In the normal course of business, the Company maintains investments in sponsored CLO entities and privately offered equity funds that are considered VIEs. These variable interests generally represent seed investments made by the Company, as collateral manager or investment advisor, to launch or market these vehicles. The Company receives management fees for the services it provides as collateral manager or investment advisor to these entities. These fees may also be considered variable interests.

To determine whether or not the Company is the primary beneficiary of a VIE, management must make significant estimates and assumptions regarding probable future cash flows of the VIE. These estimates and assumptions relate primarily to market interest rates, credit default rates, pre-payment rates, discount rates, the marketability of certain securities and the probability of certain outcomes.

As described in Note 2, the Company adopted the provisions of a new consolidation standard on November 1, 2010 that resulted in the consolidation of a CLO entity.

The Company irrevocably elected the fair value option for all financial assets and liabilities of the consolidated CLO entity upon adoption of the new accounting guidance. The Company elected the fair value option to mitigate any accounting mismatches between the carrying value of the senior and subordinated note obligations and the carrying value of the assets that are held to provide the cash flows for those note obligations. Unrealized gains and losses on assets and liabilities for which the fair value option has been elected are reported in gains (losses) and other investment income, net, in the consolidated statements of income. Although the subordinated note obligations of the CLO entity have certain equity characteristics, the Company has determined that the subordinated notes should be recorded as liabilities on the Company's Consolidated Balance Sheets.

The assets of this CLO entity are held solely as collateral to satisfy the obligations of the entity. The Company has no right to the benefits from, nor does the Company bear the risks associated with, the assets held by the entity beyond the Company's minimal direct investment and beneficial interest therein and management fees generated from the entity. The note holders of the CLO entity have no recourse to the Company's general assets. There are neither explicit arrangements nor does the Company hold implicit variable interests that would require the Company to provide any ongoing financial support to the entity.

The following tables present, as of October 31, 2012 and 2011, the fair value of the consolidated CLO entity's assets and liabilities subject to fair value accounting:

October 31, 2012
		CLO Bank Loan Investments
(in thousands)		Total CLO bank loan investments		90 days or more past due		Senior and subordinated note obligations
Unpaid principal balance	$	425,153	$	500	$	471,546
Excess unpaid principal
balance over fair value		(863)		(485)		(24,941)
Fair value	$	424,290	$	15	$	446,605

October 31, 2011
		CLO Bank Loan Investments
(in thousands)		Total CLO bank loan investments		90 days or more past due		Senior and subordinated note obligations
Unpaid principal balance	$	474,515	$	1,192	$	500,066
Excess unpaid principal
balance over fair value		(17,820)		(617)		(22,367)
Fair value	$	456,695	$	575	$	477,699

During the fiscal years ended October 31, 2012 and 2011, the changes in the fair values of the CLO entity's bank loans and other investments resulted in net gains of $20.2 million and net losses of $4.6 million, respectively, while changes in the fair value of the CLO's note obligations resulted in net gains of $2.4 million and net losses of $33.6 million, respectively. The combined net gains of $22.6 million and net losses of $38.2 million for the fiscal years ended October 31, 2012 and 2011, respectively, were recorded as gains (losses) and other investment income of the consolidated CLO entity on the Company's Consolidated Statements of Income for these periods.

Substantially all gains (losses) related to the CLO entity's bank loans, other investments and note obligations recorded in earnings for the periods were attributable to changes in instrument-specific credit risk.

The CLO entity's note obligations bear interest at variable rates based on LIBOR plus a pre-defined spread, which ranges from 0.21 percent to 1.50 percent. The principal amounts outstanding of the note obligations issued by the CLO entity mature on April 20, 2019. Subsequent to April 2012, reinvestment opportunities are limited and it is expected that prepayments received will be used to pay down the entity's note obligations. During fiscal 2012, $28.6 million of prepayments were used to pay down the entity's note obligations. The holders of a majority of the subordinated notes have the option to liquidate the CLO entity, provided there is sufficient value to repay the senior notes in full.

Interest income and expense are recorded on an accrual basis and reported as gains (losses) and other investment income and as interest expense in other income (expense) of the consolidated CLO entity on the Company's Consolidated Statements of Income for the fiscal years ended October 31, 2012 and 2011.

The following carrying amounts related to the consolidated CLO entity were included in the Company's Consolidated Balance Sheets at October 31, 2012 and 2011:

(in thousands)	2012		2011
Assets of consolidated CLO entity:
Cash and cash equivalents	$	36,758	$	16,521
Bank loans and other investments		430,583		462,586
Other assets		1,107		2,715
Liabilities of consolidated CLO entity:
Senior and subordinated note obligations		446,605		477,699
Other liabilities		766		5,193
Appropriated retained earnings (deficit)		18,699		(3,867)
Net interest in consolidated CLO entity	$	2,378	$	2,797

The Company had a subordinated interest in the consolidated CLO entity of $1.9 million and $2.3 million as of October 31, 2012 and 2011, respectively, which was eliminated in consolidation.

For the fiscal years ended October 31, 2012 and 2011, the Company recorded net income of $25.9 million and net losses of $31.0 million, respectively, related to the consolidated CLO entity. The Company recorded $22.6 million of net income attributable to other beneficial interests and a net loss of $34.5 million attributable to other beneficial interests for the fiscal years ended October 31, 2012 and 2011, respectively, reflecting the interests of third-party note holders of the consolidated CLO entity. Net income attributable to Eaton Vance Corp. shareholders included $3.3 million and $3.5 million related to the consolidated CLO entity for the fiscal years ended October 31, 2012 and 2011, respectively.

The Company is not deemed the primary beneficiary of several CLO entities in which it holds variable interests. These non-consolidated entities had total assets of $1.8 billion and $1.9 billion as of October 31, 2012 and 2011, respectively. The Company's variable interests in these entities consist of the Company's direct ownership in these entities and any collateral management fees earned but uncollected. The Company maintains an investment in one of these entities totaling $0.4 million and $0.3 million as of October 31, 2012 and 2011, respectively. Collateral management fees receivable for these CLO entities totaled $2.0 million and $3.0 million on October 31, 2012 and 2011, respectively. In the fiscal year ended October 31, 2012, the Company did not provide any financial or other support to these entities that it was not previously contractually required to provide. The Company's risk of loss with respect to these managed CLO entities is limited to the carrying value of its investment in, and collateral management fees receivable from, the CLO entities as of October 31, 2012.

The Company's investment in the CLO entity identified above is carried at amortized cost and is disclosed as a component of investments in Note 5. Income from this entity is recorded as a component of gains and other investment income, net, based upon projected investment yields.

The Company holds variable interests in, but is not deemed to be the primary beneficiary of, certain sponsored privately offered equity funds with total assets of $9.0 billion and $9.6 billion as of October 31, 2012 and 2011, respectively. The Company's variable interests in these entities consist of the Company's direct ownership in these entities and any investment advisory fees earned but uncollected. The Company held investments in these entities totaling $4.4 million and $3.7 million on October 31, 2012 and 2011, respectively, and investment advisory fees receivable totaling $0.4 million on both October 31, 2012 and 2011, respectively. In the fiscal year ended 2012, the Company did not provide any financial or other support to these entities that it was not previously contractually required to provide. The Company's risk of loss with respect to these managed entities is limited to the carrying value of its investments in, and investment advisory fees receivable from, the entities as of October 31, 2012.

The Company's investments in privately offered equity funds are carried at fair value and included in investment securities, available-for-sale, which are disclosed as a component of investments in Note 5. The Company records any change in fair value, net of income tax, in other comprehensive income (loss).