<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Common Stocks--97.0%
Security Shares Value
- --------------------------------------------------------------------------------
Advertising -- 2.5%
- --------------------------------------------------------------------------------
AC Nielson Corp. 45,668 $ 1,278,704
Advo, Inc. 170,000 4,866,250
Cognizant Corp. 249,006 12,808,246
Harte-Hanks Communications, Inc. 144,604 3,280,703
Interpublic Group of Companies, Inc.+ 20,000 1,277,117
Interpublic Group of Companies, Inc. 279,756 17,869,415
Interpublic Group of Companies, Inc.+ 42,000 2,679,531
Interpublic Group of Companies, Inc.+ 82,350 5,257,476
Omnicom Group, Inc. 1,466,200 69,461,224
Snyder Communications, Inc.+ 442,500 18,768,638
Snyder Communications, Inc.+ 40,000 1,695,750
TMP Worldwide, Inc. 43,000 1,139,500
True North Communications, Inc. 33,000 1,006,500
WPP Group PLC 488,000 3,096,458
- --------------------------------------------------------------------------------
$ 144,485,512
- --------------------------------------------------------------------------------
Aerospace and Defense -- 0.6%
- --------------------------------------------------------------------------------
Boeing Company (The) 221,682 $ 11,097,955
Raytheon Co. Class A 133 7,340
Raytheon Co. Class B 224,544 12,728,838
TRW, Inc. 2,000 105,625
United Technologies Corp. 49,398 4,862,616
United Technologies Corp.+ 36,844 3,625,018
- --------------------------------------------------------------------------------
$ 32,427,392
- --------------------------------------------------------------------------------
Apparel -- 0.0%
- --------------------------------------------------------------------------------
Samsonite Corp. 1,000 $ 28,750
- --------------------------------------------------------------------------------
$ 28,750
- --------------------------------------------------------------------------------
Auto and Parts -- 0.8%
- --------------------------------------------------------------------------------
Aftermarket Technology Corp.+ 46,000 $ 893,412
Borg-Warner Automotive, Inc. 225,000 13,992,188
Chrysler Corp. 32,000 1,286,000
Ford Motor Co. 1,000 45,813
General Motors Corp. 5,396 363,556
Harley-Davidson, Inc. 1,000 36,000
Magna International, Inc. Class A 345,000 25,724,063
Meritor Automotive, Inc. 61,133 1,577,996
Snap-On, Inc.+ 44,444 1,878,656
- --------------------------------------------------------------------------------
$ 45,797,684
- --------------------------------------------------------------------------------
Banks - Regional -- 4.5%
- --------------------------------------------------------------------------------
AmSouth Bancorporation 18,328 $ 1,143,209
Banc One Corp. 501,848 29,514,935
Bank of Granite Corp. 18,000 679,500
Bank of New York Co., Inc. (The) 78,172 4,617,034
BankBoston Corp. 1,080 116,573
BB&T Corp. 33,235 2,235,054
City National Corp. 100,000 3,718,750
Colonial Bancgroup, Inc. (The) 153,137 5,493,790
Comerica, Inc. 100,000 6,693,750
Community First Bancshares, Inc.+ 148,000 7,451,772
Compass Bancshares, Inc. 48,208 2,338,088
Crestar Financial Corp. 28,348 1,695,565
Fifth Third Bancorp 112,500 6,187,500
First Citizens Bancshares, Inc. 35,300 3,997,725
First Union Corp. 786,051 47,457,823
Fleet Financial Group, Inc. 57,486 4,965,353
Golden West Financial Corp. 7,000 737,188
Keycorp 68,800 2,730,500
Marshall and Ilsley Corp. 20,000 1,170,000
National City Corp. 33,309 2,306,648
National Commerce Bancorporation+ 79,816 3,564,622
Nationsbank Corp. 309,101 23,414,401
Northern Trust Corp. 141,898 10,358,554
Norwest Corp. 1,626,244 64,541,558
PNC Bank Corp. 44,900 2,713,644
Sovereign Bancorp, Inc. 366,000 6,908,250
Summit Bancorp 21,642 1,084,805
SunTrust Banks, Inc. 480 39,090
U.S. Bancorp 20,000 2,540,000
Union Planters Corp. 14,875 914,813
Valley National Bancorp 184,691 7,410,726
Wachovia Corp. 6,330 537,654
Westamerica Bancorporation 82,596 2,725,668
- --------------------------------------------------------------------------------
$ 262,004,542
- --------------------------------------------------------------------------------
Banks and Money Services -- 2.0%
- --------------------------------------------------------------------------------
Ahmanson (H.F.) & Co. 2,600 $ 198,250
Bank of Montreal 19,000 1,037,875
Bank United Corp. 2,000 103,500
BankAmerica Corp. 41,624 3,538,040
Beneficial Corp. 14,100 1,838,288
Chase Manhattan Corp. 32,632 4,521,572
See notes to financial statements
9
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security Shares Value
- --------------------------------------------------------------------------------
Banks and Money Services (continued)
- --------------------------------------------------------------------------------
Citicorp 430,117 $ 64,732,608
First Chicago NBD Corp. 43,006 3,994,182
Firstbank of Illinois Co. 26,146 1,196,180
FirstPlus Financial Group, Inc. 120,000 5,820,000
FirstPlus Financial Group, Inc.+ 209,395 10,020,587
Morgan (J.P.) & Co., Inc. 55,800 7,323,750
Washington Mutual, Inc. 92,759 6,498,927
Wells Fargo & Co. 11,542 4,253,227
- --------------------------------------------------------------------------------
$ 115,076,986
- --------------------------------------------------------------------------------
Beverages -- 1.8%
- --------------------------------------------------------------------------------
Anheuser-Busch Cos., Inc. 261,465 $ 11,978,365
Coca-Cola Company (The) 502,245 38,107,839
PepsiCo, Inc. 1,311,156 52,036,503
- --------------------------------------------------------------------------------
$ 102,122,707
- --------------------------------------------------------------------------------
Broadcasting and Cable -- 1.0%
- --------------------------------------------------------------------------------
American Radio Systems Corp. 149,451 $ 9,910,469
Clear Channel Communications, Inc. 43,700 4,118,725
Comcast Corp., Class A 62,500 2,238,281
Cox Communications, Inc., Class A 93,319 4,164,360
Liberty Media Group, Class A 91,828 3,047,542
Tele-Communications, Inc. 490,073 15,804,854
U.S. West, Inc. - Media Group 258,524 9,759,281
Univision Communications, Inc. 200,649 7,687,365
- --------------------------------------------------------------------------------
$ 56,730,877
- --------------------------------------------------------------------------------
Building Materials -- 0.9%
- --------------------------------------------------------------------------------
American Standard Companies, Inc. 143,358 $ 6,979,743
CRH PLC 255,000 3,638,289
Interface, Inc. 184,213 7,817,539
Masco Corp. 114,331 6,631,198
Sherwin-Williams Co. (The) 44,670 1,591,369
Stanley Works (The) 12,160 622,440
Valspar Corp. 570,000 22,728,750
Walter Industries, Inc. 1,000 20,625
- --------------------------------------------------------------------------------
$ 50,029,953
- --------------------------------------------------------------------------------
Business Services - Miscellaneous -- 0.8%
- --------------------------------------------------------------------------------
Accustaff, Inc. 100,000 $ 3,587,500
Corporate Express, Inc. 92,486 930,640
Corrections Corporation of America 54,756 1,519,479
Fair, Issac and Co., Inc. 88,828 3,530,913
Fair, Issac and Co., Inc.+ 150,000 5,947,594
Half (Robert) International, Inc. 1,800 97,425
Manpower, Inc. 110,000 4,846,875
Metzler Group, Inc. (The) 90,000 3,116,250
Romac International, Inc.+ 45,546 1,204,555
Staff Leasing, Inc. 78,125 2,285,156
Staff Leasing, Inc.+ 78,125 2,276,016
Sylvan Learning Systems, Inc.* 142,857 7,053,564
Sylvan Learning Systems, Inc.+ 196,789 9,704,311
- --------------------------------------------------------------------------------
$ 46,100,278
- --------------------------------------------------------------------------------
Chemicals -- 1.0%
- --------------------------------------------------------------------------------
Bayer AG ADR 40,000 $ 1,778,764
Dow Chemical Co. (The) 25,248 2,441,166
DuPont (E.I.) de Nemours & Co. 215,107 15,662,478
Eastman Chemical Co. 123 8,456
Mississippi Chemical Corp. 272,180 4,933,263
Monsanto Co. 492,240 26,027,190
Olin Corp. 1,037 48,545
Solutia, Inc. 200,336 5,684,534
- --------------------------------------------------------------------------------
$ 56,584,396
- --------------------------------------------------------------------------------
Chemicals - Specialty -- 0.1%
- --------------------------------------------------------------------------------
Airgas, Inc. 61,000 $ 945,500
Airgas, Inc.+ 205,555 3,179,730
- --------------------------------------------------------------------------------
$ 4,125,230
- --------------------------------------------------------------------------------
Communications Equipment -- 1.5%
- --------------------------------------------------------------------------------
Dialogic Corp. 80,000 $ 2,990,000
General Cable Corp. 2,000 90,625
L.M. Ericsson Telephone Co., ADR 226,000 11,624,875
Lucent Technologies, Inc. 2,830 215,434
Nokia Corp., Class A ADR 683,000 45,675,624
Northern Telecom Ltd. ADR 111,740 6,802,173
PairGain Technologies, Inc. 140,581 2,591,962
PairGain Technologies, Inc.+ 210,000 3,869,939
See notes to financial statements
10
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security Shares Value
- --------------------------------------------------------------------------------
Communications Equipment (continued)
- --------------------------------------------------------------------------------
Salient 3 Communications, Inc., Class A 78,125 $ 810,547
Tellabs, Inc. 146,623 10,391,905
- --------------------------------------------------------------------------------
$ 85,063,084
- --------------------------------------------------------------------------------
Communications Services -- 1.7%
- --------------------------------------------------------------------------------
360 Communications Co. 1,333 $ 40,740
Airtouch Communications, Inc. 1,865 99,078
Aliant Communications, Inc. 36,322 1,030,637
Alltel Corp. 53,760 2,298,240
Ameritech Corp. 28,362 1,207,158
AT&T Corp. 34,467 2,070,174
BellSouth Corp. 6,980 448,029
Citizens Utilities Corp., Class B 44,309 448,632
Excel Communications, Inc. 100,000 2,350,000
McLeodUSA, Inc. 57,143 2,628,578
McLeodUSA, Inc.+ 36,000 1,652,688
Nextel Communications, Inc., Class A /(1)/ 75,830 2,175,373
Premier Technologies, Inc. 89,479 2,852,143
SBC Communications, Inc. 9,342 387,109
Sprint Corp. 1,600 109,300
Tel-Save Holdings, Inc. 247,376 5,643,265
Telecom Corp. of New Zealand Ltd. ADR 8,000 306,500
Telephone & Data Systems, Inc. 86,756 4,120,910
Worldcom, Inc. 1,575,000 67,380,389
- --------------------------------------------------------------------------------
$ 97,248,943
- --------------------------------------------------------------------------------
Computer Software -- 3.9%
- --------------------------------------------------------------------------------
Baan Co., NV ADR 223,926 $ 9,936,716
BMC Software, Inc.* 4,000 374,250
Cadence Design Systems, Inc. 506,000 18,374,125
Computer Associates International, Inc. 624,684 36,583,057
Compuware Corp. 1,400 68,425
CSG Systems International, Inc. 7,958 362,089
HNC Software, Inc.* 125,000 4,875,000
HNC Software, Inc.+ 147,980 5,756,792
HNC Software, Inc.+ 129,814 5,050,089
Intuit, Inc. 286,227 15,223,699
Lexmark International Group, Inc. 1,197,000 69,276,374
Microsoft Corp. 139,700 12,590,463
Oracle Corp. 502,500 13,002,188
Parametric Technology Corp. 94,600 3,024,239
PeopleSoft, Inc. 134,692 6,263,178
PeopleSoft, Inc.+ 120,000 5,577,210
Saville Systems PLC ADR 160,000 7,980,000
Saville Systems PLC ADR 160,000 7,970,025
Security Dynamics Technologies, Inc.* 40,000 965,000
Sterling Commerce, Inc. 2,388 101,639
Wind River Systems, Inc.+ 13,000 449,225
- --------------------------------------------------------------------------------
$ 223,803,783
- --------------------------------------------------------------------------------
Computers and Business Equipment -- 4.0%
- --------------------------------------------------------------------------------
Cabletron Systems, Inc. 33,715 $ 446,724
Cisco Systems, Inc. 427,930 31,345,873
Cisco Systems, Inc.+ 116,062 8,497,291
Compaq Computer Corp. 10,224 286,911
Dell Computer Corp. 1,900 153,425
Dell Computer Corp.+ 750,000 60,441,374
Digital Equipment Corp. 29,355 1,632,872
EMC Corp. 3,000 138,375
Hewlett-Packard Co. 505,085 38,039,214
International Business Machines Corp. 168,510 19,526,096
Sun Microsystems, Inc. 3,500 144,156
Xerox Corp. 624,000 70,823,999
- --------------------------------------------------------------------------------
$ 231,476,310
- --------------------------------------------------------------------------------
Conglomerates -- 0.9%
- --------------------------------------------------------------------------------
General Electric Co. 642,104 $ 54,659,102
- --------------------------------------------------------------------------------
$ 54,659,102
- --------------------------------------------------------------------------------
Consumer Services -- 0.4%
- --------------------------------------------------------------------------------
Block (H&R), Inc. 366,177 $ 16,477,965
Cendant Corp. 187,999 4,699,975
Service Corp. International 3,000 123,750
ServiceMaster Co. 45,562 1,301,365
Stewart Enterprises, Inc. 114,000 2,949,750
- --------------------------------------------------------------------------------
$ 25,552,805
- --------------------------------------------------------------------------------
Containers and Packaging -- 0.6%
- --------------------------------------------------------------------------------
Sealed Air Corp. 535,000 $ 33,537,813
- --------------------------------------------------------------------------------
$ 33,537,813
- --------------------------------------------------------------------------------
See notes to financial statements
11
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security Shares Value
- --------------------------------------------------------------------------------
Distribution -- 1.3%
- --------------------------------------------------------------------------------
Cardinal Health, Inc. 211,200 $ 20,328,000
Supervalu, Inc. 51,506 2,250,168
Sysco Corp. 1,492,272 35,534,727
U.S. Foodservice, Inc. 452,443 15,976,893
U.S. Foodservice, Inc.+ 66,438 2,340,227
Wilmar Industries, Inc. 50,000 1,193,750
- --------------------------------------------------------------------------------
$ 77,623,765
- --------------------------------------------------------------------------------
Drugs -- 8.3%
- --------------------------------------------------------------------------------
American Home Products Corp. 2,300 $ 214,188
Amgen, Inc. 405,532 24,179,846
Astra AB Class A 1,074,400 22,074,300
Astra AB Class B ADR 160,000 3,240,000
Bristol-Myers Squibb Co. 354,171 37,497,855
Covance, Inc. 81,250 1,741,797
Elan Corp., PLC ADR* 401,676 24,954,122
Genentech, Inc. 80,000 5,540,000
Genzyme Corp.* 12,150 92,644
Genzyme Corp., Class A 940,000 29,081,250
Lilly (Eli) & Co. 589,158 40,983,303
Merck & Co., Inc. 562,848 67,823,183
Pfizer, Inc. 845,058 96,178,163
Quintiles Transnational Corp. 95,420 4,723,290
Quintiles Transnational Corp.+ 100,000 4,947,525
Schering-Plough Corp. 276,240 22,133,730
Sepracor, Inc.* 96,000 4,440,000
SmithKline Beecham PLC ADR 105,440 6,280,270
Teva Pharmaceutical Industries Ltd. ADR+ 100,000 4,256,831
Vertex Pharmaceuticals, Inc.* 215,000 6,691,875
Warner-Lambert Co. 215,344 40,740,393
Watson Pharmaceuticals, Inc. 573,550 24,662,650
Watson Pharmaceuticals, Inc.+ 122,888 5,270,974
- --------------------------------------------------------------------------------
$ 477,748,189
- --------------------------------------------------------------------------------
Electric Utilities -- 0.2%
- --------------------------------------------------------------------------------
Central and South West Corp. 1,600 $ 41,700
Dominion Resources, Inc. 3,249 128,539
Duke Energy Corp. 1,800 104,175
New England Electric System 2,700 117,450
Texas Utilities Co. 250,196 10,007,840
- --------------------------------------------------------------------------------
$ 10,399,704
- --------------------------------------------------------------------------------
Electrical Equipment -- 0.7%
- --------------------------------------------------------------------------------
American Power Conversion Corp. 200,000 $ 6,434,281
AMP, Inc. 112,340 4,416,366
Emerson Electric Co. 151,648 9,648,604
General Signal Corp. 68,600 3,018,400
Molex, Inc. Class A 90,066 2,420,524
Rockwell International Corp. 93,700 5,241,344
Rockwell International Corp.+ 90,000 5,031,858
Thomas & Betts Corp.+ 22,963 1,339,795
- --------------------------------------------------------------------------------
$ 37,551,172
- --------------------------------------------------------------------------------
Electronics - Instruments -- 0.7%
- --------------------------------------------------------------------------------
Analog Devices, Inc. 280,000 $ 10,902,500
Dionex Corp. 181,070 9,664,611
Thermo Electron Corp. 390,000 15,526,875
Waters Corp.+ 29,580 1,581,739
X-Rite, Inc. 170,000 2,199,375
X-Rite, Inc.+ 118,000 1,523,572
X-Rite, Inc.+ 140,000 1,810,344
- --------------------------------------------------------------------------------
$ 43,209,016
- --------------------------------------------------------------------------------
Electronics - Semiconductors -- 2.1%
- --------------------------------------------------------------------------------
Altera Corp.* 3,600 $ 145,800
Burr-Brown Corp.+ 600,000 18,253,369
Intel Corp. 595,670 48,137,581
Intel Corp.+ 70,002 5,654,208
KLA-Tencor Corp. 36,000 1,451,250
Linear Technologies Corp. 45,000 3,622,500
Maxim Integrated Products Co.+ 40,000 1,614,193
Motorola, Inc. 110,768 6,161,470
National Semiconductor Corp.+ 79,368 1,745,223
Smart Modular Technologies, Inc.+ 60,000 1,479,398
Speedfam International, Inc.+ 221,000 6,405,796
Texas Instruments, Inc. 313,780 20,101,531
Ultratech Stepper, Inc.+ 245,129 6,013,455
Uniphase Corp.+ 25,932 1,403,997
- --------------------------------------------------------------------------------
$ 122,189,771
- --------------------------------------------------------------------------------
Engineering and Construction -- 0.1%
- --------------------------------------------------------------------------------
Jacobs Engineering Group, Inc. 130,225 $ 4,346,259
Jacobs Engineering Group, Inc.+ 32,230 1,075,138
- --------------------------------------------------------------------------------
$ 5,421,397
- --------------------------------------------------------------------------------
See notes to financial statements
12
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security Shares Value
- --------------------------------------------------------------------------------
Entertainment -- 0.3%
- --------------------------------------------------------------------------------
Callaway Golf Co.+ 235,715 $ 6,407,818
Disney (Walt) Co. 26,900 3,344,006
Mattel, Inc. 20,995 804,371
Regal Cinemas, Inc. 2,250 68,766
Time Warner Inc. 104,628 8,213,298
- --------------------------------------------------------------------------------
$ 18,838,259
- --------------------------------------------------------------------------------
Environmental Services -- 0.7%
- --------------------------------------------------------------------------------
Browning-Ferris Industries, Inc. 391,647 $ 13,364,954
U.S.A. Waste Services, Inc. 303,556 14,893,216
Waste Management, Inc. 304,212 10,191,102
- --------------------------------------------------------------------------------
$ 38,449,272
- --------------------------------------------------------------------------------
Financial - Miscellaneous -- 3.5%
- --------------------------------------------------------------------------------
American Express Co. 273,148 $ 27,861,096
American General Corp. 91,153 6,073,069
Capital One Financial Corp. 36,000 3,458,250
Federal Home Loan Mortgage Corp. 502,500 23,272,031
Federal National Mortgage Association 1,242,855 74,415,942
Household International, Inc. 36,018 4,734,116
MGIC Investment Corp. 680,000 42,840,000
Providian Financial Corp. 166,107 9,997,565
Travelers Group, Inc. 154,161 9,432,726
- --------------------------------------------------------------------------------
$ 202,084,795
- --------------------------------------------------------------------------------
Foods -- 3.7%
- --------------------------------------------------------------------------------
Archer-Daniels-Midland Co. 136,929 $ 2,943,974
Bestfoods 22,400 1,229,200
Corn Products International, Inc. 500 17,813
Earthgrains Co. (The) 1 47
Flowers Industries, Inc. 393,000 8,400,375
General Mills, Inc. 17,500 1,182,344
Kellogg Co. 44,714 1,844,453
McCormick & Co., Inc. 554,298 18,984,707
Pioneer Hi-Bred International, Inc. 852,171 32,169,455
Quaker Oats Co. (The) 39,942 2,076,984
Riviana Foods, Inc.+ 150,000 3,476,386
Sara Lee Corp. 577,972 34,425,457
Tyson Food, Inc. 1,779,999 34,376,231
Unilever ADR 812,000 60,595,499
Wrigley (Wm.) Jr. Co. 113,180 10,073,020
- --------------------------------------------------------------------------------
$ 211,795,945
- --------------------------------------------------------------------------------
Furniture and Appliances -- 0.9%
- --------------------------------------------------------------------------------
HON Industries, Inc. 1,000,558 $ 32,017,856
HON Industries, Inc.+ 134,930 4,315,601
HON Industries, Inc.+ 134,930 4,309,124
Leggett & Platt, Inc. 119,744 6,219,204
Leggett & Platt, Inc.+ 29,420 1,527,237
Miller (Herman), Inc. 120,000 3,622,500
- --------------------------------------------------------------------------------
$ 52,011,522
- --------------------------------------------------------------------------------
Health Services -- 1.0%
- --------------------------------------------------------------------------------
Aetna, Inc. 4,821 $ 389,597
Aetna, Inc.+ 55,000 4,442,465
Beverly Enterprises, Inc. 357,143 5,625,002
FPA Medical Management, Inc. 315,000 3,937,500
Genesis Health Ventures, Inc. 4,000 105,750
Health Management Associates, Inc., Class A 40,780 1,284,570
HealthSouth Corp. 146,000 4,407,375
Integrated Health Services, Inc. 50,000 1,928,125
Magellan Health Services, Inc. 50,000 1,387,500
MedPartners, Inc. 17,696 181,384
Omnicare, Inc. 25,650 878,513
Orthodontic Centers of America, Inc.+ 100,000 2,122,003
Pacificare Health Systems, Inc., Class B 19,500 1,396,688
Parexel International Corp.+ 35,000 1,169,569
Quest Diagnostics, Inc. 15,625 300,781
Quorum Health Group, Inc. 6,893 221,422
Quorum Health Group, Inc.+ 48,840 1,568,201
Renal Care Group, Inc. 116,855 4,469,704
Renal Care Group, Inc.+ 130,817 4,983,735
Response Oncology, Inc. 44,761 374,873
Sunrise Assisted Living, Inc.+ 140,000 6,256,811
Sunrise Assisted Living, Inc.+ 210,000 9,405,920
United HealthCare Corp. 20,000 1,405,000
Vencor, Inc. 25,600 694,400
- --------------------------------------------------------------------------------
$ 58,936,888
- --------------------------------------------------------------------------------
See notes to financial statements
13
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security Shares Value
- --------------------------------------------------------------------------------
Household Products -- 1.9%
- --------------------------------------------------------------------------------
Blyth Industries, Inc. 222,000 $ 8,144,625
Blyth Industries, Inc.+ 300,000 10,992,492
Blyth Industries, Inc.+ 40,000 1,464,565
Blyth Industries, Inc.+ 20,000 730,815
Colgate-Palmolive Co. 43,652 3,915,039
Fortune Brands, Inc. 1,500 55,313
Gillette Co. 127,100 14,672,106
Kimberly-Clark Corp. 511,394 25,953,246
Procter & Gamble Co. 360,700 29,645,031
Rubbermaid, Inc. 463,920 13,279,710
- --------------------------------------------------------------------------------
$ 108,852,942
- --------------------------------------------------------------------------------
Industrial Equipment -- 1.0%
- --------------------------------------------------------------------------------
Dover Corp. 324,360 $ 12,812,220
Dover Corp.+ 46,000 1,816,092
Federal Signal Corp. 283,471 6,076,910
Illinois Tool Works, Inc. 169,010 11,915,205
Parker-Hannifin Corp. 150,898 6,733,823
Regal Beloit Corp. 265,000 8,148,750
Tecumseh Products Co., Class A 193,055 9,725,146
- --------------------------------------------------------------------------------
$ 57,228,146
- --------------------------------------------------------------------------------
Information Services -- 3.4%
- --------------------------------------------------------------------------------
Automatic Data Processing, Inc. 1,184,740 $ 79,303,533
Bell and Howell Co. 115,000 3,176,875
BISYS Group, Inc. (The)* 53,873 2,127,984
Ceridian Corp. 90,500 5,118,906
Computer Sciences Corp. 282,000 14,875,500
Computer Sciences Corp.+ 160,000 8,435,780
Dun & Bradstreet Corp. (The) 86,158 3,058,609
Electronic Data Systems Corp. 155,000 6,665,000
First Data Corp. 128,618 4,356,935
HBO and Co. 12,219 730,849
IDX Systems Corp.+ 35,000 1,520,876
Lason, Inc.+ 165,000 6,422,130
Lason, Inc.+ 190,000 7,380,360
Paychex, Inc. 58,651 3,185,482
Reuters Holdings PLC ADR 334,611 21,686,975
Sapient Corp. 236,480 11,661,605
Sapient Corp.+ 87,396 4,309,784
Saville Systems PLC ADR+ 99,197 4,927,661
Siebel Systems, Inc. 118,000 3,053,250
SunGard Data Systems, Inc. 80,000 2,850,000
USCS International, Inc.+ 150,000 3,011,203
- --------------------------------------------------------------------------------
$ 197,859,297
- --------------------------------------------------------------------------------
Insurance -- 8.4%
- --------------------------------------------------------------------------------
Aegon, N.V. ADR 42,726 $ 5,677,217
Allmerica Financial Corp. 1,500 93,938
Allstate Corp. (The) 598,208 57,577,519
American International Group, Inc. 506,784 66,673,769
AON Corp. 44,054 2,841,483
Berkshire Hathaway, Inc. Class A+ 500 3,430,000
Berkshire Hathaway, Inc. Class B 21 48,195
Chubb Corp. 101,050 7,976,634
Conseco, Inc.+ 100,000 4,942,650
General RE Corp. 362,481 81,037,158
Jefferson-Pilot Corp. 38,268 2,245,824
Kansas City Life Insurance Co. 35,400 3,009,000
Lab Holdings, Inc. 35,960 836,070
Marsh & McLennan Cos., Inc. 804,444 73,304,959
Mercury General Corp. 2,000 129,500
Mutual Risk Management Ltd. 863,500 29,251,063
Progressive Corp. 285,085 38,611,200
Protective Life Corp. 64,346 2,388,845
Provident Companies, Inc. 3,728 145,625
Safeco Corp. 12,122 605,342
St. Paul Cos., Inc. (The) 134,513 11,399,969
SunAmerica, Inc. 1,542,524 77,029,791
Torchmark Corp. 222,850 9,930,753
UICI 57,257 1,660,453
UICI+ 180,000 5,211,283
UNUM Corp. 50,000 2,687,500
- --------------------------------------------------------------------------------
$ 488,745,740
- --------------------------------------------------------------------------------
Investment Services -- 0.6%
- --------------------------------------------------------------------------------
E*Trade Group, Inc.+ 100,000 $ 2,353,477
Merrill Lynch & Co., Inc. 259,116 22,737,429
Morgan Stanley Dean Witter Discover & Co. 55,533 4,380,165
Price (T. Rowe) Associates, Inc. 43,358 3,273,529
Schwab (Charles) and Co., Inc. 44,500 1,557,500
- --------------------------------------------------------------------------------
$ 34,302,100
- --------------------------------------------------------------------------------
See notes to financial statements
14
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security Shares Value
- --------------------------------------------------------------------------------
Lodging and Gaming -- 0.0%
- --------------------------------------------------------------------------------
Signature Resorts, Inc.+ 50,000 $ 887,985
- --------------------------------------------------------------------------------
$ 887,985
- --------------------------------------------------------------------------------
Machinery -- 0.0%
- --------------------------------------------------------------------------------
DT Industries, Inc. 37,728 $ 1,263,888
- --------------------------------------------------------------------------------
$ 1,263,888
- --------------------------------------------------------------------------------
Manufacturing -- 0.0%
- --------------------------------------------------------------------------------
Tyco International Ltd. 20,000 $ 1,090,000
- --------------------------------------------------------------------------------
$ 1,090,000
- --------------------------------------------------------------------------------
Medical Products -- 6.4%
- --------------------------------------------------------------------------------
Abbott Laboratories 219,233 $ 16,031,413
Allegiance Corp. 22,661 1,033,908
Ballard Medical Products+ 251,058 6,304,678
Bausch & Lomb, Inc. 145,574 7,196,815
Baxter International, Inc. 806,028 44,684,177
Becton, Dickinson and Co. 3,510 244,384
Becton, Dickinson and Co.+ 14,490 1,006,849
Boston Scientific Corp. 508,000 36,734,750
Dentsply International, Inc. 42,000 1,380,750
ESC Medical Systems Ltd. 30,000 975,000
Heartport, Inc. 41,026 435,901
Hillenbrand Industries, Inc. 647,898 40,412,638
Incyte Pharmaceuticals, Inc.+ 577,571 25,946,511
Johnson & Johnson Co. 1,150,375 82,108,015
Marquette Medical Systems, Inc. 55,000 1,485,000
Medtronics, Inc. 1,052,726 55,399,705
Medtronics, Inc.+ 29,472 1,550,189
Schein (Henry) Corp. 200,000 7,800,000
Schein (Henry) Corp.+ 225,700 8,797,899
Schein (Henry) Corp.+ 17,000 660,348
Schein (Henry) Corp.+ 130,000 5,066,603
Sofamor Danek Group, Inc.* 223,000 19,568,250
St. Jude Medical, Inc. 42,144 1,493,478
Steris Corp. 37,297 2,193,530
- --------------------------------------------------------------------------------
$368,510,791
- --------------------------------------------------------------------------------
Metals - Gold -- 0.0%
- --------------------------------------------------------------------------------
Freeport-McMoran Copper & Gold, Inc. 6,000 $ 112,875
- --------------------------------------------------------------------------------
$ 112,875
- --------------------------------------------------------------------------------
Metals - Industrial -- 0.3%
- --------------------------------------------------------------------------------
Cyprus Amax Minerals Co. 20,950 $ 361,388
Inco, Ltd. 124,000 2,177,750
Nucor Corp. 40,000 2,397,500
Nucor Corp.+ 22,648 1,354,750
Potash Corp. of Saskatchewan 120,105 10,726,878
- --------------------------------------------------------------------------------
$ 17,018,266
- --------------------------------------------------------------------------------
Natural Gas Utilities -- 0.2%
- --------------------------------------------------------------------------------
Columbia Energy Group 747 $ 60,694
KN Energy, Inc. 20,000 1,173,750
NGC Corp. 290,000 4,277,500
Sonat, Inc. 107,200 4,757,000
- --------------------------------------------------------------------------------
$ 10,268,944
- --------------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 2.9%
- --------------------------------------------------------------------------------
Baker Hughes, Inc. 639,234 $ 25,888,977
Dresser Industries, Inc. 79,800 4,219,425
EVI, Inc. 33,000 1,757,250
Halliburton Co. 259,925 14,295,875
National-Oilwell, Inc. 50,000 1,896,875
National-Oilwell, Inc.+ 416,400 15,733,986
Newpark Resources, Inc. 110,000 2,646,346
Noble Drilling, Inc. 170,000 5,493,125
Patterson Energy, Inc.+ 200,000 2,779,700
Rowan Companies, Inc. 250,000 7,359,375
Royal Dutch Petroleum Co. 24,289 1,373,847
Schlumberger Ltd. 879,470 72,886,075
Tosco Corp. 300 10,688
Tosco Corp.+ 314,619 11,185,885
Weatherford Enterra, Inc. 25,000 1,251,563
- --------------------------------------------------------------------------------
$168,778,992
- --------------------------------------------------------------------------------
Oil and Gas - Exploration
and Production -- 1.7%
- --------------------------------------------------------------------------------
Anadarko Petroleum Corp. 512,000 $37,504,000
Apache Corp. 945,440 33,444,940
British Petroleum Co. PLC ADR 500 47,250
Burlington Resources, Inc. 119,335 5,608,745
Oryx Energy Co. 369,103 9,642,816
Phillips Petroleum Co. 979 48,522
Triton Energy Ltd.* 150,000 6,018,750
See notes to financial statements
15
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security Shares Value
- --------------------------------------------------------------------------------
Oil and Gas - Exploration
and Production (continued)
- --------------------------------------------------------------------------------
Union Pacific Resources Group, Inc. 79,795 $ 1,905,106
USX-Marathon Group 50,895 1,822,677
- --------------------------------------------------------------------------------
$96,042,806
- --------------------------------------------------------------------------------
Oil and Gas - Integrated -- 0.9%
- --------------------------------------------------------------------------------
Amoco Corp. 282,730 $12,510,803
Atlantic Richfield Co. 42,450 3,311,100
Chevron Corp. 55,600 4,597,425
Exxon Corp. 206,175 15,037,889
Mobil Corp. 183,413 14,489,627
Murphy Oil Corp. 29,700 1,527,694
National Fuel Gas Co. 2,000 92,000
Quaker State Corp. 90,758 1,639,316
Texaco, Inc. 1,914 117,711
- --------------------------------------------------------------------------------
$53,323,565
- --------------------------------------------------------------------------------
Paper and Forest Products -- 0.7%
- --------------------------------------------------------------------------------
Caraustar Industries, Inc. 184,961 $ 6,334,914
Champion International Corp. 61,687 3,319,532
Deltic Timber Corp. 8,485 242,353
Fort James Corp. 56,401 2,798,900
Georgia-Pacific Corp. - G-P Group 160,000 12,350,000
Georgia-Pacific Corp. - G-P Group+ 14,133 1,088,164
Georgia-Pacific Corp. - Timber Group 160,000 4,100,000
Mead Corporation (The) 38,768 1,342,342
Sonoco Products Co. 71,429 2,870,553
Union Camp Corp. 80,309 4,848,656
Weyerhauser Co. 61,755 3,558,632
- --------------------------------------------------------------------------------
$ 42,854,046
- --------------------------------------------------------------------------------
Photography -- 0.1%
- --------------------------------------------------------------------------------
Eastman Kodak Co. 49,744 $ 3,590,895
- --------------------------------------------------------------------------------
$ 3,590,895
- --------------------------------------------------------------------------------
Printing and Business Products -- 1.0%
- --------------------------------------------------------------------------------
American Business Products, Inc. 261,355 $ 6,043,834
Avery Dennison Corp. 537,816 28,168,113
Bowne & Co., Inc. 86,320 3,566,095
Danka Business Systems, PLC ADR 1,000 20,000
Deluxe Corp. 80,675 $ 2,702,613
Donnelley (R.R.) & Sons Co. 32,896 1,449,480
Harland (John H.) Co. 51,540 918,056
Ikon Office Solutions, Inc. 115,500 2,793,656
U.S. Office Products Co. 776,817 13,739,951
- --------------------------------------------------------------------------------
$ 59,401,798
- --------------------------------------------------------------------------------
Publishing -- 2.4%
- --------------------------------------------------------------------------------
Belo (A.H.) Corp. 55,110 $ 2,917,386
Central Newspapers, Inc., Class A 210,000 15,382,500
Dow Jones & Co., Inc. 1,011,000 49,223,062
Gannett Co., Inc. 260,900 17,724,894
Houghton Mifflin Co. 112,400 3,660,025
McGraw-Hill Companies, Inc. (The) 455,608 35,281,145
Meredith Corp. 190,000 8,170,000
Times Mirror Co. Class A 151,670 9,280,308
- --------------------------------------------------------------------------------
$141,639,320
- --------------------------------------------------------------------------------
REITS -- 0.3%
- --------------------------------------------------------------------------------
Catellus Development Corp. 290,000 $ 5,165,625
Equity Office Properties Trust 2,812 79,966
Lasalle Partners, Inc.+ 213,193 7,313,852
Redwood Trust, Inc. 71,710 1,765,859
Rouse Co. (The) 127,700 3,942,738
SLH Corp. 53,940 1,618,200
- --------------------------------------------------------------------------------
$ 19,886,240
- --------------------------------------------------------------------------------
Restaurants -- 1.0%
- --------------------------------------------------------------------------------
Bob Evans Farms, Inc. 48,193 $ 981,932
Boston Chicken, Inc. 38,500 164,826
Brinker International, Inc. 446,376 10,713,024
CKE Restaurants, Inc. 100,000 3,455,575
CKE Restaurants, Inc.+ 10,000 344,865
McDonald's Corp. 263,100 16,279,313
Outback Steakhouse, Inc. 77,101 2,939,476
Outback Steakhouse, Inc.+ 130,181 4,961,165
Starbucks Corp.* 300,000 14,437,500
Tricon Global Restaurants, Inc. 189,766 6,025,071
- --------------------------------------------------------------------------------
$ 60,302,747
- --------------------------------------------------------------------------------
See notes to financial statements
16
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security Shares Value
- --------------------------------------------------------------------------------
Retail - Food and Drug -- 3.2%
- --------------------------------------------------------------------------------
Albertson's, Inc. 1,521,744 $ 76,087,199
CVS Corp. 690,000 50,887,499
Hannaford Brothers Co. 30,849 1,370,852
Kroger Co. (The) 22,800 954,750
Rite Aid Corp. 6,000 192,750
Safeway, Inc. 1,343,768 51,399,125
Walgreen Co. 13,750 474,375
Whole Foods Market, Inc. 90,000 5,568,750
Winn-Dixie Stores, Inc. 19,681 740,498
- --------------------------------------------------------------------------------
$187,675,798
- --------------------------------------------------------------------------------
Retail - General -- 2.3%
- --------------------------------------------------------------------------------
99 Cents Only Stores+ 342,670 $ 13,034,246
Casey's General Stores, Inc.+ 75,000 1,225,055
Dayton Hudson Corp. 135 11,787
Department 56, Inc. 190,000 6,828,125
Dollar General Corp. 20,500 776,438
Dollar Tree Stores, Inc.+ 165,195 8,943,905
Dollar Tree Stores, Inc.+ 195,000 10,573,461
May Department Stores Co. (The) 104,008 6,415,994
Penney (J.C.) Company, Inc. 928,864 66,007,397
Pier 1 Imports, Inc.+ 100,000 2,630,906
Wal-Mart Stores, Inc. 344,390 17,413,219
- --------------------------------------------------------------------------------
$133,860,533
- --------------------------------------------------------------------------------
Retail - Specialty and Apparel -- 2.7%
- --------------------------------------------------------------------------------
Burlington Coat Factory Warehouse Corp. 205,200 $ 3,975,750
Burlington Coat Factory Warehouse Corp.+ 338,400 6,553,222
CompUSA, Inc. 1,000 18,563
Harcourt General, Inc. 216,416 11,294,210
Home Depot, Inc. (The) 1,099,500 76,552,687
Limited, Inc. (The) 205,000 6,880,313
Lowe's Companies+ 30,000 2,097,076
Office Depot, Inc. 90,000 2,981,250
OfficeMax, Inc. 333,334 6,270,846
Pep Boys - Manny, Moe & Jack (The)+ 35,476 771,217
Pep Boys - Manny, Moe & Jack (The)+ 62,500 1,356,656
Republic Industries, Inc. 1,060,417 29,492,848
TJX Companies, Inc. (The) 250 11,063
Toys "R" Us, Inc. 113,225 3,120,764
Unifi, Inc. 50,000 1,915,625
- --------------------------------------------------------------------------------
$153,292,090
- --------------------------------------------------------------------------------
Specialty Chemicals and Materials -- 2.2%
- --------------------------------------------------------------------------------
Corning, Inc. 130,000 $ 5,200,000
Dexter Corp. (The) 47,829 1,975,936
Ecolab, Inc. 1,844,036 58,432,890
Great Lakes Chemical Corp. 33,290 1,672,823
International Flavors & Fragrances, Inc. 148,101 7,247,693
International Specialty Products, Inc. 59,000 1,176,313
Lam Research Corp. 83,000 2,573,000
Millipore Corp. 1,011,340 34,891,230
Minnesota Mining & Manufacturing Co. 37,685 3,556,522
Nalco Chemical Co. 221,952 8,822,592
Pall Corp. 216,000 4,239,000
- --------------------------------------------------------------------------------
$129,787,999
- --------------------------------------------------------------------------------
Telephone Utilities -- 0.0%
- --------------------------------------------------------------------------------
Bell Atlantic Corp. 4,083 $ 382,016
GTE Corp.+ 17,500 1,020,100
U.S. West, Inc. - Communications Group 1,280 67,520
- --------------------------------------------------------------------------------
$ 1,469,636
- --------------------------------------------------------------------------------
Tobacco -- 0.1%
- --------------------------------------------------------------------------------
Philip Morris Cos., Inc. 182,560 $ 6,811,770
Schweitzer-Mauduit International, Inc. 5,731 190,556
- --------------------------------------------------------------------------------
$ 7,002,326
- --------------------------------------------------------------------------------
Transportation -- 0.7%
- --------------------------------------------------------------------------------
Arnold Industries, Inc. 148,543 $ 2,376,688
Burlington Northern Santa Fe Corp. 62,933 6,230,367
Coach USA, Inc. 94,666 4,490,718
Coach USA, Inc.+ 74,223 3,519,193
Coach USA, Inc.+ 185,676 8,794,793
FDX Corp. 93,723 6,373,164
Heartland Express, Inc.+ 250,000 6,215,641
Union Pacific Corp. 90,300 4,943,925
- --------------------------------------------------------------------------------
$ 42,944,489
- --------------------------------------------------------------------------------
See notes to financial statements
17
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security Shares Value
- --------------------------------------------------------------------------------
Trucks and Parts -- 0.1%
- --------------------------------------------------------------------------------
Paccar, Inc. 46,602 $ 2,766,994
- --------------------------------------------------------------------------------
$ 2,766,994
- --------------------------------------------------------------------------------
Total Common Stocks
(identified cost $3,813,073,110) $5,613,877,090
- --------------------------------------------------------------------------------
Convertible Preferred Stocks-- 0.6%
Security Shares Value
Entertainment -- 0.6%
- --------------------------------------------------------------------------------
Time Warner Inc., Series J 100,187 $ 16,998,074
Time Warner Inc., Series J+/(1)/ 66,791 11,508,464
Time Warner Inc., Series J+/(1)/ 21,410 3,627,043
Time Warner Inc., Series J+/(1)/ 14,272 2,455,455
- --------------------------------------------------------------------------------
$ 34,589,036
- --------------------------------------------------------------------------------
Financial - Miscellaneous -- 0.0%
- --------------------------------------------------------------------------------
American General Corp., Series D 21,474 $ 1,224,018
- --------------------------------------------------------------------------------
$ 1,224,018
- --------------------------------------------------------------------------------
Insurance -- 0.0%
- --------------------------------------------------------------------------------
Aetna, Inc., Series C 449 $ 35,247
- --------------------------------------------------------------------------------
$ 35,247
- --------------------------------------------------------------------------------
Total Convertible Preferred Stocks
(identified cost $23,414,320) $ 35,848,301
- --------------------------------------------------------------------------------
Commercial Paper-- 2.8%
Face Amount
Name of Company (000's omitted) Value
- --------------------------------------------------------------------------------
CIT Group Holdings, Inc., 5.52%, 5/6/98 $ 87,551 $ 87,483,878
Prudential Funding Corp., 5.55%, 5/1/98 76,449 76,449,000
- --------------------------------------------------------------------------------
Total Commercial Paper
(identified cost $163,932,878) $ 163,932,878
- --------------------------------------------------------------------------------
Total Investments -- 100.4%
(identified cost $4,000,420,308) $5,813,658,269
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities-- (0.4)% $ (21,685,428)
- --------------------------------------------------------------------------------
Net Assets -- 100.0% $5,791,972,841
- --------------------------------------------------------------------------------
ADR -- American Depositary Receipt
+ Security exempt from registration under Rule 144A or Rule 145 of the
Securities Act of 1933. These securities may be resold in transactions
exempt from registration, normally to qualified institutional buyers. At
April 30, 1998, the value of these securities amounted to $538,710,935 or
9.3% of net assets.
* Non-income producing security.
/(1)/ Security valued at fair value using methods determined in good faith by or
at the direction of the Trustees.
See notes to financial statements
18
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
As of April 30, 1998
Assets
- --------------------------------------------------------------------------------
Investments, at value (Note 1A)
(identified cost $4,000,420,308) $5,813,658,269
Cash 717,709
Dividends and interest receivable 4,394,381
Tax reclaim receivable 121,594
Other assets 15,734
Prepaid expenses 78,230
Deferred organization expenses (Note 1C) 5,625
- --------------------------------------------------------------------------------
Total assets $5,818,991,542
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for investments purchased $ 26,919,490
Payable to affiliate for Trustees' fees (Note 2) 2,856
Accrued expenses 96,355
- --------------------------------------------------------------------------------
Total liabilities $ 27,018,701
- --------------------------------------------------------------------------------
Net Assets applicable to investors' interest in
Portfolio $5,791,972,841
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $3,978,733,433
Net unrealized appreciation of investments
(computed on the basis of identified cost) 1,813,239,408
- --------------------------------------------------------------------------------
Total $5,791,972,841
- --------------------------------------------------------------------------------
Statement of Operations
For the Six Months
Ended April 30, 1998
Investment Income (Note 1F)
- --------------------------------------------------------------------------------
Dividends (net of foreign taxes, $305,713) $ 23,598,717
Interest income 3,981,921
- --------------------------------------------------------------------------------
Total income $ 27,580,638
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 9,349,095
Compensation of Trustees not members of the
Investment Adviser's organization (Note 2) 16,376
Legal and accounting services 449,226
Custodian fee 259,346
Amortization of organization expenses (Note 1C) 10,297
Miscellaneous 242,687
- --------------------------------------------------------------------------------
Total expenses $ 10,327,027
- --------------------------------------------------------------------------------
Net investment income $ 17,253,611
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 5,622,063
- --------------------------------------------------------------------------------
Net realized gain on investments $ 5,622,063
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 758,404,874
Foreign currency 1,447
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $ 758,406,321
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 764,028,384
- --------------------------------------------------------------------------------
Net increase in net assets from operations $ 781,281,995
- --------------------------------------------------------------------------------
See notes to financial statements
19
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
Six Months Ended
Increase (Decrease) April 30, 1998 Year Ended
in Net Assets (Unaudited) October 31, 1997
- --------------------------------------------------------------------------------
From operations --
Net investment income $ 17,253,611 $ 14,399,615
Net realized gain on
investment transactions 5,622,063 52,637,579
Net change in unrealized
appreciation (depreciation)
of investments 758,406,321 375,109,348
- --------------------------------------------------------------------------------
Net increase in net assets
from operations $ 781,281,995 $ 442,146,542
- --------------------------------------------------------------------------------
Capital transactions --
Contributions $2,270,240,902 $1,907,707,281
Withdrawals (130,995,874) (415,207,575)
- --------------------------------------------------------------------------------
Net increase in net assets from
capital transactions $2,139,245,028 $1,492,499,706
- --------------------------------------------------------------------------------
Net increase in net assets $2,920,527,023 $1,934,646,248
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $2,871,445,818 $ 936,799,570
- --------------------------------------------------------------------------------
At end of period $5,791,972,841 $2,871,445,818
- --------------------------------------------------------------------------------
See notes to financial statements
20
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Six Months Ended
April 30, 1998 Year Ended Period Ended
(Unaudited) October 31, 1997 October 31,1996*
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Ratios to average daily net assets
- ------------------------------------------------------------------------------------------------------------------
Expenses 0.54%+ 0.56% 0.66%+
Net investment income 0.90%+ 0.81% 0.91%+
Portfolio Turnover 2% 14% 6%
- ------------------------------------------------------------------------------------------------------------------
Average commission rate (per share)/(1)/ $ 0.0581 $ 0.0582 $ 0.0585
- ------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 5,791,973 $ 2,871,446 $ 936,800
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, December 1, 1995, to October
31, 1996.
/(1)/ Average commission rate paid is computed by dividing the total dollar
amount of commissions paid during the fiscal year by the total number of
shares purchased and sold during the fiscal year for which commissions
were charged.
See notes to financial statements
21
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
-----------------------------------------------------------------------------
Tax-Managed Growth Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Portfolio, which is organized as a trust
under the laws of the State of New York on December 1, 1995, seeks to provide
long-term after-tax returns by investing in a diversified portfolio of equity
securities. The Declaration of Trust permits the Trustees to issue interests
in the Portfolio. The following is a summary of significant accounting
policies consistently followed by the Portfolio in the preparation of its
financial statements. The policies are in conformity with generally accepted
accounting principles.
A Investment Valuations -- Marketable securities, including options, that are
listed on foreign or U.S. securities exchanges or in the NASDAQ National
Market System are valued at closing sale prices, on the exchange where such
securities are principally traded. Futures positions on securities or
currencies are generally valued at closing settlement prices. Unlisted or
listed securities for which closing sale prices are not available are valued
at the mean between the latest bid and asked prices. Short-term debt
securities with a remaining maturity of 60 days or less are valued at
amortized cost, which approximates value. Other fixed income and debt
securities, including listed securities and securities for which price
quotations are available, will normally be valued on the basis of valuations
furnished by a pricing service. Investments for which valuations or market
quotations are unavailable are valued at fair value using methods determined
in good faith by or at the direction of the Trustees.
B Income Taxes -- The Portfolio is treated as a partnership for Federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes on its share of such
income. Since some of the Portfolio's investors are regulated investment
companies that invest all or substantially all of their assets in the
Portfolio, the Portfolio normally must satisfy the applicable source of
income and diversification requirements (under the Internal Revenue Code) in
order for its investors to satisfy them. The Portfolio will allocate, at
least annually among its investors, each investor's distributive share of the
Portfolio's net investment income, net realized capital gains, and any other
items of income, gain, loss, deduction or credit.
C Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization, are being amortized on the straight-line
basis over five years.
D Futures Contracts -- Upon the entering of a financial futures contract, the
Portfolio is required to deposit either in cash or securities an amount
("initial margin") equal to a certain percentage of the purchase price
indicated in the financial futures contract. Subsequent payments are made or
received by the Portfolio ("margin maintenance") each day, dependent on daily
fluctuations in the value of the underlying security, and are recorded for
book purposes as unrealized gains or losses by the Portfolio. The Portfolio's
investment in financial futures contracts is designed to hedge against
anticipated future changes in price of current or anticipated portfolio
positions. Should prices move unexpectedly, the Portfolio may not achieve the
anticipated benefits of the financial futures contracts and may realize a
loss.
E Securities Sold Short -- The Portfolio may sell securities it does not own
in anticipation of a decline in the market price of the securities or in
order to hedge portfolio positions. The Portfolio will generally borrow the
security sold in order to make delivery to the buyer. Upon executing the
transaction, the Portfolio records the proceeds as deposits with brokers in
the Statement of Assets and Liabilities and establishes an offsetting payable
for securities sold short for the securities due on settlement. The proceeds
are retained by the broker as collateral for the short position. The
liability is marked to market and the Portfolio is required to pay the
lending broker any dividend or interest income earned while the short
position is open. A gain or loss is recorded when the security is delivered
to the broker. The Portfolio may recognize a loss on the transaction if the
market value of the securities sold increases before the securities are
delivered.
F Other -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividend income is recorded on the ex-
dividend date. However, if the ex-dividend date has passed, certain dividends
from foreign securities are recorded as the Portfolio is informed of the ex-
dividend date. Interest income is recorded on the accrual basis.
G Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and
22
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
expense during the reporting period. Actual results could differ from those
estimates.
H Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT receives
a fee reduced by credits which are determined based on the average daily cash
balances the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reflected as a reduction of
expenses on the statement of operations.
I Interim Financial Information -- The interim financial statements relating
to April 30, 1998 and for the six-month period then ended have not been
audited by independent certified public accountants, but in the opinion of
the Portfolio's management, reflect all adjustments, consisting only of
normal recurring adjustments necessary for the fair presentation of the
financial statements.
2 Investment Adviser Fee and Other Transactions with Affiliates
----------------------------------------------------------------------------
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation
for management and investment advisory services rendered to the Portfolio.
Under the advisory agreement, BMR receives a monthly advisory fee of 5/96 of
1% (0.625% annually) of the average daily net assets of the Portfolio up to
$500,000,000, and at reduced rates as daily net assets exceed that level. For
the six month period ended April 30, 1998, the adviser fee was 0.49% of the
Portfolio's average net assets (annualized). Except as to Trustees of the
Portfolio who are not members of EVM's or BMR's organization, officers and
Trustees receive remuneration for their services to the Portfolio out of such
investment adviser fee. Trustees of the Portfolio that are not affiliated
with the Investment Adviser may elect to defer receipt of all or a percentage
of their annual fees in accordance with the terms of the Trustees Deferred
Compensation Plan. For the six month period ended April 30, 1998, no
significant amounts have been deferred. Certain of the officers and Trustees
of the Portfolio are officers or directors/trustees of the above
organizations.
3 Investment Transactions
-----------------------------------------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $2,184,250,541 and $65,206,232, respectively. In addition,
investments having an aggregate market value of $25,484,816 at dates of
withdrawal were distributed in payment for capital withdrawals resulting in
capital gains for book purposes of $23,796,960.
4 Federal Income Tax Basis of Investment
-----------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at April 30, 1998, as computed on a federal income tax
basis, are as follows:
Aggregate cost $4,000,420,308
-----------------------------------------------------------------------------
Gross unrealized appreciation $1,813,836,547
Gross unrealized depreciation (598,586)
-----------------------------------------------------------------------------
Net unrealized appreciation $1,813,237,961
-----------------------------------------------------------------------------
5 Financial Instruments
-----------------------------------------------------------------------------
The Portfolio may trade in financial instruments with off-balance sheet risk
in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include written
options, forward foreign currency exchange contracts and financial futures
contracts and may involve, to a varying degree, elements of risk in excess of
the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment the Portfolio has in particular classes of financial instruments
and does not necessarily represent the amounts potentially subject to risk.
The measurement of the risks associated with these instruments is meaningful
only when all related and offsetting transactions are considered.
The Portfolio did not have any open obligations under these financial
instruments at April 30, 1998.
23
<PAGE>
Tax-Managed Growth Portfolio as of April 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
6 Line of Credit
-----------------------------------------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $100 million unsecured line of credit agreement
with a group of banks. The Portfolio may temporarily borrow from the line of
credit to satisfy redemption requests or settle investment transactions.
Interest is charged to each portfolio or fund based on its borrowings at the
Eurodollar rate or federal funds rate. In addition, a fee computed at an
annual rate of 0.10% on the daily unused portion of the line of credit is
allocated among the participating portfolios and funds at the end of each
quarter. The Portfolio did not have any significant borrowings or allocated
fees during the six month period ended April 30, 1998.
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Tax-Managed Growth Portfolio as of April 30, 1998
INVESTMENT MANAGEMENT
Tax-Managed Growth Portfolio
Officers Other Trustees
James B. Hawkes Landon T. Clay
President and Trustee
Donald R. Dwight
Duncan W. Richardson President, Dwight Partners, Inc.
Vice President and
Portfolio Manager Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
James L. O'Connor Banking, Harvard University Graduate
Treasurer School of Business Administration
Alan R. Dynner Norton H. Reamer
Secretary Chairman and Chief Executive Officer,
United Asset Management Corporation
John L. Thorndike
Formerly Director,
Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
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