Eaton Vance Corp. (NYSE:EV) reported Wednesday weaker-than-expected second-quarter earnings, as higher expenses and unrealized losses on investments trumped improved revenues from fees, causing shares to trade down more than 5%.

The investment fund manager posted net income of $41.8 million, or 34 cents a share, compared with $31.2 million, or 25 cents a share, in the same quarter last year, and falling short of the average analyst estimate of 38 cents, according to a Thomson Reuters poll.

“In the third quarter of fiscal 2010, Eaton Vance showed solid profitability and double digit internal growth,” said Eaton CEO Thomas E. Faust Jr. “Generating organic growth on a recurring basis through a variety of market conditions continues to be a hallmark of the company.”

Revenue for the Boston-based company was $273.1 million, up 20% from $228.37 million a year ago, and missing the Street’s view of $284.9 million.

Earnings were boosted by improved fees for investment advisory and administration, distribution and underwriting, and services, though impeded by a $1.9 million drop in non-fee revenues, particularly due to net realized and unrealized losses on investments, as well as a 15% increase in operating expenses.