-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, RqknvJUbQTCktLAfY4IJhoq27QQgHpeoAh1fTeUUUafJ9NeTZs8QjGY5w/cDs2zJ xfPec7eYF1FSQy59ReRHUg== 0000950156-97-000028.txt : 19970106 0000950156-97-000028.hdr.sgml : 19970106 ACCESSION NUMBER: 0000950156-97-000028 CONFORMED SUBMISSION TYPE: N-30D PUBLIC DOCUMENT COUNT: 1 CONFORMED PERIOD OF REPORT: 19961031 FILED AS OF DATE: 19970103 SROS: NONE FILER: COMPANY DATA: COMPANY CONFORMED NAME: CAPITAL EXCHANGE FUND INC CENTRAL INDEX KEY: 0000017147 STANDARD INDUSTRIAL CLASSIFICATION: UNKNOWN SIC - 0000 [0000] IRS NUMBER: 042385053 STATE OF INCORPORATION: MA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: N-30D SEC ACT: 1940 Act SEC FILE NUMBER: 811-01339 FILM NUMBER: 97500563 BUSINESS ADDRESS: STREET 1: 24 FEDERAL ST CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6174828260 MAIL ADDRESS: STREET 1: 24 FEDERAL ST STREET 2: 11TH FLOOR CITY: BOSTON STATE: MA ZIP: 02110 N-30D 1 CAPITAL EXCHANGE FUND AR CAPITAL EXCHANGE FUND, INC. PERFORMANCE RESULTS+ - ------------------------------------------------------------------------------ AVERAGE ANNUAL TOTAL RETURNS (STANDARDIZED SEC PERFORMANCE DATA FOR THE PERIODS ENDED OCTOBER 31, 1996) - ------------------------------------------------------------------------------ ADJUSTED TOTAL TOTAL RETURN RETURN* - ------------------------------------------------------------------------------ One year 22.7% 22.7% - ------------------------------------------------------------------------------ Five years 16.1% 16.1% - ------------------------------------------------------------------------------ Ten years 14.8% 15.2% - ------------------------------------------------------------------------------ Life of Fund (3/29/66) 10.6% 11.0% - ------------------------------------------------------------------------------ CUMULATIVE TOTAL RETURN LIFE OF FUND (3/29/66 TO 10/31/96) - ------------------------------------------------------------------------------ Capital Exchange Fund 2,343.4% - ------------------------------------------------------------------------------ Dow Jones Industrial Average 2,219.2% - ------------------------------------------------------------------------------ Standard & Poor's 500 2,418.8% - ------------------------------------------------------------------------------ + Past performance is no guarantee of future results. Investment returns and principal will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. The Dow Jones Industrial Average and the Standard & Poor's 500 are unmanaged lists of common stocks. This report must be preceded or accompanied by a prospectus which contains more complete information on the Fund including its distribution plan, sales charges and expenses. Please read the prospectus carefully before investing. * These total return figures have been adjusted to reflect the Fund's election to retain its long term capital gain during the period and to pay the federal tax thereon on behalf of shareholders. SEC standardized total return figures treat such payments as an expense of the Fund while the adjusted figures treat such payments as a distribution to shareholders (who receive a tax credit in the amount of the allocable share of the taxes paid by the Fund). EATON VANCE The Boston Tradition Funds offered through Eaton Vance Distributors, Inc. 24 Federal Street, Boston, Massachusetts 02110 12/96 CAPITAL EXCHANGE FUND An Eaton Vance Exchange Fund Annual Report October 31, 1996 [graphic omitted] - ------------------------------------------------------------------------------ To Shareholders - ------------------------------------------------------------------------------ CAPITAL EXCHANGE FUND, INC. HAD A TOTAL RETURN OF 22.7% FOR THE YEAR ENDED OCTOBER 31, 1996. DURING THE YEAR ENDED OCTOBER 31, 1996, CAPITAL EXCHANGE FUND, INC. HAD A TOTAL RETURN OF 22.7%. This return resulted from an increase in net asset value to $280.57 per share on October 31, 1996 from $230.96 per share on October 31, 1995 and the reinvestment of $2.50 in dividend income. By comparison, the S&P 500 Index, an unmanaged index of large capitalization stocks traded in the U.S., had a total return of 24.0% during the same period.* The Fund seeks to achieve its investment objective by investing in the Tax-Managed Portfolio (the "Portfolio"), a separate open-end management investment company with substantially the same investment objectives and policies as the Fund. THE U.S. ECONOMY IN 1996 HAS REMAINED STRONG, BUT SHOWS NO SIGN YET OF OVERHEATING. After slowing somewhat at the end of 1995, the U.S. economy has shown solid growth in 1996. Gross domestic product - the official indicator of economic growth calculated by the U.S. Department of Commerce - grew by 2.0% in the first quarter of 1996, shot up to 4.7% in the second quarter, and is expected to exceed 3.0% for the year as a whole. Inflation, meanwhile, remains subdued. The "core rate" of inflation, as measured by the Consumer Price Index (CPI) excluding food and energy prices, declined 0.3% in October, and the overall inflation rate as measured by the CPI is expected to remain at 3.0% for 1996, where it has been for over four years. AFTER CORRECTING IN JULY, THE STOCK MARKET'S RECOVERY HAS BEEN LED BY THE TYPE OF BLUE CHIP GROWTH STOCKS IN WHICH THIS PORTFOLIO INVESTS. The stock market's correction brought the Dow Jones Industrial Average down 11%, and the smaller capitalization Nasdaq Index down almost 20%. Beginning in August, the market has recovered to attain new highs. The total return of the Dow Jones Industrial Average between August 1, 1996 and October 31, 1996 was almost 10%. This recovery among the larger, well-known stocks, indicates that as the market continues into record territory, investors are seeking higher quality, less speculative investments. - ------------------------------------------------------------------------------ "THROUGHOUT ITS 30-YEAR HISTORY, CAPITAL EXCHANGE FUND, INC. HAS BEEN MANAGED FOR THE LONG-TERM AND WITH CONSIDERATION TO STOCKHOLDER TAXES AND AFTER-TAX RETURNS." [Photo of Landon T. Clay] MANAGEMENT HAS TAKEN ADVANTAGE OF SHORT-TERM PRICE DECLINES TO ADD HOLDINGS IN SOLID COMPANIES WITH LONG TERM GROWTH PROSPECTS. Duracell and Boeing are good examples of well-positioned companies whose stock prices had declined on short-term disappointments. In the case of Duracell, the company is being acquired by Gillette in a stock transaction, giving shareholders the benefit of a significant increase in value with no tax consequence. The Portfolio's management continues to seek out such opportunities to build positions in high-quality growth companies. We believe that in the long run, a company's stock price should appreciate along with its earnings progress. - ------------------------------------------------------------------------------ A FUND THAT INVESTS SECURITIES IN THE PORTFOLIO HAS THE RIGHT TO RECEIVE THOSE SECURITIES TO MEET ITS REDEMPTIONS. THROUGHOUT ITS 30-YEAR HISTORY, CAPITAL EXCHANGE FUND, INC. HAS BEEN MANAGED FOR THE LONG-TERM AND WITH CONSIDERATION TO STOCKHOLDER TAXES AND AFTER-TAX RETURNS. This begins with investing in high-quality growth stocks and staying with them for a sustained period of years. IT IS IMPORTANT TO NOTE THAT A FUND THAT INVESTS SECURITIES IN THE PORTFOLIO HAS THE RIGHT TO RECEIVE THOSE SECURITIES TO MEET ITS REDEMPTIONS, IF THOSE SECURITIES ARE AT THAT TIME HELD IN THE PORTFOLIO. Moreover, those securities will not be distributed to any other redeeming fund until they have been held in the Portfolio for at least five years. This policy reduces flexibility in selecting particular securities used to meet in-kind redemptions, but the Trustees of the Portfolio believe that this potential disadvantage is outweighed by the potential advantages derived from attracting contributions of securities to the Portfolio that would not be made in the absence of this policy. Sincerely, /s/ Landon T. Clay LANDON T. CLAY President November 26, 1996 *It is not possible to invest directly in this index. - ------------------------------------------------------------------------------ Fund shares are not guaranteed by the FDIC and are not deposits or other obligations of, or guaranteed by, any depository institution. Shares are subject to investment risks including possible loss of principal invested. - ------------------------------------------------------------------------------ - ------------------------------------------------------------------------------ FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES - ------------------------------------------------------------------------------ October 31, 1996 - ------------------------------------------------------------------------------ ASSETS: Investment in Tax-Managed Growth Portfolio (Portfolio), at value (Note 1A) (Identified cost, $18,913,716) $135,882,935 LIABILITIES: Payable to affiliate -- Directors fees (Note 4) $ 278 Accrued expenses 8,315 ------ Total liabilities 8,593 ------------ NET ASSETS for 484,277 shares of capital stock outstanding $135,874,342 ============ SOURCES OF NET ASSETS: Accumulated undistributed net realized gain on investment transactions (computed on the basis of identified cost), less the excess of cost of capital stock redeemed over proceeds from sales of capital stock (including shares issued to shareholders electing to receive payment of distributions in capital stock) $ 28,198,341 Unrealized appreciation of investments (computed on the basis of identified cost) 116,969,219 Provision for federal tax on undistributed net realized long-term capital gain, paid on behalf of shareholders (Note 1C) (9,348,114) Undistributed net investment income 54,896 ------------ Total $135,874,342 ============ NET ASSET VALUE AND REDEMPTION PRICE PER SHARE ($135,874,342 / 484,277 shares of capital stock outstanding) $280.57 ======= See notes to financial statements STATEMENT OF OPERATIONS - ------------------------------------------------------------------------------ Year Ended October 31, 1996 - ------------------------------------------------------------------------------ INVESTMENT INCOME (NOTE 1B): Dividend income allocated from Portfolio (net of foreign taxes withheld, $13,169) $ 1,812,483 Dividend income 230,177 Interest income allocated from Portfolio 139,813 Interest income 10,562 Expenses allocated from Portfolio (772,875) ----------- Total investment income $ 1,420,160 Expenses -- Investment adviser fee (Note 4) $ 60,464 Compensation of Directors not members of the Administrator's organization (Note 4) 4,138 Custodian fees 17,988 Transfer and dividend disbursing agent fees 16,919 Printing and postage 29,709 Legal and accounting services 31,774 Miscellaneous 6,269 ----------- Total expenses 167,261 ----------- Net investment income $ 1,252,899 REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain from Portfolio, computed on the basis of identified cost $ 2,789,065 Net realized gain on investments computed on the basis of identified cost 58,935 ----------- Net realized gain on investments ($371,741 net realized loss, as computed for federal income tax purposes) $ 2,848,000 Increase in unrealized appreciation of investments 21,470,324 ----------- Net realized and unrealized gain on investments 24,318,324 ----------- Net increase in net assets from operations $25,571,223 =========== See notes to financial statements FINANCIAL STATEMENTS (Continued) STATEMENTS OF CHANGES IN NET ASSETS - ------------------------------------------------------------------------------ YEAR ENDED OCTOBER 31, ---------------------------- 1996 1995 ------------ ------------ INCREASE (DECREASE) IN NET ASSETS: From operations -- Net investment income $ 1,252,899 $ 1,342,981 Net realized gain on investments 2,848,000 6,830,476 Increase in unrealized appreciation of investments 21,470,324 21,643,313 ------------ ------------ Net increase in net assets from operations $ 25,571,223 $ 29,816,770 ------------ ------------ Distributions to shareholders -- From net investment income $ (1,223,371) $ (1,366,266) From net realized gain on investments -- (12,852) ------------ ------------ Total distributions to shareholders $ (1,223,371) $ (1,379,118) ------------ ------------ Provision for federal tax on undistributed net realized long-term gain (Note 1C) $ -- $ (1,023,649) ------------ ------------ Net decrease from capital stock transactions (Note 2) $ (3,116,725) $ (4,059,852) ------------ ------------ Net increase in net assets $ 21,231,127 $ 23,354,151 NET ASSETS: At beginning of year 114,643,215 91,289,064 ------------ ------------ At end of year (including undistributed net investment income of $54,896 and $25,368, respectively) $135,874,342 $114,643,215 ============ ============ See notes to financial statements
FINANCIAL HIGHLIGHTS - ---------------------------------------------------------------------------------------------------------------- YEAR ENDED OCTOBER 31, ------------------------------------------------------------ 1996 1995 1994 1993 1992 -------- -------- -------- -------- -------- NET ASSET VALUE, beginning of year $230.960 $176.610 $164.860 $156.030 $142.810 -------- -------- -------- -------- -------- INCOME FROM OPERATIONS: Net investment income $ 2.562 $ 2.657 $ 2.521 $ 2.334 $ 2.178 Net realized and unrealized gain on investments 49.548 56.480 11.869 9.533 13.332 -------- -------- -------- -------- -------- Total income from operations $ 52.110 $ 59.137 $ 14.390 $ 11.867 $ 15.510 -------- -------- -------- -------- -------- LESS DISTRIBUTIONS: From net investment income $ (2.500) $ (2.700) $ (2.490) $ (2.550) $ (2.130) From net realized gain on investments -- (0.025) (0.150) -- (0.160) -------- -------- -------- -------- -------- Total distributions $ (2.500) $ (2.725) $ (2.640) $ (2.550) $ (2.290) -------- -------- -------- -------- -------- PROVISION FOR FEDERAL TAX ON UNDISTRIBUTED NET REALIZED LONG-TERM GAIN (NOTE 1C) $ -- $ (2.062) $ -- $ (0.487) $ -- -------- -------- -------- -------- -------- NET ASSET VALUE, end of year $280.570 $230.960 $176.610 $164.860 $156.030 ======== ======== ======== ======== ======== TOTAL RETURN(1) 22.67% 32.56% 8.80% 7.33% 10.94% RATIOS/SUPPLEMENTAL DATA: Ratio of expenses to average net assets(2) 0.76% 0.76% 0.76% 0.78% 0.78% Ratio of net investment income to average net assets 1.01% 1.32% 1.49% 1.46% 1.44% Net assets, end of year (000's omitted) $135,874 $114,643 $ 91,289 $ 89,593 $ 88,632 PORTFOLIO TURNOVER** 0% 2% 2% 2% 0% (1) Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale at the net asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at the net asset value on the payable date. (2) Includes the Fund's share of Tax-Managed Growth Portfolio's allocated expenses for the period from December 1, 1995, to October 31, 1996. ** Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making investments directly in securities. The portfolio turnover for the period since the Fund transferred substantially all of its investable assets to the Portfolio is shown in the Portfolio's financial statements which are included elsewhere in this report.
See notes to financial statements - ------------------------------------------------------------------------------- NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- (1) SIGNIFICANT ACCOUNTING POLICIES The Capital Exchange Fund, Inc. (the Fund) is registered under the Investment Company Act of 1940, as amended, as a diversified, open-end, management investment company. The Fund invests all of its investable assets in interests in the Tax-Managed Growth Portfolio (the Portfolio), a New York Trust, having the same investment objective as the Fund. The value of the Fund's investment in the Portfolio reflects the Fund's proportionate interest in the net assets of the Portfolio (14.5% at October 31, 1996). The performance of the Fund is directly affected by the performance of the Portfolio. The financial statements of the Portfolio, including the portfolio of investments, are included elsewhere in this report and should be read in conjunction with the Fund's financial statements. The following is a summary of significant accounting policies consistently followed by the Fund in the preparation of its financial statements. The policies are in conformity with generally accepted accounting principles. A. INVESTMENT VALUATION -- Valuation of the securities by the Portfolio is discussed in Note 1 of the Portfolio's Notes to Financial Statements which are included elsewhere in this report. B. INCOME -- The Fund's net investment income consists of the Fund's pro rata share of the net investment income of the Portfolio, less all actual and accrued expenses of the Fund determined in accordance with generally accepted accounting principles. Prior to the Fund's investment in the Portfolio, the Fund held its investments directly. For investments held directly, dividend income was recorded on the ex-dividend date. C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the Internal Revenue Code available to regulated investment companies and to distribute to shareholders each year all of its net investment income and net realized short-term capital gain. Accordingly, no provision for federal income or excise tax is necessary. At October 31, 1996, the Fund, for federal income tax purposes, had a capital loss carryover of $371,741 which will reduce the taxable income arising from future net realized gain on investments, if any, to the extent permitted by the Internal Revenue Code, and thus will reduce the amount of the distributions to shareholders which would otherwise be necessary to relieve the Fund of any liability for federal income or excise tax. Such capital loss carryover will expire on October 31, 2004. The Fund generally designates as undistributed any taxable net realized long-term gain (but reserves the right to distribute such gain in any year) and pays the federal tax thereon on behalf of shareholders. Provision for such tax is recorded on the Fund's records on the last business day of the Fund's fiscal year because the Internal Revenue Code provides that such tax is allocated among shareholders of record on that date. D. OTHER -- Investment transactions are accounted for on a trade date basis. Dividends to shareholders are recorded on the ex-dividend date. E. DISTRIBUTIONS -- Generally accepted accounting principles require that differences in the recognition or classification of income between the financial statements and tax earnings and profits which result in temporary over-distributions for financial statement purposes, are classified as distributions in excess of net investment income or accumulated net realized gains. F. 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 expense during the reporting period. Actual results could differ from those estimates. G. EXPENSE REDUCTION -- Investors Bank & Trust Company (IBT) serves as custodian to the Fund and the Portfolio. Prior to November 10, 1995, IBT was an affiliate of EVM. Pursuant to the respective custodian agreements, IBT receives a fee reduced by credits which are determined based on the average cash balances the Fund or the Portfolio maintains with IBT. All significant credit balances used to reduce the Fund's custodian fees are reflected as a reduction of operating expenses on the Statement of Operations. - ------------------------------------------------------------------------------ (2) CAPITAL STOCK At October 31, 1996, there were 4,000,000 shares of $1.00 par value capital stock authorized. Transactions in capital stock were as follows: YEAR ENDED OCTOBER 31, ------------------------------------------ 1996 1995 ------------------------------------------ SHARES AMOUNT SHARES AMOUNT ------- ---------- ------ ------ Redemptions (13,140) $(3,380,499) (22,059) $(4,365,843) Issued to shareholders electing to receive payment of dividends in capital stock 1,033 263,774 1,533 305,991 ------- ----------- ------- ----------- Net decrease (12,107) $(3,116,725) (20,526) $(4,059,852) ======= =========== ======= =========== - ------------------------------------------------------------------------------ (3) INVESTMENT TRANSACTIONS On December 1, 1995, the Fund transferred net assets with a value of $115,915,382 (substantially all its investable assets), including unrealized appreciation of $96,618,064, to the Portfolio in exchange for an interest in the Portfolio. Increases and decreases in the Fund's investment in the Portfolio aggregated $5,498 and $4,357,586, respectively for the eleven month period ended October 31, 1996. Investments were distributed in payment for capital stock redeemed for the period from November 1, 1995 through November 30, 1995, and the period from December 1, 1995 through October 31, 1996 resulting in capital gains for book purposes, of $58,935 and $3,210,042, respectively. No other investment transactions, other than short-term obligations, occurred during the period from November 1, 1995 to November 30, 1995. - ------------------------------------------------------------------------------ (4) TRANSACTIONS WITH AFFILIATES Prior to December 1, 1995 (when the Fund transferred substantially all of its assets to the Portfolio in exchange for an interest in the Portfolio), the Fund retained Eaton Vance Management (EVM) as its investment adviser. The investment adviser fee was earned by EVM as compensation for management and investment advisory services rendered to the Fund. The fee was computed at the monthly rate of 5/96 of 1% ( 5/8 of 1% annually) of the Fund's average monthly net assets. Since December 1, 1995, EVM has served only as the administrator of the Fund, but receives no compensation. The Portfolio has engaged Boston Management and Research (BMR), a subsidiary of EVM, to render investment advisory services. See Note 2 of the Portfolio's Notes to Financial Statements which are included elsewhere in this report. Except as to directors of the Fund who are not members of EVM's organization, officers and directors receive remuneration for their services to the Fund out of such investment adviser fee. The custodian fee was paid to Investors Bank & Trust Company (IBT) for its services as custodian of the Fund. One of the Directors of the Fund owns approximately 13% of the voting stock of Investors Financial Services Corp., the parent company of IBT. Certain of the officers and directors of the Fund are officers and directors/trustees of the above organizations. INDEPENDENT AUDITORS' REPORT - ------------------------------------------------------------------------------ TO THE DIRECTORS AND SHAREHOLDERS OF CAPITAL EXCHANGE FUND, INC.: We have audited the accompanying statement of assets and liabilities of Capital Exchange Fund, Inc. as of October 31, 1996, the related statement of operations for the year then ended, the statements of changes in net assets for the years ended October 31, 1996 and 1995, and the financial highlights for each of the years in the five-year period ended October 31, 1996. These financial statements and financial highlights are the responsibility of the Fund's management. Our responsibility is to express an opinion on these financial statements and financial highlights based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and financial highlights are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, such financial statements and financial highlights present fairly, in all material respects, the financial position of Capital Exchange Fund, Inc. as of October 31, 1996, the results of its operations, the changes in its net assets, and its financial highlights for the respective stated periods in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP BOSTON, MASSACHUSETTS NOVEMBER 29, 1996 -------------------------------- TAX-MANAGED GROWTH PORTFOLIO PORTFOLIO OF INVESTMENTS OCTOBER 31, 1996 - -------------------------------------------------------------------------- COMMON STOCKS - 97.9% - -------------------------------------------------------------------------- NAME OF COMPANY SHARES VALUE - -------------------------------------------------------------------------- ADVERTISING - 0.5% Interpublic Group of Cos., Inc. 106,000 $ 5,141,000 ------------ AEROSPACE & DEFENSE - 2.1% Boeing Co. 90,370 $ 8,619,039 Raytheon Co. 226,544 11,157,292 ------------ $ 19,776,331 ------------ BANKS - 1.0% BankAmerica Corp. 20,812 $ 1,904,298 Citicorp 40,000 3,960,000 First Chicago NBD Corp. 43,007 2,193,353 Wells Fargo & Co. 4,265 1,139,288 ------------ $ 9,196,939 ------------ BEVERAGES - 6.4% Anheuser-Busch Cos., Inc. 210,260 $ 8,095,010 Coca-Cola Co. 478,208 24,149,504 PepsiCo, Inc. 900,682 26,682,704 ------------ $ 58,927,218 ------------ BROADCAST & CABLE - 0.1% Cox Communications Inc., Class A* 93,319 $ 1,726,402 ------------ BUILDING MATERIALS - 0.3% Masco Corp. 55,540 $ 1,742,567 Stanley Works 40,490 1,143,843 ------------ $ 2,886,410 ------------ BUSINESS SERVICES - 2.3% Automatic Data Processing Inc. 211,040 $ 8,784,540 Ecolab Inc. 132,620 4,840,630 Electronic Data Systems Corp. 110,000 4,950,000 Manpower Inc. 110,000 3,121,250 ------------ $ 21,696,420 ------------ CHEMICALS - 2.5% Bayer AG Sponsored ADR 40,000 $ 1,512,548 Dow Chemical Co. 25,248 1,963,032 DuPont (E.I.) de Nemours & Co., Inc. 44,800 4,155,200 Monsanto Co. 396,680 15,718,445 ------------ $ 23,349,225 ------------ COMMUNICATIONS EQUIPMENT - 2.0% Ericsson (L.M.) Telephone Co. 66,000 $ 1,823,250 Nokia Corp. 280,000 12,985,000 Northern Telecom Ltd. 55,870 3,638,534 ------------ $ 18,446,784 ------------ COMPUTER SOFTWARE - 1.1% Microsoft Corp.* 20,000 $ 2,745,000 Oracle Systems Corp.* 180,000 7,616,250 ------------ $ 10,361,250 ------------ COMPUTER & BUSINESS EQUIPMENT - 5.1% Bay Networks, Inc.* 200,000 $ 4,050,000 Cisco Systems, Inc.* 75,000 4,640,624 Digital Equipment Corp.* 41,620 1,227,790 Hewlett-Packard Co. 481,928 21,265,073 Imation Corp.* 2,628 71,942 International Business Machines Corp. 67,921 8,761,809 Xerox Corp. 160,000 7,420,000 ------------ $ 47,437,238 ------------ CONTAINERS & PACKAGING - 0.5% Crown Cork & Seal Co., Inc. 100,000 $ 4,800,000 ------------ DISTRIBUTION - 0.5% Super Valu Stores Inc. 51,506 $ 1,532,304 Sysco Corp. 107,760 3,663,840 ------------ $ 5,196,144 ------------ DRUGS - 10.0% Astra AB-Series A 420,000 $ 19,321,973 Astra AB-ADR Series B 60,000 2,741,994 Bristol-Myers Squibb Co. 56,860 6,012,945 Elan Corp., PLC (ADRs)* 300,000 8,325,000 Genentech, Inc.* 34,000 1,831,750 Merck & Co., Inc. 239,075 17,721,434 Pfizer Inc. 290,752 24,059,728 Schering-Plough Corp. 128,120 8,199,680 Smithkline Beecham PLC 37,520 2,349,690 Warner-Lambert Co. 51,644 3,285,850 ------------ $ 93,850,044 ------------ ELECTRIC UTILITIES - 0.1% Citizen's Utilities Co., Class A* 55,411 $ 602,595 ------------ ELECTRICAL EQUIPMENT - 2.0% AMP Inc. 112,460 $ 3,809,582 Emerson Electric Co. 75,474 6,717,186 General Electric Co. 74,114 7,170,530 Lincoln Electric Co. 19,700 546,675 Lincoln Electric Co. Class A 19,700 541,750 ------------ $ 18,785,723 ------------ ELECTRICAL - SEMICONDUCTORS - 6.5% Intel Corp. 505,796 $ 55,574,335 Texas Instruments Inc. 84,390 4,061,269 ------------ $ 59,635,604 ------------ ENGINEERING & CONSTRUCTION - 0.1% Gilbert Associates Inc. Class A 78,125 $ 1,015,625 ------------ ENTERTAINMENT - 0.2% Disney (Walt) Co. 29,000 $ 1,910,375 ------------ ENVIRONMENTAL SERVICES - 0.3% WMX Technologies, Inc. 77,930 $ 2,678,844 ------------ FINANCIAL - MISCELLANEOUS - 2.1% American Express Co. 56,798 $ 2,669,506 Federal National Mortgage Association 303,820 11,886,958 MGIC Investment Corp. 75,000 5,146,875 ------------ $ 19,703,339 ------------ FOOD - 1.6% Pioneer Hi-Bred International, Inc. 87,000 $ 5,839,875 Earthgrains Co. 4,204 222,812 McCormick & Co., Inc., Non-voting 375,208 9,051,893 ------------ $ 15,114,580 ------------ HEALTH SERVICES - 0.7% Columbia/HCA Healthcare Corp. 180,000 $ 6,435,000 Medpartners, Inc.* 17,696 373,828 ------------ $ 6,808,828 ------------ HOUSEHOLD PRODUCTS - 3.5% Colgate-Palmolive Co. 21,826 $ 2,007,991 Duracell International Inc. 100,000 6,675,000 Kimberly-Clark Corp. 57,310 5,344,158 Procter & Gamble Co. 170,800 16,909,200 Rubbermaid Inc. 78,920 1,834,890 ------------ $ 32,771,239 ------------ INDUSTRIAL EQUIPMENT - 3.0% Dover Corp. 164,580 $ 8,455,297 General Signal Corp. 68,600 2,795,450 Goulds Pumps, Inc. 110,539 2,556,214 Illinois Tool Works Inc. 10,000 702,500 Parker-Hannifin Corp. 76,099 2,882,250 Tecumseh Products Co. Class A 167,090 9,398,813 Tecumseh Products Co. Class B 18,320 980,120 ------------ $ 27,770,644 ------------ INFORMATION SERVICES - 3.3% Dun & Bradstreet Corp. 137,006 $ 7,929,222 Reuters Holdings PLC, ADR 310,090 23,062,944 ------------ $ 30,992,166 ------------ INSURANCE - 7.4% American International Group, Inc. 206,633 $ 22,445,510 Chubb Corp. 101,050 5,052,500 General Re Corp. 112,446 16,557,671 Highlands Insurance Group* 5,070 100,133 Kansas City Life Insurance Co. 35,400 1,982,400 Marsh & McLennan Cos., Inc. 62,172 6,473,660 Progressive Corp. (The) 50,000 3,437,500 Providian Corp. 46,794 2,199,318 Provident Companies Inc. 18,789 697,542 Seafield Capital Corp. 35,960 1,269,838 St. Paul Cos., Inc. 130,280 7,083,975 Torchmark Corp. 31,425 1,520,184 ------------ $ 68,820,231 ------------ MEDICAL PRODUCTS - 6.6% Abbott Laboratories 80,000 $ 4,050,000 Bausch & Lomb Inc. 145,574 4,913,121 Baxter International, Inc. 170,828 7,110,716 Boston Scientific Corp.* 255,000 13,865,625 Johnson & Johnson 449,040 22,115,220 Medtronic, Inc. 72,000 4,635,000 Sofamor Danek Group, Inc.* 173,000 4,757,500 ------------ $ 61,447,182 ------------ METALS - 0.6% Inco Ltd. 124,000 $ 3,937,000 Nucor Corp. 40,000 1,895,000 ------------ $ 5,832,000 ------------ NATURAL GAS UTILITIES - 0.4% Enron Oil & Gas Co. 100,000 $ 2,575,000 Sonat, Inc. 27,200 1,339,600 ------------ $ 3,914,600 ------------ OIL & GAS - EXPLORATION & PRODUCTION - 2.2% Anadarko Petroleum Corp. 161,000 $ 10,243,625 Apache Corp. 66,440 2,358,626 Louisiana Land & Exploration Corp. 25,000 1,421,875 Triton Energy Ltd.* 100,000 4,462,500 Union Pacific Resources Group, Inc. 79,796 2,194,386 ------------ $ 20,681,012 ------------ OIL & GAS - EQUIPMENT & SERVICES - 2.5% Baker Hughes, Inc. 39,234 $ 1,397,711 Dresser Industries, Inc. 79,800 2,623,425 Halliburton Co. 50,700 2,870,888 Schlumberger Ltd. 168,393 16,691,956 ------------ $ 23,583,980 ------------ OIL & GAS - INTEGRATED - 3.1% Amoco Corp. 47,928 $ 3,630,546 Atlantic Richfield Co. 20,883 2,766,998 Chevron Corp. 55,600 3,655,700 Exxon Corp. 100,704 8,924,892 Mobil Corp. 74,333 8,678,378 Murphy Oil Corp. 29,700 1,466,437 ------------ $ 29,122,951 ------------ PAPER & FOREST PRODUCTS - 1.0% Allegiance Corp.* 22,661 $ 424,894 Champion International Corp. 41,484 1,804,554 Union Camp Corp. 80,309 3,915,064 Weyerhaeuser Co. 61,630 2,827,276 ------------ $ 8,971,788 ------------ PHOTOGRAPHY - 1.0% Eastman Kodak Co. 122,181 $ 9,743,935 ------------ PRINTING & BUSINESS FORMS - 1.1% American Business Products Inc. GA 146,497 $ 3,259,558 Bowne & Co. Inc. 91,770 2,145,124 Deluxe Corp. 57,150 1,864,519 Donnelley, (R.R.) & Sons Co. 47,896 1,454,841 Harland, (John H.) Co. 51,540 1,604,183 Moore Corp., Ltd. 19,075 386,268 ------------ $ 10,714,493 ------------ PUBLISHING - 2.7% Gannett Co., Inc. 130,450 $ 9,897,894 Harcourt General, Inc. 90,000 4,477,500 Houghton Mifflin Co. 63,700 3,161,113 McGraw-Hill Inc. 25,608 1,200,375 Times Mirror Co. Class A 151,670 7,014,737 ------------ $ 25,751,619 ------------ RESTAURANTS - 0.7% McDonald's Corp. 143,100 $ 6,350,063 ------------ RETAIL - GENERAL - 0.8% Wal-Mart Stores, Inc. 274,390 $ 7,305,634 ------------ RETAIL - FOOD & DRUG - 0.6% Albertson's, Inc. 156,048 $ 5,364,150 ------------ RETAIL - SPECIALTY & APPAREL - 2.5% Home Depot, Inc. (The) 255,000 $ 13,961,250 Toys 'R' Us, Inc.* 287,075 9,724,666 ------------ $ 23,685,916 ------------ SPECIALTY - CHEMICALS & MATERIALS - 6.1% Corning Inc. 100,000 $ 3,875,000 Dexter Corp. 47,829 1,482,697 Dionex Corp.* 181,070 6,925,928 Great Lakes Chemical Corp. 68,720 3,582,030 International Flavors & Fragrances, Inc. 148,101 6,127,679 International Specialty Products Inc.* 59,000 641,625 Loctite Corp. 177,167 10,386,415 Memtec Ltd. Sponsored ADR 77,500 2,644,688 Millipore Corp. 151,440 5,300,400 Minnesota Mining & Manufacturing Co. 26,288 2,014,318 Nalco Chemical Co. 196,020 7,130,228 Sealed Air Corp.* 180,000 6,997,500 ------------ $ 57,108,508 ------------ TOBACCO - 0.0% Schweitzer-Mauduit International Inc. 5,731 $ 176,228 ------------ TRANSPORTATION - 0.8% CSX Corp. 15,270 $ 658,519 Flightsafety International, Ltd. 35,000 1,728,125 Union Pacific Corp. 94,210 5,287,536 ------------ $ 7,674,180 ------------ TOTAL COMMON STOCKS (IDENTIFIED COST, $237,105,867) $916,829,437 ------------ - -------------------------------------------------------------------------- SHORT-TERM OBLIGATIONS - 2.1% - -------------------------------------------------------------------------- NAME OF COMPANY FACE AMOUNT VALUE - -------------------------------------------------------------------------- Ford Motor Credit Company, 5.35%, due 11/6/96 $10,000,000 $ 9,992,570 Prudential Funding Corporation, 5.60%, due 11/1/96 9,626,000 9,626,000 ------------ TOTAL SHORT-TERM OBLIGATIONS, AT AMORTIZED COST $ 19,618,570 ------------ TOTAL INVESTMENTS (IDENTIFIED COST, $256,724,437) - 100% $936,448,007 OTHER ASSETS, LESS LIABILITIES - 0.0% 351,563 ------------ NET ASSETS - 100% $936,799,570 ============ *Non-income producing security. See notes to financial statements -------------------------------- FINANCIAL STATEMENTS STATEMENT OF ASSETS AND LIABILITIES - ---------------------------------------------------------------------------- October 31, 1996 - ---------------------------------------------------------------------------- ASSETS: Investments, at value (Note 1A) (identified cost, $256,724,437) $936,448,007 Cash 30,274 Receivable for investments sold 504,059 Dividends receivable 572,932 Deferred organization expenses (Note 1C) 8,879 Other assets 64,669 ------------ Total assets $937,628,820 LIABILITIES: Payable for investments purchased $798,425 Payable to affiliate -- Trustees' fees (Note 2) 1,406 Accrued expenses 29,419 -------- Total liabilities 829,250 ------------ NET ASSETS APPLICABLE TO INVESTORS' INTEREST IN PORTFOLIO $936,799,570 ============ SOURCES OF NET ASSETS: Net proceeds from capital contributions and withdrawals $257,075,830 Unrealized appreciation of investments (computed on the basis of identified cost) 679,723,740 ------------ Total $936,799,570 ============ See notes to financial statements STATEMENT OF OPERATIONS - -------------------------------------------------------------------------------- For the period from the start of business, December 1, 1995, to October 31, 1996 - -------------------------------------------------------------------------------- INVESTMENT INCOME (NOTE 1B): Income -- Dividends (net of foreign withholding taxes of $25,573) $ 4,931,924 Interest 442,263 ----------- Total income $ 5,374,187 Expenses -- Investment adviser fee (Note 2) $ 2,116,576 Compensation of Trustees not members of the Investment Adviser's organization (Note 2) 9,500 Custodian fee 125,097 Legal and accounting services 1,200 Amortization of organization expenses (Note 1C) 2,007 Miscellaneous 15,099 ----------- Total expenses 2,269,479 ----------- Net investment income $ 3,104,708 REALIZED AND UNREALIZED GAIN ON INVESTMENTS: Net realized gain on investments, computed on the basis of identified cost $ 9,582,500 Unrealized appreciation of investments 70,637,961 ----------- Net realized and unrealized gain on investments 80,220,461 ----------- Net increase in net assets from operations $83,325,169 =========== See notes to financial statements STATEMENT OF CHANGES IN NET ASSETS - -------------------------------------------------------------------------------- For the period from the start of business, December 1, 1995, to October 31, 1996 - -------------------------------------------------------------------------------- INCREASE IN NET ASSETS: From operations -- Net investment income $ 3,104,708 Net realized gain on investments 9,582,500 Unrealized appreciation of investments 70,637,961 ------------ Net increase in net assets from operations $ 83,325,169 ------------ Capital transactions -- Contributions $871,076,582 Withdrawals (17,702,191) ------------ Increase in net assets from capital transactions $853,374,391 ------------ Total increase in net assets $936,699,560 NET ASSETS: At beginning of period 100,010 ------------ At end of period $936,799,570 ============ - -------------------------------------------------------------------------------- SUPPLEMENTARY DATA - -------------------------------------------------------------------------------- For the period from the start of business, December 1, 1995, to October 31, 1996 - -------------------------------------------------------------------------------- RATIOS (AS A PERCENTAGE OF NET ASSETS): Expenses 0.66%+ Net investment income 0.91%+ PORTFOLIO TURNOVER 6% AVERAGE COMMISSION RATE PAID(1) $0.0585 + Annualized. (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 -------------------------------- NOTES TO FINANCIAL STATEMENTS - ------------------------------------------------------------------------------- (1) SIGNIFICANT ACCOUNTING POLICIES Tax-Managed Growth Portfolio (the "Portfolio") is registered under the Investment Company Act of 1940 as a diversified, open-end management investment company. The Portfolio, which was 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. Investment operations began on December 1, 1995, with the acquisition of investments with a value of $115,586,248, including unrealized appreciation of $96,618,064, in exchange for an interest in the Portfolio by one of the Portfolio's investors. During the period, additional investors contributed securities with a value of $639,241,121, including unrealized appreciation of $512,467,715. The following is a summary of the significant accounting policies followed by the Portfolio in 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. 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. F. 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 expense during the reporting period. Actual results could differ from those estimates. G. 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 reported as a reduction of expenses on the Statement of Operations. - ------------------------------------------------------------------------------- (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 period from the start of business, December 1, 1995, to October 31, 1996 the adviser fee was 0.618% 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 period ended October 31, 1996, 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 $119,106,410 and $20,535,675, respectively. - ------------------------------------------------------------------------------- (4) FEDERAL INCOME TAX BASIS OF INVESTMENT The cost and unrealized appreciation (depreciation) in value of the investments owned at October 31, 1996, as computed on a federal income tax basis, are as follows: Aggregate cost $256,724,437 ============ Gross unrealized appreciation $682,343,179 Gross unrealized depreciation 2,619,609 ------------ Net unrealized appreciation $679,723,570 ============ - ------------------------------------------------------------------------------- (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 October 31, 1996. - ------------------------------------------------------------------------------- (6) LINE OF CREDIT The Portfolio participates with other portfolios and funds managed by BMR and EVM and its affiliates in a $120 million unsecured line of credit agreement with a bank. Borrowings will be made by the Portfolio solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to each portfolio or fund based on its borrowings at the bank's base rate or an amount above either the bank's adjusted certificate of deposit rate, a Eurodollar rate, or a federal funds effective rate. In addition, a fee computed at an annual rate of 0.15% on the average daily amount of the unused portion of the facility is allocated among the participating funds and portfolios at the end of each quarter. The Portfolio did not have any significant borrowings or allocated fees during the period. INDEPENDENT AUDITORS' REPORT - ------------------------------------------------------------------------------- TO THE TRUSTEES AND INVESTORS OF TAX-MANAGED GROWTH PORTFOLIO: We have audited the accompanying statement of assets and liabilities, including the portfolio of investments of Tax-Managed Growth Portfolio as of October 31, 1996, the related statements of operations, changes in net assets, and the supplementary data for the period from the start of business, December 1, 1995, to October 31, 1996. These financial statements and supplementary data are the responsibility of the Trust's management. Our responsibility is to express an opinion on these financial statements and supplementary data based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements and supplementary data are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. Our procedures included confirmation of the securities owned at October 31, 1996, by correspondence with the custodian and brokers; where replies were not received from brokers, we performed other audit procedures. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, such financial statements and supplementary data present fairly, in all material respects, the financial position of Tax-Managed Growth Portfolio as of October 31, 1996, the results of its operations, the changes in its net assets and its supplementary data for the period from the start of business, December 1, 1995, to October 31, 1996, in conformity with generally accepted accounting principles. DELOITTE & TOUCHE LLP BOSTON, MASSACHUSETTS NOVEMBER 29, 1996 - ------------------------------------------------------------------------------ INVESTMENT MANAGEMENT CAPITAL EXCHANGE OFFICERS AND STAFF INDEPENDENT DIRECTORS FUND, INC. 24 Federal Street LANDON T. CLAY DONALD R. DWIGHT Boston, MA 02110 President, Director President, Dwight Partners, Inc. JAMES B. HAWKES Chairman, Newspapers of Vice President New England, Inc. JAMES L. O'CONNOR SAMUEL L. HAYES, III Treasurer Jacob H. Schiff Professor of THOMAS OTIS Investment Banking, Clerk Harvard University Graduate School of Business Administration NORTON H. REAMER President and Director, United Asset Management Corporation JOHN L. THORNDIKE Director, Fiduciary Company Incorporated JACK L. TREYNOR Investment Adviser and Consultant -------------------------------------------- TAX-MANAGED OFFICERS INDEPENDENT TRUSTEES GROWTH PORTFOLIO 24 Federal Street LANDON T. CLAY DONALD R. DWIGHT Boston, MA 02110 President, Trustee President, Dwight Partners, Inc. JAMES B. HAWKES Chairman, Newspapers of Vice President New England, Inc. DUNCAN W. RICHARDSON SAMUEL L. HAYES, III Vice President and Jacob H. Schiff Portfolio Manager Professor of Investment Banking, JAMES L. O'CONNOR Harvard University Treasurer Graduate School of Business Administration THOMAS OTIS Secretary NORTON H. REAMER President and Director, United Asset Management Corporation JOHN L. THORNDIKE Director, Fiduciary Company Incorporated JACK L. TREYNOR Investment Adviser and Consultant INVESTMENT ADVISER OF TAX-MANAGED GROWTH PORTFOLIO Boston Management and Research 24 Federal Street Boston, MA 02110 ADMINISTRATOR OF CAPITAL EXCHANGE FUND, INC. Eaton Vance Management 24 Federal Street Boston, MA 02110 CUSTODIAN Investors Bank & Trust Company 89 South Street P.O. Box 1537 Boston, MA 02205-1537 TRANSFER AND DIVIDEND DISBURSING AGENT First Data Investor Services Group Attn: Eaton Vance Funds P.O. Box 5123 Westborough, MA 01581-5123 INDEPENDENT AUDITORS Deloitte & Touche LLP 125 Summer Street Boston, MA 02110 -----END PRIVACY-ENHANCED MESSAGE-----