Tax-Managed Global Dividend Income Fund (A)

A Word On The Markets  as of Dec 31, 2011

Political irresolution characterized most of the developed world during the fourth quarter of 2011, creating an atmosphere of uncertainty that subjected global equity markets to dramatic volatility. In the U.S., the congressional Super Committee failed to identify $1.2 trillion in federal spending cuts in November. Then, in December, Congress waffled once more and failed to approve until the twelfth hour a two-month extension of unemployment benefits and the payroll-tax holiday. In Europe, EU officials were unable to convince the markets that they had a viable plan to stem the region's sovereign debt crisis.

In spite of this, the U.S. economy displayed signs of economic growth in the fourth quarter, spurred largely by lower energy prices. Looking globally, manufacturing data showed expansion, including in China, where there had been concerns about slowing.

Despite extreme volatility during the fourth quarter, global equity markets generally posted positive returns. The MSCI EAFE Index rose 3.33%¹⁰, while the broader-based MSCI All Country World Index¹¹ rose 7.18% during the quarter. In the U.S., the S&P 500 Index¹² added 11.82% during the quarter to finish up 2.11% for the calendar year, while the blue chip Dow Jones Industrial Average¹³ gained 12.78%, posting a return of 8.38% for the year. Small-cap stocks outperformed large caps during the quarter, with the Russell 2000 Index¹⁴ gaining 15.47% compared to 11.84% for the large-cap Russell 1000 Index¹⁵. Across capitalizations, value stocks outperformed growth stocks.

Performance Summary 

Eaton Vance Tax-Managed Global Dividend Income Fund outperformed its benchmark, the MSCI World Index², during the fourth quarter at NAV.

• All countries in the benchmark had positive returns for the quarter, with the exception of debt-plagued Italy and Spain. Three of four regions in the benchmark posted positive returns for the quarter. North America was the best-performing region, with a return of 11.11%, while the Pacific Rim was the worst performing region, with a return of -0.63%.
• All 10 sectors in the benchmark had positive returns for the quarter. Energy was the best-performing sector in the benchmark, with a return of 16.53%, and Utilities was the worst performing sector with a return of 1.61%.
• Preferred securities, as measured by the BofA Merrill Lynch Fixed Rate Preferred Securities Index¹⁶, underperformed the benchmark for the quarter. As of 12/31/11, preferred securities were 20.1% of the Fund's total assets.

Contributors 

Stock selection in the financials, consumer staples, and materials sectors contributed to the Fund's relative performance compared to the benchmark for the quarter. An underweight position in the financial sector also helped fund performance. The preferred stocks in the Fund outperformed the BofA Merrill Lynch Fixed Rate Preferred Securities Index. ¹⁶.

• Consumer Staples company Philip Morris was the top contributor to the Fund's relative performance for the quarter.
• Consumer Discretionary companies TJX and McDonald's also contributed to the Fund's relative performance for the quarter.
• Two major railroad companies, Canadian National and Union Pacific, helped boost Fund performance for the quarter.

Detractors 

Relative performance compared to the benchmark for the quarter was hurt by stock selection as well as sector allocation. Stock selection in the information technology and health care sectors detracted from Fund performance. An overweight in utilities also hampered the Fund's relative performance for the quarter. Preferred securities, as measured by the BofA Merrill Lynch Fixed Rate Preferred Securities Index, underperformed the Fund's benchmark for the quarter.

• Three international stocks in the utilities sector, SSE, United Utilities Group, and National Grid, detracted from relative performance for the quarter.
• In the information technology sector, Oracle, Accenture, and HTC also detracted from the Fund's performance for the quarter.
• Fresenius Medical Care and Merck, both in the health care sector, also had a negative impact on relative performance.

Investment Outlook And Fund Positioning 

Entering 2012, political and economic uncertainty remains an issue in the equity markets. However, we believe there continue to be attractive opportunities in large-capitalization, dividend-paying stocks. We continued to see companies increase dividends; in 2011, there were 60% more dividend increases within the benchmark than in 2010.

Management remains committed to our fundamental, research-driven process. We continue to invest in companies we feel have strong business franchises and attractive growth prospects.

At year end, the Fund's most meaningful overweight positions were in the utilities, consumer staples, and energy sectors; the most substantive underweights were in the financials, industrials, and information technology sectors.

The views expressed in this report are those of portfolio manager(s) and are current only through the date stated at the top of this page. These views are subject to change at any time based upon market or other conditions, and Eaton Vance disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions are based on many factors, may not be relied upon as an indication of trading intent on behalf of any Eaton Vance fund. This commentary may contain statements that are not historical facts, referred to as "forward looking statements". The Fund's actual future results may differ significantly from those stated in any forward-looking statement, depending on factors such as changes in securities or financial markets or general economic conditions, the volume of sales and purchases of Fund shares, the continuation of investment advisory, administrative and service contracts, and other risks discussed from time to time in the Fund's filings with the Securities and Exchange Commission. Ratings are based on Moody's, S&P or Fitch, as applicable. Credit ratings are based largely on the rating agency's investment analysis at the time of rating and the rating assigned to any particular security is not necessarily a reflection of the issuer's current financial condition. The rating assigned to a security by a rating agency does not necessarily reflect its assessment of the volatility of a security's market value or of the liquidity of an investment in the security. If securities are rated differently by the rating agencies, the higher rating is applied. Ratings are based on Moody's, S&P or Fitch, as applicable. Credit ratings are based largely on the rating agency's investment analysis at the time of rating and the rating assigned to any particular security is not necessarily a reflection of the issuer's current financial condition. The rating assigned to a security by a rating agency does not necessarily reflect its assessment of the volatility of a security's market value or of the liquidity of an investment in the security. If securities are rated differently by the rating agencies, the higher rating is applied.

Portfolio profile subject to change due to active management. Percentages may not total 100% due to rounding.

About Risk 

Fund share values are sensitive to stock market volatility. Changes in the dividend policies of companies could make it difficult to provide a predictable level of income. Investments in foreign instruments or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical or other conditions. Dividend capture strategies may result in higher portfolio turnover, increased trading costs and potential for capital loss or gain. When interest rates rise, the value of preferred stocks will generally decline. Market conditions may limit the ability to generate tax losses or to generate dividend income taxed at favorable tax rates. The Fund's ability to utilize various tax-managed techniques may be curtailed or eliminated in the future by tax legislation or regulation. No Fund is a complete investment program and you may lose money investing in a Fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund prospectus for a complete description.

No attribution information is available.

Portfolio profile subject to change due to active management. Percentages may not total 100% due to rounding.

About Risk 

Fund share values are sensitive to stock market volatility. Changes in the dividend policies of companies could make it difficult to provide a predictable level of income. Investments in foreign instruments or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical or other conditions. Dividend capture strategies may result in higher portfolio turnover, increased trading costs and potential for capital loss or gain. When interest rates rise, the value of preferred stocks will generally decline. Market conditions may limit the ability to generate tax losses or to generate dividend income taxed at favorable tax rates. The Fund's ability to utilize various tax-managed techniques may be curtailed or eliminated in the future by tax legislation or regulation. No Fund is a complete investment program and you may lose money investing in a Fund. The Fund may engage in other investment practices that may involve additional risks and you should review the Fund prospectus for a complete description.