As filed with the Securities and Exchange Commission on February 27, 1998
File No. 811-07409
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 2 [X]
TAX-MANAGED GROWTH PORTFOLIO
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(Exact Name of Registrant as Specified in Charter)
24 Federal Street
Boston, Massachusetts 02110
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(Address of Principal Executive Offices)
(617) 482-8260
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(Registrant's Telephone Number, including Area Code)
Alan R. Dynner
24 Federal Street, Boston, Massachusetts 02110
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(Name and Address of Agent for Service)
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Throughout this Registration Statement, information concerning Tax-Managed
Growth Portfolio (the "Portfolio") is incorporated by reference from Amendment
No. 41 to the Registration Statement of Eaton Vance Mutual Funds Trust (File No.
02-90946 under the Securities Act of 1933 (the "1933 Act")) (the "Amendment"),
which was filed electronically with the Securities and Exchange Commission on
February 26, 1998 (Accession No. 0000950156-98-000178). The Amendment contains
the prospectus and statement of additional information ("SAI") of Eaton Vance
Tax-Managed Growth Fund (the "Feeder Fund"), which invests substantially all of
its assets in the Portfolio.
PART A
Responses to Items 1 through 3 and 5A have been omitted pursuant to
Paragraph 4 of Instruction F of the General Instructions to Form N-1A.
ITEM 4. GENERAL DESCRIPTION OF REGISTRANT
The Portfolio is a diversified, open-end management investment company, is
organized as a trust under the laws of the State of New York, and is treated as
a partnership for federal tax purposes. Interests in the Portfolio are issued
solely in private placement transactions that do not involve any "public
offering" within the meaning of Section 4(2) of the 1933 Act. Investments in the
Portfolio may be made only by U.S. and foreign investment companies, common or
commingled trust funds, organizations or trusts described in Sections 401(a) or
501(a) of the Internal Revenue Code of 1986, as amended (the "Code") or similar
organizations or entities that are "accredited investors" within the meaning of
Regulation D under the 1933 Act. This Registration Statement, as amended, does
not constitute an offer to sell, or the solicitation of an offer to buy, any
"security" within the meaning of the 1933 Act.
The Portfolio is not intended to be a complete investment program, and a
prospective investor should take into account its objectives and other
investments when considering the purchase of an interest in the Portfolio. The
Portfolio cannot assure achievement of its investment objective.
Registrant incorporates by reference information concerning the Portfolio's
investment objective and investment practices from "The Funds' Investment
Objectives", "The Tax-Managed Mutual Fund Advantage" and "Investment Policies
and Risks" in the Feeder Fund prospectus.
ITEM 5. MANAGEMENT OF THE PORTFOLIO
Registrant incorporates by reference information concerning the Portfolio's
management from "Management of the Funds and the Portfolio" in the Feeder Fund
prospectus.
ITEM 6. CAPITAL STOCK AND OTHER SECURITIES
Registrant incorporates by reference information concerning interests in
the Portfolio from "Organization of the Funds and the Portfolio" in the Feeder
Fund prospectus and "Other Information" in the Feeder Fund SAI. An interest in
the Portfolio has no preemptive or conversion rights and is fully paid and
nonassessable by the Portfolio, except as described under Item 18 below.
A-1
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As of January 30, 1998, the Feeder Fund, a series of Eaton Vance Mutual
Funds Trust, controlled the Portfolio by virtue of owning approximately 38.2% of
the outstanding voting interests in the Portfolio.
The net asset value of the Portfolio is determined each day on which the
New York Stock Exchange (the "Exchange") is open for trading ("Portfolio
Business Day"). This determination is made each Portfolio Business Day as of the
close of regular trading on the Exchange (normally 4:00 p.m., New York time)
(the "Portfolio Valuation Time").
Each investor in the Portfolio may add to or reduce its investment in the
Portfolio on each Portfolio Business Day as of the Portfolio Valuation Time. The
value of each investor's interest in the Portfolio will be determined by
multiplying the net asset value of the Portfolio by the percentage, determined
on the prior Portfolio Business Day, which represents that investor's share of
the aggregate interests in the Portfolio on such prior day. Any additions or
withdrawals for the current Portfolio Business Day will then be recorded. Each
investor's percentage of the aggregate interest in the Portfolio will then be
recomputed as a percentage equal to a fraction (i) the numerator of which is the
value of such investor's investment in the Portfolio as of the Portfolio
Valuation Time on the prior Portfolio Business Day plus or minus, as the case
may be, the amount of any additions to or withdrawals from the investor's
investment in the Portfolio on the current Portfolio Business Day and (ii) the
denominator of which is the aggregate net asset value of the Portfolio as of the
Portfolio Valuation Time on the prior Portfolio Business Day plus or minus, as
the case may be, the amount of the net additions to or withdrawals from the
aggregate investment in the Portfolio on the current Portfolio Business Day by
all investors in the Portfolio. The percentage so determined will then be
applied to determine the value of the investor's interest in the Portfolio for
the current Portfolio Business Day.
Registrant incorporates by reference information concerning the tax
consequences of certain of the Portfolio's investment practices from
"Distributions and Taxes" in the Feeder Fund prospectus.
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. The Portfolio's net investment income consists of all income accrued on
the Portfolio's assets, less all actual and accrued expenses of the Portfolio,
determined in accordance with generally accepted accounting principles.
Under the anticipated method of operation of the Portfolio, the Portfolio
will not be subject to any federal income tax (see Part B, Item 20). However,
each investor in the Portfolio will take into account its allocable share of the
Portfolio's ordinary income and capital gain in determining its federal income
tax liability. The determination of each such share will be made in accordance
with the governing instruments of the Portfolio, which are intended to comply
with the requirements of the Code and the regulations promulgated thereunder.
It is intended that the Portfolio's assets and income will be managed in
such a way that an investor in the Portfolio which seeks to qualify as a
regulated investment company ("RIC") under the Code will be able to satisfy the
requirements for such qualification.
A-2
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ITEM 7. PURCHASE OF INTERESTS IN THE PORTFOLIO
Interests in the Portfolio are issued solely in private placement
transactions that do not involve any "public offering" within the meaning of
Section 4(2) of the 1933 Act. See "General Description of Registrant" above.
Registrant incorporates by reference information concerning the computation
of net asset value and valuation of Portfolio assets from "Valuing Shares" in
the Feeder Fund prospectus. For further information, see Item 19 of Part B.
There is no minimum initial or subsequent investment in the Portfolio. The
Portfolio reserves the right to cease accepting investments at any time or to
reject any investment order. Certain investors in the Portfolio may acquire
interests in the Portfolio by contributing securities, subject to BMR's consent
to accept the securities.
The placement agent for the Portfolio is Eaton Vance Distributors, Inc.
("EVD"), a wholly-owned subsidiary of Eaton Vance Management. The principal
business address of EVD is 24 Federal Street, Boston, Massachusetts 02110. EVD
receives no compensation for serving as the placement agent for the Portfolio.
ITEM 8. REDEMPTION OR DECREASE OF INTEREST
An investor in the Portfolio may withdraw all of (redeem) or any portion of
(decrease) its interest in the Portfolio if a withdrawal request in proper form
is furnished by the investor to the Portfolio. All withdrawals will be effected
as of the next Portfolio Valuation Time. The proceeds of a withdrawal will be
paid by the Portfolio normally on the Portfolio Business Day the withdrawal is
effected, but in any event within seven days.
The Portfolio expects to meet many redemption requests in whole or in part
by distributing securities held in the Portfolio. By distributing securities,
the forced sale of assets and the realization of capital gains during periods of
net investor redemptions can be avoided. At the request of a redeeming investor
who is to receive securities, the Portfolio may, in its discretion, provide the
redeeming investor with a diversified selection of securities. However, the
Portfolio is not obligated to do so.
The securities available for distribution in a redemption may be affected
by certain tax considerations. See "Tax Status" in Part B.
The Portfolio will distribute only readily marketable securities, except
for restricted securities contributed by an investor which may be distributed
back to the contributing investor. Distributed securities will be valued
pursuant to the Portfolio's valuation procedures.
Investments in the Portfolio may not be transferred.
A-3
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The right of any investor to receive payment with respect to any withdrawal
may be suspended or the payment of the withdrawal proceeds postponed during any
period in which the Exchange is closed (other than weekends or holidays) or
trading on the Exchange is restricted or, to the extent otherwise permitted by
the Investment Company Act of 1940, as amended (the "1940 Act"), if an emergency
exists, or during any other period permitted by order of the Securities and
Exchange Commission (the "Commission") for the protection of investors.
ITEM 9. PENDING LEGAL PROCEEDINGS
Not applicable.
A-4
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PART B
ITEM 10. COVER PAGE
Not applicable.
ITEM 11. TABLE OF CONTENTS
Page
General Information and History .............................................B-1
Investment Objectives and Policies...........................................B-1
Management of the Portfolio..................................................B-2
Control Persons and Principal Holder of Securities...........................B-2
Investment Advisory and Other Services.......................................B-2
Brokerage Allocation and Other Practices.....................................B-2
Capital Stock and Other Securities...........................................B-2
Purchase, Redemption and Pricing of Securities...............................B-4
Tax Status...................................................................B-5
Underwriters.................................................................B-7
Calculation of Performance Data..............................................B-7
Financial Statements.........................................................B-8
ITEM 12. GENERAL INFORMATION AND HISTORY
Not applicable.
ITEM 13. INVESTMENT OBJECTIVES AND POLICIES
Part A contains additional information about the investment objective and
policies of the Portfolio. This Part B should be read in conjunction with Part
A. Capitalized terms used in this Part B and not otherwise defined have the
meanings given them in Part A.
Registrant incorporates by reference additional information concerning the
investment policies of the Portfolio as well as information concerning the
investment restrictions of the Portfolio from "Additional Information about
Investment Policies" and "Investment Restrictions" in the Feeder Fund SAI. The
Portfolio's portfolio turnover rates for the fiscal years ended October 31, 1997
and 1996 were 14% and 6%, respectively.
ITEM 14. MANAGEMENT OF THE PORTFOLIO
Registrant incorporates by reference additional information concerning the
management of the Portfolio from "Trustees and Officers" in the Feeder Fund SAI.
B-1
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ITEM 15. CONTROL PERSONS AND PRINCIPAL HOLDER OF SECURITIES
As of January 30, 1998, the following entities (each a "Fund"), owned the
approximate percentage indicated of the outstanding voting interests in the
Portfolio: the Feeder Fund (38.2%) and Vance Sanders Exchange Fund (10.7%), both
registered investment companies and, Belvedere Capital Fund LLC (30.5%), a
Massachusetts Limited Liability Company. Each Fund has informed the Portfolio
that whenever it is requested to vote on matters pertaining to the fundamental
policies of the Portfolio, it will hold a meeting of shareholders and will cast
its votes as instructed by its shareholders. It is anticipated that any other
investor in the Portfolio which is an investment company registered under the
1940 Act would follow the same or a similar practice. Vance Sanders Exchange
Fund is a series of Eaton Vance Series Trust and the Feeder Fund is a series of
Eaton Vance Mutual Funds Trust. Both such Trusts are organized as trusts under
the laws of the Commonwealth of Massachusetts. The address of each Fund is 24
Federal Street, Boston, MA 02110.
ITEM 16. INVESTMENT ADVISORY AND OTHER SERVICES
Registrant incorporates by reference information concerning investment
advisory and other services provided to the Portfolio from "Investment Adviser
and Administrator", "Custodian" and "Independent Certified Public Accountants"
in the Feeder Fund SAI.
ITEM 17. BROKERAGE ALLOCATION AND OTHER PRACTICES
Registrant incorporates by reference information concerning the brokerage
practices of the Portfolio from "Portfolio Security Transactions" in the Feeder
Fund SAI.
ITEM 18. CAPITAL STOCK AND OTHER SECURITIES
Under the Portfolio's Declaration of Trust, the Trustees are authorized to
issue interests in the Portfolio. Investors are entitled to participate pro rata
in distributions of taxable income, loss, gain and credit of the Portfolio. Upon
dissolution of the Portfolio, the Trustees shall liquidate the assets of the
Portfolio and apply and distribute the proceeds thereof as follows: (a) first,
to the payment of all debts and obligations of the Portfolio to third parties
including, without limitation, the retirement of outstanding debt, including any
debt owed to holders of record of interests in the Portfolio ("Holders") or
their affiliates, and the expenses of liquidation, and to the setting up of any
reserves for contingencies which may be necessary; and (b) second, then in
accordance with the Holders' positive Book Capital Account balances after
adjusting Book Capital Accounts for certain allocations provided in the
Declaration of Trust and in accordance with the requirements described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(b) (2). Notwithstanding the
foregoing, if the Trustees shall determine that an immediate sale of part or all
of the assets of the Portfolio would cause undue loss to the Holders, the
Trustees, in order to avoid such loss, may, after having given notification to
all the Holders, to the extent not then prohibited by the law of any
jurisdiction in which the Portfolio is then formed or qualified and applicable
in the circumstances, either defer liquidation of and withhold from distribution
for a reasonable time any assets of the Portfolio except those necessary to
satisfy the Portfolio's debts and obligations or distribute the Portfolio's
assets to the Holders in liquidation. Certificates representing an investor's
interest in the Portfolio are issued only upon the written request of a Holder.
B-2
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Each Holder is entitled to vote in proportion to the amount of its interest
in the Portfolio. Holders do not have cumulative voting rights. The Portfolio is
not required and has no current intention to hold annual meetings of Holders but
the Portfolio will hold meetings of Holders when in the judgment of the
Portfolio's Trustees it is necessary or desirable to submit matters to a vote of
Holders at a meeting. Any action which may be taken by Holders may be taken
without a meeting if Holders holding more than 50% of all interests entitled to
vote (or such larger proportion thereof as shall be required by any express
provision of the Declaration of Trust of the Portfolio) consent to the action in
writing and the consents are filed with the records of meetings of Holders.
The Portfolio's Declaration of Trust may be amended by vote of Holders of
more than 50% of all interests in the Portfolio at any meeting of Holders or by
an instrument in writing without a meeting, executed by a majority of the
Trustees and consented to by the Holders of more than 50% of all interests. The
Trustees may also amend the Declaration of Trust (without the vote or consent of
Holders) to change the Portfolio's name or the state or other jurisdiction whose
law shall be the governing law, to supply any omission or to cure, correct or
supplement any ambiguous, defective or inconsistent provision, to conform the
Declaration of Trust to applicable federal law or regulations or to the
requirements of the Code, or to change, modify or rescind any provision,
provided that such change, modification or rescission is determined by the
Trustees to be necessary or appropriate and not to have a materially adverse
effect on the financial interests of the Holders. No amendment of the
Declaration of Trust which would change any rights with respect to any Holder's
interest in the Portfolio by reducing the amount payable thereon upon
liquidation of the Portfolio may be made, except with the vote or consent of the
Holders of two-thirds of all interests. References in the Declaration of Trust
and in Part A or this Part B to a specified percentage of, or fraction of,
interests in the Portfolio, means Holders whose combined Book Capital Account
balances represent such specified percentage or fraction of the combined Book
Capital Account balance of all, or a specified group of, Holders.
The Portfolio may merge or consolidate with any other corporation,
association, trust or other organization or may sell or exchange all or
substantially all of its assets upon such terms and conditions and for such
consideration when and as authorized by the Holders of (a) 67% or more of the
interests in the Portfolio present or represented at the meeting of Holders, if
Holders of more than 50% of all interests are present or represented by proxy,
or (b) more than 50% of all interests, whichever is less. The Portfolio may be
terminated (i) by the affirmative vote of Holders of not less than two-thirds of
all interests at any meeting of Holders or by an instrument in writing without a
meeting, executed by a majority of the Trustees and consented to by Holders of
not less than two-thirds of all interests, or (ii) by the Trustees by written
notice to the Holders.
The Portfolio is organized as a trust under the laws of the State of New
York. Investors in the Portfolio will be held personally liable for its
obligations and liabilities, subject, however, to indemnification by the
Portfolio in the event that there is imposed upon an investor a greater portion
of the liabilities and obligations of the Portfolio than its proportionate
interest in the Portfolio. The Portfolio intends to maintain fidelity and errors
and omissions insurance deemed adequate by the Trustees. Thus, the risk of an
investor incurring financial loss on account of investor liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio itself
is unable to meet its obligations.
B-3
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The Declaration of Trust provides that obligations of the Portfolio are not
binding upon the Trustees individually but only upon the property of the
Portfolio and that the Trustees will not be liable for any action or failure to
act, but nothing in the Declaration of Trust protects a Trustee against any
liability to which he would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of the duties
involved in the conduct of his office.
ITEM 19. PURCHASE, REDEMPTION AND PRICING OF SECURITIES
See "Purchase of Interests in the Portfolio" and "Redemption or Decrease of
Interest" in Part A.
Registrant incorporates by reference information concerning valuation of
the Portfolio's assets from "Determination of Net Asset Value" in Part I of the
Feeder Fund SAI.
ITEM 20. TAX STATUS
The Portfolio has been advised by tax counsel that, provided the Portfolio
is operated at all times during its existence in accordance with certain
organizational and operational documents, the Portfolio should be classified as
a partnership under the Code and it should not be a "publicly traded
partnership" within the meaning of Section 7704 of the Code. Consequently, the
Portfolio does not expect that it will be required to pay any federal income
tax, and a Holder will be required to take into account in determining its
federal income tax liability its share of the Portfolio's income, gains, losses,
deductions and credits.
Under Subchapter K of the Code, a partnership is considered to be either an
aggregate of its members or a separate entity depending upon the factual and
legal context in which the question arises. Under the aggregate approach, each
partner is treated as an owner of an undivided interest in partnership assets
and operations. Under the entity approach, the partnership is treated as a
separate entity in which partners have no direct interest in partnership assets
and operations. The Portfolio has been advised by tax counsel that, in the case
of a Holder that seeks to qualify as a RIC, the aggregate approach should apply,
and each such Holder should accordingly be deemed to own a proportionate share
of each of the assets of the Portfolio and to be entitled to the gross income of
the Portfolio attributable to that share for purposes of all requirements of
Sections 851(b), 852(b)(5), 853(a) and 854 of the Code. Further, the Portfolio
has been advised by tax counsel that each Holder that seeks to qualify as a RIC
should be deemed to hold its proportionate share of the Portfolio's assets for
the period the Portfolio has held the assets or for the period the Holder has
been an investor in the Portfolio, whichever is shorter. Investors should
consult their tax advisers regarding whether the entity or the aggregate
approach applies to their investment in the Portfolio in light of their
particular tax status and any special tax rules applicable to them.
In order to enable a Holder (that is otherwise eligible) to qualify as a
RIC, the Portfolio intends to satisfy the requirements of Subchapter M of the
Code relating to sources of income and diversification of assets as if they were
applicable to the Portfolio and to permit withdrawals in a manner that will
enable a Holder which is a RIC to comply with the distribution requirements
applicable to RICs (including those under Section 852 and 4982 of the Code). The
B-4
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Portfolio will allocate at least annually to each Holder such Holder'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 in
a manner intended to comply with the Code and applicable Treasury regulations.
Tax counsel has advised the Portfolio that the Portfolio's allocations of
taxable income and loss should have "economic effect" under applicable Treasury
regulations.
To the extent the cash proceeds of any withdrawal (or, under certain
circumstances, such proceeds plus the value of any marketable securities
distributed to an investor) ("liquid proceeds") exceed a Holder's adjusted basis
of his interest in the Portfolio, the Holder will generally realize a gain for
federal income tax purposes. If, upon a complete withdrawal (redemption of the
entire interest), a Holder receives only liquid proceeds (and/or unrealized
receivables) and the Holder's adjusted basis of his interest exceeds the liquid
proceeds of such withdrawal, the Holder will generally realize a loss for
federal income tax purposes. In addition, on a distribution to a Holder from the
Portfolio (whether pursuant to a partial or complete withdrawal or otherwise),
(1) income or gain will be recognized if the distribution is in liquidation of
the Holder's entire interest in the Portfolio and includes a disproportionate
share of any unrealized receivables held by the Portfolio and (2) gain or loss
may be recognized on a distribution to a Holder that contributed property to the
Portfolio. The tax consequences of a withdrawal of property (instead of or in
addition to liquid proceeds) will be different and will depend on the specific
factual circumstances. A Holder's adjusted basis of an interest in the Portfolio
will generally be the aggregate prices paid therefor (including the adjusted
basis of contributed property and any gain recognized on the contribution
thereof), increased by the amounts of the Holder's distributive share of items
of income (including interest income exempt from federal income tax) and
realized net gain of the Portfolio, and reduced, but not below zero, by (i) the
amounts of the Holder's distributive share of items of Portfolio loss, and (ii)
the amount of any cash distributions (including distributions of interest income
exempt from federal income tax and cash distributions on withdrawals from the
Portfolio) and the basis to the Holder of any property received by such Holder
other than in liquidation, and (iii) the Holder's distributive share of the
Portfolio's nondeductible expenditures not properly chargeable to capital
account. Increases or decreases in a Holder's share of the Portfolio's
liabilities may also result in corresponding increases or decreases in such
adjusted basis.
Foreign exchange gains and losses realized by the Portfolio and allocated
to an investor that is a RIC in connection with the Portfolio's investments in
foreign securities and certain options, futures or forward contracts or foreign
currency may be treated as ordinary income and losses under special tax rules.
Certain options, futures or forward contracts of the Portfolio may be required
to be marked to market (i.e., treated as if closed out) on the last day of each
taxable year, and any gain or loss realized with respect to these contracts may
be required to be treated as 60% long-term and 40% short-term gain or loss.
Positions of the Portfolio in securities and offsetting options, futures or
forward contracts may be treated as "straddles" and be subject to other special
rules that may, upon allocation of the Portfolio's income, gain or loss to an
investor that is a RIC, affect the amount, timing and character of the RIC's
distributions to its shareholders. Certain uses of foreign currency and foreign
currency derivatives such as options, futures, forward contracts and swaps and
investment by the Portfolio in certain "passive foreign investment companies"
may be limited or a tax election may be made, if available, in order to enable
an investor that is a RIC to preserve its qualification as a RIC or to avoid the
imposition of a tax on such an investor.
The Portfolio will allocate at least annually to its investors their
respective distributive shares of any net investment income and net capital
gains which have been recognized for federal income tax purposes (including
unrealized gains at the end of the Portfolio's fiscal year on certain options
and futures transactions that are required to be marked-to-market).
B-5
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Certain investors in the Portfolio, including RICs, may acquire interests
in the Portfolio by contributing securities. Due to tax considerations, during
the first seven years following the contribution of securities (or within five
years for securities contributed prior to June 9, 1997) to the Portfolio by an
investor, such securities will not be distributed to any investor other than the
investor who contributed those securities. Investors who acquire an interest in
the Portfolio by contributing securities and who redeem that interest within the
applicable time period will generally receive back one or more of the securities
they contributed. In partial redemptions by such investors during this period,
the Portfolio will attempt to accommodate requests to distribute initially those
contributed securities and share lots with the highest cost basis.
An entity that is treated as a partnership under the Code, such as the
Portfolio, is generally treated as a partnership under state and local tax laws,
but certain states may have different entity classification criteria and may
therefore reach a different conclusion. Entities that are classified as
partnerships are not treated as taxable entities under most state and local tax
laws, and the income of a partnership is considered to be income of partners
both in timing and in character. The laws of the various states and local taxing
authorities vary with respect to the status of a partnership interest under
state and local tax laws, and each holder of an interest in the Portfolio is
advised to consult his own tax adviser.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as insurance companies and financial
institutions. Investors should consult their own tax advisers with respect to
special tax rules that may apply in their particular situations, as well as the
state, local or foreign tax consequences of investing in the Portfolio.
ITEM 21. UNDERWRITERS
The placement agent for the Portfolio is EVD. Investment companies, common
and commingled trust funds and similar organizations and entities may
continuously invest in the Portfolio.
ITEM 22. CALCULATION OF PERFORMANCE DATA
Not applicable.
ITEM 23. FINANCIAL STATEMENTS
The following audited financial statements of the Portfolio are
incorporated by reference into this Part B and have been so incorporated in
reliance upon the report of Deloitte & Touche LLP, independent certified public
accountants, as experts in accounting and auditing.
Portfolio of Investments as of October 31, 1997
Statement of Assets and Liabilities as of October 31, 1997
Statement of Operations for the fiscal year ended October 31, 1997
Statement of Changes in Net Assets for the fiscal year ended October
31, 1997 and for the period from the start of business, December 1,
1995, to October 31, 1996
Supplementary Data for the fiscal year ended October 31, 1997 and for
the period from the start of business, December 1, 1995, to October
31, 1996
Notes to Financial Statements
Independent Auditors' Report
B-6
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For purposes of the EDGAR filing of this amendment to the Portfolio's
registration statement, the Portfolio incorporates by reference the above
audited financial statements as previously filed electronically with the
Commission (Accession No. 0000950156-98-000081).
B-7
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PART C
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements
The financial statements called for by this Item are included in Part
B and listed in Item 23 hereof.
(b) Exhibits
1. (a) Declaration of Trust dated October 23, 1995 filed as Exhibit 1 to
the Registration Statement and incorporated herein by reference.
(b) Amendment to Declaration of Trust dated May 14, 1997, filed
herewith.
2. By-Laws of the Registrant adopted October 23, 1995 filed as Exhibit 2
to the Registration Statement and incorporated herein by reference.
5. Investment Advisory Agreement dated October 23, 1995 between the
Registrant and Boston Management and Research filed as Exhibit 5 to
the Registration Statement and incorporated herein by reference.
6. Placement Agent Agreement between the Registrant and Eaton Vance
Distributors, Inc. dated November 1, 1996, filed as Exhibit 6 to
Amendment No. 1 and incorporated herein by reference.
7. The Securities and Exchange commission has granted the Registrant an
exemptive order that permits the Registrant to enter into deferred
compensation arrangements with its independent Trustees. See In the
Matter of Capital Exchange Fund, Inc., Release No. IC-20671 (November
1, 1994).
8. (a) Custodian Agreement between the Registrant and Investors Bank &
Trust Company filed as Exhibit 8 to Amendment No. 1 and incorporated
herein by reference.
(b) Revised Procedures for Allocations and Distributions dated
May 14, 1997, filed herewith.
13. Investment representation letter of Eaton Vance Management dated
October 23, 1995 filed as Exhibit 13 to the Registration Statement and
incorporated herein by reference.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable.
C-1
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ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
Number of
Title of Class Record Holders
-------------- --------------
As of January 30, 1998
Interests 11
ITEM 27. INDEMNIFICATION
Article V of the Registrant's Declaration of Trust contains indemnification
provisions for Trustees and officers. The Trustees and officers of the
Registrant and the personnel of the Registrant's investment adviser are insured
under an errors and omissions liability insurance policy.
The Placement Agent Agreement also provides for reciprocal indemnity of the
Placement Agent, on the one hand, and the Trustees and officers, on the other.
ITEM 28. BUSINESS AND OTHER CONNECTIONS
To the knowledge of the Portfolio, none of the trustees or officers of the
Portfolio's investment adviser, except as set forth on its Form ADV as filed
with the Commission, is engaged in any other business, profession, vocation or
employment of a substantial nature, except that certain trustees and officers
also hold various positions with and engage in business for affiliates of the
investment adviser.
ITEM 29. PRINCIPAL UNDERWRITERS
Not applicable.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the 1940 Act and the Rules promulgated
thereunder are in the possession and custody of the Registrant's custodian,
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116, with the
exception of certain corporate documents and portfolio trading documents which
are in the possession and custody of the Registrant's investment adviser at 24
Federal Street, Boston, MA 02110. The Registrant is informed that all applicable
accounts, books and documents required to be maintained by registered investment
advisers are in the custody and possession of the Registrant's investment
adviser.
ITEM 31. MANAGEMENT SERVICES
Not applicable.
ITEM 32. UNDERTAKINGS
Not applicable.
C-2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Investment Company Act of 1940, the
Registrant has duly caused this Amendment No. 2 to the Registration Statement on
Form N-1A to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Boston, and the Commonwealth of Massachusetts on the
25th day of February, 1998.
TAX-MANAGED GROWTH PORTFOLIO
By: /s/ James B. Hawkes
--------------------
James B. Hawkes
President
<PAGE>
INDEX TO EXHIBITS
Exhibit No. Description of Exhibit
- ----------- ----------------------
1(b) Amendment to Declaration of Trust dated May 14, 1997.
8(b) Revised Procedures for Allocations and Distributions dated
May 14, 1997.
EXHIBIT 1(b)
TAX-MANAGED GROWTH PORTFOLIO
AMENDMENT TO DECLARATION OF TRUST
Effective May 14, 1997
AMENDMENT, effective May 14, 1997, to the Declaration of Trust made October
23, 1995 (hereinafter called the "Declaration") of Tax-Managed Growth Portfolio,
a New York trust (hereinafter called the "Trust").
This AMENDMENT to the Declaration of Trust is being made by the
undersigned, a majority of the Trustees in office as of the date of this
AMENDMENT, pursuant to Section 10.4 of the Declaration, to conform the
Declaration to the requirements of applicable federal law and regulations. The
Trustees have found that the changes effected by this AMENDMENT are necessary
and appropriate and do not have a materially adverse effect on the financial
interests of the Holders.
NOW, THEREFORE, the undersigned Trustees do hereby amend the Declaration in
the following manner:
1. ARTICLE VI Interests is hereby amended by the addition of a Section 6.4
as follows:
6.4 Total Number of Holders. Notwithstanding anything in this
Declaration to the contrary, the total number of Holders (as determined
under Treasury Regulations Section 1.7704-1(h)(3)) shall not exceed 100,
unless the Trust shall have obtained a ruling from the U.S. Internal
Revenue Service to the effect that the admission of additional Holders
would not cause the Trust to be considered a "publicly traded partnership"
within the meaning of Section 7704 of the Code. In determining the number
of Holders for purposes of this limitation, each person owning Trust
interests through an entity that would be treated as a partnership, grantor
trust, or S corporation for U.S. federal income tax purposes shall be
counted as a Holder if substantially all of such entity" assets consist of
direct or indirect Trust interests.
2. ARTICLE VIII Determination of Book Capital Account Balances and
Distributions is hereby amended by the addition of a Section 8.4 as follows:
8.4 Signature on Returns; Tax Matters Partner
(a) Eaton Vance Management shall sign on behalf of the Trust the tax
returns of the Trust, unless applicable law requires a Holder to
sign such documents, in which case such documents shall be signed
by Eaton Vance Management.
<PAGE>
(b) Eaton Vance Management shall be designated the "tax matters
partner" of the Trust pursuant to Section 6231(a)(7)(A) of the
Code and applicable Treasury Regulations.
IN WITNESS WHEREOF, the undersigned Trustees have executed this instrument
this 23rd day of June, 1997.
/s/ Landon T. Clay /s/ Donald R. Dwight
- ------------------------------- -----------------------------------
Landon T. Clay Donald R. Dwight
/s/ James B. Hawkes /s/ Samuel L. Hayes, III
- ------------------------------- -----------------------------------
James B. Hawkes Samuel L. Hayes, III
/s/ Norton H. Reamer /s/ John L. Thorndike
- ------------------------------- -----------------------------------
Norton H. Reamer John L. Thorndike
/s/ Jack L. Treynor
------------------------------
Jack L. Treynor
2
EXHIBIT 8(b)
TAX-MANAGED GROWTH PORTFOLIO
-----------------------------
REVISED PROCEDURES FOR ALLOCATIONS
AND DISTRIBUTIONS
Effective May 14, 1997
<PAGE>
TABLE OF CONTENTS
PAGE
----
ARTICLE I--Introduction .......................................................1
ARTICLE II--Definitions .......................................................1
ARTICLE III--Capital Accounts
Section 3.1 Capital Accounts of Holders ...............................4
Section 3.2 Book Capital Accounts .....................................4
Section 3.3 Tax Capital Accounts ......................................4
Section 3.4 Compliance with Treasury Regulations ......................5
ARTICLE IV--Distributions of Cash and Assets
Section 4.1 Distributions of Distributable Cash .......................5
Section 4.2 Division Among Holders ....................................5
Section 4.3 Distributions Upon Liquidation of a Holder's
Interest in the Trust ..................................5
Section 4.4 Amounts Withheld ..........................................5
ARTICLE V--Allocations
Section 5.1 Allocation of Items to Book Capital Accounts ..............6
Section 5.2 Allocation of Taxable Income and Tax Loss
to Tax Capital Accounts.................................6
Section 5.3 Special Allocations to Book and Tax Capital
Accounts ...............................................7
Section 5.4 Other Adjustments to Book and Tax Capital
Accounts ...............................................7
Section 5.5 Timing of Tax Allocations to Book and Tax
Capital Accounts .......................................7
Section 5.6 Redemptions During the Fiscal Year ........................8
ARTICLE VI--Withdrawals
Section 6.1 Partial Withdrawals .......................................8
Section 6.2 Redemptions ...............................................8
Section 6.3 Distribution in Kind.......................................8
ARTICLE VII--Liquidation
Section 7.1 Liquidation Procedure .....................................8
Section 7.2 Alternative Liquidation Procedure .........................9
Section 7.3 Cash Distributions Upon Liquidation .......................9
Section 7.4 Treatment of Negative Book Capital
Account Balance ........................................9
i
<PAGE>
PROCEDURES FOR
ALLOCATIONS AND DISTRIBUTIONS
OF
TAX-MANAGED GROWTH PORTFOLIO
(the "Trust")
--------------------
ARTICLE I
Introduction
------------
The Trust is treated as a partnership for federal income tax purposes.
These procedures have been adopted by the Trustees of the Trust and will be
furnished to the Trust's accountants for the purpose of allocating Trust gains,
income or loss and distributing Trust assets. The Trust will maintain its books
and records, for both book and tax purposes, using the accrual method of
accounting.
ARTICLE II
Definitions
-----------
Except as otherwise provided herein, a term referred to herein shall have
the same meaning as that ascribed to it in the Declaration. References in this
document to "hereof", "herein" and "hereunder" shall be deemed to refer to this
document in its entirety rather than the article or section in which any such
word appears.
"Book Capital Account" shall mean, for any Holder at any time in any Fiscal
Year, the Book Capital Account balance of the Holder on the first day of the
Fiscal Year, as adjusted each day pursuant to the provisions of Section 3.2
hereof.
"Book Value" means, with respect to any asset, the asset's adjusted basis
for Federal income tax purposes, except as follows:
(a) Any asset contributed by a Holder to the Trust shall be treated as
having been purchased and the initial Book Value of such asset shall
be the fair market value of such asset as of the date of contribution;
(b) A revaluation of any asset under Section 5.1(a) or 5.1(b) shall be
treated as a purchase of such Trust asset, and the Book Value of such
Trust asset shall be adjusted to equal its Fair Market Value as of the
date of such revaluation;
(c) The distribution by the Trust of an asset to a Holder shall be treated
as a sale of such asset, and the Book Value of any Trust asset
distributed to any Holder shall be the Fair Market Value of such
assets as of the date of distribution.
1
<PAGE>
"Capital Contribution" shall mean, with respect to any Holder, the amount
of money and the Fair Market Value of any assets actually contributed from time
to time to the Trust with respect to the Interest held by such Holder.
"Code" shall mean the U.S. Internal Revenue Code of 1986, as amended from
time to time, as well as any non-superseded provisions of the Internal Revenue
Code of 1954, as amended (or any corresponding provision or provisions of
succeeding law).
"Declaration" shall mean the Trust's Declaration of Trust, dated October
23, 1995, as amended from time to time.
"Designated Expenses" shall mean extraordinary Trust expenses attributable
to a particular Holder that are to be borne by such Holder.
"Distributable Cash" for any Fiscal Year shall mean the gross cash proceeds
from Trust activities, less the portion thereof used to pay or establish
Reserves, plus such portion of the Reserves as the Trustees, in their sole
discretion, no longer deem necessary to be held as Reserves. Distributable Cash
shall not be reduced by depreciation, amortization, cost recovery deductions, or
similar allowances.
"Fair Market Value" of a security, instrument or other asset on any
particular day shall mean the fair value thereof as determined in good faith by
or on behalf of the Trustees in the manner set forth in the Registration
Statement.
"Fiscal Year" shall mean an annual period determined by the Trustees which
ends on such day as is permitted by the Code.
"Holders" shall mean as of any particular time all holders of record of
Interests in the Trust.
"Interest(s)" shall mean the interest of a Holder in the Trust, including
all rights, powers and privileges accorded to Holders by the Declaration, which
interest may be expressed as a percentage, determined by calculating, at such
times and on such bases as the Trustees shall from time to time determine, the
ratio of each Holder's Book Capital Account balance to the total of all Holders'
Book Capital Account balances.
"Investments" shall mean all securities, instruments or other assets of the
Trust of any nature whatsoever, including, but not limited to, all equity and
debt securities, futures contracts, and all property of the Trust obtained by
virtue of holding such assets.
"Matched Income or Loss" shall mean Taxable Income, Tax-Exempt Income or
Tax Loss of the Trust comprising interest, original issue discount and dividends
and all other types of income or loss to the extent the Taxable Income,
Tax-Exempt Income, Tax Loss or Loss items not included in Tax Loss arising from
such items are recognized for tax purposes at the same time that Profit or Loss
are accrued for book purposes by the Trust.
"Net Unrealized Gain" shall mean the excess, if any, of the aggregate Fair
Market Value of all Investments over the aggregate adjusted bases, for federal
income tax purposes, of all Investments.
2
<PAGE>
"Net Unrealized Loss" shall mean the excess, if any, of the aggregate
adjusted bases, for federal income tax purposes, of all Investments over the
aggregate Fair Market Value of all Investments.
"Profit" and "Loss" shall mean, for each Fiscal Year or other period, an
amount equal to the Taxable Income or Tax Loss for such Fiscal Year or period
with the following adjustments:
(i) Any Tax-Exempt Income shall be added to such Taxable Income or
subtracted from such Tax Loss; and
(ii) Any expenditures of the Trust for such year or period described
in Section 705(a)(2)(B) of the Code or treated as expenditures under
Section 705(a)(2)(B) of the Code pursuant to Treasury Regulations Section
1.704-1(b)(2)(iv)(i), and not otherwise taken into account in computing
Profit or Loss or specially allocated shall be subtracted from such Taxable
Income or added to such Tax Loss.
(iii) Gain or loss resulting from any disposition of a Trust asset
shall be computed by reference to the Book Value of the asset disposed of,
notwithstanding that the adjusted tax basis of such asset differs from its
Book Value.
"Redemption" shall mean the complete withdrawal of an Interest of a Holder
the result of which is to reduce the Book Capital Account balance of that Holder
to zero.
"Registration Statement" shall mean the Registration Statement of the Trust
on Form N-1A as filed with the U.S. Securities and Exchange Commission under the
1940 Act, as the same may be amended from time to time.
"Reserves" shall mean, with respect to any Fiscal Year, funds set aside or
amounts allocated during such period to reserves which shall be maintained in
amounts deemed sufficient by the Trustees for working capital and to pay taxes,
insurance, debt service, renewals, or other costs or expenses, incident to the
ownership of the Investments or to its operations.
"Tax Capital Account" shall mean, for any Holder at any time in any Fiscal
Year, the Tax Capital Account balance of the Holder on the first day of the
Fiscal Year, as adjusted each day pursuant to the provisions of Section 3.3
hereof.
"Tax-Exempt Income" shall mean income of the Trust for such Fiscal Year or
period that is exempt from federal income tax and not otherwise taken into
account in computing Profit or Loss.
"Tax Lot" shall mean securities or other property which are both purchased
or acquired, and sold or otherwise disposed of, as a unit.
"Taxable Income" or "Tax Loss" shall mean the taxable income or tax loss of
the Trust, determined in accordance with Section 703(a) of the Code, for each
Fiscal Year as determined for federal income tax purposes, together with each of
the Trust's items of income, gain, loss or deduction which is separately stated
or otherwise not included in computing taxable income and tax loss.
3
<PAGE>
"Treasury Regulations" shall mean the Income Tax Regulations promulgated
under the Code, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust" shall mean Tax-Managed Growth Portfolio, a trust fund formed under
the laws of the State of New York by the Declaration.
"Trustees" shall mean each signatory to the Declaration, so long as such
signatory shall continue in office in accordance with the terms thereof, and all
other individuals who at the time in question have been duly elected or
appointed and have qualified as Trustees in accordance with the provisions
thereof and are then in office.
The "1940 Act" shall mean the U.S. Investment Company Act of 1940, as
amended from time to time, and the rules and regulations thereunder.
ARTICLE III
Capital Accounts
----------------
3.1. Capital Accounts of Holders. A separate Book Capital Account and a
separate Tax Capital Account shall be maintained for each Holder pursuant to
Section 3.2 and Section 3.3. hereof, respectively. In the event the Trustees
shall determine that it is prudent to modify the manner in which the Book
Capital Accounts or Tax Capital Accounts, or any debits or credits thereto, are
computed in order to comply with the Treasury Regulations, the Trustees may make
such modification, provided that it is not likely to have a material effect on
the amounts distributable to any Holder pursuant to Article VII hereof upon the
dissolution of the Trust.
3.2. Book Capital Accounts. The Book Capital Account balance of each Holder
shall be adjusted each day by the following amounts:
(a) increased by any increase in Net Unrealized Gains or decrease in Net
Unrealized Losses allocated to such Holder pursuant to Section 5.1(a) hereof;
(b) decreased by any decrease in Net Unrealized Gains or increase in Net
Unrealized Losses allocated to such Holder pursuant to Section 5.1(b) hereof;
(c) increased or decreased, as the case may be, by the amount of Profit or
Loss, respectively, allocated to such Holder pursuant to Section 5.1(c) hereof;
(d) increased by any Capital Contribution made by such Holder; and,
(e) decreased by any distribution, including any distribution to effect a
withdrawal or Redemption, made to such Holder by the Trust.
Any adjustment pursuant to Section 3.2 (a), (b) or (c) above shall be
prorated for increases in each Holder's Book Capital Account balance resulting
from Capital Contributions, or distributions or withdrawals from the Trust or
Redemptions by the Trust occurring, during such Fiscal Year as of the day after
the Capital Contribution, distribution, withdrawal or Redemption is accepted,
made or effected by the Trust.
4
<PAGE>
3.3. Tax Capital Accounts. The Tax Capital Account balance of each Holder
shall be adjusted at the following times by the following amounts:
(a) increased daily by the adjusted tax bases of any Capital Contribution
made by such Holder to the Trust;
(b) increased daily by the amount of Taxable Income and Tax-Exempt Income
allocated to such Holder pursuant to Section 5.2 hereof at such times as the
allocations are made under Section 5.2 hereof;
(c) decreased daily by the amount of cash distributed to the Holder
pursuant to any of these procedures including any distribution made to effect a
withdrawal or Redemption; and
(d) decreased by the amount of Tax Loss allocated to such Holder pursuant
to Section 5.2 hereof at such times as the allocations are made under Section
5.2 hereof.
3.4. Compliance with Treasury Regulations. The foregoing provisions and
other provisions contained herein relating to the maintenance of Book Capital
Accounts and Tax Capital Accounts are intended to comply with Treasury
Regulations Section 1.704-1(b), and shall be interpreted and applied in a manner
consistent with such Treasury Regulations.
The Trustees shall make any appropriate modifications in the event
unanticipated events might otherwise cause these procedures not to comply with
Treasury Regulations Section 1.704-1(b), including the requirements described in
Treasury Regulations Section 1.704-1(b)(2)(ii)(b)(1) and Treasury Regulations
Section 1.704-1(b)(2)(iv). Such modifications are hereby incorporated into these
procedures by this reference as though fully set forth herein.
ARTICLE IV
Distributions of Cash and Assets
--------------------------------
4.1. Distributions of Distributable Cash. Except as otherwise provided in
Article VII hereof, Distributable Cash for each Fiscal Year may be distributed
to the Holders at such times, if any, and in such amounts as shall be determined
in the sole discretion of the Trustees. In exercising such discretion, the
Trustees shall distribute such Distributable Cash so that Holders that are
regulated investment companies can comply with the distribution requirements set
forth in Code Section 852 and avoid the excise tax imposed by Code Section 4982.
4.2. Division Among Holders. All distributions to the Holders with respect
to any Fiscal Year pursuant to Section 4.1 hereof shall be made to the Holders
(i) in the case of Matched Income or Loss, in proportion to the corresponding
net allocations of Profit or Loss, and (ii) in the case of other items, in
proportion to the respective daily average Book Capital Account balances for the
Fiscal Year determined as of the date of such distribution.
4.3. Distributions Upon Liquidation of a Holder's Interest in the Trust.
Upon partial withdrwal or complete redemption of a Holder's interest in the
Trust, the proceeds will be distributed to the Holder as provided in Section
5.6, Article VI, and Article VII hereof. If such Holder has a negative book
capital account balance, the provisions of Section 7.4 will apply.
5
<PAGE>
4.4. Amounts Withheld. All amounts withheld pursuant to the Code or any
provision of any state or local tax law with respect to any payment or
distribution to the Trust or the Holders shall be treated as amounts distributed
to such Holders pursuant to this Article IV for all purposes under these
procedures. The Trustees may allocate any such amount among the Holders in any
manner that is in accordance with applicable law.
ARTICLE V
Allocations
-----------
5.1. Allocation of Items to Book Capital Accounts.
(a) Increase in Net Unrealized Gains or Decrease in Net Unrealized Losses.
Any decrease in Net Unrealized Loss due to realization of items shall be
allocated to the Holder receiving the allocation of Loss, in the same amount,
under Section 5.1(c) hereof. Subject to Section 5.1(d) hereof, any increase in
Net Unrealized Gains or decrease in Net Unrealized Loss on any day during the
Fiscal Year shall be allocated to the Holders' Book Capital Accounts at the end
of such day, in proportion to the Holders' respective Book Capital Account
balances at the commencement of such day.
(b) Decrease in Net Unrealized Gains or Increase in Net Unrealized Losses.
Any decrease in Net Unrealized Gains due to realization of items shall be
allocated to the Holder receiving the allocation of Profit, in the same amount,
under Section 5.1(c) hereof. Subject to Section 5.1(d) hereof, any decrease in
Net Unrealized Gains or increase in Net Unrealized Loss on any day during the
Fiscal Year shall be allocated to the Holders' Book Capital Accounts at the end
of such day, in proportion to the Holders' respective Book Capital Account
balances at the commencement of such day.
(c) Profit and Loss. Subject to Section 5.1(d) hereof, Profit and Loss
occurring on any day during the Fiscal Year shall be allocated to the Holders'
Book Capital Accounts at the end of such day in proportion to the Holders'
respective Book Capital Account balances at the commencement of such day.
(d) Other Book Capital Account Adjustments.
(i) Any allocation pursuant to Section 5.1(a), (b) or (c) above shall
be prorated for increases in each Holder's Book Capital Account resulting
from Capital Contributions, or distributions or withdrawals from the Trust
or Redemptions by the Trust occurring, during such Fiscal Year as of the
day after the Capital Contribution, distribution, withdrawal or Redemption
is accepted, made or effected by the Trust.
(ii) For purposes of determining the Profit, Loss, and Net Unrealized
Gain or Net Unrealized Loss or any other item allocable to any Fiscal Year,
Profit, Loss, and Net Unrealized Gain or Net Unrealized Loss and any such
other item shall be determined by or on behalf of the Trustees using any
reasonable method under Code Section 706 and the Treasury Regulations
thereunder.
6
<PAGE>
5.2. Allocation of Taxable Income and Tax Loss to Tax Capital Accounts.
(a) Taxable Income and Tax Loss. Subject to Section 5.2(b) and Section 5.3
hereof, which shall take precedence over this Section 5.2(a), Taxable Income or
Tax Loss for any Fiscal Year shall be allocated at least annually to the
Holders' Tax Capital Accounts as follows:
(i) First, Taxable Income and Tax Loss, whether constituting ordinary
income (or loss) or capital gain (or loss), derived from the sale or other
disposition of a Tax Lot of securities or other property shall be allocated
as of the date such income, gain or loss is recognized for federal income
tax purposes solely in proportion to the amount of unrealized appreciation
(in the case of such income or capital gain, but not in the case of any
such loss) or depreciation (in the case of any such loss, but not in the
case of any such income or capital gain) from that Tax Lot which was
allocated to the Holders' Book Capital Accounts each day that such
securities or other property was held by the Trust pursuant to Section
5.1(a) and (b) hereof; and
(ii) Second, any remaining amounts at the end of the Fiscal Year, to
the Holders in proportion to their respective daily average Book Capital
Account balances determined for the Fiscal Year of the allocation.
(b) Matched Income or Loss. Notwithstanding the provisions of Section
5.2(a) hereof, Taxable Income, Tax-Exempt Income or Tax Loss accruing on any day
during the Fiscal Year constituting Matched Income or Loss, shall be allocated
daily to the Holders' Tax Capital Accounts solely in proportion to and to the
extent of corresponding allocations of Profit or Loss to the Holders' Book
Capital Accounts pursuant to the first sentence of Section 5.1(c) hereof.
5.3. Special Allocations to Book and Tax Capital Accounts.
(a) The Designated Expenses computed for each Holder shall be allocated
separately (not included in the allocations of Matched Income or Loss, Loss or
Tax Loss) to the Book Capital Account and Tax Capital Account of each Holder.
(b) If the Trust incurs any nonrecourse indebtedness, then allocations of
items attributable to nonrecourse indebtedness shall be made to the Tax Capital
Account of each Holder in accordance with the requirements of Treasury
Regulations Section 1.704-1(b)(4)(iv)(d).
(c) In accordance with Code Section 704(c) and the Treasury Regulations
thereunder, Taxable Income and Tax Loss with respect to any property contributed
to the capital of the Trust shall be allocated to the Tax Capital Account of
each Holder so as to take into account any variation between the adjusted tax
basis of such property to the Trust for federal income tax purposes and such
property's Fair Market Value at the time of contribution to the Trust.
5.4. Other Adjustments to Book and Tax Capital Accounts.
(a) Any election or other decision relating to such allocations shall be
made by the Trustees in any manner that reasonably reflects the purpose and
intention of these procedures.
(b) Each Holder will report its share of Trust income and loss for federal
income tax purposes in accordance with the allocations effected pursuant to
Section 5.2 hereof.
7
<PAGE>
(c) Eaton Vance Management may adopt such policies and modifications with
respect to allocation of Taxable Income and Taxable Loss among the Holders as
Eaton Vance Management deems appropriate in its sole discretion fo rpurposes of
satisfying relevant tax law considerations, including Section 704 of the Code
and the regulations thereunder.
5.5. Timing of Tax Allocations to Book and Tax Capital Accounts. Allocation
of Taxable Income, Tax-Exempt Income and Tax Loss pursuant to Section 5.2 hereof
for any Fiscal Year, unless specified above to the contrary, shall be made only
after corresponding adjustments have been made to the Book Capital Accounts of
the Holders for the Fiscal Year as provided pursuant to Section 5.1 hereof.
5.6. Redemptions During the Fiscal Year. If a Redemption occurs prior to
the end of a Fiscal Year, the Trust will treat the Fiscal Year as ended for the
purposes of computing the redeeming Holder's distributive share of Trust items
and allocations of all items to such Holder will be made as though each Holder
were receiving its allocable share of Trust items at such time. All items so
allocated to the redeeming Holder will be subtracted from the items to be
allocated among the other non-redeeming Holders at the actual end of the Fiscal
Year. All items allocated among the redeeming and non-redeeming Holders will be
made subject to the rules of Code Sections 702, 704, 706 and 708 and the
Treasury Regulations promulgated thereunder.
ARTICLE VI
Withdrawals
-----------
6.1. Partial Withdrawals. At any time any Holder shall be entitled to
request a withdrawal of such portion of the Interest held by such Holder as such
Holder shall request. The Trust may atisfy any such request by a distribution of
cash or subject to Section 6.3, other assets.
6.2. Redemptions. At any time a Holder shall be entitled to request a
Redemption of all of its Interest. A Holder's Interest may be redeemed at any
time during the Fiscal Year by a cash distribution or, at the option of the
Trust, and subject to Section 6.3, by a distribution of assets.
6.3. Distribution in Kind. If specified by the redeeming Holder, the Trust
shall satisfy a Redemption request by distributing securities held in the Trust
at the time of the Redemption that were contirbuted to the Trust by such Holder.
Without the consent of Belvedere Capital Fund Company LLC (the "Company"), the
Trust shall not distribute securities that were contributed to the Trust by the
Company to any other person. If a withdrawing Holder receives a distribution in
kind, then unrealized income, gain, loss or deduction attributable to such
property shall be allocated among the Holders as if there had been a disposition
of the property on the date of distribution in compliance with the requirements
of Treasury Regulations Section 1.704-1(b)(2)(iv)(e).
8
<PAGE>
ARTICLE VII
Liquidation
-----------
7.1. Liquidation Procedure. Subject to Section 7.4 hereof, upon dissolution
of the Trust, the Trustees shall liquidate the assets of the Trust, apply and
distribute the proceeds thereof as follows:
(a) first to the payment of all debts and obligations of the Trust to third
parties, including without limitation the retirement of outstanding debt,
including any debt owed to Holders or their affiliates, and the expenses of
liquidation, and to the setting up of any Reserves for contingencies which may
be necessary; and
(b) then in accordance with the Holders' positive Book Capital Account
balances after adjusting Book Capital Accounts for allocations provided in
Article V hereof and in accordance with the requirements described in Treasury
Regulations Section 1.704-1(b)(2) (ii)(b)(2).
7.2. Alternative Liquidation Procedure. Notwithstanding the foregoing, if
the Trustees shall determine that an immediate sale of part or all of the Trust
assets would cause undue loss to the Holders, the Trustees, in order to avoid
such loss, may, after having given notification to all the Holders, to the
extent not then prohibited by the law of any jurisdiction in which the Trust is
then formed or qualified and applicable in the circumstances, either defer
liquidation of and withhold from distribution for a reasonable time any assets
of the Trust except those necessary to satisfy the Trust's debts and obligations
or distribute the Trust's assets to the Holders in liquidation.
7.3. Cash Distributions Upon Liquidation. Except as provided in Section 7.2
hereof, amounts distributed in liquidation of the Trust shall be paid solely in
cash.
7.4. Treatment of Negative Book Capital Account Balance. If a Holder has a
negative balance in its Book Capital Account following the liquidation of its
Interest, as determined after taking into account all capital account
adjustments for the Fiscal Year during which the liquidation occurs, then such
Holder shall restore the amount of such negative balance to the Trust by the
later of the end of the Fiscal Year or 90 days after the date of such
liquidation so as to comply with the requirements of Treasury Regulations
Section 1.704-1(b)(2)(ii)(b)(3). Such amount shall, upon liquidation, be paid to
creditors of the Trust or distributed to other Holders in accordance with their
positive Book Capital Account balances.
9
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 104
<NAME> TAX MANAGED GROWTH PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> OCT-31-1997
<PERIOD-END> OCT-31-1997
<INVESTMENTS-AT-COST> 1,859,931
<INVESTMENTS-AT-VALUE> 2,914,765
<RECEIVABLES> 2,625
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 217
<TOTAL-ASSETS> 2,917,607
<PAYABLE-FOR-SECURITIES> 46,013
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 148
<TOTAL-LIABILITIES> 46,161
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 1,816,613
<SHARES-COMMON-STOCK> 0
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<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
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<NET-ASSETS> 2,871,446
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<EXPENSES-NET> 10,007
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<REALIZED-GAINS-CURRENT> 52,638
<APPREC-INCREASE-CURRENT> 375,109
<NET-CHANGE-FROM-OPS> 442,146
<EQUALIZATION> 0
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<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 1,934,646
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
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<INTEREST-EXPENSE> 0
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<AVERAGE-NET-ASSETS> 1,781,153
<PER-SHARE-NAV-BEGIN> 0.00
<PER-SHARE-NII> 0.000
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<PER-SHARE-DIVIDEND> 0.000
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<PER-SHARE-NAV-END> 0.00
<EXPENSE-RATIO> 0.56
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
