Consolidated assets under management were $440.1 billion on April 30, 2018, up 14 percent from $387.0 billion of consolidated managed assets on April 30, 2017 and down 2 percent from $449.2 billion of consolidated managed assets on January 31, 2018. The year-over-year increase in consolidated assets under management reflects net inflows of $28.6 billion and market price appreciation of $24.5 billion. The sequential quarterly decrease in consolidated assets under management reflects net inflows of $4.4 billion and market price declines of $13.6 billion in the second quarter of fiscal 2018.

“With seven percent annualized internal growth in management fee revenue in the second quarter, Eaton Vance continues to rank among the fastest-growing U.S. public asset managers,” said Thomas E. Faust Jr., Chairman and Chief Executive Officer. “Our combination of high-performing active investment strategies, high-value specialty investment solutions and strong distribution and client service continues to position Eaton Vance for business success.”

Average consolidated assets under management were $440.6 billion in the second quarter of fiscal 2018, up 17 percent from $376.5 billion in the second quarter of fiscal 2017 and up 2 percent from $433.5 billion in the first quarter of fiscal 2018.

Excluding performance-based fees, annualized management fee rates on consolidated assets under management averaged 33.3 basis points in the second quarter of fiscal 2018, down 4 percent from 34.7 basis points in the second quarter of fiscal 2017 and down 1 percent from 33.7 basis points in the first quarter of fiscal 2018. Changes in average annualized management fee rates for the compared periods primarily reflect the ongoing shift in the Company’s mix of business toward lower-fee mandates.

Attachments 5 and 6 summarize the Company’s consolidated assets under management and net flows by investment mandate and investment vehicle. Attachments 7, 8 and 9 summarize the Company’s ending consolidated assets under management by investment mandate, investment vehicle and investment affiliate. Attachment 10 shows the Company’s average annualized management fee rates by investment mandate.

As shown in Attachments 5 and 6, consolidated sales and other inflows were $39.4 billion in the second quarter of fiscal 2018, up 1 percent from $39.0 billion in the second quarter of fiscal 2017 and down 10 percent from $44.0 billion in the first quarter of fiscal 2018.

Consolidated redemptions and other outflows were $35.0 billion in the second quarter of fiscal 2018, up 35 percent from $26.0 billion in the second quarter of fiscal 2017 and down 5 percent from $36.9 billion in the first quarter of fiscal 2018.

As of April 30, 2018, Hexavest managed $15.8 billion of client assets, up 9 percent from $14.5 billion of managed assets on April 30, 2017 and down 5 percent from $16.7 billion of managed assets on January 31, 2018. Hexavest had net outflows of $0.2 billion in the second quarter of fiscal 2018, $0.6 billion in the second quarter of fiscal 2017 and $0.4 billion in the first quarter of fiscal 2018. Attachment 11 summarizes assets under management and net flow information for Hexavest. Other than Eaton Vance-sponsored funds for which Hexavest is adviser or sub-adviser, the managed assets and flows of Hexavest are not included in Eaton Vance’s consolidated totals.

Second Quarter Fiscal 2018 vs. Second Quarter Fiscal 2017

In the second quarter of fiscal 2018, revenue increased 11 percent to $414.3 million from $374.6 million in the second quarter of fiscal 2017. Management fees were up 12 percent, as a 17 percent increase in average consolidated assets under management more than offset lower consolidated average management fee rates. Performance fees were $(0.5) million in the second quarter of fiscal 2018 and negligible in the second quarter of fiscal 2017. Distribution and service fee revenues collectively were down 1 percent, reflecting lower managed assets in fund share classes that are subject to these fees.

Operating expenses increased 10 percent to $281.6 million in the second quarter of fiscal 2018 from $256.7 million in the second quarter of fiscal 2017. Increases in compensation, distribution expense, amortization of deferred sales commissions, fund-related expenses and other operating expenses were partially offset by a decrease in service fee expense. The increase in compensation expense reflects higher salaries and benefits associated with increases in headcount, higher operating income- and performance-based bonus accruals and higher stock-based compensation, partially offset by a decrease in sales-based incentive compensation. The increase in distribution expense reflects an increase in intermediary marketing support payments, higher distribution fees on certain share classes and higher marketing and promotion costs. The increase in amortization of deferred sales commissions reflects higher commission amortization for private funds, partially offset by lower Class C commission amortization. The increase in fund-related expenses reflects increases in fund subsidies, higher sub-advisory fees paid and an increase in fund expenses borne by the Company on funds for which it earns an all-in fee. Other operating expenses increased 14 percent, reflecting higher facilities, information technology, professional services and travel expenses. The decrease in service fee expense reflects lower average assets under management in fund share classes subject to service fee payments.

Expenses in connection with the Company’s NextShares^TM exchange-traded managed funds (NextShares) initiative totaled $1.7 million in the second quarter of fiscal 2018 and $1.8 million in the second quarter of fiscal 2017.

Operating income increased 13 percent to $132.7 million in the second quarter of fiscal 2018 from $117.9 million in the second quarter of fiscal 2017. Operating margin increased to 32.0 percent in the second quarter of fiscal 2018 from 31.5 percent in the second quarter of fiscal 2017.

Non-operating expense totaled $5.3 million in the second quarter of fiscal 2018 versus $1.2 million of non-operating income in the second quarter of fiscal 2017. The year-over-year change reflects a $9.5 million decrease in net gains and other investment income from the Company’s investments in sponsored strategies, including consolidated sponsored funds, partially offset by a $2.2 million decrease in interest expense and $0.8 million of income contribution from a consolidated warehouse-stage CLO entity that the Company began consolidating in the fourth quarter of fiscal 2017. Net gains and other investment income in the second quarter of fiscal 2017 included 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 (BVI) Ltd. in fiscal 2011. The decrease in interest expense year-over-year primarily reflects the May 2017 retirement of $250 million aggregate principal amount of the Company’s 6.5 percent senior notes due October 2017 and the April 2017 issuance of $300 million in aggregate principal amount of 3.5 percent senior notes due April 2027.

The Company’s effective tax rate, calculated as a percentage of income before income taxes and equity in net income of affiliates, was 26.7 percent in the second quarter of fiscal 2018 and 37.5 percent in the second quarter of fiscal 2017. The Company’s effective tax rate for the second quarter of fiscal 2018 is discussed in greater detail in the section captioned “Taxation” below.

Equity in net income of affiliates was $3.1 million in the second quarter of both fiscal 2018 and fiscal 2017. Equity in net income of affiliates in the second quarter of fiscal 2018 included $2.8 million from the Company’s investment in Hexavest and $0.3 million from the Company’s investment in a private equity partnership. Equity in net income of affiliates in the second quarter of fiscal 2017 included $3.0 million from the Company’s Hexavest investment and $0.1 million from the Company’s private equity partnership investment.

As detailed in Attachment 3, net income (loss) attributable to non-controlling and other beneficial interests was $(0.2) million in the second quarter of fiscal 2018 and $5.7 million in the second quarter of fiscal 2017. The year-over-year change primarily reflects a decrease in income earned by consolidated sponsored funds.

Second Quarter Fiscal 2018 vs. First Quarter Fiscal 2018

In the second quarter of fiscal 2018, revenue decreased 2 percent to $414.3 million from $421.4 million in the first quarter of fiscal 2018. Management fees were down 1 percent, as the impact of three fewer fee days and lower consolidated average management fee rates in the fiscal second quarter outweighed a 2 percent increase in average consolidated assets under management. Performance fees were $(0.5) million in both the second and first quarters of fiscal 2018. Distribution and service fee revenues collectively were down 3 percent, reflecting lower managed assets in fund share classes that are subject to these fees and the effect of three fewer fee days in the fiscal second quarter.

Operating expenses decreased 1 percent to $281.6 million in the second quarter of fiscal 2018 from $285.6 million in the first quarter of fiscal 2018. Decreases in compensation, distribution expense and service fee expense were partially offset by increases in amortization of deferred sales commissions, fund-related expenses and other operating expenses. The decrease in compensation expense reflects lower stock-based compensation, lower salaries, primarily driven by fewer payroll days in the second fiscal quarter, a decrease in operating income-based bonus accruals and a decrease in sales-based incentive compensation. The decrease in distribution expense primarily reflects reduced intermediary marketing support payments, lower Class C distribution fees, primarily driven by three fewer fee days in the fiscal second quarter, and lower marketing and promotion costs. The decrease in service fee expense reflects lower average assets under management in fund share classes subject to service fee payments and the impact of three fewer fee days in the fiscal second quarter. The increase in amortization of deferred sales commissions reflects higher private fund commission amortization, partially offset by lower Class C commission amortization. The increase in fund-related expenses reflects an increase in sub-advisory fees paid and fund subsidies, partially offset by a decrease in fund expenses borne by the Company on funds for which it earns an all-in fee. Other operating expenses increased 10 percent, primarily reflecting higher facilities, professional services, travel and information technology expenses.

Expenses in connection with the Company’s NextShares initiative totaled $1.7 million in the second quarter of fiscal 2018 and $1.9 million in the first quarter of fiscal 2018.

Operating income decreased 2 percent to $132.7 million in the second quarter of fiscal 2018 from $135.8 million in the first quarter of fiscal 2018. Operating margin decreased to 32.0 percent in the second quarter of fiscal 2018 from 32.2 percent in the first quarter of fiscal 2018.

Non-operating expense totaled $5.3 million in the second quarter of fiscal 2018 versus $1.7 million in the first quarter of fiscal 2018. The sequential change reflects a $2.9 million decrease in net gains and other investment income from the Company’s investments in sponsored strategies, including consolidated sponsored funds, and a $0.8 million decrease in income contribution from a consolidated warehouse-stage CLO entity that the Company began consolidating in the fourth quarter of fiscal 2017. Net gains and other investment income in the first quarter of fiscal 2018 included a $6.5 million charge to reflect the expiration during the period of the Company’s option to acquire an additional 26 percent ownership interest in Hexavest under the terms of the option agreement entered into when the Company acquired its Hexavest position in 2012.

The Company’s effective tax rate, calculated as a percentage of income before income taxes and equity in net income of affiliates, was 26.7 percent in the second quarter of fiscal 2018 and 36.3 percent in the first quarter of fiscal 2018. The Company’s effective tax rate for the second and first quarters of fiscal 2018 is discussed in greater detail in the section captioned “Taxation” below.

Equity in net income of affiliates was $3.1 million in the second quarter of fiscal 2018 and $3.0 million in the first quarter of fiscal 2018. Equity in net income of affiliates in the second quarter of fiscal 2018 included $2.8 million from the Company’s investment in Hexavest and $0.3 million from the Company’s investment in a private equity partnership. Equity in net income of affiliates in the first quarter of fiscal 2018 included $2.8 million from the Company’s Hexavest investment and $0.2 million from the Company’s private equity partnership investment.

As detailed in Attachment 3, net income (loss) attributable to non-controlling and other beneficial interests was $(0.2) million in the second quarter of fiscal 2018 and $10.5 million in the first quarter of fiscal 2018. The sequential change primarily reflects a decrease in income earned by consolidated sponsored funds.

Taxation

On December 22, 2017, the Tax Act was signed into law in the U.S. Among other significant changes, the Tax Act reduced the statutory federal income tax rate for U.S. corporate taxpayers from a maximum of 35 percent to 21 percent and required the deemed repatriation of foreign earnings not previously subject to U.S. taxation. Because the lower federal income tax rate took effect two months into the Company’s fiscal year, a blended federal tax rate of 23.3 percent applies to the Company for fiscal 2018 (see table below).

The Company’s income tax provision in the second and first quarters of fiscal 2018 was reduced by net excess tax benefits of $1.9 million and $11.9 million, respectively, related to the exercise of stock options and vesting of restricted stock during those periods. New accounting guidance adopted in the first quarter of fiscal 2018 requires these net excess tax benefits to be recognized in earnings. The Company’s income tax provision for the first quarter of fiscal 2018 also included a non-recurring charge of $24.7 million to reflect the estimated effect of the Tax Act. The non-recurring charge included $21.7 million from the revaluation of the Company’s deferred tax assets and liabilities and $3.0 million for the deemed repatriation of foreign-sourced net earnings not previously subject to U.S. taxation.

Our calculations of adjusted net income and adjusted earnings per diluted share remove the effect of the net excess tax benefits recognized in the second and first quarters of fiscal 2018 in connection with the new accounting guidance and

the non-recurring impact of the tax reform recognized in the first quarter of fiscal 2018. On this basis, our adjusted effective tax rate was 28.2 percent and 26.7 percent in the second and first quarters of fiscal 2018, respectively. On the same adjusted basis, the Company estimates that its quarterly effective tax rate will be approximately 27.5 to 28.0 percent for the balance of fiscal 2018 and for the fiscal year as a whole. The Company’s actual tax rates in fiscal 2018 may vary from these estimates due to, among other things, changes in the Company’s tax policy interpretations and assumptions, as well as additional regulatory guidance that may be issued.

The following table reconciles the statutory federal income tax rate to the Company’s effective tax rate for the second and first quarters of fiscal 2018:

The Company continues to carefully evaluate the impact of the Tax Act, certain provisions of which will not take effect for the Company until fiscal 2019, including, but not limited to, the global intangible low-taxed income, foreign-derived intangible income and base erosion anti-abuse tax provisions.

Balance Sheet Information

As of April 30, 2018, the Company held $511.7 million of cash and cash equivalents and $279.7 million of investments in short-term debt securities with maturities between 90 days and one year. There were no outstanding borrowings under the Company’s $300 million credit facility at such date. During the first six months of fiscal 2018, the Company used $109.5 million to repurchase and retire approximately 2.0 million shares of its Non-Voting Common Stock under its repurchase authorizations. Of the current 8.0 million share repurchase authorization, approximately 4.1 million shares remain available.

(2) Statutory U.S. federal income tax rate is a blend of 35 percent and 21 percent based on the number of days in the Company’s fiscal year before and after the January 1, 2018 effective date of the reduction in the federal corporate income tax rate pursuant to the Tax Act. Based on current law, the Company’s fiscal 2019 statutory U.S. federal income tax rate will be 21 percent.

(3) Represents the Company’s effective income tax rate, excluding the tax impact of stock-based compensation shortfalls or windfalls, which recently-adopted accounting guidance requires to be recognized in earnings, and the non-recurring tax impact of U.S. tax law changes recognized in the first quarter of fiscal 2018. Management believes that the Company’s adjusted effective income tax rate is an important indicator of our operations because it excludes 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 Company estimates that its adjusted effective income tax rate for fiscal 2019 will be approximately 25.3 to 25.8 percent.

(4) This amount reflects the impact of Accounting Standard Update (ASU) 2016-09, Improvements to Employee Share-Based Payment Accounting, which was adopted in the first quarter of fiscal 2018. The Company anticipates that the adoption of this guidance may cause fluctuations in the Company’s effective tax rate, particularly in the first quarter of each fiscal year, when most of the Company’s annual stock-based awards vest.

Conference Call Information

Eaton Vance Corp. will host a conference call and webcast at 11:00 AM eastern time today to discuss the financial results for the three and six months ended April 30, 2018. To participate in the conference call, please dial 866-521-4909 (domestic) or 647-427-2311 (international) and refer to “Eaton Vance Corp. Second Fiscal Quarter Earnings.” A webcast of the conference call can also be accessed via Eaton Vance’s website, eatonvance.com.

A replay of the call will be available for one week by calling 800-585-8367 (domestic) or 416-621-4642 (international) or by accessing Eaton Vance’s website, eatonvance.com. To listen to the replay, enter the conference ID number 8328248 when instructed.

About Eaton Vance Corp.

Eaton Vance is a leading global asset manager whose history dates to 1924. With offices in North America, Europe, Asia and Australia, Eaton Vance and its affiliates offer individuals and institutions a broad array of investment strategies and wealth management solutions. The Company’s long record of providing exemplary service, timely innovation and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today’s most discerning investors. For more information about Eaton Vance, visit eatonvance.com.

Forward-Looking Statements

This news release may contain statements that are not historical facts, referred to as “forward-looking statements.” The Company’s actual future results may differ significantly from those stated in any forward-looking statements, depending on factors such as changes in securities or financial markets or general economic conditions, client sales and redemption activity, the continuation of investment advisory, administration, distribution and service contracts, and other risks discussed in the Company’s filings with the Securities and Exchange Commission.