In the normal course of business, the Company maintains investments in sponsored CLO entities, sponsored funds 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 should be treated as 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, prepayment rates, discount rates, the marketability of certain securities and the probability of certain outcomes.

From time to time the Company invests in investment companies that meet the definition of a VIE. Disclosure regarding such consolidated sponsored funds is included in Note 4. In the ordinary course of business, the Company may elect to contractually waive investment advisory fees that it is entitled to receive from sponsored funds, and these waivers are disclosed in Note 20.

The Company is the primary beneficiary of one CLO entity where it has, by design and in its role as collateral manager, the power to direct the activities that most significantly impact the economic performance of the entity. In developing its conclusion that it is the primary beneficiary of this entity, the Company determined that it has variable interests in the entity by virtue of both its residual interest in, and collateral management fees it receives from, the entity and that these variable interests may represent an obligation to absorb losses of or a right to receive benefits from the entity that could potentially be significant to the entity. Quantitative distinguishing factors supporting the Company's qualitative conclusion included the relative size of the Company's economic interest (approximately 8 percent, which is greater than the Company's investment in the non-consolidated CLO entities in which the Company holds variable interests and serves as collateral manager) and the presence of an incentive management fee which, when combined with returns on the Company's residual interest, may result in more than an insignificant economic interest in the total returns of the entity. In consideration of these factors, the Company concluded that it was the primary beneficiary of that CLO entity for consolidation accounting purposes.

The Company irrevocably elected the fair value option for all financial assets and liabilities of the consolidated CLO entity. Unrealized gains and losses on assets and liabilities for which the fair value option has been elected are reported in gains and other investment income, net, in the Company's 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 in 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 no 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 July 31, 2013 and October 31, 2012, the fair value of the consolidated CLO entity's assets and liabilities subject to fair value accounting:

July 31, 2013
		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	$	241,835	$	908	$	311,580
Unpaid principal balance
over fair value		(2,166)		(570)		(20,405)
Fair value	$	239,669	$	338	$	291,175

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
Unpaid principal balance
over fair value		(863)		(485)		(24,941)
Fair value	$	424,290	$	15	$	446,605

During the three months ended July 31, 2013 and 2012, the changes in the fair values of the CLO entity's bank loans and other investments resulted in net losses of $2.2 million and $1.1 million, respectively, while changes in the fair value of the CLO's note obligations resulted in net gains of $0.7 million and $8.5 million, respectively. The combined net losses of $1.5 million and net gains of $7.4 million for the three months ended July 31, 2013 and 2012, respectively, were recorded as gains and other investment income, net, of the consolidated CLO entity in the Company's Consolidated Statement of Income for those periods.

During the nine months ended July 31, 2013 and 2012, the changes in the fair values of the CLO entity's bank loans and other investments resulted in net gains of $0.3 million and $14.8 million, respectively, while changes in the fair value of the CLO's note obligations resulted in net losses of $4.5 million and net gains of $0.6 million, respectively. The combined net losses of $4.2 million and net gains of $15.4 million for the nine months ended July 31, 2013 and 2012, respectively, were recorded as gains and other investment income, net, of the consolidated CLO entity in the Company's Consolidated Statement of Income for those 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. It is expected that prepayments received will be used to pay down the entity's note obligations. During the nine months ended July 31, 2013, $159.9 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 and other investment income, net and as interest expense in other income (expense) of the consolidated CLO entity in the Company's Consolidated Statements of Income for the three and nine months ended July 31, 2013 and 2012, respectively.

The following carrying amounts related to the consolidated CLO entity were included in the Company's Consolidated Balance Sheets at July 31, 2013 and October 31, 2012:

	July 31,		October 31,
(in thousands)	2013		2012
Assets of consolidated CLO entity:
Cash and cash equivalents	$	58,300	$	36,758
Bank loans and other investments		245,991		430,583
Other assets		2,237		1,107
Liabilities of consolidated CLO entity:
Senior and subordinated note obligations		291,175		446,605
Other liabilities		421		766
Appropriated retained earnings		13,107		18,699
Net interest in consolidated CLO entity	$	1,825	$	2,378

The Company had a subordinated interest in the consolidated CLO entity of $1.5 million and $1.9 million as of July 31, 2013 and October 31, 2012, respectively, which was eliminated in consolidation.

For the three months ended July 31, 2013 and 2012, the Company recorded a net loss of $1.3 million and net income of $8.4 million, respectively, related to the consolidated CLO entity. The Company recorded a $2.4 million net loss attributable to other beneficial interests and $7.5 million of net income attributable to other beneficial interests for three months ended July 31, 2013 and 2012, respectively, reflecting the interests of third-party note holders of the consolidated CLO entity. Net income attributable to Eaton Vance Corp. shareholders included $1.0 million and $0.9 million related to the consolidated CLO entity for each of the three months ended July 31, 2013 and 2012, respectively.

For the nine months ended July 31, 2013 and 2012, the Company recorded a net loss of $2.6 million and net income of $18.9 million, respectively, related to the consolidated CLO entity. The Company recorded a $5.6 million net loss attributable to other beneficial interests and $16.4 million of net income attributable to other beneficial interests for the nine months ended July 31, 2013 and 2012, respectively, reflecting the interests of third-party note holders of the consolidated CLO entity. Net income attributable to Eaton Vance Corp. shareholders included $2.9 million and $2.5 million related to the consolidated CLO entity for each of the nine months ended July 31, 2013 and 2012, respectively.

The Company classifies its investments in certain sponsored funds that are considered VIEs as either equity method investments (generally when the Company owns more than 20 percent but less than 50 percent of the fund) or as available-for-sale investments (generally when the Company owns less than 20 percent of the fund), when it is not considered the primary beneficiary of those VIEs. The Company has provided aggregated disclosures with respect to these non-consolidated sponsored fund VIEs in Note 5.

The Company is not deemed the primary beneficiary of several CLO entities in which it holds variable interests. In its role as collateral manager, the Company has the power to direct the activities of the CLO entities that most significantly impact the economic performance of these entities. In developing its conclusion that it is not the primary beneficiary of these entities, the Company determined that, although it has variable interests in each entity by virtue of its residual interests therein and the collateral management fees it receives, its variable interests neither individually nor in the aggregate represent an obligation to absorb losses of or a right to receive benefits from any such entity that could potentially be significant to that entity. Quantitative factors supporting the Company's qualitative conclusion in each case included the relative size of the Company's residual interest (in each instance representing less than 6 percent of the residual interest tranche and less than 1 percent of the total capital of the entity) and the overall magnitude and design of the collateral management fees within each structure.

These non-consolidated entities had total assets of $1.8 billion as of July 31, 2013 and October 31, 2012. The Company's investment in these entities totaled $0.3 million and $0.4 million as of July 31, 2013 and October 31, 2012, respectively, and collateral management fees receivable for these entities totaled $2.1 million and $2.0 million on July 31, 2013 and October 31, 2012, respectively. In the first nine months of fiscal 2013, 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 entities is limited to the carrying value of its investments in, and collateral management fees receivable from, the CLO entities as of July 31, 2013.

The Company's investment in non-consolidated CLO entities is carried at amortized cost and is disclosed as a component of investments in Note 5. Income from non-consolidated CLO entities is recorded as a component of gains and other investment income, net, in the Company's Consolidated Statements of Income, 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 $9.6 billion and $9.0 billion as of July 31, 2013 and October 31, 2012, 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 $5.4 million and $4.4 million on July 31, 2013 and October 31, 2012, respectively, and investment advisory fees receivable totaling $0.5 million and $0.4 million on July 31, 2013 and October 31, 2012, respectively. In the first nine months of fiscal 2013, 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 July 31, 2013.

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).