3 billion and $16.7 billion in fiscal 2016 and 2015, respectively, representing 6 percent internal growth in managed assets in both fiscal 2016 and 2015. On the basis of net contribution to management fee revenue, the Company’s internal revenue growth (calculated as the management fees attributed to sales and other inflows less management fees attributable to redemptions and other outflows, divided by beginning of period management fees) was 7 percent in fiscal 2017 and 1 percent in fiscal 2016, as the management fee revenue contribution from new sales and other inflows during each of these years exceeded the management fee revenue lost from redemptions and other withdrawals. The Company’s internal revenue growth was -2 percent in fiscal 2015, as the management fee revenue lost from redemptions and other withdrawals exceeded the revenue contribution from new sales and other inflows during the fiscal year.

The following tables summarize our consolidated assets under management and asset flows by investment mandate and investment vehicle for the fiscal years ended October 31, 2017, 2016 and 2015:

Consolidated Assets under Management and Net Flows by Investment Mandate⁽¹⁾⁽²⁾

										2017			2016
	Years Ended October 31,									vs.			vs.
(in millions)	2017			2016			2015			2016			2015
Equity assets - beginning of period⁽³⁾⁽⁴⁾	$	89,981		$	89,890		$	96,224			0	%		-7	%
Sales and other inflows		21,111			15,321			18,068			38	%		-15	%
Redemptions/outflows		(19,828	)		(15,668	)		(22,957	)		27	%		-32	%
Net flows		1,283			(347	)		(4,889	)		NM			-93	%
Assets acquired⁽⁵⁾		5,704			-			-			NM			NM
Exchanges		62			(32	)		47			NM			NM
Market value change		16,442			470			(1,492	)		NM			NM
Equity assets - end of period	$	113,472		$	89,981		$	89,890			26	%		0	%
Fixed income assets - beginning of period⁽⁴⁾⁽⁶⁾		60,607			52,465			46,162			16	%		14	%
Sales and other inflows		22,097			20,451			18,532			8	%		10	%
Redemptions/outflows		(16,137	)		(13,033	)		(11,339	)		24	%		15	%
Net flows		5,960			7,418			7,193			-20	%		3	%
Assets acquired⁽⁵⁾		4,170			-			-			NM			NM
Exchanges		(139	)		23			51			NM			-55	%
Market value change		199			701			(941	)		-72	%		NM
Fixed income assets - end of period	$	70,797		$	60,607		$	52,465			17	%		16	%
Floating-rate income assets - beginning of period⁽⁴⁾		32,107			35,534			41,920			-10	%		-15	%
Sales and other inflows		15,222			7,232			9,332			110	%		-23	%
Redemptions/outflows		(8,889	)		(11,078	)		(14,376	)		-20	%		-23	%
Net flows		6,333			(3,846	)		(5,044	)		NM			-24	%
Exchanges		136			(16	)		(133	)		NM			-88	%
Market value change		243			435			(1,209	)		-44	%		NM
Floating-rate income assets - end of period	$	38,819		$	32,107		$	35,534			21	%		-10	%
Alternative assets - beginning of period⁽⁴⁾		10,687			10,289			11,385			4	%		-10	%
Sales and other inflows		5,930			4,183			3,221			42	%		30	%
Redemptions/outflows		(4,067	)		(3,590	)		(3,914	)		13	%		-8	%
Net flows		1,863			593			(693	)		214	%		NM
Exchanges		(4	)		(2	)		25			100	%		NM
Market value change		91			(193	)		(428	)		NM			-55	%
Alternative assets - end of period	$	12,637		$	10,687		$	10,289			18	%		4	%
Portfolio implementation assets - beginning of period		71,426			59,487			48,008			20	%		24	%
Sales and other inflows		23,359			19,882			18,034			17	%		10	%
Redemptions/outflows		(12,438	)		(10,455	)		(7,217	)		19	%		45	%
Net flows		10,921			9,427			10,817			16	%		-13	%
Exchanges		5			(3	)		-			NM			NM
Market value change		17,263			2,515			662			586	%		280	%
Portfolio implementation assets - end of period	$	99,615		$	71,426		$	59,487			39	%		20	%
Exposure management assets - end of period		71,572			63,689			54,036			12	%		18	%
Sales and other inflows		80,532			57,988			57,586			39	%		1	%
Redemptions/outflows		(69,058	)		(51,929	)		(48,286	)		33	%		8	%
Net flows⁽²⁾		11,474			6,059			9,300			89	%		-35	%
Market value change		3,930			1,824			353			115	%		417	%
Exposure management assets - end of period	$	86,976		$	71,572		$	63,689			22	%		12	%
Total assets under management - beginning of period		336,380			311,354			297,735			8	%		5	%
Sales and other inflows		168,251			125,057			124,773			35	%		0	%
Redemptions/outflows		(130,417	)		(105,753	)		(108,089	)		23	%		-2	%
Net flows		37,834			19,304			16,684			96	%		16	%
Assets acquired⁽⁵⁾		9,874			-			-			NM			NM
Exchanges		60			(30	)		(10	)		NM			200	%
Market value change		38,168			5,752			(3,055	)		564	%		NM
Total assets under management - end of period	$	422,316		$	336,380		$	311,354			26	%		8	%

⁽¹⁾

Consolidated Eaton Vance Corp. See table on page 40 for directly managed assets and flows of 49 percent-owned Hexavest Inc., which are not included in the table above.

⁽²⁾

Reported consolidated net flows exclude certain client positions in exposure management mandates identified as transitory in nature. There were no such positions held in exposure management mandates as of October 31, 2017, 2016 or 2015.

⁽³⁾

Includes balanced and multi-asset mandates.

⁽⁴⁾

In fiscal 2017, the Company reclassified certain managed assets and flows among investment mandates. Prior years' amounts have been revised for comparability purposes. The reclassification does not affect total consolidated assets under management or total consolidated net flows for any period.

⁽⁵⁾

Represents managed assets gained in the acquisition of the business assets of Calvert Investments on December 30, 2016. Equity assets acquired and total assets acquired exclude $2.1 billion of managed assets of Calvert Equity Portfolio sub-advised by Atlanta Capital and previously included in the Company's consolidated assets under management.

⁽⁶⁾

Includes cash management mandates.

Consolidated Assets under Management and Net Flows by Investment Vehicle⁽¹⁾⁽²⁾

										2017			2016
	Years Ended October 31,									vs.			vs.
(in millions)	2017			2016			2015			2016			2015
Fund assets - beginning of period⁽³⁾	$	125,722		$	125,934		$	134,564			0	%		-6	%
Sales and other inflows		40,967			29,890			32,029			37	%		-7	%
Redemptions/outflows		(33,350	)		(29,535	)		(36,330	)		13	%		-19	%
Net flows		7,617			355			(4,301	)		NM			NM
Assets acquired⁽⁴⁾		9,821			-			-			NM			NM
Exchanges⁽⁵⁾		2,196			(94	)		181			NM			NM
Market value change		11,497			(473	)		(4,510	)		NM			-90	%
Fund assets - end of period	$	156,853		$	125,722		$	125,934			25	%		0	%
Institutional separate accounts - beginning of period		136,451			119,987			106,443			14	%		13	%
Sales and other inflows		93,067			74,476			75,568			25	%		-1	%
Redemptions/outflows		(81,096	)		(62,945	)		(61,569	)		29	%		2	%
Net flows⁽²⁾		11,971			11,531			13,999			4	%		-18	%
Assets acquired⁽⁴⁾		40			-			-			NM			NM
Exchanges⁽⁵⁾		(2,063	)		420			(208	)		NM			NM
Market value change		13,587			4,513			(247	)		201	%		NM
Institutional separate accounts - end of period	$	159,986		$	136,451		$	119,987			17	%		14	%
High-net-worth separate accounts - beginning of period		25,806			24,516			22,235			5	%		10	%
Sales and other inflows		12,965			5,832			4,816			122	%		21	%
Redemptions/outflows		(5,370	)		(4,841	)		(2,933	)		11	%		65	%
Net flows		7,595			991			1,883			666	%		-47	%
Exchanges		(24	)		(309	)		(99	)		-92	%		212	%
Market value change		6,338			608			497			942	%		22	%
High-net-worth separate accounts - end of period	$	39,715		$	25,806		$	24,516			54	%		5	%
Retail managed accounts - beginning of period		48,401			40,917			34,493			18	%		19	%
Sales and other inflows		21,252			14,859			12,360			43	%		20	%
Redemptions/outflows		(10,601	)		(8,432	)		(7,257	)		26	%		16	%
Net flows		10,651			6,427			5,103			66	%		26	%
Assets acquired⁽⁴⁾		13			-			-			NM			NM
Exchanges		(49	)		(47	)		116			4	%		NM
Market value change		6,746			1,104			1,205			511	%		-8	%
Retail managed accounts - end of period	$	65,762		$	48,401		$	40,917			36	%		18	%
Total assets under management - beginning of period		336,380			311,354			297,735			8	%		5	%
Sales and other inflows		168,251			125,057			124,773			35	%		0	%
Redemptions/outflows		(130,417	)		(105,753	)		(108,089	)		23	%		-2	%
Net flows		37,834			19,304			16,684			96	%		16	%
Assets acquired⁽⁴⁾		9,874			-			-			NM			NM
Exchanges		60			(30	)		(10	)		NM			200	%
Market value change		38,168			5,752			(3,055	)		564	%		NM
Total assets under management - end of period	$	422,316		$	336,380		$	311,354			26	%		8	%

⁽¹⁾

Consolidated Eaton Vance Corp. See the table on page 40 for directly managed assets and flows of 49 percent-owned Hexavest Inc., which are not included in the table above.

⁽²⁾

⁽³⁾

Includes assets in cash management funds.

⁽⁴⁾

Represents managed assets gained in the acquisition of the business assets of Calvert Investments on December 30, 2016. Fund assets acquired and total assets acquired exclude $2.1 billion of managed assets of Calvert Equity Portfolio, which was sub-advised by Atlanta Capital prior to the acquisition and previously included in the Company’s consolidated institutional separate accounts.

⁽⁵⁾

Reflects the reclassification from institutional separate accounts to funds of $2.1 billion of managed assets of Calvert Equity Portfolio, sub-advised by Atlanta Capital and previously included in the Company's consolidated institutional separate accounts.

As of October 31, 2017, the Company’s 49 percent-owned affiliate Hexavest Inc. (Hexavest) managed $16.0 billion of client assets, up 17 percent from $13.7 billion of managed assets on October 31, 2016. Other than Eaton Vance-sponsored funds for which Hexavest is adviser or sub-adviser, the managed assets of Hexavest are not included in Eaton Vance consolidated totals.

The following table summarizes assets under management and asset flow information for Hexavest for the fiscal years ended October 31, 2017, 2016 and 2015:

Hexavest Assets under Management and Net Flows

										2017			2016
	Years Ended October 31,									vs.			vs.
(in millions)	2017			2016			2015			2016			2015
Eaton Vance distributed:
Eaton Vance sponsored funds – beginning of period⁽¹⁾	$	231		$	229		$	227			1	%		1	%
Sales and other inflows		92			22			22			318	%		0	%
Redemptions/outflows		(177	)		(33	)		(21	)		436	%		57	%
Net flows		(85	)		(11	)		1			673	%		NM
Market value change		36			13			1			177	%		NM
Eaton Vance sponsored funds – end of period	$	182		$	231		$	229			-21	%		1	%
Eaton Vance distributed separate accounts – beginning of period⁽²⁾	$	2,492		$	2,440		$	2,367			2	%		3	%
Sales and other inflows		1,124			131			535			758	%		-76	%
Redemptions/outflows		(920	)		(236	)		(488	)		290	%		-52	%
Net flows		204			(105	)		47			NM			NM
Market value change		396			157			26			152	%		504	%
Eaton Vance distributed separate accounts – end of period	$	3,092		$	2,492		$	2,440			24	%		2	%
Total Eaton Vance distributed – beginning of period	$	2,723		$	2,669		$	2,594			2	%		3	%
Sales and other inflows		1,216			153			557			695	%		-73	%
Redemptions/outflows		(1,097	)		(269	)		(509	)		308	%		-47	%
Net flows		119			(116	)		48			NM			NM
Market value change		432			170			27			154	%		530	%
Total Eaton Vance distributed – end of period	$	3,274		$	2,723		$	2,669			20	%		2	%
Hexavest directly distributed – beginning of period⁽³⁾	$	11,021		$	11,279		$	14,101			-2	%		-20	%
Sales and other inflows		1,140			985			786			16	%		25	%
Redemptions/outflows		(1,208	)		(1,919	)		(3,503	)		-37	%		-45	%
Net flows		(68	)		(934	)		(2,717	)		-93	%		-66	%
Market value change		1,795			676			(105	)		166	%		NM
Hexavest directly distributed – end of period	$	12,748		$	11,021		$	11,279			16	%		-2	%
Total Hexavest assets – beginning of period	$	13,744		$	13,948		$	16,695			-1	%		-16	%
Sales and other inflows		2,356			1,138			1,343			107	%		-15	%
Redemptions/outflows		(2,305	)		(2,188	)		(4,012	)		5	%		-45	%
Net flows		51			(1,050	)		(2,669	)		NM			-61	%
Market value change		2,227			846			(78	)		163	%		NM
Total Hexavest assets – end of period	$	16,022		$	13,744		$	13,948			17	%		-1	%

⁽¹⁾

Managed assets and flows of Eaton Vance-sponsored pooled investment vehicles for which Hexavest is adviser or sub-adviser. Eaton Vance receives management fees (and in some cases also distribution fees) on these assets, which are included in Eaton Vance's consolidated assets under management and flows.

⁽²⁾

Managed assets and flows of Eaton Vance-distributed separate accounts managed by Hexavest. Eaton Vance receives distribution fees, but not management fees, on these assets, which are not included in Eaton Vance's consolidated assets under management and flows.

⁽³⁾

Managed assets and flows of pre-transaction Hexavest clients and post-transaction Hexavest clients in Canada. Eaton Vance receives no management fees or distribution fees on these assets, which are not included in Eaton Vance's consolidated assets under management and flows.

Results of Operations

In evaluating operating performance, we consider net income attributable to Eaton Vance Corp. shareholders and earnings per diluted share, which are calculated on a basis consistent with U.S. GAAP, as well as adjusted net income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted share, both of which are internally derived non-U.S. GAAP performance measures.

Management believes that certain non-U.S. GAAP financial measures, specifically, adjusted net income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted share, while not a substitute for U.S. GAAP financial measures, may be effective indicators of the Company’s performance over time. Non-U.S. GAAP financial measures should not be construed to be superior to U.S. GAAP measures. In calculating these non-U.S. GAAP financial measures, net income attributable to Eaton Vance Corp. shareholders and earnings per diluted share are adjusted to exclude items management deems non-operating or non-recurring in nature or otherwise outside the ordinary course of business. These adjustments may include the add back of adjustments made in connection with changes in the estimated redemption value of non-controlling interests in our affiliates redeemable at other than fair value (non-controlling interest value adjustments) and, when applicable, other items such as closed-end fund structuring fees, special dividends, costs associated with retiring debt and tax settlements. Management and our Board of Directors, as well as certain of our outside investors, consider these adjusted numbers a measure of the Company’s underlying operating performance. Management believes adjusted net income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted share are important indicators of our operations because they exclude items that may not be indicative of, or are unrelated to, our core operating results, and may provide a useful baseline for analyzing trends in our underlying business.

The following table provides a reconciliation of net income attributable to Eaton Vance Corp. shareholders and earnings per diluted share to adjusted net income attributable to Eaton Vance Corp. shareholders and adjusted earnings per diluted share, respectively, for the fiscal years ended October 31, 2017, 2016 and 2015:

								2017			2016
	Years Ended October 31,							vs.			vs.
(in thousands, except per share data)	2017		2016		2015			2016			2015

Net income attributable to Eaton Vance Corp. shareholders	$	282,131	$	241,307	$	230,299			17	%		5	%
Non-controlling interest value adjustments⁽¹⁾		531		200		(204	)		166	%		NM
Closed-end fund structuring fees, net of tax⁽²⁾		2,179		1,401		-			56	%		NM
Loss on extinguishment of debt, net of tax⁽³⁾		3,346		-		-			NM			NM
Payments to end certain closed-end fund service and additional compensation arrangements, net of tax⁽⁴⁾		-		-		44,895			NM			-100	%
Adjusted net income attributable to Eaton Vance Corp. shareholders	$	288,187	$	242,908	$	274,990			19	%		-12	%

Earnings per diluted share	$	2.42	$	2.12	$	1.92			14	%		10	%
Non-controlling interest value adjustments		0.01		-		-			NM			NM
Closed-end fund structuring fees, net of tax		0.02		0.01		-			100	%		NM
Loss on extinguishment of debt, net of tax		0.03		-		-			NM			NM
Payments to end certain closed-end fund service and additional compensation arrangements, net of tax		-		-		0.37			NM			-100	%
Adjusted earnings per diluted share	$	2.48	$	2.13	$	2.29			16	%		-7	%

⁽¹⁾

Please see page 52, "Net Income Attributable to Non-controlling and Other Beneficial Interests," for a further discussion of the non-controlling interest value adjustments referenced above.

⁽²⁾

Reflects closed-end fund structuring fees paid of $3.5 million (net of the associated impact to taxes of $1.3 million) and $2.3 million (net of the associated impact to taxes of $0.9 million) for the fiscal years ended October 31, 2017 and 2016, respectively.

⁽³⁾

Reflects a loss on extinguishment of debt of $5.4 million associated with the retirement of the Company’s remaining $250 million aggregate principal amount of 6.5 percent senior notes due October 2, 2017, net of the associated impact to taxes of $2.1 million.

⁽⁴⁾

Reflects a $73.0 million payment to end certain fund services and additional compensation arrangements for certain Eaton Vance closed-end funds, net of the associated impact to taxes of $28.1 million. See page 48 for a further discussion.

The 17% percent increase in net income attributable to Eaton Vance Corp. shareholders in fiscal 2017 compared to fiscal 2016 can be attributed primarily to the following:

An increase in revenue of $186.2 million, or 14 percent, primarily reflecting growth in average consolidated assets under management, partially offset by lower consolidated average annualized management fee rates.

An increase in expenses of $117.7 million, or 13 percent, primarily reflecting increases in compensation, distribution expense, service fee expense, amortization of deferred sales commissions, fund-related expenses and other operating expenses. The increase in compensation expense is driven by the Calvert acquisition at the end of the 2016 calendar year, increased headcount, increased sales- and operating income-based bonus accruals, and increased stock-based compensation. The increase in non-compensation-related costs is due to an increase in service and distribution fees due to higher fund average assets under management, an increase in closed-end fund structuring fees paid, an

increase in marketing and promotion costs, certain fund reimbursements made by the Company in fiscal 2017 and an increase in other corporate expenses.

A $6.9 million increase in gains and other investment income, net, primarily due to an increase in interest income, partially offset by an increase in net investment losses attributable to investments in sponsored funds and related economic hedges and an increase in foreign currency losses. Gains and other investment income, net, also includes a $1.9 million gain recognized in fiscal 2017 upon release from escrow of payments received in connection with the sale of the Company’s equity interest in Lloyd George Management (BVI) Ltd. (Lloyd George Management) in fiscal 2011.

A $1.9 million decrease in interest expense, primarily reflecting the May 2017 retirement of $250 million in aggregate principal amount of the Company’s 6.5 percent senior notes due October 2, 2017 (2017 Senior Notes) and the April 2017 issuance of $300 million in aggregate principal amount of 3.5 percent senior notes due April 6, 2027 (2027 Senior Notes).

A $5.4 million loss on extinguishment of debt related to the costs incurred on the retirement of the 2017 Senior Notes referenced above.

A $10.8 million decrease in income contribution from the Company’s consolidated CLO entities attributable to the deconsolidation of a CLO entity in the fourth quarter of fiscal 2016. In the fourth quarter of fiscal 2017, the Company consolidated a new CLO entity. The income contribution from this newly consolidated CLO entity was negligible, as the vehicle was consolidated late in the fiscal year and is in the warehouse phase.

An increase in income taxes of $20.0 million, or 13 percent, reflecting the increase in the Company’s income before taxes offset by a modest decrease in the effective tax rate.

An increase in equity in net income of affiliates, net of tax, of $0.5 million, primarily reflecting an increase in the Company’s proportionate net interest in the earnings of Hexavest offset by a decrease in the Company’s proportionate net interest in the earnings of a private equity partnership, both of which are accounted for under the equity method.

An increase in net income attributable to non-controlling and other beneficial interests of $0.8 million, primarily reflecting an increase in net income attributable to non-controlling interest holders in the Company’s consolidated sponsored funds and majority-owned subsidiaries, partially offset by a decrease in the net income of consolidated CLOs attributable to other beneficial interest holders.

Weighted average diluted shares outstanding increased by 2.4 million shares, or 2 percent, in fiscal 2017 compared to fiscal 2016, primarily reflecting the impact of employee stock option exercises and vesting of restricted stock, partially offset by share repurchases in fiscal 2017, as well as an increase in the dilutive effect of in-the-money options and unvested restricted stock.

The 5 percent increase in net income attributable to Eaton Vance Corp. shareholders in fiscal 2016 compared to fiscal 2015 can be attributed primarily to the following:

A decrease in revenue of $60.7 million, or 4 percent, primarily reflecting lower average managed assets in higher fee-rate floating-rate income, alternative and equity mandates, partially offset by growth in lower fee-rate exposure management, portfolio implementation and laddered bond mandates.

A decrease in expenses of $74.5 million, or 7 percent, reflecting lower distribution fees and service fees, partially offset by increases in compensation, amortization of deferred sales commissions and other corporate expenses. The decrease in distribution expense relates principally to the payment of $73.0 million to terminate certain closed-end fund service and additional compensation arrangements in fiscal 2015.

A $12.4 million increase in gains (losses) and other investment income, net, primarily reflecting increases in net gains and interest and other income recognized on our seed capital portfolio.

A $12.5 million increase in income related to the Company’s consolidated CLO entities.

An increase in income taxes of $10.4 million, or 7 percent, reflecting an increase in the Company’s income before taxes. Consolidated CLO entity income that is allocated to other beneficial interest holders is not subject to tax in the Company’s provision.

A decrease in equity in net income of affiliates, net of tax, of $1.7 million, reflecting a decrease in the Company’s proportionate net interest in the earnings of Hexavest and sponsored funds accounted for under the equity method.

An increase in net income attributable to non-controlling interests of $15.6 million, primarily reflecting an increase in net income of the Company’s consolidated CLO entities that are borne by other beneficial interests and a decrease in net losses attributable to non-controlling interest holders in the Company’s consolidated sponsored funds, partially offset by a decrease in net income attributable to non-controlling interest holders in the Company’s majority-owned subsidiaries.

Weighted average diluted shares outstanding decreased by 4.2 million shares, or 4 percent, in fiscal 2016 compared to fiscal 2015. The change reflects the impact of shares repurchased over the course of the fiscal year and the lower dilutive impact of unexercised options, partially offset by the impact of employee stock option exercises and the annual vesting of restricted stock.

Revenue

Our revenue increased by 14 percent in fiscal 2017, reflecting higher management fees, distribution and underwriter fees, service fees and other revenue.

The following table shows our management fees, distribution and underwriter fees, service fees and other revenue for the fiscal years ended October 31, 2017, 2016 and 2015:

							2017			2016
	Years Ended October 31,						vs.			vs.
(in thousands)	2017		2016		2015		2016			2015
Management fees	$	1,318,141	$	1,151,198	$	1,196,866		15	%		-4	%
Distribution and underwriter fees		78,776		74,822		80,815		5	%		-7	%
Service fees		119,962		107,684		116,448		11	%		-8	%
Other revenue		12,131		9,156		9,434		32	%		-3	%
Total revenue	$	1,529,010	$	1,342,860	$	1,403,563		14	%		-4	%

Management fees

The 15 percent increase in management fees in fiscal 2017 can be primarily attributed to an increase in average consolidated assets under management, partially offset by a decline in our consolidated average annualized management fee rate due primarily to changes in business mix. The 4 percent decrease in management fees in fiscal 2016 can be attributed primarily to the loss of assets in higher-fee investment mandates. Consolidated average assets under management increased by 19 percent and 6 percent in fiscal 2017 and 2016, respectively.

Excluding performance-based fees, our average management fee rate decreased to 34.5 basis points in fiscal 2017 from 35.8 basis points in fiscal 2016 and 39.3 basis points in fiscal 2015. Performance-based fees were $0.4 million, $3.4 million and $3.7 million in fiscal 2017, 2016 and 2015, respectively.

The primary drivers of our average management fee rates are the mix of our assets by investment mandate and distribution channel, and the timing and amount of performance fees recognized. Excluding the impact of performance-based fees, changes in consolidated average management fee rates for the compared periods primarily reflect the ongoing shift in the Company’s mix of business towards investment mandates and distribution channels with lower fee rates.

Consolidated average management fee rates, excluding performance-based fees, for the fiscal years ended October 31, 2017, 2016 and 2015 by investment mandate were as follows:

							2017			2016
	Years Ended October 31,						vs.			vs.
(in basis points on average managed assets)	2017		2016		2015		2016			2015

Equity⁽¹⁾		61.7		62.8		64.1		-2	%		-2	%
Fixed income⁽¹⁾		38.0		40.0		43.0		-5	%		-7	%
Floating-rate income⁽¹⁾		51.6		51.8		53.2		0	%		-3	%
Alternatives⁽¹⁾		63.3		63.0		61.8		0	%		2	%
Portfolio implementation		14.7		14.9		15.5		-1	%		-4	%
Exposure management⁽²⁾		5.2		5.1		5.4		2	%		-6	%
Consolidated average management fee rates		34.5		35.8		39.3		-4	%		-9	%

⁽¹⁾

In fiscal 2017, the Company reclassified certain managed assets among investment mandates. Prior years' amounts have been revised for comparability purposes.

⁽²⁾

Excludes management fees attributable to certain client positions in exposure management mandates identified as transitory in nature.

Average assets under management by investment mandate to which these fee rates apply can be found in the table, “Consolidated Average Assets under Management by Investment Mandate,” on page 35.

Distribution and underwriter fees

Distribution fees, which are earned under contractual agreements with certain sponsored funds, are calculated as a percentage of, and fluctuate with, average assets under management of the applicable funds and fund share classes. Underwriter fees and other distribution income includes underwriter commissions earned on sales of fund share classes subject to those fees, contingent deferred sales charges received on certain Class A redemptions, unit investment trust sales charges and fundraising and servicing fees associated with The U.S. Charitable Gift Trust.

Distribution fees, underwriter fees and other distribution income for the fiscal years ended October 31, 2017, 2016 and 2015 were as follows:

							2017			2016
	Years Ended October 31,						vs.			vs.
(in thousands)	2017		2016		2015		2016			2015
Distribution fees:
Class A	$	627		646		876		-3	%		-26	%
Class B		792		1,338		2,173		-41	%		-38	%
Class C		61,068		60,031		64,809		2	%		-7	%
Class F		1,354		-		-		NM			NM
Class N		72		78		136		-8	%		-43	%
Class R		1,624		1,361		1,208		19	%		13	%
Private funds		5,942		4,382		4,267		36	%		3	%
Total distribution fees	$	71,479	$	67,836	$	73,469		5	%		-8	%
Underwriter fees		2,765		2,763		2,745		0	%		1	%
Other distribution income		4,532		4,223		4,601		7	%		-8	%
Total distribution and underwriter fees	$	78,776	$	74,822	$	80,815		5	%		-7	%

Service fees

Service fees, which are paid to EVD pursuant to distribution or service plans adopted by our sponsored mutual funds, are calculated as a percent of, and fluctuate with, average assets under management in specific mutual fund share classes (principally Classes A, B, C, F, N and R). Certain private funds also make service fee payments to EVD.

Service fee revenue increased 11 percent in fiscal 2017, primarily reflecting an increase in consolidated average assets under management in funds and fund share classes subject to service fees. Service fee revenue decreased 8 percent in fiscal 2016, primarily reflecting a decrease in consolidated average assets under management in certain classes of funds subject to service fees.

Other revenue

Other revenue, which consists primarily of shareholder servicing fees, miscellaneous dealer income, Hexavest-related distribution and service revenue, and sub-lease income, increased 32 percent in fiscal 2017, primarily reflecting an increase in shareholder servicing fees and miscellaneous dealer income. Other revenue decreased 3 percent in fiscal 2016, primarily reflecting lower sub-lease income.

Expenses

Operating expenses increased 13 percent in fiscal 2017 from fiscal 2016, reflecting increases in compensation and related costs, distribution expense, service fee expense, amortization of deferred sales commissions, fund-related expenses and other operating expenses. Expenses in connection with the Company’s NextShares initiative totaled approximately $7.4 million in fiscal 2017, $8.0 million in fiscal 2016 and $7.4 million in fiscal 2015.

The following table shows our operating expenses for the fiscal years ended October 31, 2017, 2016 and 2015:

							2017			2016
	Years Ended October 31,						vs.			vs.
(in thousands)	2017		2016		2015		2016			2015
Compensation and related costs:
Cash compensation	$	473,903	$	419,515	$	414,307		13	%		1	%
Stock-based compensation		80,049		71,600		69,520		12	%		3	%
Total compensation and related costs		553,952		491,115		483,827		13	%		2	%
Distribution expense		132,873		117,996		198,155		13	%		-40	%
Service fee expense		112,519		98,494		106,663		14	%		-8	%
Amortization of deferred sales commissions		16,239		15,451		14,972		5	%		3	%
Fund-related expenses		48,995		35,899		35,886		36	%		0	%
Other expenses		181,674		169,637		163,613		7	%		4	%
Total expenses	$	1,046,252	$	928,592	$	1,003,116		13	%		-7	%

Compensation and related costs

The following table shows our compensation and related costs for the fiscal years ended October 31, 2017, 2016 and 2015:

							2017			2016
	Years Ended October 31,						vs.			vs.
(in thousands)	2017		2016		2015		2016			2015
Base salaries and employee benefits	$	245,693	$	226,463	$	217,289		8	%		4	%
Stock-based compensation		80,049		71,600		69,520		12	%		3	%
Operating income-based incentives		152,952		131,250		134,052		17	%		-2	%
Sales incentives		72,094		55,550		57,716		30	%		-4	%
Other compensation expense		3,164		6,252		5,250		-49	%		19	%
Total	$	553,952	$	491,115	$	483,827		13	%		2	%

Compensation expense increased by $62.8 million, or 13 percent, in fiscal 2017 compared to fiscal 2016. The increase was driven primarily by: (i) a $19.2 million increase in base salaries and benefits reflecting annual merit increases and higher headcount, partially due to the Calvert acquisition on December 30, 2016; (ii) an $8.4 million increase in stock-based compensation, primarily due to an increase in annual stock-based compensation awards; (iii) a $21.7 million increase in operating income-based incentives due to an increase in pre-bonus adjusted operating income (as described in more detail in “Compensation Discussion and Analysis” in Item 11 of this Annual Report on Form 10-K); and (iv) a $16.5 million increase in sales-based incentive driven by strong compensation-eligible sales. The $3.1 million decrease in other compensation expense is related to lower employee recruiting and termination costs.

Compensation expense increased by $7.3 million, or 2 percent, in fiscal 2016 compared to fiscal 2015. The increase was driven primarily by: (i) a $9.2 million increase in base salaries and employee benefits reflecting annual merit increases, higher headcount and a corresponding increase in employee benefits; and (ii) a $2.1 million increase in stock-based compensation, primarily due to an increase in annual stock-based compensation awards due to increased headcount. These increases were partially offset by: (i) a $2.8 million

decrease in operating-income based incentives due to a decrease in pre-bonus adjusted operating income; and (ii) a $2.2 million decrease in sales-based incentive resulting from a decrease in compensation-eligible sales. The $1.0 million increase in other compensation expense is related to increased costs associated with employee recruiting and terminations.

Distribution expense

Distribution expense consists primarily of commissions paid to broker-dealers on the sale of Class A shares at net asset value, ongoing asset-based payments made to distribution partners pursuant to third-party distribution arrangements for Class C shares and certain closed-end funds, marketing support payments to distribution partners and other discretionary marketing expenses.

The following table shows our distribution expense for the fiscal years ended October 31, 2017, 2016 and 2015:

							2017			2016
	Years Ended October 31,						vs.			vs.
(in thousands)	2017		2016		2015		2016			2015
Class A share commissions	$	2,417	$	2,064	$	2,628		17	%		-21	%
Class C share distribution fees		52,038		50,324		53,462		3	%		-6	%
Closed-end fund structuring fees		3,515		2,291		-		53	%		NM
Payments to end certain closed-end fund service and additional compensation arrangements		-		-		73,000		NM			-100	%
Closed-end fund dealer compensation payments		3,867		3,836		6,575		1	%		-42	%
Intermediary marketing support payments		47,721		40,308		41,901		18	%		-4	%
Discretionary marketing expenses		23,315		19,173		20,589		22	%		-7	%
Total	$	132,873	$	117,996	$	198,155		13	%		-40	%

Distribution expense increased by $14.9 million, or 13 percent, in fiscal 2017 compared to fiscal 2016, primarily attributable to increases in Class A sales on which we pay commissions, Class C share assets held more than one year on which we pay distribution fees, closed-end fund structuring fees, intermediary marketing support payments and discretionary marketing expense related to significant corporate initiatives. The increase in intermediary market support payments was driven primarily by higher average assets under management subject to market support payments, attributable in part to the acquisition of the Calvert business in December 2016.

Distribution expense decreased by $80.2 million, or 40 percent, in fiscal 2016 compared to fiscal 2015, primarily attributable to a decrease in expense resulting from the inclusion of a one-time payment of $73.0 million in fiscal 2015 to terminate certain closed-end fund service and additional compensation arrangements with a distribution partner pursuant to which we were obligated to make recurring payments over time based on the assets of the closed-end funds covered by the arrangements. The decrease also reflects lower Class A sales on which we pay commissions, declines in Class C share assets held more than one year on which we pay distribution fees, a decrease in closed-end fund dealer compensation payments, reflecting the above-described termination of fund service and additional compensation arrangements, a decrease in intermediary marketing support payments driven by lower average managed assets and a decrease in discretionary marketing expenses, reflecting lower spending on advertising and marketing communications.

Service fee expense

Service fees we receive from sponsored funds are generally retained in the first year and paid to broker-dealers thereafter pursuant to third-party selling agreements. These fees are calculated as a percent of average assets under management in certain share classes of our mutual funds (principally Classes A, C, N and R), as well as certain private funds. Service fee expense increased by 14 percent in fiscal 2017, reflecting higher average fund assets retained more than one year in funds and share classes that are subject to service fees. Service fee expense decreased by 8 percent in fiscal 2016, reflecting lower average fund assets retained more than one year in funds and share classes that are subject to service fees.

Amortization of deferred sales commissions

Amortization expense is affected by ongoing sales and redemptions of mutual fund Class C shares and certain private funds and redemptions of Class B shares. Amortization expense increased 5 percent and 3 percent in fiscal 2017 and 2016, respectively, reflecting higher private fund commission amortization offset by lower Class B and Class C commission amortization for both periods. In fiscal 2017, 2 percent of total amortization expense related to Class B shares, 50 percent to Class C shares and 48 percent to privately offered equity funds. In fiscal 2016, 4 percent of total amortization expense related to Class B shares, 61 percent to Class C shares and 35 percent to privately offered equity funds.

Fund-related expenses

Fund-related expenses consist primarily of fees paid to sub-advisers, compliance costs and other fund-related expenses we incur. Fund-related expenses increased by 36 percent in fiscal 2017, reflecting higher fund subsidies attributable primarily to the addition of the Calvert Funds, higher sub-advisory fees paid, an increase in fund expenses borne by the Company on funds for which it earns an all-in fee and $1.9 million in one-time reimbursements made to the funds by the Company in fiscal 2017. Fund-related expenses were substantially unchanged in fiscal 2016 from the prior fiscal year.

Other expenses

The following table shows our other expense for the fiscal years ended October 31, 2017, 2016 and 2015:

							2017			2016
	Years Ended October 31,						vs.			vs.
(in thousands)	2017		2016		2015		2016			2015
Information technology	$	77,450	$	72,718	$	67,834		7	%		7	%
Facilities-related		40,799		40,806		40,771		0	%		0	%
Travel		17,351		16,663		16,360		4	%		2	%
Professional services		15,347		13,331		13,854		15	%		-4	%
Communications		5,536		5,081		5,272		9	%		-4	%
Amortization of intangible assets		9,014		8,648		9,693		4	%		-11	%
Other corporate expense		16,177		12,390		9,829		31	%		26	%
Total	$	181,674	$	169,637	$	163,613		7	%		4	%

The increase in information technology expense in fiscal 2017 can be attributed primarily to increases in market data and maintenance costs, partially offset by decreases in project-related consulting and outside custody and back-office service costs. The increase in travel expense relates to an increase in travel activity. The increase in professional services expense can be attributed primarily to one-time legal and consulting costs incurred in conjunction with the investigation of fraudulent activities of a former Eaton Vance Management trader. The increase in communications reflects increases in costs associated with telecommunications,

subscriptions and supplies, partially offset by a decrease in postage. The increase in other corporate expenses is largely associated with the Calvert acquisition.

The increase in information technology expense in fiscal 2016 can be attributed primarily to increases in project-related consulting and software maintenance fees. The increase in travel expense relates to an increase in travel activity. The decrease in professional services expense can be attributed primarily to a decrease in corporate consulting engagements and external legal costs. The decrease in communications reflects a reduction in expenses primarily related to shareholder communications. The increase in other corporate expenses primarily reflects an increase in other corporate taxes.

Non-operating Income (Expense)

The main categories of non-operating income (expense) for the fiscal years ended October 31, 2017, 2016 and 2015 are as follows:

										2017			2016
	Years Ended October 31,									vs.			vs.
(in thousands)	2017			2016			2015			2016			2015
Gains (losses) and other investment income, net	$	19,303		$	12,411		$	(31	)		56	%		NM
Interest expense		(27,496	)		(29,410	)		(29,357	)		-7	%		0	%
Loss on extinguishment of debt		(5,396	)		-			-			NM			NM
Other income (expense) of consolidated CLO entities: ⁽¹⁾
Gains and other investment income, net		-			24,069			5,092			-100	%		373	%
Interest and other expense		-			(13,286	)		(6,767	)		-100	%		96	%
Total non-operating expense	$	(13,589	)	$	(6,216	)	$	(31,063	)		119	%		-80	%

⁽¹⁾

Income and expense amounts related to the consolidated CLO entity in fiscal 2017 were negligible as the CLO entity wasconsolidated in the fourth quarter of the fiscal year and is in the warehouse phase.

Gains (losses) and other investment income, net, increased by $6.9 million in fiscal 2017 compared to fiscal 2016, reflecting an increase in interest and other income of $11.0 million, which partially offset increases in net investment losses attributable to investments in sponsored funds and related economic hedges and foreign currency losses. Fiscal 2017 gains and other investment income, net, include a $1.9 million gain recognized upon the release from escrow of payments received in connection with the sale of the Company’s equity interest in Lloyd George Management in fiscal 2011. In fiscal 2017, we recognized $1.9 million of net losses related to our seed capital investments and associated hedges, compared to $0.1 million of net losses in fiscal 2016.

Gains (losses) and other investment income, net, improved by $12.4 million in fiscal 2016 compared to fiscal 2015, reflecting increases in net investment gains, interest income and foreign currency gains of $9.0 million, $2.2 million and $1.2 million, respectively. In fiscal 2016, we recognized $0.1 million of net losses related to our seed investments and associated hedges, compared to $9.2 million of net losses in fiscal 2015.

Interest expense decreased by $1.9 million in fiscal 2017 compared to fiscal 2016, primarily reflecting the net effect of the retirement of the remaining $250 million of our 2017 Senior Notes and the issuance of $300

million of our 2027 Senior Notes. During fiscal 2017, the Company also recognized a $5.4 million loss on extinguishment of debt related to costs incurred on the retirement of the 2017 Senior Notes. Interest expense was substantially unchanged in fiscal 2016 compared to fiscal 2015.

Net gains (losses) of consolidated CLO entities were negligible during fiscal 2017 and were $10.8 million and $(1.7) million in fiscal 2016 and 2015, respectively. The decrease in net gains (losses) of consolidated CLO entities in fiscal 2017 compared to fiscal 2016 is attributable to the deconsolidation of a CLO entity in the fourth quarter of fiscal 2016. Consolidated CLO entities’ gains (losses) included in net income attributable to non-controlling and other beneficial interest were negligible during fiscal 2017 and were approximately $9.8 million and $(5.8) million during fiscal 2016 and 2015, respectively, reflecting third-party note holders’ proportionate interests in the net income (loss) of each consolidated CLO entity. Income associated with the consolidated CLO entities included in net income attributable to Eaton Vance Corp. shareholders was negligible during fiscal 2017 and was $0.8 million and $4.1 million for fiscal 2016 and 2015, respectively, representing management fees earned by the Company and the Company’s proportionate interest in net gains (losses) of the consolidated CLO entities.

Income Taxes

Our effective tax rate, calculated as income taxes as a percentage of income before income taxes and equity in net income of affiliates, was 37.0 percent, 37.6 percent and 38.8 percent in fiscal 2017, 2016 and 2015, respectively.

Our policy for accounting for income taxes includes monitoring our business activities and tax policies for compliance with federal, state and foreign tax laws. In the ordinary course of business, various taxing authorities may not agree with certain tax positions we have taken, or applicable law may not be clear. We periodically review these tax positions and provide for and adjust as necessary estimated liabilities relating to such positions as part of our overall tax provision.

Equity in Net Income of Affiliates, Net of Tax

Equity in net income of affiliates, net of tax, primarily reflects our 49 percent equity interest in Hexavest, our seven percent minority equity interest in a private equity partnership managed by a third party and equity interests in certain funds we sponsor or manage.

The following table summarizes the components of equity in net income of affiliates, net of tax, for the fiscal years ended October 31, 2017, 2016 and 2015:

							2017			2016
	Years Ended October 31,						vs.			vs.
(in thousands)	2017		2016		2015		2016			2015
Investment in Hexavest, net of tax and amortization	$	10,602	$	9,979	$	10,857		6	%		-8	%
Investment in private equity partnership, net of tax		268		356		849		-25	%		-58	%
Investment in sponsored funds, net of tax		-		-		315		NM			-100	%
Total	$	10,870	$	10,335	$	12,021		5	%		-14	%

Net Income Attributable to Non-controlling and Other Beneficial Interests

The following table summarizes the components of net income attributable to non-controlling and other beneficial interests for the fiscal years ended October 31, 2017, 2016 and 2015:

										2017			2016
	Years Ended October 31,									vs.			vs.
(in thousands)	2017			2016			2015			2016			2015
Consolidated sponsored funds	$	(6,816	)	$	43		$	1,752			NM			-98	%
Majority-owned subsidiaries		(16,895	)		(13,525	)		(15,673	)		25	%		-14	%
Non-controlling interest value adjustments⁽¹⁾		(531	)		(200	)		204			166	%		NM
Consolidated CLO entities		-			(9,768	)		5,825			-100	%		NM
Net income attributable to non-controlling and other beneficial interests	$	(24,242	)	$	(23,450	)	$	(7,892	)		3	%		197	%

⁽¹⁾

Relates to non-controlling interests redeemable at other than fair value.

Net income attributable to non-controlling and other beneficial interests is not adjusted for taxes due to the underlying tax status of our consolidated majority-owned subsidiaries, which are treated as partnerships or other pass-through entities for tax purposes. Funds and the CLO entities we consolidate are registered investment companies or private funds that are treated as pass-through entities for tax purposes.

In fiscal 2017, 2016 and 2015, non-controlling interest value adjustments reflect changes in the estimated redemption value of non-controlling interests in Atlanta Capital.

Changes in Financial Condition, Liquidity and Capital Resources

The assets and liabilities of our consolidated CLO entities do not affect our liquidity or capital resources. The collateral assets of our consolidated CLO entities are held solely to satisfy the obligations of these entities and we have no right to these assets beyond our direct investment in, and management fees generated from, these entities. The note holders and third-party creditors of these entities have no recourse to the general credit of the Company. As a result, the assets and liabilities of our consolidated CLO entities are excluded from the discussion of liquidity and capital resources below.

The following table summarizes certain key financial data relating to our liquidity and capital resources on October 31, 2017, 2016 and 2015 and uses of cash for the years then ended:

Balance Sheet and Cash Flow Data

	As of October 31,
(in thousands)	2017		2016		2015
Balance sheet data:
Assets:
Cash and cash equivalents	$	610,555	$	424,174	$	465,558
Management fees and other receivables		200,453		186,172		187,753
Total liquid assets	$	811,008	$	610,346	$	653,311

Investments	$	898,192	$	589,773	$	507,020

Liabilities:
Debt⁽¹⁾	$	618,843	$	571,773	$	571,077

⁽¹⁾

In fiscal 2017, the Company adopted Accounting Standard Update 2015-03, which requires certain debt issuance costs to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability. Total assets and debt were each reduced by $2.2 million and $2.7 million as of October 31, 2016 and 2015, respectively, to reflect the reclassification of debt issuance costs from other assets to debt.

	Years Ended October 31,
(in thousands)	2017			2016			2015
Cash flow data:
Operating cash flows	$	64,892		$	340,549		$	219,867
Investing cash flows		(91,425	)		(108,278	)		84,266
Financing cash flows		210,213			(270,199	)		(221,446	)

Liquidity and Capital Resources

Liquid assets consist of cash and cash equivalents and management fees and other receivables. Cash and cash equivalents consist of cash and short-term, highly liquid investments that are readily convertible to cash. Management fees and other receivables primarily represent receivables due from sponsored funds and separately managed accounts for investment advisory and distribution services provided. Liquid assets represented 35 percent of total assets on both October 31, 2017 and 2016, excluding those assets identified as assets of our consolidated CLO entity. Not included in the liquid asset amounts are $213.5 million and $85.8 million of highly liquid short-term debt securities with remaining maturities between three and 12 months held as of October 31, 2017 and 2016, respectively, which are included within investments on our Consolidated Balance Sheets. Our seed investments in consolidated funds and separate accounts are not treated as liquid assets because they may be longer term in nature.

The $200.7 million increase in liquid assets in fiscal 2017 primarily reflects net proceeds of $296.1 million from the issuance of our 2027 Senior Notes in the second quarter of fiscal 2017, proceeds from the issuance of Non-Voting Common Stock of $210.9 million in connection with the exercise of employee stock options and other employee stock purchases, proceeds from net subscriptions received from non-controlling interest holders of $188.5 million, cash provided by operating activities of $64.9 million, net proceeds of $16.2 million from the sale of investments classified as available-for-sale, excess tax benefits of $14.8 million associated with stock option exercises and vesting of restricted stock awards, and principal repayments on notes receivable from

stock option exercises of $4.5 million, offset by total consideration paid to redeem our 2017 Senior Notes of $256.8 million, the repurchase of $126.2 million of Non-Voting Common Stock, the payment of $125.8 million of dividends to shareholders, net cash paid in acquisitions of $63.6 million, an investment of $18.8 million in our consolidated CLO entity, the addition of $12.7 million in equipment and leasehold improvements, and the purchase of additional non-controlling interests for $9.8 million.

The $43.0 million decrease in liquid assets in fiscal 2016 primarily reflects the repurchase of $253.0 million of Non-Voting Common Stock, the payment of $118.6 million of dividends to shareholders, $82.6 million from the investing and financing activities of consolidated CLO entities, the payment of $15.7 million to acquire additional interests in Atlanta Capital and Parametric, a $10.1 million contingent payment related to the Company’s acquisition of the Tax Advantaged Bond Strategies (TABS) business, the addition of $10.7 million in equipment and leasehold improvements and the issuance of a $5.0 million note receivable to our affiliate Hexavest, offset by net cash provided by operating activities of $340.6 million, proceeds from the issuance of Non-Voting Common Stock of $110.4 million in connection with the exercise of employee stock options and other employee stock purchases and excess tax benefits of $2.9 million associated with stock option exercises.

Our debt consists of $325 million in aggregate principal amount of 3.625 percent Senior Notes due in June 2023 and $300 million in aggregate principal amount of 3.5 percent Senior Notes due in April 2027.

The 2027 Senior Notes offering resulted in net proceeds of $296.1 million after deducting the underwriting discount and offering expenses. Interest on the 2027 Senior Notes is payable semi-annually in arrears on April 6th and October 6th of each year, commencing on October 6, 2017. The 2027 Senior Notes are unsecured and unsubordinated obligations of the Company. On May 6, 2017, the net proceeds from the issuance of our 2027 Senior Notes were used to redeem the remaining $250 million aggregate principal amount of the 2017 Senior Notes. We paid total consideration of $256.8 million to the holders of the 2017 Senior Notes at redemption and recognized a $5.4 million non-operating loss on the extinguishment of the debt, representing the difference between the total consideration paid and the net carrying amount of the extinguished debt plus interest accrued to the date of redemption.

We maintain a $300 million unsecured revolving credit facility with several banks that expires on October 21, 2019. The facility provides that we may borrow at LIBOR-based rates of interest that vary depending on the level of usage of the facility and our credit ratings. The agreement contains financial covenants with respect to leverage and interest coverage and requires us to pay an annual commitment fee on any unused portion. We had no borrowings under our revolving credit facility at October 31, 2017 or at any point during the fiscal year. We were in compliance with all debt covenants as of October 31, 2017.

We continue to monitor our liquidity daily. We remain committed to growing our business and returning capital to shareholders. We expect that our main uses of cash will be paying dividends, acquiring shares of our Non-Voting Common Stock, making seed investments in new products and strategic acquisitions, enhancing our technology infrastructure and paying the operating expenses of our business, which are largely variable in nature and fluctuate with revenue and assets under management. We believe that our existing liquid assets, cash flows from operations and borrowing capacity under our existing credit facility are sufficient to meet our current and forecasted operating cash needs. The risk exists, however, that if we need to raise additional capital or refinance existing debt in the future, resources may not be available to us in sufficient amounts or on acceptable terms. Our ability to enter the capital markets in a timely manner depends on a number of factors, including the state of global credit and equity markets, interest rates, credit spreads and our credit ratings. If we are unable to access capital markets to issue new debt, refinance existing debt or sell shares of our Non-

Voting Common Stock as needed, or if we are unable to obtain such financing on acceptable terms, our business could be adversely affected.

Recoverability of our Investments

Our $898.2 million of investments as of October 31, 2017 consisted of our 49 percent equity interest in Hexavest, positions in Company-sponsored funds and separate accounts entered into for investment and business development purposes, and certain other investments held directly by the Company. Investments in Company-sponsored funds and separate accounts and investments held directly by the Company are generally in liquid debt or equity securities and are carried at fair market value. We test our investments, other than trading and equity method investments, for impairment on a quarterly basis. We evaluate our investments in non-consolidated CLO entities and investments classified as available-for-sale for impairment using quantitative factors, including how long the investment has been in a net unrealized loss position, and qualitative factors, including the credit quality of the underlying issuer and our ability and intent to continue holding the investment. During fiscal 2017, the Company recognized $0.4 million of other-than-temporary impairment losses related to its investment in a non-consolidated CLO entity. If markets deteriorate in the quarters ahead, our assessment of impairment on a quantitative basis may lead us to impair additional investments in future quarters that were in an unrealized loss position at October 31, 2017.

We test our investments in equity method investees, goodwill and indefinite-lived intangible assets in the fourth quarter of each fiscal year, or as facts and circumstances indicate that additional analysis is warranted. There have been no significant changes in financial condition in fiscal 2017 that would indicate that an impairment loss exists at October 31, 2017.

We periodically review our deferred sales commissions and amortizing identifiable intangible assets for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. There have been no significant changes in financial condition in fiscal 2017 that would indicate that an impairment loss exists at October 31, 2017.

Operating Cash Flows

Our operating cash flows are calculated by adjusting net income to reflect other significant sources and uses of cash, certain significant non-cash items and timing differences in the cash settlement of other assets and liabilities. Significant sources and uses of cash that are not reflected in either revenue or expenses include net cash flows associated with our deferred sales commission assets (capitalized sales commissions paid net of contingent deferred sales charges received), as well as net cash flows associated with the purchase and sale of investments within the portfolios of our consolidated sponsored funds and separate accounts (proceeds received from the sale of trading investments net of cash outflows associated with the purchase of trading investments). Significant non-cash items include the amortization of deferred sales commissions and intangible assets, depreciation, stock-based compensation and net change in deferred income taxes.

Cash provided by operating activities totaled $64.9 million in fiscal 2017, a decrease of $275.7 million from $340.5 million in fiscal 2016. The decrease in net cash provided by operating activities year-over-year primarily reflects an increase in net cash used for the purchase of investments in trading securities and a decrease in the cash provided by the operating activities of our previously consolidated CLO entity, partially offset by an increase in the timing differences in the cash settlements of our other assets and liabilities.

Cash provided by operating activities totaled $340.5 million in fiscal 2016, an increase of $120.7 million from $219.9 million in fiscal 2015. The increase in net cash provided by operating activities primarily reflects an increase in the cash provided by the operating activities of our consolidated CLO entities and increases in the timing differences in the cash settlement of other assets and liabilities, offset by an increase in net purchases of trading securities.

Investing Cash Flows

Cash flows from investing activities consist primarily of the purchase of equipment and leasehold improvements, cash paid in acquisitions and the purchase and sale of available-for-sale investments in sponsored funds that we do not consolidate.

Cash used for investing activities totaled $91.4 million in fiscal 2017, of which $31.3 million was used for investing activities of our consolidated CLO entity, compared to cash used for investing activities of $108.3 million in fiscal 2016. Excluding cash flows attributable to investing activities of consolidated CLO entities, the year-over year change in cash used by investing activities can be primarily attributed to an increase in net cash paid in acquisitions of $53.5 million, an increase of $16.0 million in net proceeds from purchases and sales of available-for-sale securities, a decrease in lending to affiliates of $5.0 million and an increase in additions to equipment and leasehold improvements of $2.0 million.

Cash used for investing activities totaled $108.3 million in fiscal 2016 compared to cash provided by investing activities of $84.3 million in fiscal 2015. The change in cash provided by (used for) investing activities can be attributed primarily to a decrease of $128.1 million in the net proceeds from the sales of consolidated CLO entity investments, a decrease of $59.2 million in the net proceeds from the sales and purchases of available-for-sale securities, the issuance of a $5.0 million note receivable to Hexavest and an increase of $1.0 million in payment to sellers of the TABS business in fiscal 2016.

Financing Cash Flows

Financing cash flows primarily reflect the proceeds and repayments associated with the Company’s debt, the issuance and repurchase of our Non-Voting Common Stock, the payment of dividends to our shareholders, the purchase of non-controlling interests in our majority-owned subsidiaries, distributions to non-controlling interest holders of our majority-owned subsidiaries and excess tax benefits associated with stock option exercises and the vesting of restricted stock awards. Financing cash flows also reflect the financing activities of our consolidated funds, including the proceeds from the issuance of capital stock, payments for redemptions and distributions to non-controlling interest holders of these funds. In addition, financing cash flows reflect the financing activities of our consolidated CLO entities, including the issuance and repayment of CLO beneficial interests (senior and subordinated notes) and proceeds and repayments of CLO borrowings.

Cash provided by (used for) financing activities totaled $210.2 million, $(270.2) million and $(221.4) million in fiscal 2017, 2016 and 2015, respectively. In fiscal 2017, the Company issued $300 million of 2027 Senior Notes, resulting in net proceeds of approximately $296.1 million, and redeemed the remaining $250 million of the Company’s 2017 Notes for $255.4 million. In other financing activities, we paid $9.8 million to acquire additional interests in Atlanta Capital and Parametric, repurchased and retired a total of 2.9 million shares of our Non-Voting Common Stock for $126.2 million under our authorized repurchase programs, and issued 7.4 million shares of our Non-Voting Common Stock in connection with the grant of restricted share awards, the exercise of stock options and other employee stock purchases for total proceeds of $210.9 million. As of October 31, 2017, we have authorization to purchase an additional 6.1 million shares under our current share

repurchase authorization and anticipate that future repurchases will continue to be an ongoing use of cash. Our dividends declared per share were $1.15 in fiscal 2017 and $1.075 in fiscal 2016. We currently expect to declare and pay quarterly dividends on our Voting and Non-Voting Common Stock comparable to the dividend declared in the fourth quarter of fiscal 2017.

In fiscal 2016, we paid $15.7 million to acquire additional interests in Atlanta Capital and Parametric, repurchased and retired approximately 7.3 million shares of our Non-Voting Common Stock for $253.0 million under our authorized repurchase programs and issued 5.4 million shares of our Non-Voting Common Stock in connection with the grant of restricted share awards, the exercise of stock options and other employee stock purchases for total proceeds of $110.4 million.

In fiscal 2015, cash used for financing activities included $381.5 million in principal payments made on senior notes, lines of credit and redeemable preferred shares of consolidated CLO entities, as well as $485.2 million related to the proceeds from the line of credit and the issuance of new senior notes and redeemable preferred shares of those entities.

Contractual Obligations

The following table details our contractual obligations as of October 31, 2017:

	Payments due by Period
			Less						More
			than 1		1-3		4-5		than 5
(in millions)	Total		Year		Years		Years		Years
Operating leases – facilities and equipment⁽¹⁾	$	328	$	23	$	47	$	40	$	218
Senior notes		625		-		-		-		625
Interest payment on senior notes		170		22		45		45		58
Payments to non-controlling interest holders of majority-owned subsidiaries		13		13		-		-		-
Unrecognized tax benefits⁽²⁾		2		1		1		-		-
Total	$	1,138	$	59	$	93	$	85	$	901

Contractual obligations of consolidated CLO entity:
Line of credit	$	13	$	13	$	-	$	-	$	-
Total for consolidated CLO entity	$	13	$	13	$	-	$	-	$	-

⁽¹⁾

Minimum payments have not been reduced by minimum sublease rentals of $0.1 million to be received in the future under non-cancelable subleases.

⁽²⁾

This amount includes unrecognized tax benefits along with accrued interest and penalties.

Non-controlling interests held by employees in Atlanta Capital and Parametric long-term equity incentive plans are not subject to mandatory redemption. The purchase of non-controlling interests is predicated on the exercise of a series of puts held by non-controlling interest holders and calls held by us. The puts provide the non-controlling interest holders the right to require us to purchase these retained interests at specific intervals over time, while the calls provide us with the right to require the non-controlling interest holders to sell their retained equity interests to us at specified intervals over time, as well as upon the occurrence of certain events such as death or permanent disability. These non-controlling interests are redeemable at fair value. There is significant uncertainty as to the timing and amount of any non-controlling interest purchase in the future.

Accordingly, future payments to be made to purchase non-controlling interests have been excluded from the above table, unless a put or call option has been exercised and a mandatory firm commitment exists for us to purchase such non-controlling interests. Although the timing and amounts of these purchases cannot be predicted with certainty, we anticipate that the purchase of non-controlling interests in our consolidated subsidiaries may be a significant use of cash in future years. In the table above, payments to non-controlling interest holders of majority-owned subsidiaries include $4.2 million and $5.7 million of payments upon the execution of termination call options by the Company related to indirect profit interests held by terminated employees of Atlanta Capital and Parametric, respectively. These transactions settled in November 2017. Within the same line in the table above is $2.8 million related to the Company’s exercise of a final call option pursuant to the terms of the Atlanta Capital original acquisition agreement, as amended. This transaction is expected to settle in December 2017.

We have presented all redeemable non-controlling interests at redemption value on our Consolidated Balance Sheet as of October 31, 2017. We have recorded the current year change in the estimated redemption value of non-controlling interests redeemable at fair value as a component of additional paid-in capital and have recorded the current year change in the estimated redemption value of non-controlling interests redeemable at other than fair value (non-controlling interests redeemable based on a multiple of earnings before interest and taxes of the subsidiary) as a component of net income attributable to non-controlling and other beneficial interests. Based on our calculations, the estimated redemption value of our non-controlling interests totaled $250.8 million on October 31, 2017 compared to $109.0 million on October 31, 2016. These interests are all redeemable at fair value. No puts or calls redeemable at other than fair value were outstanding as of October 31, 2017.

Redeemable non-controlling interests as of October 31, 2017 consisted of third-party investors’ ownership in consolidated investment funds of $154.1 million, non-controlling interests in Parametric issued in conjunction with the Clifton Group Investment Management Company (Clifton) acquisition of $8.4 million, non-controlling interests in Parametric issued in conjunction with the Parametric Risk Advisors LLC (Parametric Risk Advisors) final put option of $14.7 million and profit interests granted under the long-term incentive plans of Parametric and Atlanta Capital of $46.3 million and $27.3 million, respectively, all of which are redeemable at fair value.

We have elected to maintain the Company’s ownership interest in Hexavest at 49 percent. On December 11, 2017, we notified the employee-owners of Hexavest that we would not be exercising our option to purchase an additional 26 percent interest under the terms of the option agreement entered into when we acquired our Hexavest position in 2012. As a result, there will be no future payment related to this option, which has been excluded from the table above.

In November 2010, we acquired patents and other intellectual property from Managed ETFs LLC, a developer of intellectual property in the field of exchange-traded funds. This intellectual property is the foundation of the Company’s NextShares™ exchange-traded managed funds initiative. The terms of the acquisition of the patents and other intellectual property of Managed ETFs LLC include approximately $9.0 million in aggregate contingent milestone payments that are based on specific events representing key developments in the commercialization of NextShares. There is no defined timing on these payments, resulting in significant uncertainty as to when the amount of any payment is due in the future. Accordingly, future payments to be made have been excluded from the above table until such time as the uncertainty has been resolved. If and when the milestones are reached, Managed ETFs LLC is also entitled to revenue-sharing payments that are calculated as a percentage of licensing revenue that we receive for use of the acquired intellectual property.

Foreign Subsidiaries

We consider the undistributed earnings of certain of our foreign subsidiaries to be indefinitely reinvested in foreign operations as of October 31, 2017. Accordingly, no U.S. income taxes have been provided thereon. As of October 31, 2017, the Company had approximately $61.7 million of undistributed earnings in certain Canadian, United Kingdom and Australian foreign subsidiaries that are not available to fund domestic operations or to distribute to shareholders unless repatriated. Repatriation would require the Company to accrue and pay U.S. corporate income taxes. The unrecognized deferred income tax liability on these un-repatriated funds, or temporary difference, is estimated to be $7.7 million at October 31, 2017. The Company does not intend to repatriate these funds, has not previously repatriated funds from these entities, and has the financial liquidity to permanently leave these funds offshore.

Off-Balance Sheet Arrangements

We do not invest in any off-balance sheet vehicles that provide financing, liquidity, market or credit risk support or engage in any leasing activities that expose us to any liability that is not reflected in our Consolidated Financial Statements.

Critical Accounting Policies

We believe the following critical accounting policies reflect our accounting policies that require significant judgments and estimates used in the preparation of our Consolidated Financial Statements. Actual results may differ from these estimates.

Consolidation of variable interest entities (VIEs)

Accounting guidance provides a framework for determining whether an entity should be considered a VIE and, if so, whether our involvement with the entity represents a variable interest in the entity. If we determine that we have a variable interest in a VIE, we must perform an analysis to determine whether we are the primary beneficiary of the VIE. If we determine we are the primary beneficiary of the VIE, we are required to consolidate the assets, liabilities, results of operations and cash flows of the VIE.

Our evaluation of whether we qualify as the primary beneficiary of a VIE is complex. We are the primary beneficiary of a VIE if we have a controlling financial interest in the VIE. A company is deemed to have a controlling financial interest in a VIE if it has both (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.

For collateralized loan obligation (CLO) entities, we must evaluate the relative size of our beneficial interest and the overall magnitude and design of the collateral management fees within each structure. There is also judgment involved in assessing whether we have the power to direct the activities that most significantly impact the VIE’s economic performance and the obligation to absorb losses of or the right to receive benefits from the VIE that could potentially be significant.

While we believe our overall evaluation of VIEs is appropriate, future changes in estimates, judgments and assumptions or changes in our ownership interests in a VIE may affect the resulting consolidation, or deconsolidation, of the assets, liabilities, results of operations and cash flows of a VIE.

Fair value measurements

The accounting standards for fair value measurement provide a framework for measuring fair value and require expanded disclosures regarding fair value measurements. Fair value is defined as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date. The accounting standards establish a fair value measurement hierarchy, which requires an entity to maximize the use of observable inputs where available. This fair value measurement hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

We utilize third-party pricing services to value investments in various asset classes, including interests in senior floating-rate loans and other debt obligations, derivatives and certain foreign equity securities, as further discussed below. Valuations provided by the pricing services are subject to exception reporting that identifies securities with significant movements in valuation, as well as investments with no movements in valuation. These exceptions are reviewed by us on a daily basis. We compare the price of trades executed by us to the valuations provided by the third-party pricing services to identify and research significant variances. We periodically compare the pricing service valuations to valuations provided by a secondary independent source when available. Market data provided by the pricing services and other market participants, such as the Loan Syndication and Trading Association (LSTA) trade study, is reviewed to assess the reliability of the provided data. Our Valuation Committee reviews the general assumptions underlying the methodologies used by the pricing services to value various asset classes at least annually. Throughout the year, members of our Valuation Committee meet with the service providers to discuss any significant changes to the service providers’ valuation methodologies or operational processes.

Assets and liabilities measured and reported at fair value are classified and disclosed in one of the following categories based on the nature of the inputs that are significant to the fair value measurements in their entirety. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value measurement hierarchy. In such cases, an investment’s classification within the fair value measurement hierarchy is based on the lowest level of input that is significant to the fair value measurement.

	Level 1	Unadjusted quoted market prices in active markets for identical assets or liabilities at the reporting date.

	Level 2	Observable inputs other than Level 1 unadjusted quoted market prices, such as quoted market prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities that are not active, and inputs other than quoted prices that are observable or corroborated by observable market data.

	Level 3	Unobservable inputs that are supported by little or no market activity.

We recognize any transfers between levels at the end of each quarter.

Income taxes

Deferred income taxes reflect the expected future tax consequences of temporary differences between the carrying amounts and tax bases of our assets and liabilities measured using rates expected to be in effect when such differences reverse. To the extent that deferred tax assets are considered more likely than not to be unrealizable, valuation allowances are provided. Proposed changes in U.S. tax policy, which include a proposal to reduce federal tax rates for corporations, may impact the carrying value of deferred tax assets and liabilities due to the change in future tax rates. Remeasurement of deferred taxes for a corporate rate reduction and

other applicable provisions of tax reform will be recorded as an expense or benefit in the period that the new legislation is enacted.

Our effective tax rate reflects the statutory tax rates of the many jurisdictions in which we operate. Significant judgment is required in evaluating our tax positions. In the ordinary course of business, many transactions occur for which the ultimate tax outcome is uncertain. Accounting standards governing the accounting for uncertainty in income taxes for a tax position taken or expected to be taken in a tax return require that the tax effects of a position be recognized only if it is more likely than not to be sustained based solely on its technical merits as of the reporting date. The more-likely-than-not threshold must be met in each reporting period to support continued recognition of the benefit. The difference between the tax benefit recognized in the financial statements for a tax position and the tax benefit claimed in the income tax return is referred to as an unrecognized tax benefit. Unrecognized tax benefits, as well as the related interest and penalties, are regularly evaluated and adjusted as appropriate to reflect changing facts and circumstances. We classify any interest or penalties incurred as a component of income tax expense.

Goodwill

Goodwill represents the excess of the cost of our investment in the net assets of acquired companies over the fair value of the underlying identifiable net assets at the dates of acquisition. We attribute all goodwill associated with the acquisitions of Atlanta Capital, Parametric and Clifton, which share similar economic characteristics, to one reporting unit. We attribute all goodwill associated with the acquisition of the TABS business of M.D. Sass Investor Services and other acquisitions to a second reporting unit.

Goodwill is not amortized but is tested annually for impairment in the fourth quarter of each fiscal year by comparing the fair values of identified reporting units to their respective carrying amounts, including goodwill. We establish fair value for the purpose of impairment testing for each reporting unit by using an income approach and a market approach.

The income approach employs a discounted cash flow model that takes into account (1) assumptions that market participants would use in their estimates of fair value, (2) current period actual results and (3) budget projections for future periods that have been vetted by senior management. The discounted cash flow model incorporates the same fundamental pricing concepts used to calculate fair value in the acquisition due diligence process and a discount rate that takes into consideration our estimated cost of capital adjusted for the uncertainty inherent in the forecasted information.

The market approach employs market multiples based on comparable publicly traded companies in the financial services industry, calculated with data from industry sources. Estimates of fair value are established using current and forward multiples of both revenue and earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted for size and performance of the reporting unit relative to peer companies.

If the carrying amount of the reporting unit exceeds its calculated fair value, the second step of the goodwill impairment test will be performed to measure the amount of the impairment loss, if any.

Intangible assets

Amortizing identifiable intangible assets generally represent the cost of client relationships, intellectual property, trademarks, and research systems. In valuing these assets, we make assumptions regarding useful lives and projected growth rates, and significant judgment is required. We periodically review our amortizing identifiable intangible assets for impairment as events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. If the carrying amounts of those assets exceed their respective

fair values, additional impairment tests are performed to measure the amounts of the impairment losses, if any.

Non-amortizing intangible assets generally represent the cost of mutual fund management contracts acquired. Non-amortizing intangible assets are tested for impairment in the fourth quarter of each fiscal year by comparing the fair values of the management contracts acquired to their carrying values. We establish fair value for purposes of impairment testing using the income approach. If the carrying value of a management contract acquired exceeds its fair value, an impairment loss is recognized equal to that excess.

Stock-based compensation

We account for stock-based compensation expense at fair value. Under the fair value method, stock-based compensation expense, which reflects the fair value of stock-based awards measured at grant date, is recognized on a straight-line basis over the relevant service period (generally five years) and is adjusted each period for anticipated forfeitures.

The fair value of each option award granted is estimated using the Black-Scholes option valuation model. The Black-Scholes option valuation model incorporates assumptions as to dividend yield, expected volatility, an appropriate risk-free interest rate and the expected life of the option.

The fair value of profit interests granted under subsidiary long-term equity plans is estimated on the grant date by averaging fair value established using an income approach and fair value established using a market approach for each subsidiary. The income and fair value approaches used in the determination of grant date fair value of profit interests are consistent with those described in Goodwill above.

Tax benefits realized upon the exercise of stock options that are in excess of the expense previously recognized for financial reporting purposes are recorded in shareholders’ equity and reflected as a financing activity in our Consolidated Statements of Cash Flows. If the tax benefit realized is less than the expense previously recorded, the shortfall is recorded in shareholders’ equity. To the extent the expense exceeds available windfall tax benefits, it is recorded in our Consolidated Statements of Income and reflected as an operating activity on our Consolidated Statements of Cash Flows.

Non-controlling interests

Non-redeemable non-controlling interests consist entirely of unvested interests granted to employees of our majority-owned subsidiaries under subsidiary-specific long-term equity plans. These grants become subject to holder put rights upon vesting and are reclassified to temporary equity as vesting occurs.

Non-controlling interests redeemable at fair value consist of interests in our consolidated sponsored funds and certain vested interests held by employees of our majority-owned subsidiaries that were granted under the subsidiaries’ long-term equity plans. Our non-controlling interests redeemable at fair value are recorded in temporary equity at estimated redemption value and changes in the estimated redemption value of these interests are recognized as increases or decreases to additional paid-in capital.

Non-controlling interests redeemable at other than fair value consisted of certain other interests in our majority-owned subsidiaries. During the fiscal year ended October 31, 2017, the Company acquired the remaining profit interests held by the non-controlling interest holders of Atlanta Capital. As a result, the Company had no non-controlling interests that are redeemable at other than fair value as of October 31, 2017.

Accounting Developments

See Note 1, “Summary of Significant Accounting Policies – Adoption of new accounting standards,” and Note 2, “New Accounting Standards Not Yet Adopted,” in Item 8, “Financial Statements and Supplementary Data.”

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

In the normal course of business, our financial position is subject to different types of risk, including market risk. Market risk is the risk that we will incur losses due to adverse changes in equity and bond prices, interest rates, credit events or currency exchange rates. Management is responsible for identifying, assessing and managing market and other risks.

In evaluating market risk, it is important to note that most of our revenue is based on the market value of assets under management. As noted in “Risk Factors” in Item 1A of this Annual Report on Form 10-K, declines of financial market values negatively impact our revenue and net income.

Our primary direct exposure to equity price risk arises from investments in equity securities made by consolidated sponsored funds, investments in equity securities held in separately managed accounts seeded for new product development purposes and our investments in sponsored equity funds that are not consolidated. Equity price risk as it relates to these investments represents the potential future loss of value that would result from a decline in the fair values of the fund shares or underlying equity securities.

The following is a summary of the effect that a 10 percent increase or decrease in equity prices would have on our investments subject to equity price fluctuations at October 31, 2017:

(in thousands)	Carrying Value		Carrying Value Assuming a 10% Increase		Carrying Value Assuming a 10% Decrease
Investment securities, trading:
Consolidated sponsored funds and separately managed accounts	$	181,488	$	199,637	$	163,339
Investment securities, available-for-sale:
Sponsored funds		21,063		23,169		18,957
Total	$	202,551	$	222,806	$	182,296

At October 31, 2017, we were exposed to interest rate risk and credit spread risk as a result of approximately $527.6 million in investments in fixed and floating-rate income funds sponsored or managed by us, debt securities held by sponsored funds we consolidate, debt securities held in separately managed accounts seeded for new product development purposes and short-term debt securities held directly by us. Management considered a hypothetical 100 basis point change in interest rates and determined that an increase of such magnitude would result in a decrease of approximately $5.3 million in the carrying amount of our debt investments and that a decrease of 100 basis points would increase the carrying amount of such investments by approximately $5.3 million.

Currently we have a corporate hedging program in place to hedge currency risk, interest rate risk and market price exposures on certain investments in consolidated sponsored funds and separately managed accounts seeded for new product development purposes. As part of this program, we enter into forwards, futures and swap contracts to hedge certain exposures held within the portfolios of these consolidated sponsored funds and separately managed accounts. The contracts negotiated are short term in nature. We do not enter into derivative instruments for speculative purposes.

At October 31, 2017, we had outstanding foreign exchange contracts, stock index futures contracts, currency futures contracts, commodity futures contracts, interest rate futures contracts and total return swap contracts with aggregate notional values of approximately $28.1 million, $118.1 million, $14.5 million, $10.2 million, $25.6 million and $50.2 million, respectively. We estimate that a 10 percent adverse change in market prices would result in a decrease of approximately $59,000, $269,000, $15,000, $6,000, $18,000 and $57,000, respectively, in the fair value of open foreign exchange contracts, stock index futures contracts, currency futures contracts, commodity futures contracts, interest rate futures contracts and total return swap contracts held at October 31, 2017.

We are required to maintain cash collateral for margin accounts established to support certain derivative positions. Our initial margin requirements are currently equal to five percent of the initial underlying value of our stock index futures contracts, currency futures contracts, commodity futures contracts and interest rate futures contracts. Additional margin requirements include daily posting of variation margin equal to the daily change in the position value. We do not have a collateral requirement related to foreign exchange contracts or total return swap contracts. Cash collateral supporting margin requirements is classified as restricted cash and is included as a component of other assets on our Consolidated Balance Sheets. At October 31, 2017, cash collateral included in other assets on our Consolidated Balance Sheet totaled $8.5 million.

Direct exposure to credit risk arises from our interests in non-consolidated CLO entities that are included in investments in our Consolidated Balance Sheets, as well as our interests in consolidated CLO entities that are eliminated in consolidation. Our CLO entity investments entitle us only to a residual interest in the CLO entity, making these investments highly sensitive to the default and recovery experiences of the underlying instruments held by the CLO entity. Our CLO investments are subject to an impairment loss in the event that the cash flows generated by the collateral securities are not sufficient to allow equity holders to recover their investments. If there is deterioration in the credit quality of collateral and reference securities and a corresponding increase in defaults, CLO entity cash flows may be adversely impacted and we may be unable to recover our investment. We had total investments in non-consolidated CLO entities of $3.6 million and an investment of $18.8 million in our consolidated CLO entity as of October 31, 2017, representing our total value at risk with respect to such entities as of that date.

We are subject to foreign currency exchange risk through our international operations. While we operate primarily in the United States and, accordingly, most of our consolidated revenue and associated expenses are denominated in U.S. dollars, we also provide services and earn revenue outside of the United States. Revenue and expenses denominated in foreign currencies may be impacted by movements in foreign currency exchange rates. The exposure to foreign currency exchange risk in our Consolidated Balance Sheets relates primarily to an equity method investment and cash and cash equivalents that are denominated in foreign currencies, principally Canadian dollars. This risk will likely increase as our business outside of the United States grows. We generally do not use derivative financial instruments to manage the foreign currency exchange risk exposure we assume in connection with investments in international operations. As a result, both positive and negative currency fluctuations against the U.S. dollar may affect our results of operations and accumulated other comprehensive income (loss). We do not enter into foreign currency transactions for speculative purposes.

Item 8. Financial Statements and Supplementary Data

Index to Consolidated Financial Statements and Supplementary Data

For the Fiscal Years Ended October 31, 2017, 2016 and 2015

Contents		Page number reference

Consolidated Financial Statements of Eaton Vance Corp.:
Consolidated Statements of Income for each of the three years in the period ended October 31, 2017		66
Consolidated Statements of Comprehensive Income for each of the three years in the period ended October 31, 2017		67
Consolidated Balance Sheets as of October 31, 2017 and 2016		68
Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended October 31, 2017		69
Consolidated Statements of Cash Flows for each of the three years in the period ended October 31, 2017		72
Notes to Consolidated Financial Statements		74
Report of Independent Registered Public Accounting Firm		127

All schedules have been omitted because they are not required, are not applicable or the information is otherwise shown in the consolidated financial statements or notes thereto.

Consolidated Statements of Income

	Years Ended October 31,
(in thousands, except per share data)	2017			2016			2015
Revenue:
Management fees	$	1,318,141		$	1,151,198		$	1,196,866
Distribution and underwriter fees		78,776			74,822			80,815
Service fees		119,962			107,684			116,448
Other revenue		12,131			9,156			9,434
Total revenue		1,529,010			1,342,860			1,403,563
Expenses:
Compensation and related costs		553,952			491,115			483,827
Distribution expense		132,873			117,996			198,155
Service fee expense		112,519			98,494			106,663
Amortization of deferred sales commissions		16,239			15,451			14,972
Fund-related expenses		48,995			35,899			35,886
Other expenses		181,674			169,637			163,613
Total expenses		1,046,252			928,592			1,003,116
Operating income		482,758			414,268			400,447
Non-operating income (expense):
Gains (losses) and other investment income, net		19,303			12,411			(31	)
Interest expense		(27,496	)		(29,410	)		(29,357	)
Loss on extinguishment of debt		(5,396	)		-			-
Other income (expense) of consolidated collateralized loan obligation (CLO) entities:
Gains and other investment income, net		-			24,069			5,092
Interest and other expense		-			(13,286	)		(6,767	)
Total non-operating expense		(13,589	)		(6,216	)		(31,063	)
Income before income taxes and equity in net income of affiliates		469,169			408,052			369,384
Income taxes		(173,666	)		(153,630	)		(143,214	)
Equity in net income of affiliates, net of tax		10,870			10,335			12,021
Net income		306,373			264,757			238,191
Net income attributable to non-controlling and other beneficial interests		(24,242	)		(23,450	)		(7,892	)
Net income attributable to Eaton Vance Corp. shareholders	$	282,131		$	241,307		$	230,299
Earnings per share:
Basic	$	2.54		$	2.20		$	2.00
Diluted	$	2.42		$	2.12		$	1.92
Weighted average shares outstanding:
Basic		110,918			109,914			113,318
Diluted		116,418			113,982			118,155
Dividends declared per share	$	1.150		$	1.075		$	1.015

See notes to Consolidated Financial Statements.

Consolidated Statements of Comprehensive Income

	Years Ended October 31,
(in thousands)	2017			2016			2015

Net income	$	306,373		$	264,757		$	238,191

Other comprehensive income (loss):
Unrealized loss on cash flow hedges, net of tax		(413	)		-			-
Amortization of net gains on cash flow hedges, net of tax		27			13			13
Unrealized gains (losses) on available-for-sale investments and reclassification adjustments, net of tax		1,185			(790	)		(1,895	)
Foreign currency translation adjustments, net of tax		9,310			(8,220	)		(28,708	)
Other comprehensive income (loss), net of tax		10,109			(8,997	)		(30,590	)

Total comprehensive income		316,482			255,760			207,601
Comprehensive income attributable to non-controlling and other beneficial interests		(24,242	)		(23,450	)		(7,892	)
Total comprehensive income attributable to Eaton Vance Corp. shareholders	$	292,240		$	232,310		$	199,709

See notes to Consolidated Financial Statements.

Consolidated Balance Sheets

	October 31,
(in thousands, except share data)	2017			2016

Assets

Cash and cash equivalents	$	610,555		$	424,174
Management fees and other receivables		200,453			186,172
Investments		898,192			589,773
Assets of consolidated CLO entity:
Bank loan investments		31,348			-
Deferred sales commissions		36,423			27,076
Deferred income taxes		67,100			73,295
Equipment and leasehold improvements, net		48,989			44,427
Intangible assets, net		89,812			46,809
Goodwill		259,681			248,091
Loan to affiliate		5,000			5,000
Other assets		83,348			85,565
Total assets	$	2,330,901		$	1,730,382

Liabilities, Temporary Equity and Permanent Equity
Liabilities:
Accrued compensation	$	207,330		$	173,485
Accounts payable and accrued expenses		68,115			59,927
Dividend payable		44,634			36,525
Debt		618,843			571,773
Liabilities of consolidated CLO entity:
Line of credit		12,598			-
Other liabilities		116,298			75,069
Total liabilities		1,067,818			916,779
Commitments and contingencies (Note 20)
Temporary Equity:
Redeemable non-controlling interests		250,823			109,028
Permanent Equity:
Voting Common Stock, par value $0.00390625 per share:
Authorized, 1,280,000 shares
Issued and outstanding, 442,932 and 442,932 shares, respectively		2			2
Non-Voting Common Stock, par value $0.00390625 per share:
Authorized, 190,720,000 shares
Issued and outstanding, 118,077,872 and 113,545,008 shares, respectively		461			444
Additional paid-in capital		148,284			-
Notes receivable from stock option exercises		(11,112	)		(12,074	)
Accumulated other comprehensive loss		(47,474	)		(57,583	)
Retained earnings		921,235			773,000
Total Eaton Vance Corp. shareholders' equity		1,011,396			703,789
Non-redeemable non-controlling interests		864			786
Total permanent equity		1,012,260			704,575
Total liabilities, temporary equity and permanent equity	$	2,330,901		$	1,730,382

See notes to Consolidated Financial Statements.

Consolidated Statements of Shareholders' Equity

	Permanent Equity																													Temporary Equity
(in thousands)	Voting and Non-Voting Common Shares			Voting Common Stock		Non- Voting Common Stock			Additional Paid-In Capital			Notes Receivable from Stock Option Exercises			Accumulated Other Comprehensive Loss			Appropriated (Deficit) Retained Earnings			Retained Earnings			Non- Redeemable Non- Controlling Interests			Total Permanent Equity			Redeemable Non- Controlling Interests
Balance, November 1, 2014		118,261		$	2	$	460		$	-		$	(8,818	)	$	(17,996	)	$	2,467		$	679,061		$	2,305		$	657,481		$	107,466
Net income		-			-		-			-			-			-			(5,825	)		230,299			4,049			228,523			9,668
Other comprehensive loss, net of tax		-			-		-			-			-			(30,590	)		-			-			-			(30,590	)		-
Dividends declared ($1.015 per share)		-			-		-			-			-			-			-			(118,719	)		-			(118,719	)		-
Issuance of Voting Common Stock		14			-		-			77			-			-			-			-			-			77			-
Issuance of Non-Voting Common Stock:
On exercise of stock options		3,500			-		14			87,625			(4,752	)		-			-			-			-			82,887			-
Under employee stock purchase plans		101			-		-			3,324			-			-			-			-			-			3,324			-
Under employee stock purchase incentive plan		94			-		-			3,483			-			-			-			-			-			3,483			-
Under restricted stock plan, net of forfeitures		1,304			-		5			-			-			-			-			-			-			5			-
Stock-based compensation		-			-		-			69,279			-			-			-			-			-			69,279			-
Tax benefit of stock option exercises and vesting of restricted stock awards		-			-		-			9,979			-			-			-			-			-			9,979			-
Repurchase of Voting Common Stock		(14	)		-		-			(77	)		-			-			-			-			-			(77	)		-
Repurchase of Non-Voting Common Stock		(7,374	)		-		(28	)		(177,548	)		-			-			-			(105,796	)		-			(283,372	)		-
Principal repayments on notes receivable from stock option exercises		-			-		-			-			2,427			-			-			-			-			2,427			-
Net subscriptions (redemptions/distributions) of non-controlling interest holders		-			-		-			-			-			-			-			-			(4,032	)		(4,032	)		(3,863	)
Net consolidations (deconsolidations) of sponsored investment funds and CLO entities		-			-		-			-			-			-			(1,980	)		-			-			(1,980	)		(2,623	)
Reclass to temporary equity		-			-		-			-			-			-			-			-			(597	)		(597	)		597
Purchase of non-controlling interests		-			-		-			-			-			-			-			-			-			-			(18,474	)
Changes in redemption value of non-controlling interests redeemable at fair value		-			-		-			3,858			-			-			-			-			-			3,858			(3,858	)
Balance, October 31, 2015		115,886		$	2	$	451		$	-		$	(11,143	)	$	(48,586	)	$	(5,338	)	$	684,845		$	1,725		$	621,956		$	88,913

See notes to Consolidated Financial Statements.

Consolidated Statements of Shareholders’ Equity (continued)

	Permanent Equity																									Temporary Equity
(in thousands)	Voting and Non-Voting Common Shares		Voting Common Stock		Non- Voting Common Stock		Additional Paid-In Capital		Notes Receivable from Stock Option Exercises			Accumulated Other Comprehensive Loss			Appropriated Deficit			Retained Earnings			Non- Redeemable Non- Controlling Interests		Total Permanent Equity			Redeemable Non- Controlling Interests
Balance, November 1, 2015		115,886	$	2	$	451	$	-	$	(11,143	)	$	(48,586	)	$	(5,338	)	$	684,845		$	1,725	$	621,956		$	88,913
Net income		-		-		-		-		-			-			9,768			241,307			4,066		255,141			9,616
Other comprehensive loss, net of tax		-		-		-		-		-			(8,997	)		-			-			-		(8,997	)		-
Dividends declared ($1.075 per share)		-		-		-		-		-			-			-			(122,154	)		-		(122,154	)		-
Issuance of Voting Common Stock		56		-		-		232		-			-			-			-			-