SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934
Belmar Capital Fund LLC (the "Fund")
(Exact name of registrant as specified in its charter)
Delaware 04-3508106
-------- --------------------------------
(State of organization) (I.R.S. Employer Identification No.)
The Eaton Vance Building
255 State Street, Boston, Massachusetts 02109
---------------------------------------- -----
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: 617-482-8260
----------------------
Securities to be registered pursuant to Section 12(b) of the Act: None
---------------
Securities to be registered pursuant to Section 12(g) of the Act:
Limited Liability Company Interests in the Fund ("Shares")
----------------------------------------------------------
(Title of class)
The Exhibit Index is located on page 50.
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1. BUSINESS
- -----------------
Belmar Capital Fund LLC (the "Fund") is a Delaware limited liability
company organized in 1999 to provide diversification and tax-sensitive
investment management to investors who are "qualified purchasers" as defined in
Section 2(a)(51)(A) of the Investment Company Act of 1940, as amended (the "1940
Act"), and the rules thereunder. The Fund commenced its investment operations on
March 17, 2000. The Fund conducted no operations prior to that date.
The Fund seeks to achieve long-term, after-tax returns for qualified
purchasers who have invested in the Fund ("Shareholders") by acquiring limited
liability company interests ("Shares") in the Fund. The Fund pursues its
investment objective primarily by investing indirectly in Tax-Managed Growth
Portfolio (the "Portfolio"), a diversified, open-end management investment
company registered under the 1940 Act, with net assets of approximately $18.4
billion as of December 31, 2000. The Portfolio was organized in 1995 as
successor to the investment operations of Eaton Vance Tax-Managed Growth Fund
1.0 (formerly Capital Exchange Fund), a mutual fund established in 1966 and
managed from inception for long-term, after-tax returns. The Fund maintains its
indirect investment in the Portfolio by investing in Belvedere Capital Fund
Company LLC (the "Company"), a Massachusetts limited liability company that
invests exclusively in the Portfolio. As of December 31, 2000, the investment
assets of the Company consisted exclusively of an interest in the Portfolio with
a value of $9.94 billion. As of such date, assets of the Fund invested in the
Company totaled $2.49 billion.
The investment objective of the Portfolio is to achieve long-term,
after-tax returns for its investors by investing in a diversified portfolio of
equity securities. The Portfolio emphasizes investments in common stocks of
domestic and foreign growth companies that are considered to be high in quality
and attractive in their long-term investment prospects. Under normal market
conditions, the Portfolio will invest at least 65% of its assets in common
stocks. Although the Portfolio may also invest in investment-grade preferred
stocks and debt securities, purchases of such securities are normally limited to
securities convertible into common stocks and temporary investments in
short-term notes and government obligations. During periods in which the
investment adviser to the Portfolio believes that returns on common stock
investments may be unfavorable, the Portfolio may invest a portion of its assets
in U.S. government obligations and high quality short-term notes. The
Portfolio's holdings represent a number of different industries. Not more than
25% of the Portfolio's assets may be invested in the securities of issuers
having their principal business activity in the same industry, determined as of
the time of acquisition of any such securities.
In its operations, the Portfolio seeks to achieve long-term, after-tax
returns in part by minimizing the taxes incurred by investors in the Portfolio
in connection with the Portfolio's investment income and realized capital gains.
Taxes on investment income are minimized by investing primarily in
lower-yielding securities. Taxes on realized capital gains are minimized by
avoiding or minimizing the sale of securities holdings with large accumulated
capital gains. The Portfolio seeks to invest in a broadly diversified portfolio
of stocks and to invest primarily in established companies with characteristics
of above-average growth, predictability and stability that are acquired with the
expectation of being held for a period of years. The Portfolio generally seeks
to avoid realizing short-term capital gains. When a decision is made to sell a
particular appreciated security, the Portfolio will select for sale the share
lots resulting in the most favorable tax treatment, generally those with holding
periods sufficient to qualify for long-term capital gains treatment that have
the highest cost basis. The Portfolio may, when deemed prudent by its investment
adviser, sell securities to realize capital losses that can be used to offset
realized gains.
1
To protect against price declines in securities holdings with large
accumulated capital gains, the Portfolio may use various investment techniques,
including, but not limited to, the purchase of put options on securities held,
equity collars (combining the purchase of a put option and the sale of a call
option), equity swaps, covered short sales, and the sale of stock index futures
contracts. By using these techniques rather than selling such securities, the
Portfolio can reduce its exposure to price declines in the securities without
realizing substantial capital gains under current tax law. The Portfolio's
ability to utilize covered short sales, certain equity swaps and certain equity
collar strategies as a tax-efficient management technique with respect to
holdings of appreciated securities is limited to circumstances in which the
hedging transaction is closed out within thirty days after the end of the
Portfolio's taxable year and the underlying appreciated securities position is
held unhedged for at least the next sixty days after such hedging transaction is
closed. The use of these investment techniques may require the Portfolio to
commit or make available cash and, therefore, may not be available at such times
as the Portfolio has limited holdings of cash.
Separate from its investment in the Portfolio through the Company, the Fund
invests through its subsidiary, Belmar Realty Corporation ("BRC"), in a
portfolio of income-producing preferred equity interests in real estate
operating partnerships that generally are affiliated with real estate investment
trusts ("REITs") that are publicly traded ("Partnership Preference Units"), and
interests in real estate joint ventures ("Real Estate Joint Ventures")
(collectively, "real estate investments"). BRC may make other types of real
estate investments, such as interests in real properties subject to long-term
leases. BRC may purchase real estate investments from, and sell them to, other
investment funds sponsored by the Eaton Vance organization and REIT subsidiaries
thereof.
Each issue of Partnership Preference Units held by BRC pays regular
quarterly distributions at fixed rates. None of the issues of Partnership
Preference Units is or will be registered under the Securities Act of 1933, as
amended (the "Securities Act"), and each issue is thus subject to restrictions
on transfer. BRC invests in Partnership Preference Units of issuers whose
preferred equity or senior debt securities have been deemed by BRC's investment
adviser to be of investment-grade quality as of the time of purchase. Each Real
Estate Joint Venture in which BRC invests will be majority owned by BRC. The
principal minority investor in each Real Estate Joint Venture (the "Operating
Partner") will own a substantial interest therein and will provide the
day-to-day operating management of the Real Estate Joint Venture, subject to the
oversight of a board of directors controlled by BRC. Operating Partners may
include publicly-traded REITs or their affiliates, as well as private real
estate operating companies. It is expected that each Real Estate Joint Venture
entered by BRC will be structured as described below. The property owned by each
Real Estate Joint Venture is expected to be primarily multi-family residential
properties, but may include other types of properties.
At December 31, 2000, BRC owned a controlling interest in one Real Estate
Joint Venture. The assets of the Real Estate Joint Venture consist primarily of
multi-family residential properties acquired from or in conjunction with the
Operating Partner. Real Estate Joint Venture distributable cash flows are
allocated such that BRC: 1) holds a priority position versus the Operating
Partner with respect to a fixed annual preferred return; and 2) participates on
a pro rata or reduced basis in distributable cash flows in excess of the annual
preferred return of BRC and a subordinated preferred return of the Operating
Partner. The Real Estate Joint Venture includes a buy/sell provision that can be
activated by either BRC or the Operating Partner after a fixed period of years.
Financing for the Real Estate Joint Venture consists primarily of fixed-rate
secured mortgage debt obligations of the Real Estate Joint Venture that are
without recourse to BRC and the Fund. Equity capital also was invested in the
Real Estate Joint Venture by BRC and the Operating Partner. BRC's equity in the
Real Estate Joint Venture was acquired using the proceeds of Fund borrowings.
For a description of the Real Estate Joint Venture, see Item 3 below.
2
BRC is a Delaware corporation that operates in such a manner as to qualify
for taxation as a REIT under the Internal Revenue Code (the "Code"). As a REIT,
BRC generally is not subject to federal income tax on that portion of its
ordinary income or taxable gain that it distributes to its stockholders each
year. The Fund owns 100% of the common stock issued by BRC, and intends to hold
all of BRC's common stock at all times. Additionally, at December 31, 2000,
2,100 shares of Class A preferred stock were outstanding. The preferred stock is
owned by approximately 105 charitable organizations. As at December 31, 2000,
assets of the Fund invested in BRC totaled $628.6 million.
The Fund's investments in real estate through BRC are financed using
borrowings under a seven-year revolving securitization facility (the "Commercial
Paper Facility") of up to $650 million with a special purpose commercial paper
issuer (the "CP Issuer") and Citicorp North America, Inc. as agent for the CP
Issuer. The Commercial Paper Facility is supported by a committed liquidity
facility (the "Liquidity Facility") provided by Citibank, N.A., under which
borrowings may be made for a maximum term of seven years from the Fund's initial
closing (held March 17, 2000). On borrowings under the Commercial Paper
Facility, the Fund pays a rate of interest equal to the CP Issuer's cost of
commercial paper funding plus a margin and certain fees and expenses. Based upon
the CP Issuer's historical cost of funding, it is expected that borrowings under
the Commercial Paper Facility will be at an annual rate of approximately
one-month LIBOR plus 0.40%. The Fund also pays a commitment fee of approximately
0.18% per year on the unused portion of the Commercial Paper Facility. In the
event that the CP Issuer is unable or unwilling to maintain advances to the
Fund, it may assign its advances to the providers of the Liquidity Facility.
Borrowings under the Liquidity Facility will be at an annual rate of one-month
LIBOR plus 0.75%. The Fund's obligations under the Commercial Paper Facility and
Liquidity Facility (collectively, the "Credit Facility") are secured by a pledge
of substantially all of its assets, including BRC common stock and shares of the
Company held by the Fund. As of December 31, 2000, outstanding borrowings under
the Credit Facility totaled $613.5 million, and the unused loan commitment
amount was $36.5 million.
The Fund has entered into cancelable interest rate swap agreements (the
"swap agreements") with Merrill Lynch Capital Services, Inc. ("MLCS"), to lock
in a positive spread between the distributions expected from BRC's equity in its
real estate investments and the interest cost of the associated Fund borrowings
under the Credit Facility. The swap agreements are valued on an ongoing basis by
the Fund's investment adviser. Fluctuations in value of the interest rate swap
agreements partly offset fluctuations in the value of real estate investments
derived from changes in general interest rates. Fluctuations in the value of the
real estate investments derived from other factors besides general interest rate
movements (including issuer-specific and sector-specific credit concerns,
property-specific concerns and changes in interest rate spread relationships)
are not offset by changes in the value of the swap agreements. The Fund has the
right to terminate certain of the swap agreements beginning in 2003, at dates
corresponding approximately to the initial call dates of the Partnership
Preference Units held by BRC. The obligations of the Fund under the swap
agreements are secured by the pledge of Shares of the Company held by the Fund.
The obligations of MLCS under the arrangements are supported by the guarantee of
Merrill Lynch & Co., Inc.
The Fund issued Shares to Shareholders at closings taking place on March
17, 2000, May 16, 2000, July 19, 2000, September 27, 2000, and November 29,
2000. At the five closings, an aggregate of 25,888,893 Shares were issued in
exchange for Shareholder contributions totaling $2,605 million. All Shareholder
contributions (other than contributions by the Fund's Manager) were made in the
form of securities. At each closing, all of the securities contributed by
Shareholders were exchanged by the Fund into the Company for shares of the
Company. Immediately thereafter, all of such securities were exchanged by the
Company into the Portfolio for an interest in the Portfolio.
Shares of the Fund were privately offered and sold only to "accredited
investors" as defined in Rule 501(a) under the Securities Act who were
3
"qualified purchasers" (as defined in Section 2(a)(51)(A) of the 1940 Act). The
offering was conducted by Eaton Vance Distributors, Inc. ("EVD") as placement
agent and by certain subagents appointed by EVD in reliance upon the exemption
from registration provided by Rule 506 under the Securities Act.
The Fund discontinued its private offering on November 29, 2000.
The Fund has no officers or employees, inasmuch as its business affairs are
conducted by its Manager, Eaton Vance Management ("EVM"), a Massachusetts
business trust with offices at The Eaton Vance Building, 255 State Street,
Boston, Massachusetts 02109, and its investment operations are conducted by its
investment adviser, Boston Management and Research, a wholly-owned subsidiary of
EVM.
ITEM 2. FINANCIAL INFORMATION.
- -----------------------------
Table of Selected Financial Data
The Fund commenced its investment operations on March 17, 2000 and the
consolidated data referred to below reflects the period commencing on that date
through December 31, 2000.
Period Ended
December 31, 2000
-----------------
Total investment income $53,330,719
Interest expense $31,403,533
Net expenses (including interest expense) $45,082,887
Net investment income $ 7,930,494
Minority interest in net income $ 317,338
Net realized gain $13,706,147
Net change in unrealized depreciation $(74,236,068)
Net decrease in net assets from operations $(52,599,427)
Total assets $3,321,914,650
Loan payable $613,500,000
Net assets $2,457,715,428
Shares outstanding 25,122,311
Net Asset Value and Redemption Price per Share $97.83
Distribution paid per Share $0.30
4
Management's Discussion and Analysis of
Financial Condition and Result of Operations
- --------------------------------------------
Results of Operations
- ---------------------
Increases and decreases in the Fund's net asset value per Share are derived
from net investment income, and realized and unrealized gains and losses on
investments, including security investments held through the Fund's indirect
interest (through the Company) in the Portfolio, real estate investments held
through BRC and any direct investments of the Fund. Expenses of the Fund include
its pro-rata share of the expenses of BRC, the Company, and indirectly the
Portfolio, as well as the actual and accrued expenses of the Fund. The Fund's
most significant expense is interest incurred on borrowings under the Credit
Facility. Fund borrowings are used primarily to finance the purchase of real
estate investments through BRC. The Fund's realized and unrealized gains and
losses on investments are based on its allocated share of the realized and
unrealized gains and losses of the Company, and indirectly the Portfolio, as
well as realized and unrealized gains and losses on real estate investments held
through BRC. The realized and unrealized gains and losses on investments have
the most significant impact on the Fund's net asset value per Share and result
from sales of such investments and changes in their underlying value. The
investments of the Portfolio consist primarily of common stocks of domestic and
foreign growth companies that are considered to be high in quality and
attractive in their long-term investment prospects. Because the securities
holdings of the Portfolio are broadly diversified, the performance of the
Portfolio cannot be attributed to one particular stock or one particular
industry or market sector. The performance of the Portfolio and the Fund are
substantially influenced by the overall performance of the United States stock
market, as well as by the relative performance versus the overall market of
specific stocks and classes of stocks in which the Portfolio maintains large
positions. Through the impact of interest rates on the valuation of the Fund's
real estate investments held through BRC and its positions in swap agreements,
the performance of the Fund is also affected by movements in interest rates and,
particularly, changes in credit spread relationships. On a combined basis, the
Fund's real estate investments and interest rate swaps generally decline in
value when credit spreads widen (as fixed income markets grow more risk-averse)
and generally increase in value when credit spreads tighten.
Results of Operations For the Period from the Start of Business to December
31, 2000
- --------------------------------------------------------------------------------
The Fund's total return for the period from its inception on March 17, 2000
through December 31, 2000 was -1.88%. This return reflects a decrease in the
Fund's net asset value per Share from $100.00 to $97.83, and the payment of a
distribution of $0.30 per share at the conclusion of the year. For comparison,
the Standard & Poor's 500 Index (the "S&P 500"), an unmanaged index commonly
used to measure the performance of U.S. stocks, had a total return of -11.14%
over the same period.
In 2000, the U.S. equity markets were characterized by extreme volatility
and dramatic declines in the more aggressive sectors. After a prolonged period
in which risk-taking in stocks was amply rewarded, the markets became more
conservative during 2000. Many technology, media and telecom stocks that were
big winners in 1998 and 1999 experienced massive price declines in 2000 -
victims of diminished growth expectations, earnings shortfalls and a collapse in
valuations from inflated levels. The tech-heavy NASDAQ Composite plunged over
39%, giving back nearly all the gains made in 1999. Other market sectors
performed much better in 2000, benefiting from a shift in investor focus away
from the technology/media/telecom area. Market-leading sectors included
utilities, energy and healthcare stocks.
5
The Fund's real estate investments exerted a modest drag on performance in
2000, primarily in the second half of the year. This can be attributed to
weakness in the market for preferred equity securities due to rising credit
concerns in a slowing economy. Reflecting the fundamental strength of the U.S.
real estate sector, real estate preferreds generally outperformed other types of
preferred equity securities in 2000.
Liquidity and Capital Resources
- -------------------------------
As of December 31, 2000, the Fund had outstanding borrowings of $613.5
million and unused loan commitments of $36.5 million under the Credit Facility.
The Credit Facility is being used primarily to finance the Fund's equity in its
real estate investments and will continue to be used for such purposes in the
future, as well as to provide for any short-term liquidity needs of the Fund. In
the future, the Fund may increase the size of the Credit Facility (subject to
lender consent) and the amount of outstanding borrowings thereunder for these
purposes.
The Fund may redeem shares of the Company at any time. Both the Company and
the Portfolio follow the practice of normally meeting redemptions by
distributing securities, consisting, in the case of the Company, of securities
drawn from the Portfolio. The Company and the Portfolio may also meet
redemptions by distributing cash. As of December 31, 2000, the Portfolio had
cash and short-term investments totaling $314.2 million, compared to $642.7
million as of December 31, 1999. The Portfolio participates in a $150 million
multi-fund unsecured line of credit agreement with a group of banks. The
Portfolio may temporarily borrow from the line of credit to satisfy redemption
requests in cash or to settle investment transactions. The Portfolio had no
outstanding borrowings at December 31, 2000 or December 31, 1999. As of December
31, 2000, the net assets of the Portfolio totaled $18.4 billion, compared to
$15.1 billion as of December 31, 1999. To ensure liquidity for investors in the
Portfolio, the Portfolio may not invest more than 15% of its net assets in
illiquid assets. As of December 31, 2000, restricted securities, which are
considered illiquid, constituted 2.7% of the net assets of the Portfolio,
compared to 5.0% as of December 31, 1999.
The Partnership Preference Units held by BRC are not registered under the
Securities Act and are subject to substantial restrictions on transfer. As such,
they are considered illiquid. The liquidity of BRC's Real Estate Joint Venture
investment is extremely limited, and relies principally upon a buy/sell
arrangement with the Operating Partner that is invokable ten years after the
formation of the Real Estate Joint Venture. Transfers of BRC's interest in the
Real Estate Joint Venture to parties other than the Operating Partner thereof
are constrained by terms of the operating management agreements, buy/sell
arrangements with the Operating Partner, and lender consent requirements.
Redemptions of Fund Shares are met primarily by distributing securities
drawn from the Portfolio, although cash may also be distributed. Shareholders
generally do not have the right to receive the proceeds of Fund redemptions in
cash.
Market Risks
- ------------
(a) Quantitative Disclosure about Market Risk.
As noted above, the Fund may enter into cancelable interest rate swap
agreements in connection with its equity in real estate investments and the
associated borrowings. Under such agreements, the Fund has agreed to make
periodic payments at fixed rates in exchange for payments at floating rates. The
notional or contractual amounts of these instruments may not necessarily
represent the amounts potentially subject to risk. The measurement of the risks
associated with these investments is meaningful only when considered in
conjunction with all related assets, liabilities and agreements. As of December
6
31, 2000, the Fund has entered into cancelable interest rate swap agreements
with MLCS. The Fund has the right to terminate certain of the interest rate swap
agreements beginning in the first half of 2003, at dates corresponding
approximately to the initial call dates of the Partnership Preference Units held
by BRC.
Unrealized
Notional Initial Depreciation
Amount (000's Optional Final At
Effective omitted) Fixed Rate Floating Rate Termination Termination December 31,
Date Date Date 2000
- ----------------- ---------------- -------------- ------------------ ---------------- ---------------- ---------------
3/00 $ 27,500 8.96% Libor + .40% 3/05 3/30 $ 2,090,656
3/00 19,146 9.09% Libor + .40% 4/04 3/30 1,275,653
3/00 43,181 9.20% Libor + .40% 6/03 3/30 2,349,306
3/00 21,766 9.24% Libor + .40% 4/03 3/30 1,131,694
3/00 38,102 9.11% Libor + .40% 2/04 3/30 2,441,132
3/00 20,659 9.13% Libor + .40% 11/03 3/30 1,242,356
3/00 23,027 9.05% Libor + .40% 7/04 3/30 1,599,508
5/00 10,773 9.54% Libor + .40% 4/03 3/30 664,167
5/00 12,984 9.50% Libor + .40% 6/03 3/30 839,556
5/00 9,608 9.46% Libor + .40% 11/03 3/30 700,422
5/00 13,274 9.42% Libor + .40% 2/04 3/30 1,019,736
5/00 12,063 9.38% Libor + .40% 4/04 3/30 954,860
5/00 10,799 9.35% Libor + .40% 7/04 3/30 896,944
5/00 41,185 9.31% Libor + .40% 9/04 3/30 3,490,916
5/00 7,255 9.26% Libor + .40% 3/05 3/30 663,842
7/00 22,982 9.17% Libor + .40% 2/03 3/30 1,050,464
7/00 28,305 9.15% Libor + .40% 4/03 3/30 1,389,085
7/00 32,404 9.13% Libor + .40% 6/03 3/30 1,684,599
7/00 3,383 9.08% Libor + .40% 11/03 3/30 196,831
7/00 12,062 9.00% Libor + .40% 2/04 3/30 716,644
7/00 24,622 8.985% Libor + .40% 4/04 3/30 1,528,127
7/00 9,184 8.97% Libor + .40% 7/04 3/30 604,506
7/00 13,454 8.93% Libor + .40% 9/04 3/30 899,160
7/00 17,888 8.87% Libor + .40% 3/05 3/30 1,277,995
9/00 39,407 7.46% Libor + .40% ---- 9/10 2,741,566
11/00 11,776 8.34% Libor + .40% 3/05 3/30 354,841
11/00 2,338 8.41% Libor + .40% 9/04 3/30 66,110
11/00 23,636 8.48% Libor + .40% 2/04 3/30 588,364
11/00 20,264 8.60% Libor + .40% 6/03 3/30 433,793
11/00 28,629 8.66% Libor + .40% 2/03 3/30 546,325
- ----------------- ---------------- -------------- ------------------ ---------------- ---------------- -------------
Total $35,439,158
- ----------------- ---------------- -------------- ------------------ ---------------- ---------------- ---------------
7
(b) Qualitative Information about Market Risk.
The value of Fund Shares may not increase or may decline. The performance
of the Fund fluctuates. There can be no assurance that the performance of the
Fund will match that of the United States stock market or that of other equity
funds. In managing the Portfolio for long-term, after-tax returns, the
Portfolio's investment adviser generally seeks to avoid or minimize sales of
securities with large accumulated capital gains, including contributed
securities. Such securities constitute a substantial portion of the assets of
the Portfolio. Although the Portfolio may utilize certain management strategies
in lieu of selling appreciated securities, the Portfolio's, and hence the
Fund's, exposure to losses during stock market declines may nonetheless be
higher than that of funds that do not follow a general policy of avoiding sales
of highly-appreciated securities.
The Portfolio invests in securities issued by foreign companies and the
Fund may acquire foreign investments. Foreign investments involve considerations
and possible risks not typically associated with investing in the United States.
The value of foreign investments to U.S. investors may be adversely affected by
changes in currency rates. Foreign brokerage commissions, custody fees and other
costs of investing are generally higher than in the United States, and foreign
investments may be less liquid, more volatile and more subject to government
regulation than in the United States. Foreign investments could be adversely
affected by other factors not present in the United States, including
expropriation, confiscatory taxation, lack of uniform accounting and auditing
standards, armed conflict, and potential difficulty in enforcing contractual
obligations.
In managing the Portfolio, the investment adviser may purchase or sell
derivative instruments (which derive their value by reference to other
securities, indices, instruments, or currencies) to hedge against securities
price declines and currency movements and to enhance returns. Such transactions
may include, without limitation, the purchase and sale of stock index futures
contracts and options on stock index futures; the purchase of put options and
the sale of call options on securities held; equity swaps; and the purchase and
sale of forward currency exchange contracts and currency futures. The Portfolio
may make short sales of securities provided that an equal amount is held of the
security sold short (a covered short sale) and may also lend portfolio
securities. The Fund utilizes cancelable interest rate swap agreements to fix
the cost of its borrowings over the term of the Credit Facility. In the future,
the Fund may use other interest rate hedging arrangements (such as caps, floors
and collars) to fix or limit borrowing costs. The use of these investment
techniques is a specialized activity that may be considered speculative and
which can expose the Fund and the Portfolio to significant risk of loss.
Successful use of these investment techniques is subject to the ability and
performance of the investment adviser. The Fund's and the Portfolio's ability to
meet their investment objectives may be adversely affected by the use of these
techniques. The writer of an option or a party to an equity swap may incur
losses that substantially exceed the payments, if any, received from a
counterparty. Swaps, caps, floors, collars and over-the-counter options are
private contracts in which there is also a risk of loss in the event of a
default on an obligation to pay by the counterparty. Such instruments may be
difficult to value, may be illiquid and may be subject to wide swings in
valuation caused by changes in the price of the underlying security, index,
instrument or currency. In addition, if the Fund or the Portfolio has
insufficient cash to meet margin, collateral or settlement requirements, it may
have to sell assets to meet such requirements. Alternatively, should the Fund or
the Portfolio fail to meet these requirements, the counterparty or broker may
liquidate positions of the Fund or the Portfolio. The Portfolio may also have to
sell or deliver securities holdings in the event that it is not able to purchase
securities on the open market to cover its short positions or to close out or
satisfy an exercise notice with respect to options positions it has sold. In any
of these cases, such sales may be made at prices or in circumstances that the
investment adviser considers unfavorable.
8
The Portfolio's ability to utilize covered short sales, certain equity
swaps and certain equity collar strategies (combining the purchase of a put
option and the sale of a call option) as a tax-efficient management technique
with respect to holdings of appreciated securities is limited to circumstances
in which the hedging transaction is closed out within thirty days of the end of
the Portfolio's taxable year and the underlying appreciated securities position
is held unhedged for at least the next sixty days after such hedging transaction
is closed. There can be no assurance that counterparties will at all times be
willing to enter into covered short sales, interest rate hedges, equity swaps
and other derivative instrument transactions on terms satisfactory to the Fund
or the Portfolio. The Fund's and the Portfolio's ability to enter into such
transactions may also be limited by covenants under the Credit Facility, the
federal margin regulations and other laws and regulations. The Portfolio's use
of certain investment techniques may be constrained because the Portfolio is a
diversified, open-end management investment company registered under the 1940
Act and because other investors in the Portfolio are regulated investment
companies under Subchapter M of the Code. Moreover, the Fund and the Portfolio
are subject to restrictions under the federal securities laws on their ability
to enter into transactions in respect of securities that are subject to
restrictions on transfer pursuant to the Securities Act.
Although intended to add to returns, the borrowing of funds to purchase
real estate investments exposes the Fund to the risk that the returns achieved
on the real estate investments will be lower than the cost of borrowing to
purchase such assets and that the leveraging of the Fund to buy such assets will
therefore diminish the returns to be achieved by the Fund as a whole. In
addition, there is a risk that the availability of financing will be interrupted
at some future time, requiring the Fund to sell assets to repay outstanding
borrowings or a portion thereof. It may be necessary to make such sales at
unfavorable prices. The Fund's obligations under the Credit Facility are secured
by a pledge of substantially all of its assets. In the event of default, the
lender could elect to sell assets of the Fund without regard to consequences of
such action for Shareholders. The rights of the lender to receive payments of
interest on and repayments of principal of borrowings is senior to the rights of
the Shareholders. Under the terms of the Credit Facility, the Fund is not
permitted to make distributions of cash or securities while there is outstanding
an event of default under the Credit Facility. During such periods, the Fund
would not be able to honor redemption requests or make cash distributions.
The success of BRC's real estate investments depends in part on many
factors related to the real estate market. These factors include, without
limitation, general economic conditions, the supply and demand for different
types of real properties, the financial health of tenants, the timing of lease
expirations and terminations, fluctuations in rental rates and operating costs,
exposure to adverse environmental conditions and losses from casualty or
condemnation, interest rates, availability of financing, managerial performance,
government rules and regulations, and acts of God (whether or not insured
against). Partnership Preference Units also depend upon factors relating to the
issuing partnerships that may affect such partnerships' profitability and their
ability to make distributions to holders of Partnership Preference Units. BRC's
investment in a Real Estate Joint Venture may be influenced by decisions which
the Operating Partner of such Venture may make on behalf of the property owned
thereby and potential changes in the specific real estate sub-markets in which
the properties are located. The debt of the Real Estate Joint Venture is
fixed-rate, secured by the underlying properties and with no or limited recourse
to BRC. However, changes in interest rates, the availability of financing and
other financial conditions can have a material impact on property values and
therefore on the value of BRC's equity interest. There can be no assurance that
BRC's ownership of real estate investments will be an economic success.
Moreover, the success of any Real Estate Joint Venture investment depends in
large part upon the performance of the Operating Partner. Operating Partners
will be subject to substantial conflicts of interest in structuring, operating
and winding up the Real Estate Joint Ventures. Operating Partners will have an
economic incentive to maximize the prices at which they sell properties to Real
Estate Joint Ventures and to minimize the prices at which they acquire
properties from Real Estate Joint Ventures. Operating Partners may devote
greater attention or more resources to managing their wholly-owned properties
9
than properties held by Real Estate Joint Ventures. Future investment
opportunities identified by Operating Partners will more likely be pursued
independently, rather than through, the Real Estate Joint Ventures. Financial
difficulties encountered by Operating Partners in their other businesses may
interfere with the operations of Real Estate Joint Ventures.
The valuations of Partnership Preference Units held by the Fund through its
investment in BRC fluctuate over time to reflect, among other factors, changes
in interest rates, changes in the perceived riskiness of such units (including
call risk), changes in the perceived riskiness of comparable or similar
securities trading in the public market and the relationship between supply and
demand for comparable or similar securities trading in the public market.
Increases in interest rates and increases in the perceived riskiness of such
units or comparable or similar securities will adversely affect the valuation of
the Partnership Preference Units. The ongoing value of BRC's investments in Real
Estate Joint Ventures will be substantially uncertain. BRC's investments in Real
Estate Joint Ventures generally will be stated at estimated market value,
assuming an orderly disposition of assets. Detailed investment evaluations will
be performed annually and reviewed periodically. Interim valuations will reflect
results of operations and distributions, and may be adjusted to reflect
significant changes in economic circumstances since the most recent independent
evaluation. Fluctuations in the value of real estate investments derived from
changes in general interest rates can be expected to be offset in part (but not
entirely) by changes in the value of interest rate swap agreements or other
interest rate hedges entered into by the Fund with respect to its borrowings
under the Credit Facility. Fluctuations in the value of real estate investments
derived from other factors besides general interest rate movements (including
issuer-specific and sector-specific credit concerns, property-specific concerns
and changes in interest rate spread relationships) will not be offset by changes
in the value of interest rate swap agreements or other interest rate hedges
entered into by the Fund. Changes in the valuation of real estate investments
not offset by changes in the valuation of interest rate swap agreements or other
interest rate hedges entered into by the Fund will cause the performance of the
Fund to deviate from the performance of the Portfolio. Over time, the
performance of the Fund can be expected to be more volatile than the performance
of the Portfolio.
ITEM 3. PROPERTIES.
- ------------------
The Fund does not own any physical properties, other than indirectly as a
result of BRC's investments in Partnership Preference Units and BRC's controlled
subsidiary. At December 31, 2000, in addition to investments in Partnership
Preference Units, BRC owned a majority interest in Bel Alliance Apartments LLC,
which owns 20 multi-family residential properties in nine states (Texas,
Virginia, Tennessee, South Carolina, Missouri, Nevada, Georgia, North Carolina
and Florida).
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
- ----------------------------------------------------------------------
(a) Security Ownership of Certain Beneficial Owners.
To the knowledge of the Fund, no person beneficially owns more than five
percent of the Shares of the Fund.
(b) Security Ownership of Management.
EVM, the Manager of the Fund, beneficially owned 1,053.2 Shares of the Fund
as of March 31, 2001. None of the other entities or individuals named in
response to Item 5 below beneficially owned Shares of the Fund as of such date.
(c) Changes in Control.
Not applicable.
10
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS.
- -----------------------------------------
The Fund has no individual directors or executive officers. The Fund is
managed by EVM. Each of the Fund, BRC and the Portfolio engage Boston Management
and Research ("BMR"), a wholly-owned subsidiary of EVM, as investment adviser.
EVM, its affiliates and predecessor companies have been investment advisers to
individuals and institutions since 1924 and have been advising investment
companies since 1931. BMR and EVM currently have assets under investment
management of approximately $45 billion. EVM is a wholly-owned subsidiary of
Eaton Vance Business Trust, which is wholly-owned by Eaton Vance Corp. ("EVC"),
a publicly-held holding company which, through its subsidiaries and affiliates,
engages primarily in investment management, administration and marketing
activities. The non-voting common stock of EVC is listed and traded on the New
York Stock Exchange. All shares of the voting common stock of EVC are held in a
voting trust, the voting trustees of which are senior officers of the Eaton
Vance organization. Eaton Vance, Inc. ("EV"), a wholly-owned subsidiary of EVC,
is the sole trustee of Eaton Vance Business Trust, EVM and of BMR, each of which
is a Massachusetts business trust. The names of the executive officers and the
directors of EV and their ages and principal occupations are set forth below:
DIRECTORS AND EXECUTIVE OFFICERS OF EATON VANCE, INC.
James B. Hawkes, (59), is Chairman, President and Chief Executive Officer
of EVM, BMR, EVC and EV and a Director of EVC and EV. He is also a Trustee and
an officer of various investment companies managed by EVM or BMR and has been
employed by the Eaton Vance organization for 30 years.
Thomas E. Faust Jr., (42), is Executive Vice President of Eaton Vance, BMR,
EVC and EV, and Chief Equity Investment Officer of Eaton Vance and BMR. He is
also an officer of various investment companies managed by Eaton Vance or BMR
and has been employed by the Eaton Vance organization for 15 years.
Alan R. Dynner, (60), is Vice President and Chief Legal Officer of EVM, BMR
and EVC, and Secretary and Clerk of EV. He is also an officer of various
investment companies managed by EVM or BMR. He joined Eaton Vance on November 1,
1996. Prior to joining Eaton Vance, Mr. Dynner was a partner in the New York and
Washington offices of the law firm of Kirkpatrick & Lockhart LLP.
William M. Steul, (58), is Vice President and Chief Financial Officer of
EVM, BMR, EVC and EV. He joined Eaton Vance in December 1994.
ITEM 6. EXECUTIVE COMPENSATION.
- ------------------------------
Under the terms of the Fund's investment advisory and administrative
agreement with BMR, BMR receives a monthly advisory and administrative fee at
the rate of 1/20th of 1% (equivalent to 0.60% annually) of the average daily
gross assets of the Fund reduced by that portion of the monthly advisory fee for
such month payable by the Portfolio which is attributable to the value of the
Fund's investment in the Company. The term gross assets of the Fund is defined
in the agreement to include the value of all Fund assets (including the Fund's
interest in the Company and the Fund's ratable share of the assets of its
controlled subsidiaries), without reduction by any liabilities. As noted below,
the advisory fee payable for such month to BMR by the Portfolio in respect of
the Fund's indirect investment in the Portfolio and the management fee payable
by BRC are credited toward the Fund's advisory and administrative fee payment.
For the period commencing with the start of the Fund's business, March 17, 2000,
through December 31, 2000, the advisory and administrative fees paid by the Fund
to BMR, less the Fund's allocated share of the Portfolio's advisory fee and
BRC's management fee, totaled $1,709,648. BMR has agreed to waive a portion of
11
the monthly advisory and administrative fee payable by the Fund to the extent
that such fee, together with the monthly distribution fee payable to EVD,
exceeds an annual rate of 0.60% of the average daily gross assets of the Fund
(as defined above), reduced by the portion of the monthly advisory fee or
management fees for such month payable by the Portfolio and BRC which is
attributable to the value of the Fund's direct or indirect investments therein.
For the period from March 17, 2000 to December 31, 2000, BMR waived $1,120,030
of the advisory and administrative fee payable by the Fund.
Under the terms of BRC's management agreement with BMR, BMR receives a
monthly management fee at the rate of 1/20th of 1% (equivalent to 0.60%
annually) of the average daily gross assets of BRC. The term gross assets of BRC
is defined in the agreement to include the value of all assets of BRC, without
reduction by any liabilities. As noted above, the management fee payable by BRC
will be credited toward the Fund's advisory and administrative fee payments. For
the period commencing with the start of BRC's business, March 17, 2000, through
December 31, 2000, BRC paid BMR management fees of $2,178,946.
Under the terms of the Portfolio's investment advisory agreement with BMR,
BMR receives a monthly advisory fee at a base rate of 5/96 of 1% (equivalent to
0.625% annually) of the average daily net assets of the Portfolio up to $500
million. On net assets of $500 million or more the monthly fee is reduced and is
computed as follows: 9/192 of 1% (equivalent to 0.5625% annually) of the average
daily net assets of the Portfolio of $500 million but less than $1 billion; 1/24
of 1% (equivalent to 0.50% annually) of the average daily net assets of the
Portfolio of $1 billion but less than $1.5 billion; 7/192 of 1% (equivalent to
0.4375% annually) of the average daily net assets of the Portfolio of $1.5
billion but less than $7 billion; 17/480 of 1% (equivalent to 0.425% annually)
of the average daily net assets of the Portfolio of $7 billion but less than $10
billion; 11/320 of 1% (equivalent to 0.4125% annually) of the average daily net
assets of the Portfolio of $10 billion but less than $15 billion; and 1/30 of 1%
(equivalent to 0.40% annually) of the average daily net assets of the Portfolio
of $15 billion and above. As indicated above, the Fund's allocated share of the
monthly advisory fee paid by the Portfolio to BMR is credited toward the Fund's
advisory and administrative fee payments. As of December 31, 2000, the net
assets of the Portfolio totaled $18.4 billion. For the fiscal years ended
December 31, 1999 and 2000, the advisory fee applicable to the Portfolio was
0.45% and 0.43%, respectively, of average daily net assets for such periods, and
the Fund's allocated portion of the fee amounted to $9,624,513 and $9,165,212,
respectively.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
- ------------------------------------------------------
See the information set forth under Item 6 above.
Shares of the Fund were privately placed with qualified purchasers pursuant
to a placement agency agreement entered into between the Fund and EVD as
exclusive placement agent. EVD is a wholly-owned subsidiary of EVM. EVD
appointed certain securities dealers as subagents to participate in the private
offering. No selling commissions were paid by the Fund on behalf of Shareholders
making investment commitments of $5 million or more. The Fund paid a 1.5%
selling commission to EVD on behalf of each Shareholder making an investment
commitment of less than $2 million and a 1.0% selling commission to EVD on
behalf of each shareholder making an investment commitment of at least $2
million but less than $5 million. The selling commission paid by the Fund on
behalf of a Shareholder was deducted from the contribution to the Fund by such
Shareholder, thereby reducing the number of Shares of the Fund issued to the
Shareholder. During the period from March 17, 2000 to December 31, 2000, the
Fund paid selling commissions aggregating $8,745,977 pursuant to the placement
agency agreement, and such selling commissions were paid by EVD to those
subagents through which Shareholders invested in the Fund.
12
Pursuant to a servicing agreement between the Company and EVD, the Company
pays a servicing fee to EVD for providing certain services and information to
direct and indirect investors in the Company. The servicing fee is paid on a
quarterly basis, at an annual rate of 0.15% of the Company's average daily net
assets. With respect to investors in the Company and Shareholders of the Fund
who subscribed through a subagent, EVD will assign servicing responsibilities
and fees to the applicable subagent, beginning twelve months after the issuance
of shares of the Company or Shares of the Fund to such persons. The Fund will
assume its allocated share of the Company's servicing fee. The servicing fee
payable in respect of the Fund's investment in the Company is credited toward
the Fund servicing fee described below. During the period from March 17, 2000 to
December 31, 2000, the Company paid servicing fees aggregating $1,731,685 which
were attributable to the Fund's investments in the Company.
Pursuant to a servicing agreement between the Fund and EVD, the Fund pays a
servicing fee to EVD for providing certain services and information to the
Shareholders of the Fund. The servicing fee is paid on a quarterly basis, at an
annual rate of 0.25% of the Fund's average daily net assets. With respect to
Shareholders who subscribed through a subagent, EVD will assign servicing
responsibilities and fees to the applicable subagent, beginning twelve months
after the issuance of Shares of the Fund to such persons. The Fund's allocated
share of the servicing fee paid by the Company is credited toward the Fund's
servicing fee payment, thereby reducing the amount of the servicing fee paid by
the Fund. During the period from March 17, 2000 to December 31, 2000, the Fund
paid servicing fees aggregating $1,140,348.
Under the terms of the Fund's distribution agreement with EVD, EVD receives
a monthly distribution fee at an annual rate of 0.10% of the average daily net
assets of the Fund as compensation for its services as placement agent. The
distribution fee accrued from the Fund's initial closing and will continue for a
period of ten years (subject to the annual approval of Eaton Vance, Inc.). For
the period commencing with the start of the Fund's business, March 17, 2000, to
December 31, 2000, the distribution fees payable or accrued to EVD totaled
$1,120,030. As noted above, the distribution fee is subject to a monthly fee
cap.
Shares of the Fund redeemed within three years of issuance are generally
subject to a redemption fee equal to 1% of the net asset value of the Shares
redeemed. The redemption fee is payable to EVD in cash by the Fund on behalf of
the redeeming Shareholder. No redemption fee is imposed on Shares of the Fund
held for at least three years, Shares acquired through the reinvestment of Fund
distributions, Shares redeemed in connection with a tender offer or other
extraordinary corporate event involving securities contributed by the redeeming
Shareholder, or Shares redeemed following the death of all of the initial owners
of the Shares redeemed. In addition, no fee applies to redemptions made pursuant
to a systematic redemption plan established by a Shareholder with the Fund.
During the period from March 17, 2000 to December 31, 2000, EVD received
redemption fees of $749,356 from the Fund on behalf of redeeming Shareholders.
ITEM 8. LEGAL PROCEEDINGS.
- -------------------------
There are no material pending legal proceedings to which the Fund or BRC is
a party or of which any of their property is the subject.
13
ITEM 9. NET ASSET VALUE OF AND DISTRIBUTIONS ON THE FUND'S SHARES AND RELATED
SHAREHOLDER MATTERS.
- --------------------------------------------------------------------------------
(a) Market Information, Restrictions on Transfer of Shares and Redemption
of Shares.
There is no established public trading market for the Shares of the Fund,
and the transfer of Shares is severely restricted by the Limited Liability
Company Agreement ("LLC Agreement") of the Fund.
Other than transfer to the Fund in a redemption, transfers of Shares are
expressly prohibited without the consent of EVM, which consent may be withheld
in its sole discretion for any reason or for no reason. The Shares have not been
and will not be registered under the Securities Act, and may not be resold
unless an exemption from such registration is available. Shareholders have no
right to require registration of the Shares and the Fund does not intend to
register the Shares under the Securities Act or take any action to cause an
exemption (whether pursuant to Rule 144 of the Securities Act or otherwise) to
be available. The Fund is not and will not be registered under the 1940 Act, and
no transfer of Shares may be made that would, in the opinion of counsel to the
Fund, result in the Fund being required to be registered under the 1940 Act. In
addition, no transfer of Shares may be made unless, in the opinion of counsel
for the Fund, such transfer would not result in termination of the Fund for
purposes of Section 708 of the Code or result in the classification of the Fund
as an association or a publicly traded partnership taxable as a corporation
under the Code. In no event shall all or any part of a Shareholder's Shares be
assigned to a minor or an incompetent, unless in trust for the benefit of such
person. Shares may be sold, transferred, assigned or otherwise disposed of by a
Shareholder only if, in the opinion of counsel, such transfer, assignment or
disposition would not violate federal securities or state securities or "blue
sky" laws (including investor qualification standards).
Shares of the Fund may be redeemed on any business day. Redemptions of
Shares held for at least three years will be met at net asset value. Shares
redeemed within these years of issuance are generally subject to a redemption
fee equal to 1% of the net asset value of the Shares redeemed. See Item 7 above.
The Fund plans to meet redemption requests principally by distributing
securities drawn from the Portfolio, but may also distribute cash. If requested
by a redeeming Shareholder, the Fund will meet a redemption request by
distributing securities that were contributed by the redeeming Shareholder,
provided that such securities are held in the Portfolio at the time of
redemption. The securities contributed by a Shareholder will not be distributed
to any other Shareholder in the Fund (or to any other investor in the Company or
the Portfolio) during the first seven years following their contribution. A
shareholder redemption request within seven years of a contribution of
securities by such Shareholder will ordinarily be met by distributing securities
that were contributed by such Shareholder, prior to distributing to such
Shareholder any other securities held in the Portfolio. Securities contributed
by a Shareholder may be distributed to other Shareholders in the Fund (or to
other investors in the Company or the Portfolio) after a holding period of at
least seven years and, if so distributed, would not be available to meet
subsequent redemption requests made by the contributing Shareholder. If
requested by a redeeming Shareholder making a redemption of at least $1 million
occurring more than seven years after such Shareholder's admission to the Fund,
the Fund will generally distribute to the redeeming Shareholder a diversified
basket of securities representing a range of industry groups that is drawn from
the Portfolio, but the selection of individual securities would be made by BMR
in its sole discretion. No Partnership Preference Units or other real estate
investments held by BRC will be distributed to meet a redemption request, and
"restricted securities" will be distributed only to the Shareholder who
contributed such securities or such Shareholder's successor in interest. Other
than as set forth above, the allocation of each redemption between securities
and cash and the selection of securities to be distributed will be at the sole
discretion of BMR. Distributed securities may include securities contributed by
14
Shareholders as well as other readily marketable securities held in the
Portfolio. The value of securities and cash distributed to meet a redemption
will equal the net asset value of the number of Shares being redeemed less the
applicable redemption fee, if any. The Fund's Credit Facility prohibits the Fund
from honoring redemption requests while there is outstanding an event of default
under the Credit Facility.
The Fund may compulsorily redeem all or a portion of the Shares of a
Shareholder if the Fund has determined that such redemption is necessary or
appropriate to avoid registration of the Fund or the Company under the 1940 Act,
to avoid adverse tax or other consequences to the Portfolio, the Company, the
Fund or the Shareholders, or to discharge such Shareholder's obligation to
reimburse the Fund for state taxes paid by the Fund on behalf of the Shareholder
and accrued interest thereon. No redemption fee is payable in the event of a
compulsory redemption.
The high and low net asset values per Share of the Fund during each full
quarterly period from the Fund's inception, March 17, 2000, through the fiscal
year ended December 31, 2000 are as follows:
Quarter Ended High Low
------------- ---- ---
6/30/00 $102.81 $90.86
9/30/00 $106.55 $98.08
12/31/00 $103.11 $93.56
There are no outstanding options or warrants to purchase, or securities
convertible into, Shares of the Fund. Shares of the Fund cannot be sold pursuant
to Rule 144 under the Securities Act, and the Fund does not propose to publicly
offer any of its Shares at any time.
(b) Record Holders of Shares of the Fund.
As of March 31, 2001, there were 805 record holders of Shares of the Fund.
(c) Distributions.
The Fund intends to make annual income distributions approximately equal to
the amount of its net investment income, if any, and annual capital gains
distributions equal to approximately 22% of the amount of its net realized
capital gains, if any, other than precontribution gain allocated to a
Shareholder in connection with a tender offer or other extraordinary corporate
event involving a security contributed by such Shareholder. In addition,
whenever a distribution in respect of a precontribution gain is made, the Fund
intends to make a supplemental distribution generally equal to approximately 6%
of the allocated precontribution gain or such other percentage as deemed
appropriate to compensate Shareholders receiving such distributions for taxes
that may be due in connection with the precontribution gain and supplemental
distributions. The Fund's distribution rates with respect to realized gains may
be adjusted at a future time to reflect changes in the effective maximum
marginal individual federal tax rate applicable to long-term capital gains.
Shareholder distributions with respect to net investment income and realized
post-contribution gains will be made pro rata in proportion to the number of
Shares held as of the record date of the distribution. Distributions that are
made in respect of realized precontribution gains and the associated
supplemental distributions will be made solely to the Shareholders to whom such
gain is allocated. The Fund's net investment income and net realized gains
include the Fund's allocated share of the net investment income and net realized
gains of BRC, the Company and, indirectly, the Portfolio. The Fund's Credit
Facility prohibits the Fund from making any distribution to Shareholders while
there is outstanding an event of default under the Credit Facility.
On December 29, 2000 the Fund made a distribution of $0.30 per Share to
Shareholders of record on December 28, 2000.
15
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
- -------------------------------------------------
The Fund held its initial closing on March 17, 2000, at which time
qualified purchasers contributed cash of $105,000* and equity securities with an
aggregate exchange value of $639.3 million in exchange for an aggregate of
6,375,155 Shares of the Fund. Shares of the Fund were privately offered and sold
only to "accredited investors" as defined in Rule 501 (a) under the Securities
Act who were "qualified purchasers" (as defined in Section 2(a)(51)(A) of the
1940 Act) in certain states through EVD, the placement agent, and certain
subagents appointed by EVD in reliance upon the exemption from registration
provided by Rule 506 under the Securities Act.
The Fund held a second closing on May 16, 2000, at which time qualified
purchasers contributed equity securities with an aggregate exchange value of
$413.5 million in exchange for an aggregate of 4,131,104 Shares of the Fund. The
Fund held a third closing on July 19, 2000, at which time qualified purchasers
contributed equity securities with an aggregate exchange value of $635.8 million
in exchange for an aggregate of 6,127,268 Shares of the Fund. The Fund held a
fourth closing on September 27, 2000, at which time qualified purchasers
contributed equity securities with an aggregate exchange value of $310.0 million
in exchange for an aggregate of 3,015,088 Shares of the Fund. The Fund held a
fifth and final closing on November 29, 2000, at which time qualified purchasers
contributed equity securities with an aggregate exchange value of $606.8 million
in exchange for an aggregate of 6,240,278 Shares of the Fund. In connection with
each of the foregoing closings, Shares of the Fund were privately offered and
sold only to accredited investors who were qualified purchasers in the manner
described above.
ITEM 11. DESCRIPTION OF THE FUND'S SECURITIES TO BE REGISTERED.
- --------------------------------------------------------------
The Fund is registering only Shares representing limited liability company
interests in the Fund pursuant to Section 12(g) of the Securities Exchange Act
of 1934.
The distribution practices of the Fund are described in Item 9(c) above.
The Shares have no conversion or preemption rights, and there are no sinking
fund provisions applicable to the Shares. The redemption rights of Shareholders
are described in Item 9(a) above. Restrictions on transfer of the Shares are
described in Item 9(a) above. Upon liquidation of the Fund, all assets remaining
after payment of all liabilities and obligations of the Fund and after provision
for liquidation expenses will be distributed in cash or in kind to Shareholders
in proportion to the positive balances in their capital accounts. The Shares are
not subject to any assessment by the Fund, and the Fund's LLC Agreement provides
that no Shareholder shall be liable for any obligations or liabilities of the
Fund.
Subject to the consent of the Manager, a Shareholder may make an estate
freeze election pursuant to which all or a portion of such Shareholder's Shares
will be divided into Preferred Shares and Common Shares ("Estate Freeze
Shares"). Such division will be made in accordance with the terms of the LLC
Agreement. Estate Freeze Shares are not transferable without the consent of the
Fund's Manager and have no daily redemption rights or voting or consent rights.
Shareholders have no control of the Fund's business or activities.
Shareholders do not have the right to replace EVM as Manager of the Fund, but
may do so only upon the bankruptcy of EVM. Except as specifically required by
the LLC Agreement, no Shareholder shall have any right to vote on, consent to or
approve any action or matter under any circumstances whatsoever. Shareholders
have a very limited right to consent, pursuant to and in accordance with the LLC
Agreement, only (i) to change in or elimination of the Fund's investment
objective and fundamental investment restrictions set forth in the LLC
Agreement, (ii) to the designation by EVM of another Manager which is not an
entity directly or indirectly owned by EVC, (iii) to the designation of a
substitute Manager upon the bankruptcy of EVM, (iv) to an election to dissolve
__________________________
*Contributed by EVM in exchange for 1,050 Shares of the Fund. No selling
commission applied to such Shares.
16
the Fund upon the occurrence of certain events or (v) to the appointment of a
liquidator to wind up the Fund's affairs upon its dissolution in the event there
is no Manager to serve as liquidator.
The Fund's LLC Agreement may be amended or restated only by action of the
Manager by an instrument in writing signed by or on behalf of the Manager. No
such amendment or restatement shall in any material respect increase, add to or
alter any financial obligation of any Shareholder. No consent or approval of the
Shareholders is required to affect any such amendment or restatement, except
that the Fund's investment objective and fundamental investment restrictions set
forth in the LLC Agreement may be changed or eliminated only with the Consent of
the Shareholders (defined as the consent or approval of Shareholders holding the
lesser of (i) 50% of the outstanding Shares, (ii) 67% of those Shares acting on
the matter if Shareholders holding more than 50% of the outstanding Shares have
responded to the consent solicitation or (iii) 67% of those Shares present or
represented by proxy at a meeting if Shareholders holding more than 50% of the
outstanding Shares are present or represented by proxy at the meeting).
ITEM 12. INDEMNIFICATION OF THE MANAGER AND ITS AFFILIATES.
- ----------------------------------------------------------
EVM and BMR, their trustee, and their officers, employees and affiliates
are entitled to indemnification from the Fund against all liabilities and
expenses incurred or paid by them in connection with any claim, suit, action or
proceeding in which they become involved as a party or otherwise. No
indemnification shall be provided to any such person with respect to any matter
as to which it shall be ultimately determined by final judicial decision that
such person did not act in good faith in the reasonable belief that such
person's action was in the best interest of the Fund and therefore is not
entitled to indemnification by the Fund. Expenses incurred in defending any
claim, suit, action or proceeding may be paid by the Fund as they are incurred
upon receipt in each case of an undertaking by or on behalf of the relevant
party to repay such amounts if it is ultimately determined that such party is
not entitled to be indemnified by the Fund in accordance with the LLC Agreement.
The indemnification is not to be deemed exclusive of any other rights to which
the indemnified parties may be entitled under any statute, contract or
otherwise.
The LLC Agreement provides that EVM and BMR, their trustee, and their
officers, employees and affiliates shall not be liable to the Fund or to any
Shareholder by reason of (i) any tax liabilities incurred by the Shareholders,
including, without limitation, as a result of their contribution of securities
to the Fund or upon the exchange of such securities from the Fund to the Company
or from the Company to the Portfolio, or as a result of any sale or distribution
of any such securities; (ii) any failure to withhold income tax under federal or
state tax laws with respect to income or gains allocated to the Shareholders;
(iii) any change in the federal or state tax laws or regulations or in the
interpretations thereof as they apply to the Portfolio, the Company, BRC, the
Fund or the Shareholders, whether such change or interpretation occurs through
legislative, judicial or administrative action; or (iv) any failure of BRC to
qualify as a REIT under the Code. The LLC Agreement also provides that such
persons, when acting in their respective capacities in connection with the
Fund's business or affairs, shall not be liable to the Fund or to any
Shareholder for any act, omission or breach of duty of any such person or of any
other such persons, provided that no such person shall be exonerated from such
liability who has been finally adjudicated by a court or other body before which
a proceeding was brought not to have acted in good faith in the reasonable
belief that such action was in the best interest of the Fund and to be liable to
the Fund or to such Shareholder by reason thereof.
Reference is made to Sections 3.2 and 13.1 of the LLC Agreement (Exhibit
3.1 hereto), which provisions are incorporated herein by reference.
17
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
- -----------------------------------------------------
The Fund's financial statements, together with the auditors' report
thereon, appearing on pages 20 through 48 hereof, are incorporated herein by
reference.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURES.
- --------------------------------------------------------------------------------
There have been no changes in, or disagreements with, accountants on
accounting and financial disclosures.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS.
- ------------------------------------------
(a) The following is a list of all financial statements filed as a part of
this registration statement:
(i) Consolidated Portfolio of Investments as of December 31, 2000
Consolidated Statement of Assets and Liabilities as of December
31, 2000
Consolidated Statement of Operations for the period from the
start of business, March 17, 2000, to December 31, 2000
Consolidated Statement of Changes in Net Assets for the period
from the start of business, March 17, 2000, to December 31, 2000
Consolidated Statement of Cash Flows for the period from the
start of business, March 17, 2000, to December 31, 2000
Notes to Consolidated Financial Statements
Independent Auditors' Report dated March 9, 2001
Portfolio of Investments of Tax-Managed Growth Portfolio as of
December 31, 2000
Statement of Assets and Liabilities of Tax-Managed Growth
Portfolio as of December 31, 2000
Statement of Operations of Tax-Managed Growth Portfolio for the
fiscal year ended December 31, 2000
Statements of Changes in Net Assets of Tax-Managed Growth
Portfolio for the fiscal years ended December 31, 2000 and
December 31, 1999
Supplementary Data of Tax-Managed Growth Portfolio for the fiscal
periods ended December 31, 2000, December 31, 1999, the two month
period ended December 31, 1998, October 31, 1998, October 31,
1997 and October 31, 1996
Notes to Financial Statements
Independent Auditors' Report dated February 16, 2001
18
(b) The following is a list of all exhibits filed as a part of this
registration statement:
3 Copy of Limited Liability Company Agreement of the Fund
dated March 17, 2000. (Note: the LLC Agreement also defines
the rights of the holders of Shares of the Fund)
4 Copy of Revolving Credit and Security Agreement dated as of
March 17, 2000; Agreement of Amendment thereto dated as of
May 16, 2000; Agreement of Amendment thereto dated as of
July 19, 2000; Agreement of Amendment thereto dated as of
September 27, 2000; Agreement of Amendment thereto dated as
of November 29, 2000; Agreement of Amendment thereto dated
as of February 22, 2001; and Agreement of Amendment thereto
dated as of March 15, 2001.
9 Not applicable and not filed.
10(1) Copy of Investment Advisory and Administration Agreement
between the Fund and Boston Management and Research dated
March 10, 2000.
10(2) Copy of Management Agreement between Belmar Realty
Corporation and Boston Management and Research dated March
10, 2000.
10(3) Copy of Investor Servicing Agreement between the Fund and
Eaton Vance Distributors, Inc. dated December 15, 1999.
10(4) Copy of Custody and Transfer Agency Agreement between the
Fund and Investors Bank & Trust Company dated December 15,
1999.
11 Not applicable and not filed.
12 Not applicable and not filed.
21 List of Subsidiaries of the Fund.
24 Not applicable and not filed.
99 Form N-SAR of Eaton Vance Tax-Managed Growth Portfolio (File
No. 811-7409) for its fiscal year ended December 31, 2000
filed electronically with the Securities and Exchange
Commission under the Investment Company Act of 1940 on March
1, 2001 (Accession No. 0000940394-01-000043) (incorporated
herein by reference pursuant to Rule 12b-32).
19
BELMAR CAPITAL FUND LLC AS OF DECEMBER 31, 2000
CONSOLIDATED PORTFOLIO OF INVESTMENTS
INVESTMENT IN BELVEDERE CAPITAL FUND
COMPANY LLC -- 75.4%
SECURITY SHARES VALUE
- -------------------------------------------------------------------------
Investment in Belvedere Capital Fund
Company LLC (Belvedere Capital) 14,032,906 $2,485,733,611
- -------------------------------------------------------------------------
Total Investment in Belvedere Capital
(identified cost $2,540,960,650) $2,485,733,611
- -------------------------------------------------------------------------
PARTNERSHIP PREFERENCE UNITS -- 17.6%
SECURITY UNITS VALUE
- -------------------------------------------------------------------------
Bradley Operating Limited Partnership
(Delaware Limited Partnership affiliate
of Bradley Real Estate, Inc.), 8.875%
Series B Cumulative Redeemable Perpetual
Preferred Units, Callable from 2/23/04+ 818,348 $ 16,022,763
Cabot Industrial Properties, L.P.
(Delaware Limited Partnership affiliate
of Cabot Industrial Trust), 8.625%
Series B Cumulative Redeemable
Preferred Units,
Callable from 4/29/04+ 1,300,000 57,543,590
Camden Operating, L.P. (Delaware Limited
Partnership affiliate of Camden Property
Trust), 8.50% Series B Cumulative
Redeemable Perpetual Preferred Units,
Callable from 2/23/04+ 3,231,954 71,410,993
CP Limited Partnership (Maryland Limited
Partnership affiliate of Chateau
Communities, Inc.), 8.125% Series A
Cumulative Redeemable Preferred Units,
Callable from 4/20/03+ 1,500,000 64,924,500
Essex Portfolio, L.P. (California
Limited Partnership affiliate of Essex
Property Trust, Inc.), 7.875% Series B
Cumulative Redeemable Preferred Units,
Callable from 2/6/03+ 675,000 25,349,625
Essex Portfolio, L.P. (California
Limited Partnership affiliate of Essex
Property Trust, Inc.), 9.30% Series D
Cumulative Redeemable Preferred Units,
Callable from 7/28/04+ 2,000,000 44,350,000
Essex Portfolio, L.P. (California
Limited Partnership affiliate of Essex
Property Trust, Inc.),9.125% Series C
Cumulative Redeemable Preferred Units,
Callable from 11/24/03+ 80,000 3,472,160
Kilroy Realty, L.P. (Delaware Limited
Partnership affiliate of Kilroy Realty
Corporation), 8.075% Series A Cumulative
Redeemable Preferred Units,
Callable from 2/6/03+ 724,000 27,340,412
Kilroy Realty, L.P. (Delaware Limited
Partnership affiliate of Kilroy Realty
Corporation), 9.375% Series C Cumulative
Redeemable Preferred Units,
Callable from 11/24/03+ 700,000 30,607,500
PSA Institutional Partners, L.P.
(California Limited Partnership
affiliate of Public Storage, Inc.),
9.50% Series N Cumulative Redeemable
Perpetual Preferred Units,
Callable from 3/17/05+ 2,555,000 66,555,706
SECURITY UNITS VALUE
- -------------------------------------------------------------------------
Prentiss Properties Acquisition
Partners, L.P. (Delaware Limited
Partnership affiliate of Prentiss
Properties Trust), 8.30% Series B
Cumulative Redeemable Perpetual
Preferred Units, Callable from 6/25/03+ 1,742,928 $ 69,518,600
Regency Centers, L.P. (Delaware Limited
Partnership affiliate of Regency Realty
Corporation), 8.125% Series A Cumulative
Redeemable Preferred Units,
Callable from 6/25/03+ 1,000,000 41,343,500
Regency Centers, L.P. (Delaware Limited
Partnership affiliate of Regency Realty
Corporation), 9.125% Series D Cumulative
Redeemable Preferred Units,
Callable from 9/29/04+ 150,000 13,933,395
Sun Communities Operating L. P.
(Michigan Limited Partnership affiliate
of Sun Communities, Inc.), 8.875%
Series A Cumulative Redeemable
Perpetual Preferred Units,
Callable from 9/29/04+ 2,000,000 46,304,800
- -------------------------------------------------------------------------
Total Partnership Preference Units
(identified cost $562,247,415) $ 578,677,544
- -------------------------------------------------------------------------
OTHER REAL ESTATE INVESTMENTS -- 6.9%
DESCRIPTION VALUE
- ------------------------------------------------------------------------
Rental Property(1)(2) $ 228,933,113
- -------------------------------------------------------------------------
Total Real Estate Investments
(identified cost $228,933,113) $ 228,933,113
- -------------------------------------------------------------------------
COMMERCIAL PAPER -- 0.1%
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
- -------------------------------------------------------------------------
Corporate Receivables Corp.,
6.53%, 1/2/01 $ 4,058 $ 4,057,378
- -------------------------------------------------------------------------
Total Commercial Paper
(at amortized cost, $4,057,378) $ 4,057,378
- -------------------------------------------------------------------------
Total Investments -- 100.0%
(identified cost $3,336,198,556) $3,297,401,646
- -------------------------------------------------------------------------
+ Security exempt from registration under the Securities Act of 1933. At
December 31, 2000, the value of these securities totaled $578,677,544 or
23.5% of net assets.
(1) Investment valued at fair value using methods determined in good faith
by or at the direction of the manager of Belmar Realty Corporation.
(2) Rental property represents twenty multi-family residential properties
located in nine states. None of the individual properties represent more
than 5% of net assets.
SEE NOTES TO FINANCIAL STATEMENTS
20
BELMAR CAPITAL FUND LLC AS OF DECEMBER 31, 2000
CONSOLIDATED FINANCIAL STATEMENTS
CONSOLIDATED STATEMENT OF ASSETS AND LIABILITIES
AS OF DECEMBER 31, 2000
Assets
- --------------------------------------------------------
Total investments, at value
(identified cost $3,336,198,556) $3,297,401,646
Cash 2,256,168
Cash - security deposits 308,197
Escrow deposits - restricted 13,785,139
Dividends receivable 5,337,003
Accounts receivable and other assets 1,371,180
Deferred expenses 882,499
Prepaid expenses 572,818
- --------------------------------------------------------
TOTAL ASSETS $3,321,914,650
- --------------------------------------------------------
Liabilities
- --------------------------------------------------------
Loan payable $ 613,500,000
Mortgage payable, net of unamortized
debt issuance costs 173,083,255
Open interest rate swap contracts, at
value 35,439,158
Payable for Fund Shares redeemed 3,218,084
Security deposits 740,964
Swap interest payable 357,842
Accrued expenses:
Interest expense 4,038,348
Accrued property taxes 2,614,810
Other accrued expenses 590,660
Other liabilities 3,054,387
Minority interest in controlled
subsidiaries 27,561,714
- --------------------------------------------------------
TOTAL LIABILITIES $ 864,199,222
- --------------------------------------------------------
NET ASSETS FOR 25,122,311 SHARES
OUTSTANDING $2,457,715,428
- --------------------------------------------------------
Shareholders' Capital (Note 4)
- --------------------------------------------------------
SHAREHOLDERS' CAPITAL $2,457,715,428
- --------------------------------------------------------
Net Asset Value & Redemption
Price Per Share
- --------------------------------------------------------
($2,457,715,428 DIVIDED BY 25,122,311
SHARES OUTSTANDING) $ 97.83
- --------------------------------------------------------
CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED
DECEMBER 31, 2000*
Investment Income
- ------------------------------------------------------
Dividends allocated from Belvedere
Capital
(net of foreign taxes, $53,681) $ 9,856,066
Interest allocated from Belvedere
Capital 3,458,020
Expenses allocated from Belvedere
Capital (6,972,347)
- ------------------------------------------------------
Net investment income allocated from
Belvedere Capital $ 6,341,739
Dividends from partnership preference
units 35,662,060
Rental income 11,132,687
Interest 194,233
- ------------------------------------------------------
TOTAL INVESTMENT INCOME $ 53,330,719
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Investment advisory and administrative
fee $ 3,888,594
Property management fees 447,300
Distribution and servicing fee 2,260,378
Interest expense on credit facility 21,171,471
Interest expense on swap contracts 5,433,853
Interest expense on mortgages 4,798,209
Property and maintenance expenses 3,498,342
Loan program structuring expense 1,344,696
Property taxes and insurance 1,190,236
Legal and accounting services 883,343
Organization expenses 708,924
Amortization of deferred expenses 108,959
Printing and postage 76,664
Custodian and transfer agent fees 34,470
Miscellaneous 357,478
- ------------------------------------------------------
TOTAL EXPENSES $ 46,202,917
Deduct --
Reduction of investment adviser and
administrative fee 1,120,030
- ------------------------------------------------------
NET EXPENSES $ 45,082,887
- ------------------------------------------------------
Net investment income before minority
interest share in net income of
controlled subsidiaries $ 8,247,832
Minority interest in net income of
controlled subsidiaries (317,338)
- ------------------------------------------------------
NET INVESTMENT INCOME $ 7,930,494
- ------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions from
Belvedere Capital
(identified cost basis) $ 13,706,147
- ------------------------------------------------------
NET REALIZED GAIN $ 13,706,147
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investment in Belvedere Capital
(identified cost basis) $(55,227,039)
Investments in partnership preference
units (identified cost basis) 16,430,129
Interest rate swap contracts (35,439,158)
- ------------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $(74,236,068)
- ------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS $(60,529,921)
- ------------------------------------------------------
NET DECREASE IN NET ASSETS FROM
OPERATIONS $(52,599,427)
- ------------------------------------------------------
* For the period from the start of business, March 17, 2000, to
December 31, 2000.
SEE NOTES TO FINANCIAL STATEMENTS
21
BELMAR CAPITAL FUND LLC AS OF DECEMBER 31, 2000
CONSOLIDATED FINANCIAL STATEMENTS CONT'D
CONSOLIDATED STATEMENT OF CHANGES IN NET ASSETS
INCREASE (DECREASE) PERIOD ENDED
IN NET ASSETS DECEMBER 31, 2000*
- ---------------------------------------------------------------
Net investment income $ 7,930,494
Net realized gain on investment
transactions 13,706,147
Net change in unrealized appreciation
(depreciation) of investments (74,236,068)
- ---------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM
OPERATIONS $ (52,599,427)
- ---------------------------------------------------------------
Transactions in Fund Shares --
Investment securities contributed $ 2,605,411,580
Less -- Selling commissions (8,745,977)
- ---------------------------------------------------------------
Net contributions $ 2,596,665,603
Net asset value of Shares issued to
Shareholders in payment of
distributions declared 3,261,813
Net asset value of Shares redeemed (81,434,649)
- ---------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS $ 2,518,492,767
- ---------------------------------------------------------------
Distributions to Shareholders
Belmar Capital Fund $ (7,526,915)
Special distributions to Shareholders (744,698)
Preferred Shareholders of BRC (11,299)
- ---------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (8,282,912)
- ---------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 2,457,610,428
- ---------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------
At beginning of period $ 105,000
- ---------------------------------------------------------------
AT END OF PERIOD $ 2,457,715,428
- ---------------------------------------------------------------
* For the period from the start of business, March 17, 2000, to
December 31, 2000.
CONSOLIDATED STATEMENT OF CASH FLOWS
PERIOD ENDED
INCREASE (DECREASE) IN CASH DECEMBER 31, 2000*
- ---------------------------------------------------------------
Cash Flows From (For) Operating
Activities --
Net investment income $ 7,930,494
Adjustment to reconcile net
investment income to net cash
flows used for operating
activities --
Amortization of offering costs 108,959
Net investment income allocated
from Belvedere Capital (6,341,739)
Increase in dividends receivables (5,337,003)
Increase in security deposits (308,197)
Increase in deferred costs (891,150)
Increase in prepaid expenses (572,818)
Increase in escrow deposits (30,139)
Decrease in other assets 168,970
Increase in interest payable for
open swap contracts 357,842
Increase in minority interest 210,000
Increase in accrued property taxes 2,614,810
Increase in accrued interest and
accrued operating expenses 3,265,529
Purchase of partnership preference
units (566,518,883)
Payments for investments in other
real property (39,406,839)
Cash assumed in connection with
acquisition of real
estate investments 432,064
Improvements to real estate (1,466,114)
Sale of partnership preference
units 4,271,468
Net decrease in investment in
Belvedere Capital 8,019,495
Investment in short-term
investments (4,057,378)
Minority interest in share of net
investment income of controlled
subsidiary 317,338
- ---------------------------------------------------------------
NET CASH FLOWS USED FOR OPERATING
ACTIVITIES $ (597,233,291)
- ---------------------------------------------------------------
Cash Flows From (For) Financing
Activities --
Proceeds of loan $ 613,500,000
Payments on behalf of investors
(selling commissions) (8,745,977)
Payment on mortgage (188,670)
Capital contributed to controlled
subsidiaries 763,211
Payment of distributions (4,206,269)
Payments for Fund Shares redeemed (1,737,836)
- ---------------------------------------------------------------
NET CASH FLOWS FROM FINANCING ACTIVITIES $ 599,384,459
- ---------------------------------------------------------------
NET INCREASE IN CASH $ 2,151,168
- ---------------------------------------------------------------
CASH AT BEGINNING OF PERIOD $ 105,000
- ---------------------------------------------------------------
CASH AT END OF PERIOD $ 2,256,168
- ---------------------------------------------------------------
Supplemental Disclosure and Non-cash
Investing and Financing Activities
- ---------------------------------------------------------------
Securities contributed by Shareholders,
invested in Belvedere Capital $ 2,605,411,580
Change in unrealized depreciation of
investments and open swap contracts $ (74,236,068)
Interest paid for loan $ 18,424,162
Interest paid for mortgages $ 3,507,170
Interest paid for swap contracts $ 5,076,011
Market value of securities distributed
in payment of redemptions $ 76,478,729
Market value of real property and other
assets, net of current liabilities,
assumed in conjunction with
acquisition of real estate
investments $ 242,515,000
Mortgages assumed in conjunction with
acquisition of real property $ 176,836,466
- ---------------------------------------------------------------
* For the period from the start of business, March 17, 2000 to
December 31, 2000.
SEE NOTES TO FINANCIAL STATEMENTS
22
BELMAR CAPITAL FUND LLC AS OF DECEMBER 31, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1 Organization
- -------------------------------------------
A Investment Objective -- Belmar Capital Fund LLC (Belmar Capital) is a
Delaware limited liability company established to offer diversification and
tax-sensitive investment management to persons holding large and
concentrated positions in equity securities of selected publicly-traded
companies. The investment objective of Belmar Capital is to achieve
long-term, after-tax returns for Shareholders. Belmar Capital pursues this
objective primarily by investing indirectly in Tax-Managed Growth Portfolio
(the Portfolio), a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended. The
Portfolio is organized as a trust under the laws of the state of New York.
Belmar Capital maintains its investment in the Portfolio by investing in
Belvedere Capital Fund Company LLC (Belvedere Capital), a separate
Massachusetts limited liability company that invests exclusively in the
Portfolio. The performance of Belmar Capital and Belvedere Capital are
directly and substantially affected by the performance of the Portfolio.
Separate from its investment in the Portfolio through Belvedere Capital,
Belmar Capital invests in real estate assets including income-producing
preferred equity interests in real estate operating partnerships
(partnership preference units) affiliated with publicly-traded real estate
investment trusts (REITs) and an interest in a controlled real property
subsidiary.
B Subsidiaries -- Belmar Capital invests in real estate through its
subsidiary Belmar Realty Corporation (BRC). BRC invests directly in
partnership preference units and indirectly in real property through a
controlled subsidiary, Bel Alliance Apartments, LLC (Bel Apartments).
BRC -- BRC invests directly in partnership preference units and also holds
a majority interest in Bel Apartments. At December 31, 2000, Belmar Capital
owned 100% of the common stock issued by BRC and intends to hold all of
BRC's common stock at all times. Additionally, 2,100 shares of preferred
stock of BRC are outstanding at December 31, 2000. The preferred stock has
a par value of $0.01 per share and is redeemable by BRC at a redemption
price of $100 per share after the occurrence of certain tax events or after
December 31, 2005. Dividends on the preferred stock are cumulative and
payable annually equal to $8 per share. The interest in preferred stock is
recorded as a minority interest on the Consolidated Statement of Assets and
Liabilities.
Bel Apartments -- Bel Apartments, a majority-owned subsidiary of BRC, owns
twenty multi-family residential properties (collectively, the Bel
Apartments Properties) located in nine states (Tennessee, South Carolina,
Texas, Florida, North Carolina, Missouri, Georgia, Virginia and Nevada).
BRC owns 100% of the Class A units of Bel Apartments, representing 60% of
the equity interests in Bel Apartments, and a minority shareholder (the Bel
Apartments Minority Shareholder) owns 100% of the Class B units,
representing 40% of the equity interests in Bel Apartments. The Class B
equity interest is recorded as a minority interest on the Consolidated
Statement of Assets and Liabilities. The primary distinction between the
two classes of shares is the distribution priority and voting rights. BRC
has priority in distributions and has greater voting rights than the
holders of the Class B units.
The accompanying consolidated financial statements include the accounts of
Belmar Capital, BRC and Bel Apartments (collectively, the Fund). All
material intercompany accounts and transactions have been eliminated.
The audited 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.
2 Significant Accounting Policies
- -------------------------------------------
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 Costs -- The Fund's investment assets were principally acquired
on March 17, 2000, May 16, 2000, July 19, 2000, September 27, 2000 and
November 29, 2000 through contributions of common stock by Shareholders in
exchange for Shares of the Fund, in private purchases of partnership
preference units and through contributions of real estate investments in
exchange for cash and a minority interest in a controlled subsidiary. The
Fund immediately exchanged the contributed securities into Belvedere
Capital for shares thereof, and Belvedere Capital, in turn, immediately
thereafter exchanged the contributed securities into the Portfolio for an
interest in the Portfolio. The cost at which the Fund's investments of
contributed securities are carried in the financial statements is the value
of the contributed securities as of the close of business on the day prior
to their contribution to the Fund. The initial tax basis of the Fund's
investment in the Portfolio through Belvedere Capital is the same as the
contributing Shareholders' basis in securities and cash contributed to the
23
BELMAR CAPITAL FUND LLC AS OF DECEMBER 31, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONT'D
Fund. The initial tax and financial reporting basis of the Fund's
investments in securities and real estate purchased by the Fund is the
purchase cost. The cost at which the Fund's investments in real estate
contributed to the Fund is carried in the financial statements is the
market value on contribution date. The initial tax basis of real estate
investments contributed to the Fund is the contributor's tax basis at the
time of contribution or value at the time of contribution, depending on the
taxability of the contribution.
B Investment Valuations -- The Fund's investments consist of partnership
preference units, other real property investments, shares of Belvedere
Capital and short-term debt securities. Belvedere Capital's only investment
is an interest in the Portfolio, the value of which is derived from a
proportional interest therein. Additionally, the Fund has entered into
interest rate swap contracts (Note 8). The valuation policy followed by the
Fund, Belvedere Capital and the Portfolio is as follows:
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 fair value. Other fixed income and debt
securities, including listed securities and securities for which price
quotations are available, are normally valued on the basis of valuations
furnished by a pricing service. Investments held by the Portfolio 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. Investments held by the Fund for which valuations or market
quotations are unavailable are valued at fair value using methods
determined in good faith by Boston Management and Research (BMR), a wholly
owned subsidiary of Eaton Vance Management (EVM), as investment adviser.
Interest rate swap contracts for which prices are unavailable are valued as
determined in good faith by BMR.
The value of the Fund's real estate assets is determined in good faith by
BMR, as manager of BRC, taking into account all relevant factors, data and
information, including, with respect to investments in partnership
preference units, information from dealers and similar firms with knowledge
of such issues and the prices of comparable preferred equity securities and
other fixed or adjustable rate instruments having similar investment
characteristics. Real estate investments other than partnership preference
units are generally stated at estimated market values based upon
independent valuations assuming orderly disposition of assets. Detailed
investment valuations are performed annually and reviewed periodically and
adjusted if there has been a significant change in economic circumstances
since the previous valuation.
C Interest Rate Swaps -- The Fund has entered into interest rate swap
agreements with respect to its borrowings and real estate investments.
Pursuant to these agreements, the Fund makes periodic payments to the
counterparty at predetermined fixed rates, in exchange for floating-rate
payments from the counterparty that fluctuate with one-month LIBOR. During
the terms of the outstanding swap agreements, changes in the underlying
values of the swaps are recorded as unrealized gains or losses. The Fund is
exposed to credit loss in the event of non-performance by the swap
counterparty.
D Written Options -- The Portfolio and the Fund may write listed and
over-the-counter call options on individual securities, on baskets of
securities and on stock market indices. Upon the writing of a call option,
an amount equal to the premium received by the Portfolio or Fund is
included in the Statement of Assets and Liabilities as a liability. The
amount of the liability is subsequently marked-to-market to reflect the
current value of the option written in accordance with the investment
valuation policies discussed above. Premiums received from writing options
that expire are treated as realized gains. Premiums received from writing
options that are exercised or are closed are added to or offset against the
proceeds or amount paid on the transaction to determine the realized gain
or loss. The Portfolio or Fund as a writer of an option may have no control
over whether the underlying securities may be sold and as a result bears
the market risk of an unfavorable change in the price of the securities
underlying the written option.
E Purchased Options -- Upon the purchase of a put option, the premium paid by
the Portfolio or Fund is included in the Statement of Assets and
Liabilities as an investment. The amount of the investment is subsequently
marked-to-market to reflect the current market value of the option
purchased, in accordance with the investment valuation policies discussed
above. If an option which the Portfolio or Fund has purchased expires on
the stipulated expiration date, the Portfolio or Fund will realize a loss
in the amount of the cost of the option. If the Portfolio or Fund enters
24
BELMAR CAPITAL FUND LLC AS OF DECEMBER 31, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONT'D
into a closing sale transaction, the Portfolio or Fund will realize a gain
or loss, depending on whether the sales proceeds from the closing sale
transaction are greater or less than the cost of the option. If the
Portfolio or Fund exercises a put option, it will realize a gain or loss
from the sale of the underlying security and the proceeds from such sale
will be decreased by the premium originally paid.
F Rental Operations -- The apartment units held by Bel Apartments are leased
to residents generally for terms of one year or less, with monthly payments
due in advance.
The escrow accounts related to Bel Apartments consist of deposits for real
estate taxes, insurance, environmental, renovation, debt service and
security deposit accounts. Bel Apartments has no access to these funds once
deposited into the escrow accounts. Amounts are held by a financial
institution and controlled by the lender (Note 9).
Costs incurred in connection with acquisitions of properties have been
capitalized. Significant betterments and improvements are capitalized as
part of the building and improvements.
G Income -- Dividend income is recorded on the ex-dividend date and interest
and rental income are recorded on the accrual basis.
Belvedere Capital's net investment income or loss consists of Belvedere
Capital's pro-rata share of the net investment income of the Portfolio,
less all actual or accrued expenses of Belvedere Capital, determined in
accordance with generally accepted accounting principles. The Fund's net
investment income or loss consists of the Fund's pro-rata share of the net
investment income of Belvedere Capital, plus all income earned on the
Fund's direct investments, less all actual and accrued expenses of the Fund
determined in accordance with generally accepted accounting principles.
H Deferred Costs -- Costs incurred by the Fund in connection with its
organization have been expensed as incurred. Deferred mortgage origination
expenses incurred in connection with the financing of Bel Apartments are
amortized over the term of the loans.
I Income Taxes -- Belmar Capital, Belvedere Capital and the Portfolio are
treated as partnerships for federal income tax purposes. As a result,
Belmar Capital, Belvedere Capital and the Portfolio do not incur federal
income tax liability, and the shareholders and partners thereof are
individually responsible for taxes on items of partnership income, gain,
loss and deduction. The policy of BRC and Bel Apartments is to comply with
the Internal Revenue Code applicable to REITs. BRC and Bel Apartments will
generally not be subject to federal income tax to the extent that they
distribute their earnings to their stockholders each year and maintain
their qualifications as REITs.
J Other -- Investment transactions are accounted for on a trade date basis.
K 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 income and expense during the reporting period. Actual results
could differ from those estimates.
3 Distributions to Shareholders
- -------------------------------------------
The Fund intends to distribute each year all of its net investment income
for the year, if any, and approximately 22% of its net realized capital
gains for such year, if any, other than precontribution gains allocated to
a Shareholder in connection with a tender offer or other extraordinary
corporate event with respect to a security contributed by such Shareholder,
for which no capital gain distribution is made. In addition, whenever a
distribution in respect of a precontribution gain is made, the Fund makes a
supplemental distribution to compensate Shareholders receiving such
distributions for taxes that may be due in connection with the
precontribution gain and supplemental distributions. Special distributions
paid during the period from the start of business, March 17, 2000, to
December 31, 2000 totaled $744,698.
In addition, BRC and Bel Apartments intend to distribute substantially all
of their taxable income earned by the respective entities during the year.
Distributions made to Shareholders electing the Fund's Estate Freeze
feature (Note 4) will be paid, first, to holders of Preferred Shares to the
extent of the unpaid cumulative annual priority return of the Preferred
Shares and, second, to the holders of the associated Common Shares.
Distributions made in respect of any realized precontribution gains and
associated supplemental distributions will be apportioned between Preferred
Shares and Common Shares consistent with the allocation to the Preferred
Shares and Common Shares of such realized precontribution gains. It is
25
BELMAR CAPITAL FUND LLC AS OF DECEMBER 31, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONT'D
expected that substantially all Fund distributions in respect of Estate
Freeze Shares will be paid to holders of Preferred Shares rather than
holders of Common Shares. Distributions on Estate Freeze Shares may be
reinvested in the Fund to purchase undivided Shares at the Fund's net asset
value per Share on the date of reinvestment.
4 Shareholder Transactions
- -------------------------------------------
The Fund may issue an unlimited number of full and fractional Fund Shares.
Transactions in Fund Shares, including contributions of securities in
exchange for Shares of the Fund, were as follows:
PERIOD ENDED
DECEMBER 31, 2000*
---------------------------------------------------------------
Issued at Fund closings 25,888,893
Issued to Shareholders electing to
receive payment of distributions in
Fund Shares 32,900
Redemptions (800,532)
---------------------------------------------------------------
NET INCREASE 25,121,261
---------------------------------------------------------------
* For the period from the start of business, March 17, 2000, to
December 31, 2000.
Redemptions of Fund Shares held less than three years are generally subject
to a redemption fee of 1% of the net asset value of Shares redeemed. The
redemption fee is paid to Eaton Vance Distributors, Inc. (EVD) by the Fund
on behalf of the redeeming Shareholder. No charge is levied on redemptions
of Shares acquired through the reinvestment of distributions, Shares
redeemed in connection with a tender offer or other extraordinary corporate
event or Shares redeemed following the death of all of the initial holders
of the Shares redeemed. In addition, no fee applies to redemptions made
pursuant to a Systematic Redemption Plan whereby a Shareholder can redeem
up to 2% of Shares held on a quarterly basis. For the period from the start
of business, March 17, 2000, to December 31, 2000, EVD received $749,356 in
redemption fees.
In connection with the offering of Shares, EVD, the Placement Agent,
received $8,745,977 in selling commissions paid by the Fund on behalf of
Shareholders. EVD, in turn, paid this amount to the applicable subagent on
behalf of Shareholders investing in the Fund through such subagent. In
addition, EVD made payments to subagents from its own resources totaling
$25,975,659 equal to 1.0% of the value of investments in the Fund made
through subagents.
Shareholders in the Fund are entitled to restructure their Share interests
under what is termed an Estate Freeze Election. Under this election, Shares
are divided into Preferred Shares and Common Shares. Preferred Shares have
a preferential right over the corresponding Common Shares equal to (i) 95%
of the original capital contribution made in respect of the undivided
Shares from which the Preferred Shares and Common Shares were derived, plus
(ii) an annuity priority return equal to 8.5% of the Preferred Shares'
preferential interest in the original capital contribution of the undivided
Shares. The associated Common Shares are entitled to the remaining 5% of
the original capital contribution in respect of the undivided Shares, plus
any returns thereon in excess of the fixed annual priority of the Preferred
Shares. The existence of restructured Shares does not adversely affect
Shareholders who do not participate in the election nor do the restructured
Shares have preferential rights to Shares that have not been restructured.
Shareholders who subdivide Shares under this election sacrifice certain
rights and privileges that they would otherwise have with respect to the
Shares so divided, including redemption rights and voting and consent
rights. Upon the twentieth anniversary of the issuance of the associated
undivided Shares to the original holders thereof, Preferred and Common
Shares will automatically convert into full and fractional undivided
Shares.
The allocation of the Fund's net asset value per Share of $97.83 between
Preferred and Common Shares that have been restructured is as follows:
PER SHARE VALUE
AT DECEMBER 31, 2000
---------------------------------------------------------------
PREFERRED COMMON
DATE OF CONTRIBUTION SHARES SHARES
---------------------------------------------------------------
March 17, 2000 $ 95.00 $ 2.83
May 16, 2000 94.80 3.03
July 19, 2000 97.83 0.00
5 Investment Transactions
- -------------------------------------------
Increases and decreases of the Fund's investment in Belvedere Capital for
the period from the start of business March 17, 2000, to December 31, 2000
aggregated $2,676,465,530 and $155,552,766, respectively. Purchases and
sales of partnership preference units aggregated $566,518,883 and
$4,271,468, respectively, during the period from the start of business,
March 17, 2000, to December 31, 2000. For the period from the start of
business, March 17, 2000, to December 31, 2000, acquisitions of other real
property totaled $39,406,839.
26
BELMAR CAPITAL FUND LLC AS OF DECEMBER 31, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONT'D
Purchases and sales of partnership preference units during the period ended
December 31, 2000 include amounts purchased from and sold to other funds
sponsored by EVM.
6 Indirect Investment in Portfolio
- -------------------------------------------
Belvedere Capital's interest in the Portfolio at December 31, 2000, was
$9,944,343,179, representing 54.1% of the Portfolio's net assets. The
Fund's investment in Belvedere Capital at December 31, 2000 was
$2,485,733,611, representing 25.0% of Belvedere Capital's net assets.
Investment income allocated to Belvedere Capital from the Portfolio for the
period from the Fund's start of business, March 17, 2000, to December 31,
2000 totaled $81,806,060, of which $13,314,086 was allocated to the Fund.
Expenses allocated to Belvedere Capital from the Portfolio for the period
from the Fund's start of business, March 17, 2000, to December 31, 2000
totaled $32,799,177, of which $5,177,576 was allocated to the Fund.
Belvedere Capital allocated additional expenses to the Fund of $1,794,771
for the period from the Fund's start of business, March 17, 2000, to
December 31, 2000, representing $63,086 of operating expenses and
$1,731,685 of service fees (Note 10).
7 Rental Property
- -------------------------------------------
The average occupancy rate for real property held by Bel Apartments,
consisting of 5,806 residential units, was approximately 89.8% at December
31, 2000. The value of real property owned by the Fund through Bel
Apartments at December 31, 2000 is as follows:
Land $ 44,302,798
Buildings, improvements and other assets 184,630,315
------------------------------------------------------
VALUE $228,933,113
------------------------------------------------------
8 Cancelable Interest Rate Swap Agreements
- -------------------------------------------
The Fund has entered into cancelable interest rate swap agreements in
connection with its real estate investments and the associated borrowings.
The notional or contractual amounts of these instruments may not
necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these investments is meaningful
only when considered in conjunction with all related assets, liabilities
and agreements. As of December 31, 2000, the Fund has entered into
cancelable interest rate swap agreements with Merrill Lynch Capital
Services, Inc.
UNREALIZED
NOTIONAL INITIAL DEPRECIATION
AMOUNT OPTIONAL FINAL AT
EFFECTIVE (000'S FIXED FLOATING TERMINATION TERMINATION DECEMBER 31,
DATE OMITTED) RATE RATE DATE DATE 2000
------------------------------------------------------------------------------------------
3/00 $27,500 8.96% Libor + .40% 3/05 3/30 $ 2,090,656
3/00 19,146 9.09% Libor + .40% 4/04 3/30 1,275,653
3/00 43,181 9.20% Libor + .40% 6/03 3/30 2,349,306
3/00 21,766 9.24% Libor + .40% 4/03 3/30 1,131,694
3/00 38,102 9.11% Libor + .40% 2/04 3/30 2,441,132
3/00 20,659 9.13% Libor + .40% 11/03 3/30 1,242,356
3/00 23,027 9.05% Libor + .40% 7/04 3/30 1,599,508
5/00 10,773 9.54% Libor + .40% 4/03 3/30 664,167
5/00 12,984 9.50% Libor + .40% 6/03 3/30 839,556
5/00 9,608 9.46% Libor + .40% 11/03 3/30 700,422
5/00 13,274 9.42% Libor + .40% 2/04 3/30 1,019,736
5/00 12,063 9.38% Libor + .40% 4/04 3/30 954,860
5/00 10,799 9.35% Libor + .40% 7/04 3/30 896,944
5/00 41,185 9.31% Libor + .40% 9/04 3/30 3,490,916
5/00 7,255 9.26% Libor + .40% 3/05 3/30 663,842
7/00 22,982 9.17% Libor + .40% 2/03 3/30 1,050,464
7/00 28,305 9.15% Libor + .40% 4/03 3/30 1,389,085
7/00 32,404 9.13% Libor + .40% 6/03 3/30 1,684,599
7/00 3,383 9.08% Libor + .40% 11/03 3/30 196,831
7/00 12,062 9.00% Libor + .40% 2/04 3/30 716,644
7/00 24,622 8.985% Libor + .40% 4/04 3/30 1,528,127
7/00 9,184 8.97% Libor + .40% 7/04 3/30 604,506
7/00 13,454 8.93% Libor + .40% 9/04 3/30 899,160
7/00 17,888 8.87% Libor + .40% 3/05 3/30 1,277,995
9/00 39,407 7.46% Libor + .40% -- 9/10 2,741,566
11/00 11,776 8.34% Libor + .40% 3/05 3/30 354,841
11/00 2,338 8.41% Libor + .40% 9/04 3/30 66,110
11/00 23,636 8.48% Libor + .40% 2/04 3/30 588,364
11/00 20,264 8.60% Libor + .40% 6/03 3/30 433,793
11/00 28,629 8.66% Libor + .40% 2/03 3/30 546,325
-------------------------------------------------------------------------------------
TOTAL $35,439,158
-------------------------------------------------------------------------------------
27
BELMAR CAPITAL FUND LLC AS OF DECEMBER 31, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONT'D
9 Debt
- -------------------------------------------
A Mortgage -- Real property held by Bel Apartments is financed through loans
collateralized by its real estate assets, mortgage loan deposit accounts,
including all subaccounts thereunder, and an assignment of certain leases
and rents. Balances at December 31, 2000, excluding unamortized debt
issuance costs, are as follows:
MONTHLY
ANNUAL PRINCIPAL AND BALANCE AT
INTEREST INTEREST DECEMBER 31,
MATURITY DATE RATE PAYMENT 2000
- --------------------------------------------------------------------------------
October 1, 2010 8.56% $ 530,376 $ 68,531,692
October 1, 2010 8.54% 458,550 59,359,514
October 1, 2010 8.55% 299,792 38,772,626
September 1, 2027 7.68% 73,293 9,983,964
- --------------------------------------------------------------------------------
$1,362,011 $176,647,796
- --------------------------------------------------------------------------------
MONTHLY ANNUAL PRINCIPAL AND BALANCE AT
INTEREST INTEREST DECEMBER 31, MATURITY DATE RATE PAYMENT 2000
---------------------------------------------------------------------------
October 1, 2010 8.56% $ 530,376 $ 68,531,692 October 1, 2010 8.54% 458,550
59,359,514 October 1, 2010 8.55% 299,792 38,772,626 September 1, 20 7.68%
73,293 9,983,964
---------------------------------------------------------------------------
$1,362,011 $176,647,796
---------------------------------------------------------------------------
Scheduled repayments of mortgages, excluding unamortized debt issuance costs,
for the years subsequent to December 31, 2000 are as follows:
YEARS ENDING DECEMBER 31, AMOUNT
------------------------------------------------------
2001 $ 1,175,020
2002 1,277,787
2003 1,393,907
2004 1,476,894
2005 1,649,899
Thereafter 169,674,289
------------------------------------------------------
$176,647,796
------------------------------------------------------
B Credit Facility -- The Fund has entered into a revolving securitization
facility (the Commercial Paper Facility) of up to $650 million (increased
to $700 million subsequent to December 31, 2000) with a special purpose
commercial paper issuer (the CP Issuer) and Citicorp North America, Inc.,
as agent for the CP Issuer. The Commercial Paper Facility is supported by a
committed liquidity facility (the Liquidity Facility) provided by Citibank,
N.A., under which borrowings may be made for a maximum term of seven years
from the Fund's initial closing. The CP Issuer funds advances under the
Commercial Paper Facility by issuing highly rated commercial paper notes.
On borrowings under the Commercial Paper Facility, the Fund pays a rate of
interest equal to the CP Issuer's cost of funding plus a margin and certain
fees and expenses. Interest expense includes a commitment fee of
approximately 0.18% per year on the unused portion of the Commercial Paper
Facility. In the event that the CP issuer is unable or unwilling to
maintain advances to the Fund, it may assign its advances to the providers
of the Liquidity Facility. Borrowings under the Liquidity Facility will be
at an annual rate of one-month Libor plus 0.75%.
Initial borrowings under the Commercial Paper Facility have been used to
purchase qualifying assets, to pay organizational costs and selling
expenses of the Fund, and to provide for short-term liquidity needs of the
Fund. Additional borrowings under the Commercial Paper Facility may be made
in the future for these purposes. At December 31, 2000, amounts outstanding
under the Commercial Paper Facility totaled $613,500,000.
10 Management Fees and Other Transactions with Affiliates
- -------------------------------------------
The Fund and the Portfolio have engaged BMR as investment adviser. Under
the terms of the advisory agreement with the Portfolio, 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 Fund's start of
business, March 17, 2000, to December 31, 2000 the advisory fee applicable
to the Portfolio was 0.43% (annualized) of average daily net assets.
Belvedere Capital's allocated portion of the advisory fee totaled
$31,663,912 of which $4,961,681 was allocated to the Fund for the period
from the Fund's start of business, March 17, 2000, to December 31, 2000.
In addition, Belmar Capital pays BMR, but for the fee cap described below,
a monthly advisory and administrative fee of 1/20 of 1% (0.60% annually) of
the average daily gross assets of Belmar Capital reduced by the portion of
the advisory and management fees payable by the Portfolio and BRC that is
attributable to the value of the Fund's direct or indirect investment
therein. The term "gross assets" with respect to Belmar Capital is defined
to include all of Belmar Capital's assets (including Belmar Capital's
interest in Belvedere Capital and Belmar Capital's ratable share of the
assets of its controlled subsidiaries), without reduction by any
liabilities. BRC pays BMR a monthly management fee at a rate of 1/20 of
1%(equivalent to 0.60% annually) of the average daily gross assets of BRC.
The term "gross assets" with respect to BRC is defined to include all
assets of BRC without reduction by any liabilities. The advisory and
management fees payable by the Portfolio and BRC in respect of Belmar
Capital's direct or indirect investment therein is credited toward Belmar
Capital's advisory and administrative fee payment. For the period from the
28
BELMAR CAPITAL FUND LLC AS OF DECEMBER 31, 2000
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS CONT'D
start of business, March 17, 2000, to December 31, 2000, the advisory and
administrative fee payable to BMR by the Fund, less the Fund's allocated
share of the Portfolio's advisory fee, totaled $3,888,594.
EVM and BMR will not receive separate compensation for serving as manager
of Belmar Capital and manager of Belvedere Capital, respectively.
As compensation for its services as placement agent, Belmar Capital pays
EVD a monthly distribution fee at a rate of 1/120 of 1% (equivalent to
0.10% annually) of Belmar Capital's average daily net assets. For the
period from the start of business, March 17, 2000, to December 31, 2000,
Belmar Capital's distribution fees paid or accrued to EVD totaled
$1,120,030.
Payments to the Eaton Vance organization for investment advisory,
management, administration and distribution services made by or in respect
of the Fund on a direct or indirect basis are subject to a monthly fee cap
at a rate of 1/20 of 1% (equivalent to 0.60% annually) of the average daily
gross assets of Belmar Capital (as defined above). Payments subject to the
monthly fee cap are the distribution fee, Belmar Capital's share of the
advisory and management fees paid by the Portfolio and BRC and Belmar
Capital's advisory and administrative fee. BMR has agreed to waive a
portion of the monthly advisory and administrative fee otherwise payable by
Belmar Capital as necessary to comply with the monthly fee cap. For the
period from the start of business, March 17, 2000, to December 31, 2000,
BMR has waived $1,120,030 of the advisory and administrative fee of Belmar
Capital.
Pursuant to a servicing agreement between Belvedere Capital and EVD,
Belvedere Capital pays a servicing fee to EVD for providing certain
services and information to shareholders. The servicing fee is paid on a
quarterly basis at an annual rate of 0.15% of Belvedere Capital's average
daily net assets and totaled $10,980,870 for the period from the Fund's
start of business, March 17, 2000, to December 31, 2000, of which
$1,731,685 was allocated to Belmar Capital. Pursuant to a servicing
agreement between Belmar Capital and EVD, Belmar Capital pays a servicing
fee to EVD on a quarterly basis at an annual rate of 0.25% of Belmar
Capital's average daily net assets, less Belmar Capital's allocated share
of the servicing fee payable by Belvedere Capital. For the period from the
start of business, March 17, 2000, to December 31, 2000, the servicing fee
paid directly by Belmar Capital totaled $1,140,348.
Bel Apartments indirectly holds real property through four operating
partnerships. Each operating partnership has entered into a management
agreement with an affiliate of the Bel Apartments Minority Shareholder
(Note 1B). The management agreements provide for a management fee and allow
for reimbursement to the manager for all direct expenses incurred by the
manager for managing the Bel Apartments Properties. For the period from
inception, September 9, 2000, to December 31, 2000, Bel Apartments paid or
accrued property management fees amounting to $447,300.
29
BELMAR CAPITAL FUND LLC AS OF DECEMBER 31, 2000
INDEPENDENT AUDITORS' REPORT
TO THE SHAREHOLDERS
OF BELMAR CAPITAL FUND LLC AND SUBSIDIARIES
- ---------------------------------------------
We have audited the accompanying consolidated statement of assets and
liabilities, including the consolidated portfolio of investments, of Belmar
Capital Fund LLC and Subsidiaries (collectively, the Fund), as of December 31,
2000, and the related consolidated statements of operations, changes in net
assets and cash flows for the period from the start of business, March 17, 2000,
to December 31, 2000. These financial statements are the responsibility of the
Fund's management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements 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 securities owned as of
December 31, 2000 by correspondence with the custodian. 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 referred to above present fairly, in
all material respects, the consolidated financial position of the Fund as of
December 31, 2000, the results of its consolidated operations, consolidated
changes in net assets and consolidated cash flows for the period from the start
of business, March 17, 2000, to December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.
30
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
PORTFOLIO OF INVESTMENTS
COMMON STOCKS -- 98.1%
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Advertising and Marketing Services -- 3.4%
- --------------------------------------------------------------------------
ACNielsen Corp.(1) 66,001 $ 2,392,536
Advo, Inc.(1) 670,000 29,731,250
Catalina Marketing Corp.(1) 76,714 2,987,051
Harte-Hanks Communications, Inc. 135,487 3,209,348
Havas Advertising ADR(1) 2,431,419 34,343,793
IMS Health, Inc. 498,012 13,446,324
Interpublic Group Cos., Inc. 3,641,817 155,004,836
Lamar Advertising Co.(1) 857,818 33,106,456
Omnicom Group, Inc. 3,174,478 263,084,864
TMP Worldwide, Inc.(1) 119,580 6,576,900
TMP Worldwide, Inc.(1)(2)(3) 34,846 1,916,128
True North Communications, Inc. 499,879 21,244,857
Valassis Communications, Inc.(1) 975,000 30,773,438
Ventiv Health, Inc.(1) 160,833 2,020,465
WPP Group PLC 488,000 6,356,639
WPP Group PLC ADR 155,310 9,755,409
- --------------------------------------------------------------------------
$ 615,950,294
- --------------------------------------------------------------------------
Aerospace and Defense -- 0.8%
- --------------------------------------------------------------------------
Boeing Company (The) 1,634,544 $ 107,879,904
Boeing Company (The)(2)(3) 250,000 16,478,344
Honeywell International, Inc. 284,652 13,467,598
Northrop Grumman Corp. 67,538 5,605,654
Raytheon Co., Class B 213,564 6,633,832
Teledyne Technologies, Inc.(1) 6,117 144,514
- --------------------------------------------------------------------------
$ 150,209,846
- --------------------------------------------------------------------------
Apparel and Textiles -- 0.0%
- --------------------------------------------------------------------------
Shaw Industries, Inc. 325,000 $ 6,154,687
Unifi, Inc.(1) 51,208 457,671
- --------------------------------------------------------------------------
$ 6,612,358
- --------------------------------------------------------------------------
Auto and Parts -- 0.2%
- --------------------------------------------------------------------------
Aftermarket Technology Corp.(1) 46,000 $ 100,625
Borg-Warner Automotive, Inc. 230,270 9,210,800
DaimlerChrysler 19,952 822,022
Dana Corp. 46,137 706,473
Delphi Automotive Systems 6,128 68,940
Ford Motor Co. 240,055 5,626,289
General Motors Corp. 13,596 692,546
Genuine Parts Co. 147,059 3,851,108
SECURITY SHARES VALUE
- -------------------------------------------------------------------------
Auto and Parts (continued)
- --------------------------------------------------------------------------
Harley-Davidson, Inc. 49,700 $ 1,975,575
Honda Motor Co. Ltd. ADR 5,000 369,375
SPX Corp.(1) 47,862 5,178,070
TRW, Inc. 2,000 77,500
Visteon Corp. 15,135 174,053
- --------------------------------------------------------------------------
$ 28,853,376
- --------------------------------------------------------------------------
Banks - Money Center -- 0.4%
- --------------------------------------------------------------------------
Bank of Montreal 136,928 $ 7,214,394
Chase Manhattan Corp.(1) 459,027 20,857,039
Morgan (J.P.) & Co., Inc. 218,780 36,208,090
Royal Bank of Scotland Group PLC 51,201 1,209,977
Royal Bank of Scotland
Group PLC (A.V.S.)(1) 50,837 63,033
- --------------------------------------------------------------------------
$ 65,552,533
- --------------------------------------------------------------------------
Banks - Regional -- 5.9%
- --------------------------------------------------------------------------
AmSouth Bancorporation 692,177 $ 10,555,699
Associated Banc-Corp. 624,922 18,982,006
Bank of America Corp. 1,327,437 60,896,173
Bank of Granite Corp. 22,500 523,125
Bank of New York Co., Inc. (The) 359,398 19,834,277
Bank One Corp. 1,238,985 45,377,826
Bank United Corp. 102,072 6,960,035
Banknorth Group, Inc. 65,720 1,310,292
BB&T Corp. 695,376 25,946,217
City National Corp. 130,000 5,045,625
Colonial Bancgroup, Inc. (The) 396,090 4,257,967
Comerica, Inc. 155,041 9,205,559
Commerce Bancshares, Inc. 142,938 6,074,846
Community First Bancshares, Inc. 418,000 7,889,750
Compass Bancshares, Inc. 306,668 7,321,698
Fifth Third Bancorp 447,549 26,741,053
First Citizens BancShares, Inc. 65,900 5,321,425
First Financial Bancorp. 51,393 873,681
First Midwest Bancorp, Inc. 458,929 13,194,209
First Tennessee National Corp. 33,488 969,059
First Union Corp. 1,237,805 34,426,452
Firstar Corp. 2,808,435 65,296,114
FleetBoston Financial Corp. 2,808,399 105,490,487
Hibernia Corp., Class A 63,017 803,467
Huntington Bancshares, Inc. 400,000 6,475,000
Keycorp 500,764 14,021,392
SEE NOTES TO FINANCIAL STATEMENTS
31
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Banks - Regional (continued)
- --------------------------------------------------------------------------
M&T Bank Corp. 20,000 $ 1,360,000
Marshall and Ilsley Corp. 50,410 2,562,340
Mellon Financial Corp. 206,912 10,177,484
National City Corp. 442,706 12,727,797
National Commerce Bancorporation 1,072,894 26,554,126
Northern Trust Corp. 1,363,796 111,234,611
Old Kent Financial Corp. 79,943 3,497,506
PNC Bank Corp. 145,615 10,638,996
Popular, Inc. 716 18,840
Regions Financial Corp. 1,284,408 35,080,394
S&T Bancorp, Inc. 100,000 2,162,500
SouthTrust Corp. 76,101 3,096,359
Southwest Bancorporation of
Texas, Inc.(1) 215,601 9,257,368
Sovereign Bancorporation, Inc. 442,584 3,595,995
State Street Corp. 64,000 7,949,440
Summit Bancorp. 176,081 6,724,093
SunTrust Banks, Inc. 201,151 12,672,513
Synovus Financial 945,437 25,467,709
U.S. Bancorp. 457,914 13,365,365
Union Planters Corp. 87,070 3,112,752
Valley National Bancorp. 305,241 10,168,341
Wachovia Corp. 132,559 7,704,992
Washington Mutual, Inc. 138,506 7,349,475
Wells Fargo & Co. 4,057,454 225,949,470
Westamerica Bancorporation 266,506 11,459,758
Whitney Holding Corp. 253,297 9,197,847
Zions Bancorporation 137,571 8,589,589
- --------------------------------------------------------------------------
$ 1,085,469,094
- --------------------------------------------------------------------------
Beverages -- 2.6%
- --------------------------------------------------------------------------
Anheuser-Busch Cos., Inc. 2,128,699 $ 96,855,804
Coca-Cola Company (The) 2,078,457 126,655,974
Coca-Cola Enterprises, Inc. 264,724 5,029,756
Panamerican Beverages, Inc., Class A 80,000 1,135,000
PepsiCo, Inc. 5,023,110 248,957,889
- --------------------------------------------------------------------------
$ 478,634,423
- --------------------------------------------------------------------------
Broadcasting and Cable -- 1.2%
- --------------------------------------------------------------------------
AT&T Corp. - Liberty Media Group(1) 1,385,714 $ 18,793,746
AT&T Corp. - Liberty Media Group,
Class B(1) 32,876 616,425
Cablevision Systems Corp. (1)(2)(3) 130,000 11,032,213
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Broadcasting and Cable (continued)
- --------------------------------------------------------------------------
Clear Channel Communications, Inc.(1) 467,378 $ 22,638,622
Comcast Corp., Class A(1) 1,736,177 72,485,390
Cox Communications, Inc., Class A(1) 608,036 28,311,676
Gaylord Entertainment Co.(1) 428,482 8,944,562
General Motors Corp., Class H(1) 1,175,262 27,031,026
Infinity Broadcasting Corp.(1) 34,500 963,844
Univision Communications, Inc.(1) 663,184 27,149,095
Westwood One, Inc.(1) 122,400 2,363,850
- --------------------------------------------------------------------------
$ 220,330,449
- --------------------------------------------------------------------------
Building Materials and Tools -- 0.6%
- --------------------------------------------------------------------------
American Standard Companies, Inc.(1) 172,899 $ 8,526,082
CRH PLC 262,701 4,888,340
Interface, Inc. 422,412 3,669,704
Masco Corp. 2,278,653 58,532,899
Sherwin-Williams Co. (The) 80,069 2,106,816
Snap-On, Inc. 71,795 2,001,286
Valspar Corp. 620,000 19,951,600
Vulcan Materials Co. 49,689 2,378,861
- --------------------------------------------------------------------------
$ 102,055,588
- --------------------------------------------------------------------------
Business Services - Miscellaneous -- 0.6%
- --------------------------------------------------------------------------
ANC Rental Corp.(1) 689,786 $ 2,414,251
Century Business Services, Inc.(1) 400,000 450,000
Cintas Corp. 1,103,661 58,700,969
Concord EFS, Inc.(1) 213,905 9,398,451
Fair, Isaac and Co., Inc. 238,828 12,180,228
Gartner Group, Inc.(1) 3,000 20,700
Gartner Group, Inc., Class B(1) 92,416 585,917
Half (Robert) International, Inc.(1) 3,600 95,400
Manpower, Inc. 110,000 4,180,000
Navigant Consulting, Inc.(1) 496,795 1,894,031
Navigant International, Inc.(1) 59,630 484,494
ServiceMaster Co. 695,430 7,997,445
Spherion Corp.(1) 90,000 1,018,125
Staff Leasing, Inc.(1) 156,250 468,750
Sylvan Learning Systems, Inc.(1) 815,396 12,078,053
United Rentals, Inc.(1) 342,099 4,596,955
Viad Corp. 40,314 927,222
- --------------------------------------------------------------------------
$ 117,490,991
- --------------------------------------------------------------------------
Chemicals -- 0.6%
- --------------------------------------------------------------------------
Ashland, Inc. 106,674 $ 3,828,530
SEE NOTES TO FINANCIAL STATEMENTS
32
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Chemicals (continued)
- --------------------------------------------------------------------------
Bayer AG ADR 40,000 $ 2,106,764
Dow Chemical Co. (The) 150,501 5,512,099
DuPont (E.I.) de Nemours & Co. 1,054,446 50,942,922
Eastman Chemical Co. 148 7,215
Monsanto Co.(1) 1,810,000 48,983,125
Solutia, Inc. 99,629 1,195,548
Syngenta AG ADR (1) 10,030 109,703
- --------------------------------------------------------------------------
$ 112,685,906
- --------------------------------------------------------------------------
Communications Equipment -- 2.9%
- --------------------------------------------------------------------------
3Com Corp.(1) 873,949 $ 7,428,566
ADC Telecommunications, Inc.(1) 937,781 16,997,280
Advanced Fibre Communication, Inc.(1) 15,000 270,937
Alcatel S.A. ADR 43,728 2,446,035
Avaya, Inc.(1) 48,028 495,289
Avaya, Inc.(1)(2)(3) 25,000 257,774
CIENA Corp.(1) 702,026 57,039,612
Comverse Technology, Inc.(1) 386,378 41,970,310
Corning, Inc. 930,112 49,121,540
JDS Uniphase Corp.(1) 266,080 11,092,210
Lucent Technologies, Inc. 496,773 6,706,435
Lucent Technologies, Inc.(2)(3) 300,000 4,049,613
Marconi PLC 674,246 7,248,958
Motorola, Inc. 1,286,001 26,041,520
Nokia Corp., Class A, ADR 3,891,143 169,264,720
Nortel Networks Corp. 2,152,570 69,016,776
Qualcomm, Inc.(1) 344,112 28,281,705
Salient 3 Communications, Inc., Class A 78,125 185,547
Telefonaktiebolaget LM Ericsson,
Class B ADR 1,816,000 20,316,500
Tellabs, Inc.(1) 353,998 20,000,887
- --------------------------------------------------------------------------
$ 538,232,214
- --------------------------------------------------------------------------
Communications Services -- 2.4%
- --------------------------------------------------------------------------
Alltel Corp. 1,315,181 $ 82,116,614
Alltel Corp.(2)(3) 30,000 1,872,732
American Tower Corp., Class A(1) 145,509 5,511,153
AT&T Corp. 1,564,226 27,080,663
BCE, Inc. 80,269 2,322,784
BellSouth Corp. 699,286 28,627,021
Broadwing, Inc.(1) 764,587 17,442,141
Citizens Communications Co.(1) 59,563 781,764
Global Crossing Ltd.(1) 124,289 1,778,886
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Communications Services (continued)
- --------------------------------------------------------------------------
Intermedia Communications, Inc.(1) 403,275 $ 2,898,539
ITC Deltacom, Inc.(1) 1,118,041 6,026,912
McLeodUSA, Inc.(1) 1,523,959 21,525,919
McLeodUSA, Inc.(1)(2)(3) 150,000 2,116,102
McLeodUSA, Inc.(1)(2)(3) 231,562 3,267,951
Nextel Communications, Inc., Class A(1) 221,782 5,489,104
NTL, Inc.(1) 400,391 9,584,351
PTEK Holdings, Inc.(1) 28,000 40,250
Qwest Communications International(1) 81,903 3,358,023
RSL Communications Ltd.(1) 747,161 127,017
SBC Communications, Inc. 1,587,062 75,782,210
Sprint Corp. 1,315,630 26,723,734
Sprint Corp., PCS Group(1) 815,754 16,671,972
Talk.com, Inc.(1) 247,376 355,603
Telecom Corp. of New Zealand Ltd. ADR 8,000 133,500
Telephone & Data Systems, Inc. 131,756 11,858,040
Verizon Communications, Inc. 180,425 9,043,803
Vodafone Group PLC ADR 40,745 1,459,180
Voicestream Wireless
Corporation(1)(2)(3) 395,175 39,590,515
Winstar Communications, Inc.(1) 17,136 200,277
WorldCom, Inc.(1) 2,372,008 33,356,363
- --------------------------------------------------------------------------
$ 437,143,123
- --------------------------------------------------------------------------
- -------------------------------------------------------------------------
Computer Software -- 3.4%
- --------------------------------------------------------------------------
Adobe Systems, Inc. 231,936 $ 13,495,776
BMC Software, Inc.(1) 35,000 490,000
Cadence Design Systems, Inc.(1) 956,000 26,290,000
Cognos, Inc.(1) 77,000 1,448,562
Computer Associates International, Inc. 32,395 631,702
Compuware Corp.(1) 2,800 17,500
CSG Systems International, Inc.(1) 41,116 1,929,882
Edwards (J.D.) & Co.(1) 891,844 15,885,971
HNC Software, Inc.(1) 477,794 14,184,509
I2 Technologies, Inc.(1) 363,180 19,747,912
Intuit, Inc.(1) 1,157,751 45,658,805
Microsoft Corp.(1) 4,197,398 182,062,138
Oracle Corp.(1) 3,674,035 106,776,642
Parametric Technology Corp.(1) 94,600 1,271,187
PeopleSoft, Inc.(1) 475,770 17,692,697
Retek, Inc.(1) 593,916 14,476,703
Safeguard Scientific, Inc.(1) 26,579 176,086
Sapient Corp.(1) 2,049,828 24,469,822
Siebel Systems, Inc.(1) 1,728,628 116,898,468
SEE NOTES TO FINANCIAL STATEMENTS
33
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Computer Software (continued)
- --------------------------------------------------------------------------
Synavant, Inc.(1) 24,900 $ 116,719
Veritas Software Corp.(1) 88,142 7,712,440
Wind River Systems, Inc.(1) 220,537 7,525,825
- --------------------------------------------------------------------------
$ 618,959,346
- --------------------------------------------------------------------------
Computers and Business Equipment -- 4.7%
- --------------------------------------------------------------------------
Cabletron Systems, Inc.(1) 89,660 $ 1,350,504
Cisco Systems, Inc.(1) 5,542,579 212,003,647
Compaq Computer Corp. 74,641 1,123,347
Dell Computer Corp.(1) 3,518,058 61,346,136
EMC Corp.(1) 644,183 42,838,169
Gateway, Inc.(1) 1,111,743 20,000,257
Hewlett-Packard Co. 1,153,153 36,396,392
IDX Systems Corp.(1) 60,000 1,500,000
International Business Machines Corp. 667,872 56,769,120
Jabil Circuit, Inc.(1) 45,958 1,166,184
Jabil Circuit, Inc.(1)(2)(3) 2,082,013 52,806,866
Lexmark International, Inc.(1) 5,036,940 223,199,404
Network Appliance, Inc.(1) 488,000 31,323,500
Palm, Inc.(1) 1,298,491 36,763,526
Pitney Bowes, Inc. 67,682 2,241,966
Solectron Corp.(1) 1,068,848 36,233,947
Solectron Corp.(1)(2)(3) 500,000 16,942,231
Solectron Corp.(1)(2)(3) 250,000 8,467,584
Sun Microsystems, Inc.(1) 503,430 14,033,111
Sun Microsystems, Inc.(1)(2)(3) 47,490 1,323,253
Xerox Corp. 40,742 188,432
Zebra Technologies Corp.(1) 6,000 244,781
- --------------------------------------------------------------------------
$ 858,262,357
- --------------------------------------------------------------------------
Conglomerates -- 2.3%
- --------------------------------------------------------------------------
General Electric Co. 5,253,671 $ 251,847,854
Tyco International Ltd. 1,186,995 65,878,222
United Technologies Corp. 1,391,354 109,395,208
Vivendi Universal ADR 8,000 522,500
- --------------------------------------------------------------------------
$ 427,643,784
- --------------------------------------------------------------------------
Consumer Services -- 0.1%
- --------------------------------------------------------------------------
Block (H&R), Inc. 366,177 $ 15,150,573
Cendant Corp.(1) 187,999 1,809,490
Service Corp. International(1) 145,389 254,431
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Consumer Services (continued)
- --------------------------------------------------------------------------
Stewart Enterprises, Inc. 114,000 $ 217,318
- --------------------------------------------------------------------------
$ 17,431,812
- --------------------------------------------------------------------------
Containers and Packaging -- 0.1%
- --------------------------------------------------------------------------
Bemis Co., Inc. 91,000 $ 3,054,187
Sealed Air Corp.(1) 474,914 14,484,877
Sonoco Products Co. 122,135 2,641,169
- --------------------------------------------------------------------------
$ 20,180,233
- --------------------------------------------------------------------------
Distribution Services -- 1.4%
- --------------------------------------------------------------------------
Airgas, Inc.(1) 536,219 $ 3,652,992
Arrow Electronics, Inc.(1) 8,750 250,469
Cardinal Health, Inc. 967,387 96,375,930
Cardinal Health, Inc.(2)(3) 24,100 2,397,811
McKesson HBOC, Inc. 166,692 5,982,576
MSC Industrial Direct Co.(1) 5,000 90,312
School Specialty, Inc.(1) 66,255 1,329,241
Sysco Corp. 4,743,436 142,303,080
Sysco Corp.(2)(3) 99,028 2,969,478
Sysco Corp.(2)(3) 44,744 1,340,558
- --------------------------------------------------------------------------
$ 256,692,447
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Drugs and Drug Development -- 10.1%
- --------------------------------------------------------------------------
Abbott Laboratories 3,463,086 $ 167,743,228
Allergan, Inc. 34,340 3,324,541
Alza Corp.(1) 49,044 2,084,370
American Home Products Corp. 963,139 61,207,483
Amgen, Inc.(1) 2,351,938 150,377,036
Andrx Group(1) 93,750 5,425,781
Andrx Group(1)(2)(3) 300,000 17,337,541
AstraZeneca PLC ADR 80,720 4,157,080
Bristol-Myers Squibb Co. 2,289,343 169,268,298
Covance, Inc.(1) 81,250 873,437
Elan Corp., PLC ADR(1) 539,036 25,233,623
Forest Laboratories, Inc.(1) 10,000 1,328,750
Genzyme Corp.(1) 800,000 71,950,000
Gilead Sciences, Inc.(1) 9,532 790,560
GlaxoSmithKline PLC ADR(1) 648,382 36,309,393
Incyte Genomics, Inc.(1) 1,151,474 28,642,916
King Pharmaceuticals, Inc.(1)(2)(3) 1,563,838 80,714,682
Lilly (Eli) & Co. 1,237,852 115,197,602
Lilly (Eli) & Co.(2)(3) 38,250 3,554,524
Merck & Co., Inc. 1,557,519 145,822,716
SEE NOTES TO FINANCIAL STATEMENTS
34
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Drugs and Drug Development (continued)
- --------------------------------------------------------------------------
Mylan Laboratories 450,000 $ 11,334,375
Novo Nordisk ADR 116,911 10,346,623
Parexel International Corp.(1) 35,000 378,437
Pfizer, Inc. 6,788,726 312,281,396
Pharmacia Corp. 2,510,843 153,161,423
Quintiles Transnational Corp.(1) 417,372 8,738,726
Schering-Plough Corp. 1,368,641 77,670,377
Sepracor, Inc.(1) 884,000 70,830,500
Teva Pharmaceutical Industries Ltd. 300,000 21,975,000
Vertex Pharmaceuticals, Inc.(1) 83,000 5,934,500
Watson Pharmaceuticals, Inc.(1) 1,781,781 91,204,915
- --------------------------------------------------------------------------
$ 1,855,199,833
- --------------------------------------------------------------------------
Electric Power -- 0.8%
- --------------------------------------------------------------------------
AES Corp.(1) 1,378,084 $ 76,311,401
Ameren Corp. 5,000 231,562
American Electric Power, Inc. 960 44,640
Dominion Resources, Inc. 28,938 1,938,846
Duke Energy Corp. 4,117 350,974
Exelon Corp. 787,500 55,290,375
P G & E Corp. 47,705 954,100
Southern Energy, Inc.(1) 14,500 410,531
Teco Energy, Inc. 40,000 1,295,000
TXU Corp. 250,196 11,086,810
Wisconsin Energy Corp. 9,576 216,059
- --------------------------------------------------------------------------
$ 148,130,298
- --------------------------------------------------------------------------
Electrical Equipment -- 0.3%
- --------------------------------------------------------------------------
American Power Conversion Corp.(1) 436,671 $ 5,403,804
Baldor Electric Co. 149,060 3,148,893
Emerson Electric Co. 400,903 31,596,168
Molex, Inc., Class A 112,582 2,863,805
Rockwell International Corp. 203,032 9,669,399
Thomas and Betts Corp. 132,863 2,150,720
- --------------------------------------------------------------------------
$ 54,832,789
- --------------------------------------------------------------------------
Electronics - Instruments -- 0.5%
- --------------------------------------------------------------------------
Agilent Technologies, Inc.(1) 216,897 $ 11,875,111
Applera Corporation - Applied
Biosystems Group(1) 47,100 1,692,656
Dionex Corp.(1) 362,140 12,493,830
Invitrogen Corp.(1) 37,645 3,251,587
National Instruments Corp.(1) 466,603 22,659,408
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Electronics - Instruments (continued)
- --------------------------------------------------------------------------
PerkinElmer, Inc. 110,263 $ 11,577,615
Waters Corp.(1) 198,320 16,559,720
X-Rite, Inc. 428,000 3,343,750
- --------------------------------------------------------------------------
$ 83,453,677
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Electronics - Semiconductors and Related -- 3.7%
- --------------------------------------------------------------------------
Altera Corp.(1) 80,516 $ 2,118,577
Analog Devices, Inc.(1) 3,043,828 155,805,946
Applied Materials, Inc.(1) 80,212 3,063,096
Broadcom Corp., Class A(1) 234,000 19,656,000
Conexant Systems(1) 317,574 4,882,700
Cypress Semiconductor Corporation(1) 187,500 3,691,406
Cypress
Semiconductor Corporation(1)(2)(3) 19,307 379,774
Flextronics International Ltd.(1) 108,564 3,094,074
Intel Corp. 5,698,406 171,308,330
Intel Corp.(2)(3) 119,093 3,575,119
Intel Corp.(2)(3) 350,000 10,506,750
KLA-Tencor Corp.(1) 101,498 3,419,214
Lam Research Corp.(1) 293,051 4,249,240
Linear Technologies Corp. 267,760 12,383,900
Maxim Integrated Products Co.(1) 274,351 13,117,407
National Semiconductor Corp.(1) 79,368 1,597,281
Plexus Corp.(1) 132,189 4,017,303
Sanmina Corp.(1) 727,021 55,707,984
SpeedFam-IPEC, Inc.(1) 221,000 1,339,813
Teradyne, Inc.(1) 325,400 12,121,150
Texas Instruments, Inc. 4,051,267 191,928,774
Ultratech Stepper, Inc.(1) 245,129 6,342,713
Xilinx, Inc.(1) 68,518 3,160,393
- --------------------------------------------------------------------------
$ 687,466,944
- --------------------------------------------------------------------------
Engineering and Construction -- 0.1%
- --------------------------------------------------------------------------
Dycom Industries(1) 170,511 $ 6,127,739
Jacobs Engineering Group, Inc.(1) 168,555 7,785,134
- --------------------------------------------------------------------------
$ 13,912,873
- --------------------------------------------------------------------------
Entertainment -- 1.2%
- --------------------------------------------------------------------------
Callaway Golf Co. 35,715 $ 665,192
Disney (Walt) Co. 1,031,468 29,848,105
Mattel, Inc. 22,091 318,994
MGM Grand, Inc. 269,445 7,594,981
Time Warner, Inc. 1,410,539 73,686,557
SEE NOTES TO FINANCIAL STATEMENTS
35
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Entertainment (continued)
- --------------------------------------------------------------------------
Viacom, Inc., Class A(1) 21,774 $ 1,023,378
Viacom, Inc., Class B(1) 2,241,664 104,797,792
- --------------------------------------------------------------------------
$ 217,934,999
- --------------------------------------------------------------------------
Environmental Services -- 0.3%
- --------------------------------------------------------------------------
Allied Waste Industries, Inc.(1) 1,075,000 $ 15,654,687
Waste Management, Inc. 1,402,239 38,912,132
- --------------------------------------------------------------------------
$ 54,566,819
- --------------------------------------------------------------------------
Financial Services - Miscellaneous -- 4.4%
- --------------------------------------------------------------------------
American Express Co. 1,991,447 $ 109,405,120
Capital One Financial Corp. 560,175 36,866,517
Citigroup 4,050,760 206,841,933
Enhance Financial Service Group, Inc. 70,000 1,080,625
Fannie Mae 1,862,776 161,595,818
Finova Group, Inc. 175,587 164,613
FirstPlus Financial Group, Inc.(1) 120,000 10,800
Freddie Mac 1,368,400 94,248,550
GreenPoint Financial Corp. 100,000 4,093,750
GreenPoint Financial Corp.(2)(3) 300,000 12,263,596
Household International, Inc. 1,441,724 79,294,820
ING Groep NV ADR 105,285 8,435,961
MGIC Investment Corp. 80,000 5,395,000
Providian Financial Corp. 806,498 46,373,635
USA Education, Inc. 600,000 40,800,000
- --------------------------------------------------------------------------
$ 806,870,738
- --------------------------------------------------------------------------
Foods -- 1.5%
- --------------------------------------------------------------------------
Archer-Daniels-Midland Co. 405,243 $ 6,078,645
Campbell Soup Co. 12,242 423,879
Conagra, Inc. 707,429 18,393,154
Dean Foods Co. 150,944 4,632,094
Flowers Industries, Inc. 965,916 15,213,177
General Mills, Inc. 123,254 5,492,506
Heinz (H.J.) Co. 181,374 8,603,929
Hershey Foods Corp. 714,492 45,995,423
Keebler Food Products Co. 121,798 5,047,005
Keebler Food Products Co.(2)(3) 28,300 1,172,144
Kellogg Co. 102,235 2,683,669
McCormick & Co., Inc. 458,058 16,518,717
Quaker Oats Co. (The) 110,087 10,719,722
Ralston Purina Group 277,878 7,259,563
Riviana Foods, Inc. 250,000 4,906,250
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Foods (continued)
- --------------------------------------------------------------------------
Sara Lee Corp. 837,776 $ 20,577,873
Smithfield Foods, Inc.(1) 1,025,907 31,187,573
Smithfield Foods, Inc.(1)(2)(3) 892,858 27,137,067
Suiza Foods Corp.(1) 40,152 1,927,296
Tyson Food, Inc. 163,901 2,089,738
Unilever ADR 400,000 25,175,000
Wrigley (Wm.) Jr. Co. 171,469 16,428,874
- --------------------------------------------------------------------------
$ 277,663,298
- --------------------------------------------------------------------------
Furniture and Appliances -- 0.3%
- --------------------------------------------------------------------------
HON Industries, Inc. 1,270,418 $ 32,395,659
Leggett & Platt, Inc. 713,393 13,509,880
Maytag Corp. 27,073 874,796
Miller (Herman), Inc. 540,103 15,527,961
Steelcase, Inc., Class A 123,000 1,706,625
- --------------------------------------------------------------------------
$ 64,014,921
- --------------------------------------------------------------------------
- -------------------------------------------------------------------------
Health Services -- 0.3%
- --------------------------------------------------------------------------
Beverly Enterprises, Inc.(1) 357,143 $ 2,924,108
Caremark Rx, Inc.(1) 17,696 240,002
Cybear Group(1) 13,959 5,235
FPA Medical Management, Inc.(1)(2) 315,000 3,150
HCA - The Healthcare Company 53,310 2,346,173
Health Management Associates, Inc.,
Class A(1) 1,311,170 27,206,778
HealthSouth Corp.(1) 122,699 2,001,527
LabOne, Inc.(1) 53,940 310,155
Orthodontic Centers of America, Inc.(1) 100,000 3,125,000
Pacificare Health Systems, Inc.,
Class A(1) 19,500 292,500
PhyCor, Inc.(1) 312,500 10,000
Quest Diagnostics, Inc.(1) 15,625 2,218,750
Quorum Health Group, Inc.(1) 6,893 108,565
Renal Care Group, Inc.(1) 371,007 10,173,717
Response Oncology, Inc.(1) 44,761 11,190
Sunrise Assisted Living, Inc.(1) 354,000 8,850,000
UnitedHealth Group, Inc. 52,106 3,198,006
- --------------------------------------------------------------------------
$ 63,024,856
- --------------------------------------------------------------------------
Household Products -- 2.7%
- --------------------------------------------------------------------------
Avon Products, Inc. 134,700 $ 6,448,763
Blyth Industries, Inc.(1) 1,085,671 26,191,813
Blyth Industries, Inc.(1)(2)(3) 167,616 4,040,198
SEE NOTES TO FINANCIAL STATEMENTS
36
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Household Products (continued)
- --------------------------------------------------------------------------
Clorox Co. 421,344 $ 14,957,712
Colgate-Palmolive Co. 546,478 35,275,155
Energizer Holdings, Inc.(1) 92,626 1,979,881
Fortune Brands, Inc. 69,838 2,095,140
Gillette Co. 4,208,557 152,034,122
Helen of Troy Ltd.(1) 20,000 97,500
Kimberly-Clark Corp. 1,549,593 109,540,729
Lauder (Estee) Companies, Inc. 2,092,312 91,669,420
Newell Rubbermaid, Inc. 423,137 9,626,367
Procter & Gamble Co. 578,277 45,358,602
Water Pik Technologies, Inc.(1) 2,141 14,987
- --------------------------------------------------------------------------
$ 499,330,389
- --------------------------------------------------------------------------
Industrial Equipment -- 0.4%
- --------------------------------------------------------------------------
Dover Corp. 419,712 $ 17,024,568
Federal Signal Corp. 283,471 5,563,118
Illinois Tool Works, Inc. 386,412 23,015,665
Johnson Controls 46,758 2,431,416
Nordson Corp. 163,978 4,181,439
Parker-Hannifin Corp. 157,066 6,930,537
PPG Industries, Inc. 13,680 633,555
Regal-Beloit Corp. 265,000 4,520,900
Tecumseh Products Co., Class A 156,420 6,559,864
Teleflex, Inc. 47,559 2,101,513
Wabtec 250,000 2,937,500
- --------------------------------------------------------------------------
$ 75,900,075
- --------------------------------------------------------------------------
Information Services -- 4.9%
- --------------------------------------------------------------------------
Acxiom Corp.(1) 929,019 $ 36,173,677
Affiliated Computer Services, Inc.(1) 20,000 1,213,750
Affiliated Computer Services,
Inc.(1)(2)(3) 80,327 4,867,837
America Online, Inc.(1) 166,177 5,782,960
At Home Corp., Series A(1) 240,582 1,330,731
At Home Corp., Series A(1)(2)(3) 171,895 950,572
Automatic Data Processing, Inc. 5,597,020 354,361,329
Bell and Howell Co.(1) 115,000 1,897,500
BISYS Group, Inc. (The)(1) 107,746 5,616,260
Ceridian Corp.(1) 181,000 3,608,688
Check Point Software Technology Ltd.(1) 104,000 13,890,500
Circle.com(1) 120,625 67,852
Computer Sciences Corp.(1) 2,955,400 177,693,425
DST Systems, Inc.(1) 389,034 26,065,278
Electronic Data Systems Corp. 157,612 9,102,093
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Information Services (continued)
- --------------------------------------------------------------------------
Equifax, Inc. 80,000 $ 2,295,000
First Data Corp. 2,827,384 148,967,795
Investors Financial Services Corp. 51,000 4,386,000
Keane, Inc.(1) 200,000 1,950,000
Lason, Inc.(1) 355,000 95,850
NOVA Corp.(1) 104,965 2,092,740
Paychex, Inc. 365,232 17,759,406
Perot Systems Corp., Class A(1) 245,326 2,253,933
Reuters Holdings PLC ADR 270,131 26,607,904
Reynolds & Reynolds, Inc., Class A 451,043 9,133,621
RSA Security, Inc.(1) 40,000 2,115,000
SunGard Data Systems, Inc.(1) 988,797 46,597,059
- --------------------------------------------------------------------------
$ 906,876,760
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Insurance -- 7.0%
- --------------------------------------------------------------------------
21st Century Insurance Group 70,700 $ 1,007,475
Aegon, NV ADR 2,680,037 111,054,033
Aetna, Inc.(1) 368 15,111
Aflac Corp. 135,749 9,799,381
Allmerica Financial Corp. 1,500 108,750
Allstate Corp. (The) 40,426 1,761,058
American General Corp. 101,421 8,265,811
American International Group, Inc. 5,194,621 511,994,832
American International Group, Inc.(2)(3) 375,000 36,948,001
AON Corp. 607,321 20,800,744
Berkshire Hathaway, Inc.(1) 448 31,808,000
Berkshire Hathaway, Inc., Class B(1) 39,077 91,987,258
Chubb Corp. 104,451 9,035,012
Commerce Group, Inc. 120,000 3,261,600
Delphi Financial Group, Inc.(1) 6,448 248,248
Gallagher (A.J.) and Co. 261,250 16,622,031
Hartford Financial Services Group 3,512 248,035
Jefferson-Pilot Corp. 80,726 6,034,269
Kansas City Life Insurance Co. 70,800 2,504,550
Lincoln National Corp. 26,903 1,272,848
Marsh & McLennan Cos., Inc. 2,682,868 313,895,556
Mercury General Corp. 2,000 87,750
MetLife, Inc. 1,885,000 65,975,000
Mutual Risk Management Ltd. 240,000 3,645,000
Progressive Corp. 186,136 19,288,343
Protective Life Corp. 43,381 1,399,037
Safeco Corp. 23,248 764,278
St. Paul Cos., Inc. (The) 305,436 16,588,993
SEE NOTES TO FINANCIAL STATEMENTS
37
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Insurance (continued)
- --------------------------------------------------------------------------
Torchmark Corp. 222,850 $ 8,565,797
UICI(1) 160,854 955,071
- --------------------------------------------------------------------------
$ 1,295,941,872
- --------------------------------------------------------------------------
Investment Services -- 3.4%
- --------------------------------------------------------------------------
Dain Rauscher Corporation 13,749 $ 1,301,858
E*Trade Group, Inc.(1) 771,248 5,687,954
Federated Investors, Inc. 878,947 25,599,331
Federated Investors, Inc.,
Class B(2)(3) 378,000 11,005,397
Federated Investors, Inc.,
Class B(2)(3) 378,000 11,004,204
Franklin Resources, Inc. 1,746,081 66,525,686
Goldman Sachs Group, Inc. 9,627 1,029,487
Knight Trading Group, Inc.(1) 475,000 6,620,313
Legg Mason, Inc. 17,641 961,435
Merrill Lynch & Co., Inc.(2)(3) 150,000 10,213,422
Merrill Lynch & Co., Inc. 2,822,531 192,461,333
Morgan Stanley Dean Witter & Co. 3,038,338 240,788,287
Nuveen (John) Co., Class A (The) 50,000 2,875,000
Price (T. Rowe) Associates, Inc. 139,176 5,882,357
Schwab (Charles) Corp. 1,105,111 31,357,525
Stilwell Financial, Inc. 95,458 3,764,625
Waddell & Reed Financial, Inc., Class A 19,020 715,628
Waddell & Reed Financial, Inc., Class B 81,862 3,069,825
- --------------------------------------------------------------------------
$ 620,863,667
- --------------------------------------------------------------------------
Lodging and Gaming -- 0.1%
- --------------------------------------------------------------------------
Marriott International, Inc., Class A 157,628 $ 6,659,783
Royal Caribbean Cruises Ltd. 500,000 13,225,000
Wyndham International, Class A(1) 132,212 231,371
- --------------------------------------------------------------------------
$ 20,116,154
- --------------------------------------------------------------------------
Medical Products -- 4.1%
- --------------------------------------------------------------------------
Bausch & Lomb, Inc. 145,054 $ 5,865,621
Baxter International, Inc. 1,508,565 133,225,147
Becton, Dickinson and Co. 36,245 1,254,983
Biomet, Inc. 129,346 5,133,419
Biomet, Inc.(2)(3) 87,596 3,473,405
Boston Scientific Corp.(1) 541,644 7,413,752
Dentsply International, Inc. 47,401 1,854,564
Edwards Lifesciences Corp.(1) 295,714 5,248,924
ESC Medical Systems Ltd.(1) 170,000 2,050,625
Genzyme Corporation - Genzyme Biosurgery
Division (1) 86,784 753,936
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Medical Products (continued)
- --------------------------------------------------------------------------
Guidant Corp.(1) 453,816 $ 24,477,701
Heartport, Inc.(1) 41,026 64,103
Hillenbrand Industries, Inc. 647,898 33,366,747
Johnson & Johnson Co. 2,478,558 260,403,500
Medtronic, Inc. 3,548,358 214,232,114
MiniMed, Inc.(1) 407,100 17,110,942
Schein (Henry), Corp.(1) 1,125,194 38,959,842
Steris Corp.(1) 78,394 1,264,103
VISX, Inc.(1) 50,000 521,875
- --------------------------------------------------------------------------
$ 756,675,303
- --------------------------------------------------------------------------
Metals - Industrial -- 0.4%
- --------------------------------------------------------------------------
Alcoa, Inc. 1,896,000 $ 63,516,000
Allegheny Technologies, Inc. 21,408 339,852
Nucor Corp. 221,462 8,789,273
Phelps Dodge Corp. 7,332 409,217
Steel Dynamics, Inc.(1) 311,800 3,429,800
Worthington Industries 147,466 1,188,945
- --------------------------------------------------------------------------
$ 77,673,087
- --------------------------------------------------------------------------
Natural Gas Distribution -- 0.8%
- --------------------------------------------------------------------------
Coastal Corp. (The) 200,000 $ 17,662,500
Dynegy, Inc. 430,200 24,118,088
Dynegy, Inc.(2)(3) 63,525 3,556,271
Kinder Morgan, Inc.(2)(3) 500,000 26,059,502
Kinder Morgan, Inc. 1,275,912 66,586,658
National Fuel Gas Co. 2,000 125,875
Williams Cos., Inc. (The) 100,000 3,993,750
- --------------------------------------------------------------------------
$ 142,102,644
- --------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 2.2%
- --------------------------------------------------------------------------
Baker Hughes, Inc. 746,804 $ 31,039,041
Core Laboratories NV(1) 205,000 5,599,063
Grant Prideco, Inc.(1) 163,681 3,590,752
Halliburton Co. 3,257,050 118,068,063
Nabors Industries, Inc.(1) 400,000 23,660,000
Nabors Industries, Inc.(1)(2)(3) 150,000 8,869,395
National-Oilwell, Inc.(1) 641,199 24,806,386
National-Oilwell, Inc.(1)(2)(3) 45,730 1,766,857
Newpark Resources, Inc.(1) 110,000 1,051,875
Noble Drilling, Inc.(1) 170,000 7,384,375
Patterson Energy, Inc.(1) 200,000 7,450,000
Schlumberger Ltd. 1,703,413 136,166,577
SEE NOTES TO FINANCIAL STATEMENTS
38
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Oil and Gas - Equipment and Services (continued)
- --------------------------------------------------------------------------
Smith International, Inc.(1) 70,000 $ 5,219,375
Syntroleum Corp.(1) 2,735 46,495
Transocean Sedco Forex, Inc. 237,966 10,946,436
Valero Energy Corp. 51,510 1,915,528
Weatherford International(1) 163,681 7,733,927
- --------------------------------------------------------------------------
$ 395,314,145
- --------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 1.5%
- --------------------------------------------------------------------------
Anadarko Petroleum Corp. 2,591,906 $ 184,232,678
Apache Corp. 204,874 14,353,985
Burlington Resources, Inc. 428,629 21,645,765
Devon Energy Corp. 224,853 13,709,287
El Paso Energy Corp. 478,836 34,296,629
Kerr - McGee Corp. 136,199 9,116,821
Newfield Exploration Co.(1) 60,000 2,846,250
USX-Marathon Group 50,000 1,387,500
- --------------------------------------------------------------------------
$ 281,588,915
- --------------------------------------------------------------------------
Oil and Gas - Integrated -- 1.2%
- --------------------------------------------------------------------------
BP Amoco PLC ADR 1,214,307 $ 58,134,948
Chevron Corp. 93,585 7,902,083
Exxon Mobil Corp. 1,379,486 119,929,064
Murphy Oil Corp. 29,700 1,794,994
Pennzoil-Quaker State Co. 74,457 958,634
Phillips Petroleum Co. 18,407 1,046,898
Royal Dutch Petroleum Co. 56,537 3,424,022
Texaco, Inc. 2,500 155,313
Tosco Corp. 614,619 20,858,632
- --------------------------------------------------------------------------
$ 214,204,588
- --------------------------------------------------------------------------
Paper and Forest Products -- 0.3%
- --------------------------------------------------------------------------
Caraustar Industries, Inc. 264,862 $ 2,483,081
Georgia-Pacific Corp. - G-P Group 655,759 20,410,499
Georgia-Pacific Corp. - Timber Group 305,098 9,133,871
International Paper Co. 161,321 6,583,913
Louisiana Pacific Corp. 70,750 716,344
Mead Corporation (The) 38,768 1,216,346
Temple Inland, Inc. 12,632 677,391
Westvaco Corp. 47,000 1,371,813
Weyerhaeuser Co. 119,608 6,070,106
Willamette Industries, Inc. 156,412 7,341,588
- --------------------------------------------------------------------------
$ 56,004,952
- --------------------------------------------------------------------------
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Photography -- 0.0%
- --------------------------------------------------------------------------
Eastman Kodak Co. 143,906 $ 5,666,299
- --------------------------------------------------------------------------
$ 5,666,299
- --------------------------------------------------------------------------
Printing and Business Products -- 0.5%
- --------------------------------------------------------------------------
Avery Dennison Corp. 1,501,504 $ 82,395,032
Banta Corp. 42,341 1,076,308
Bowne & Co., Inc. 172,640 1,823,510
Consolidated Graphics, Inc.(1) 70,215 838,192
Day Runner, Inc.(1) 1,600 500
Deluxe Corp. 80,675 2,038,657
Donnelley (R.R.) & Sons Co. 85,277 2,302,479
Harland (John H.) Co. 51,540 728,003
Ikon Office Solutions, Inc. 122,526 306,315
Workflow Management, Inc.(1) 79,507 546,611
- --------------------------------------------------------------------------
$ 92,055,607
- --------------------------------------------------------------------------
- --------------------------------------------------------------------------
Publishing -- 1.6%
- --------------------------------------------------------------------------
Belo (A.H.) Corp. 542,924 $ 8,686,784
Dow Jones & Co., Inc. 376,300 21,307,988
Gannett Co., Inc. 600,300 37,856,419
Houghton Mifflin Co. 97,400 4,516,925
MacClatchy Co. (The), Class A 48,066 2,048,813
McGraw-Hill Companies, Inc. (The) 3,155,455 184,988,549
Meredith Corp. 190,000 6,115,625
New York Times Co. (The), Class A 315,755 12,649,935
Tribune Co. 226,200 9,556,950
Washington Post Co. (The), Class B 3,600 2,220,750
- --------------------------------------------------------------------------
$ 289,948,738
- --------------------------------------------------------------------------
Real Estate -- 0.2%
- --------------------------------------------------------------------------
Avalonbay Communities, Inc. 55,000 $ 2,756,875
Catellus Development Corp.(1) 415,722 7,275,135
Equity Office Properties Trust 2,812 91,742
Jones Lang Lasalle, Inc.(1) 213,193 2,958,053
Rouse Co. (The) 127,700 3,256,350
Trammell Crow Co.(1) 876,098 11,827,323
Ventas, Inc. 25,600 144,000
- --------------------------------------------------------------------------
$ 28,309,478
- --------------------------------------------------------------------------
Restaurants -- 1.1%
- --------------------------------------------------------------------------
Boston Chicken, Inc.(1)(2) 38,500 $ 385
Brinker International, Inc.(1) 388,158 16,399,676
SEE NOTES TO FINANCIAL STATEMENTS
39
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
- --------------------------------------------------------------------------
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Restaurants (continued)
- --------------------------------------------------------------------------
CBRL Group, Inc. 62,047 $ 1,128,480
CKE Restaurants, Inc. 5,522 15,186
Evans (Bob) Farms, Inc. 48,193 1,027,113
Jack in the Box, Inc.(1) 500,000 14,718,750
Lone Star Steakhouse and Saloon, Inc. 345,981 3,330,067
McDonald's Corp. 2,075,892 70,580,328
Outback Steakhouse, Inc.(1) 685,923 17,748,258
Outback Steakhouse, Inc.(1)(2)(3) 600,000 15,517,884
Outback Steakhouse, Inc.(1)(2)(3) 500,000 12,918,902
Papa John's International, Inc.(1) 197,246 4,388,724
Sonic Corp.(1) 71,007 1,655,351
Starbucks Corp.(1) 684,000 30,267,000
Tricon Global Restaurants, Inc.(1) 219,321 7,237,593
- --------------------------------------------------------------------------
$ 196,933,697
- --------------------------------------------------------------------------
Retail - Food and Drug -- 2.1%
- --------------------------------------------------------------------------
Albertson's, Inc. 868,341 $ 23,011,036
CVS Corp. 1,958,878 117,410,250
Delhaize America, Inc. 33,442 591,505
Kroger Co. (The)(1) 60,140 1,627,539
Safeway, Inc.(1) 3,479,293 217,455,813
Walgreen Co. 518,466 21,678,360
Winn-Dixie Stores, Inc. 519,957 10,074,167
- --------------------------------------------------------------------------
$ 391,848,670
- --------------------------------------------------------------------------
Retail - General -- 1.5%
- --------------------------------------------------------------------------
99 Cents Only Stores(1) 571,116 $ 15,634,300
Casey's General Stores, Inc. 91,201 1,362,315
Costco Wholesale Corporation(1) 20,435 816,123
Costco Wholesale Corporation(1)(2)(3) 56,823 2,266,106
Department 56, Inc.(1) 255,162 2,934,363
Dollar General Corp. 249,983 4,718,429
Dollar Tree Stores, Inc.(1) 1,518,256 37,197,272
Family Dollar Stores 2,618,411 56,132,186
May Department Stores Co. (The) 436,040 14,280,310
Nordstrom, Inc. 65,692 1,194,773
Penney (J.C.) Company, Inc. 907,984 9,874,326
Sears Roebuck & Co. 15,750 547,313
Target Corporation 2,200,000 70,950,000
Wal-Mart Stores, Inc. 1,175,988 62,474,363
- --------------------------------------------------------------------------
$ 280,382,179
- --------------------------------------------------------------------------
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Retail - Specialty and Apparel -- 2.5%
- --------------------------------------------------------------------------
Abercrombie & Fitch Co., Class A(1) 5,604 $ 112,080
AutoNation, Inc.(1) 5,359,593 32,157,558
Burlington Coat Factory Warehouse Corp. 628,228 11,897,068
Circuit City Stores-Circuit City Group 216,000 2,484,000
Gap, Inc. (The) 521,688 13,303,044
Harcourt General, Inc. 216,416 12,378,995
Home Depot, Inc. (The) 4,294,789 196,218,172
Intimate Brands, Inc. 53,000 795,000
Limited, Inc. (The) 675,566 11,526,845
Limited, Inc. (The)(2)(3) 45,139 769,173
Lowe's Companies 2,313,241 102,939,225
Neiman Marcus Group, Inc. (The),
Class B(1) 65,206 2,159,949
Office Depot, Inc.(1) 303,219 2,160,435
OfficeMax, Inc.(1) 912,117 2,622,336
Payless Shoesource, Inc.(1) 7,700 544,775
Pep Boys - Manny, Moe & Jack (The) 97,976 355,163
Pier 1 Imports, Inc. 350,000 3,609,375
RadioShack Corporation 609,588 26,097,986
Tiffany and Co. 88,000 2,783,000
TJX Companies, Inc. (The) 1,000,000 27,750,000
Too, Inc.(1) 39,087 488,588
- --------------------------------------------------------------------------
$ 453,152,767
- --------------------------------------------------------------------------
Specialty Chemicals and Materials -- 0.7%
- --------------------------------------------------------------------------
Arch Chemicals, Inc. 4,950 $ 87,863
Ecolab, Inc. 2,023,831 87,404,201
International Flavors & Fragrances, Inc. 148,101 3,008,302
MacDermid, Inc. 61,937 1,176,803
Millipore Corp. 101,440 6,390,720
Minnesota Mining & Manufacturing Co. 122,203 14,725,462
Olin Corp. 9,900 219,038
Pall Corp. 216,000 4,603,500
RPM, Inc. 470,138 4,025,557
Sigma Aldrich Corp. 395,000 15,528,438
- --------------------------------------------------------------------------
$ 137,169,884
- --------------------------------------------------------------------------
Tobacco -- 0.1%
- --------------------------------------------------------------------------
Philip Morris Co., Inc. 481,024 $ 21,165,056
- --------------------------------------------------------------------------
$ 21,165,056
- --------------------------------------------------------------------------
Transportation -- 1.7%
- --------------------------------------------------------------------------
Arnold Industries, Inc. 148,543 $ 2,673,774
SEE NOTES TO FINANCIAL STATEMENTS
40
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Transportation (continued)
- --------------------------------------------------------------------------
Burlington Northern Santa Fe Corp. 214,916 $ 6,084,809
CSX Corp. 36,496 946,615
FedEx Corp.(1) 2,945,106 117,686,436
Florida East Coast Industries, Inc. 122,888 4,408,607
Heartland Express, Inc.(1) 250,000 5,703,125
Kansas City Southern Industrials, Inc. 15,215 154,052
Norfolk Southern Corp. 390 5,192
Robinson (C.H.) Worldwide, Inc. 821,308 25,819,870
Robinson (C.H.) Worldwide, Inc.(2)(3) 320,000 10,055,389
Union Pacific Corp. 92,081 4,673,111
United Parcel Service, Inc., Class B 2,234,027 131,388,713
- --------------------------------------------------------------------------
$ 309,599,693
- --------------------------------------------------------------------------
Trucks and Parts -- 0.0%
- --------------------------------------------------------------------------
Arvinmeritor, Inc. 53,849 $ 612,532
Paccar, Inc. 12,894 635,030
- --------------------------------------------------------------------------
$ 1,247,562
- --------------------------------------------------------------------------
Water Utilities -- 0.0%
- --------------------------------------------------------------------------
American Water Works Co. 79,211 $ 2,326,823
- --------------------------------------------------------------------------
$ 2,326,823
- --------------------------------------------------------------------------
Total Common Stocks
(identified cost $13,439,891,552) $18,037,861,223
- --------------------------------------------------------------------------
RIGHTS -- 0.0%
SECURITY SHARES VALUE
- --------------------------------------------------------------------------
Computer Software -- 0.0%
- --------------------------------------------------------------------------
Veritas Software Corp.
(Tax Refund Rights)(1) 197,392 $ 15,791
- --------------------------------------------------------------------------
$ 15,791
- --------------------------------------------------------------------------
Total Rights
(identified cost $15,791) $ 15,791
- --------------------------------------------------------------------------
COMMERCIAL PAPER -- 1.5% PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
- --------------------------------------------------------------------------
Barton Capital Corp., 6.62%, 1/11/01 $ 30,151 $ 30,095,556
Barton Capital Corp., 6.65%, 1/5/01 78,988 78,929,637
Barton Capital Corp., 6.65%, 1/5/01 65,000 64,951,972
Corporate Receivables Corp.,
6.53%, 1/2/01 21,450 21,446,109
Ford Motor Credit Co., 6.51%, 1/10/01 84,943 84,804,755
- --------------------------------------------------------------------------
Total Commercial Paper
(at amortized cost, $280,228,029) $ 280,228,029
- --------------------------------------------------------------------------
Total Investments -- 99.6%
(identified cost $13,720,135,372) $18,318,105,043
- --------------------------------------------------------------------------
SECURITIES SOLD SHORT -- -1.0%
SECURITY SHARES VALUE
- ------------------------------------------------------------------------
American International Group, Inc. 1,000,000 $ (98,562,500)
Oracle Corp. 2,000,000 (58,125,000)
Siebel Systems, Inc. 400,000 (27,050,000)
- --------------------------------------------------------------------------
Total Securities Sold Short
(proceeds $227,951,317) $ (183,737,500)
- --------------------------------------------------------------------------
Other Assets, Less Liabilities
excluding securities sold short -- 1.4% $ 250,701,342
- --------------------------------------------------------------------------
Net Assets -- 100.0% $18,385,068,885
- --------------------------------------------------------------------------
ADR - American Depositary Receipt
(1) Non-income producing security.
(2) Security valued at fair value using methods determined in good faith by
or at the direction of the Trustees.
(3) Security restricted from resale for a period not exceeding two years. At
December 31, 2000, the value of these securities totaled $487,752,865 or
2.7% of net assets.
SEE NOTES TO FINANCIAL STATEMENTS
41
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AS OF DECEMBER 31, 2000
Assets
- ---------------------------------------------------------
Investments, at value (identified cost,
$13,720,135,372) $18,318,105,043
Cash 33,931,620
Deposits with brokers for securities
sold short 187,909,032
Dividends and interest receivable 22,219,113
Receivable for investments sold 6,947,733
Tax reclaim receivable 22,242
Other assets 294,764
- ---------------------------------------------------------
TOTAL ASSETS $18,569,429,547
- ---------------------------------------------------------
Liabilities
- ---------------------------------------------------------
Securities sold short, at value
(proceeds received of $227,951,317) $ 183,737,500
Miscellaneous liabilities 32,000
Payable to affiliate for Trustees' fees 16,977
Accrued expenses 574,185
- ---------------------------------------------------------
TOTAL LIABILITIES $ 184,360,662
- ---------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $18,385,068,885
- ---------------------------------------------------------
Sources of Net Assets
- ---------------------------------------------------------
Net proceeds from capital contributions
and withdrawals $13,742,884,218
Net unrealized appreciation (computed on
the basis of identified cost) 4,642,184,667
- ---------------------------------------------------------
TOTAL $18,385,068,885
- ---------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED
DECEMBER 31, 2000
Investment Income
- ------------------------------------------------------
Dividends (net of foreign taxes,
$953,924) $145,545,700
Interest 44,194,837
- ------------------------------------------------------
TOTAL INVESTMENT INCOME $189,740,537
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Investment adviser fee $ 73,317,616
Trustees fees and expenses 41,436
Custodian fee 1,951,652
Legal and accounting services 123,245
Amortization of organization expenses 1,989
Miscellaneous 381,771
- ------------------------------------------------------
TOTAL EXPENSES $ 75,817,709
- ------------------------------------------------------
NET INVESTMENT INCOME $113,922,828
- ------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $118,155,592
Securities sold short 78,957,715
Foreign currency transactions (150,768)
- ------------------------------------------------------
NET REALIZED GAIN $196,962,539
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 97,145,947
Securities sold short 44,213,817
Foreign currency 1,179
- ------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $141,360,943
- ------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $338,323,482
- ------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $452,246,310
- ------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
42
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
INCREASE (DECREASE) YEAR ENDED YEAR ENDED
IN NET ASSETS DECEMBER 31, 2000 DECEMBER 31, 1999
- --------------------------------------------------------------------------------
From operations --
Net investment income $ 113,922,828 $ 82,826,268
Net realized gain 196,962,539 19,281,587
Net change in unrealized appreciation
(depreciation) 141,360,943 1,954,982,313
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 452,246,310 $ 2,057,090,168
- ------------------------------------------------------------------------------
Capital transactions --
Contributions $ 4,816,070,598 $ 5,393,615,110
Withdrawals (1,997,896,982) (1,040,915,654)
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CAPITAL
TRANSACTIONS $ 2,818,173,616 $ 4,352,699,456
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 3,270,419,926 $ 6,409,789,624
- ------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------
At beginning of year $ 15,114,648,959 $ 8,704,859,335
- ------------------------------------------------------------------------------
AT END OF YEAR $ 18,385,068,885 $ 15,114,648,959
- ------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
43
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
YEAR ENDED DECEMBER 31, YEAR ENDED OCTOBER 31,
---------------------------- PERIOD ENDED ---------------------------------------
2000 1999 DECEMBER 31, 1998(1) 1998 1997 1996(2)
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------------------------------
Ratios (As a percentage of average daily
net assets):
Expenses 0.45% 0.46% 0.48%(3) 0.50% 0.56% 0.66%(3)
Net investment income 0.67% 0.72% 0.72%(3) 0.78% 0.81% 0.91%(3)
Portfolio Turnover 13% 11% 3% 12% 14% 6%
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(000'S OMITTED) $18,385,069 $15,114,649 $8,704,859 $6,985,678 $2,871,446 $936,800
- ---------------------------------------------------------------------------------------------------------------------------------
(1) For the two-month period ended December 31, 1998.
(2) For the period from the start of business, December 1, 1995, to
October 31, 1996.
(3) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
44
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
- -------------------------------------------
Tax-Managed Growth Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940, as amended, as a diversified, open-end
management investment company. The Portfolio, which 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. The following is a summary of significant
accounting policies consistently followed by the Portfolio in the
preparation of its financial statements. The policies are in conformity
with generally accepted accounting principles.
A Investment Valuations -- Marketable securities, including options, that are
listed on foreign or U.S. securities exchanges or in the NASDAQ National
Market System are valued at closing sale prices on the exchange where such
securities are principally traded. Futures positions on securities or
currencies are generally valued at closing settlement prices. Unlisted or
listed securities for which closing sale prices are not available are
generally 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 fair 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. Over-the counter options are
normally valued at the mean between the latest bid and asked price.
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 taxable 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 Put Options -- Upon the purchase of a put option by the Portfolio, the
premium paid is recorded as an investment, the value of which is
marked-to-market daily. When a purchased option expires, the Portfolio will
realize a loss in the amount of the cost of the option. When the Portfolio
enters into a closing sale transaction, the Portfolio will realize a gain
or loss depending on whether the sales proceeds from the closing sale
transaction are greater or less than the cost of the option. When the
Portfolio exercises a put option, settlement is made in cash. The risk
associated with purchasing options is limited to the premium originally
paid.
F Securities Sold Short -- The Portfolio may sell securities it does not own
in anticipation of a decline in the market price of the securities or in
order to hedge portfolio positions. The Portfolio will generally borrow the
security sold in order to make delivery to the buyer. Upon executing the
transaction, the Portfolio records the proceeds as deposits with brokers in
the Statement of Assets and Liabilities and establishes an offsetting
payable for securities sold short for the securities due on settlement. The
proceeds are retained by the broker as collateral for the short position.
The liability is marked to market and the Portfolio is required to pay the
lending broker any dividend or interest income earned while the short
position is open. A gain or loss is recorded when the security is delivered
to the broker. The Portfolio may recognize a loss on the transaction if the
45
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
market value of the securities sold increases before the securities are
delivered.
G Other -- Investment transactions are accounted for on the date the
securities 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.
H Use of Estimates -- The preparation of the 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 income and expense during the reporting period.
Actual results could differ from those estimates.
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 year ended December 31, 2000, the
adviser fee was 0.43% of the Portfolio's average net assets. Except for
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 who 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 year
ended December 31, 2000, no significant amounts have been deferred.
Certain officers and Trustees of the Portfolio are officers of the above
organizations.
3 Investment Transactions
- -------------------------------------------
For the year ended December 31, 2000, purchases and sales of investments,
other than short-term obligations, aggregated $3,441,068,199 and
$2,085,534,854, respectively. In addition, investments having an aggregate
market value of $457,566,723 at dates of withdrawal were distributed in
payment for capital withdrawals. During the year ended December 31, 2000,
investors contributed securities with a value of $2,622,113,147.
4 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at December 31, 2000, as computed on a federal income tax
basis, were as follows:
AGGREGATE COST $ 5,919,433,713
---------------------------------------------------------
Gross unrealized appreciation $12,444,556,001
Gross unrealized depreciation (45,884,671)
---------------------------------------------------------
NET UNREALIZED APPRECIATION $12,398,671,330
---------------------------------------------------------
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 December 31, 2000.
6 Line of Credit
- -------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR
and EVM and its affiliates in a $150 million unsecured line of credit
agreement with a group of banks. 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 participating
portfolio or fund based on its borrowings at an amount above either the
Eurodollar rate or federal funds rate. In addition, a fee computed at an
annual rate of 0.10% on the daily unused portion of the line of credit is
allocated among the participating portfolios and funds at the end of each
46
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
quarter. The Portfolio did not have any significant borrowings or allocated
fees during the year ended December 31, 2000.
7 Restricted Securities
- -------------------------------------------
At December 31, 2000, the Portfolio owned the following securities
(representing 2.7% of net assets) which were restricted as to public resale
and not registered under the Securities Act of 1933. The securities are
valued at fair value using methods determined in good faith by or at the
direction of the Trustees.
DATE OF
DESCRIPTION ACQUISITION SHARES/FACE COST FAIR VALUE
----------------------------------------------------------------------------------------------
COMMON STOCKS
----------------------------------------------------------------------------------------------
Affiliated Computer Services, Inc. 11/29/00 80,327 $ 4,516,629 $ 4,867,837
Alltel Corp. 5/16/00 30,000 1,896,544 1,872,732
American International Group, Inc. 3/17/00 375,000 24,949,397 36,948,001
Andrx Group 11/29/00 300,000 19,676,691 17,337,541
At Home Corp., Series A 3/17/00 171,895 5,000,018 950,572
Avaya, Inc. 9/29/00 25,000 963,897 257,774
Biomet, Inc. 7/19/00 87,596 2,500,016 3,473,405
Blyth Industries, Inc. 7/19/00 167,616 5,000,017 4,040,198
Boeing Company (The) 9/27/00 250,000 16,506,453 16,478,344
Cablevision Systems Corp. 7/19/00 130,000 8,826,740 11,032,213
Cardinal Health, Inc. 9/27/00 24,100 2,287,570 2,397,811
Costco Wholesale Corporation 11/29/00 56,823 2,000,006 2,266,106
Cypress Semiconductor Corporation 7/19/00 19,307 1,000,048 379,774
Dynegy, Inc. 11/29/00 63,525 3,108,056 3,556,271
Federated Investors, Inc., Class B 3/17/00 378,000 6,243,996 11,005,397
Federated Investors, Inc., Class B 5/16/00 378,000 7,221,298 11,004,204
GreenPoint Financial Corp. 11/29/00 300,000 8,780,559 12,263,596
Intel Corp. 11/29/00 350,000 14,688,889 10,506,750
Intel Corp. 11/29/00 119,093 5,000,002 3,575,119
Jabil Circuit, Inc. 5/16/00 2,082,013 75,000,003 52,806,866
Keebler Food Products Co. 5/16/00 28,300 1,000,011 1,172,144
Kinder Morgan, Inc. 9/27/00 500,000 19,657,969 26,059,502
DATE OF
DESCRIPTION ACQUISITION SHARES/FACE COST FAIR VALUE
----------------------------------------------------------------------------------------------
King Pharmaceuticals, Inc. 11/29/00 1,563,838 $ 77,586,646 $ 80,714,682
Lilly (Eli) & Co. 11/29/00 38,250 3,504,173 3,554,524
Limited, Inc. (The) 9/27/00 45,139 1,000,019 769,173
Lucent Technologies, Inc. 5/16/00 300,000 16,638,317 4,049,613
McLeodUSA, Inc. 3/17/00 150,000 4,182,109 2,116,102
McLeodUSA, Inc. 7/19/00 231,562 5,000,017 3,267,951
Merrill Lynch & Co., Inc. 11/29/00 150,000 9,192,441 10,213,422
Nabors Industries, Inc. 3/17/00 150,000 5,738,829 8,869,395
National-Oilwell, Inc. 9/27/00 45,730 1,347,011 1,766,857
Outback Steakhouse, Inc. 5/16/00 600,000 19,815,679 15,517,884
Outback Steakhouse, Inc. 11/29/00 500,000 13,011,703 12,918,902
Robinson (C.H.) Worldwide, Inc. 5/16/00 320,000 8,260,903 10,055,389
Smithfield Foods, Inc. 7/19/00 892,858 24,981,274 27,137,067
Solectron Corp. 5/16/00 500,000 17,137,378 16,942,231
Solectron Corp. 7/19/00 250,000 11,747,977 8,467,584
Sun Microsystems, Inc. 5/16/00 47,490 2,000,072 1,323,253
Sysco Corp. 5/16/00 99,028 2,000,020 2,969,478
Sysco Corp. 9/27/00 44,744 1,015,003 1,340,558
TMP Worldwide, Inc. 5/16/00 34,846 2,048,347 1,916,128
Voicestream Wireless Corporation 3/17/00 395,175 46,008,743 39,590,515
----------------------------------------------------------------------------------------------
$508,041,470 $487,752,865
----------------------------------------------------------------------------------------------
47
TAX-MANAGED GROWTH PORTFOLIO AS OF DECEMBER 31, 2000
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 (the Portfolio) as
of December 31, 2000, and the related statement of operations for the year then
ended, the statements of changes in net assets for the two years then ended and
the supplementary data for the two years ended December 31, 2000, the two-month
period ended December 31, 1998 and for each of the years in the two-year period
ended October 31, 1998 and 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 Portfolio's management. Our responsibility is to
express an opinion on these financial statements and supplementary data based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. 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
securities owned as of December 31, 2000 by correspondence with the custodian
and brokers; where replies were not received, we performed other 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 audits provide a reasonable basis
for our opinion.
In our opinion, such financial statements and supplementary data referred to
above present fairly, in all material respects, the financial position of the
Portfolio as of December 31, 2000, and the results of its operations, the
changes in its net assets and its supplementary data for the respective stated
periods in conformity with accounting principles generally accepted in the
United States of America.
48
SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the registrant has duly caused this registration statement to be signed
on its behalf by the undersigned officer of its Manager, Eaton Vance Management,
thereunto duly authorized.
BELMAR CAPITAL FUND LLC
(Registrant)
By: EATON VANCE MANAGEMENT, its Manager
By: /s/ Alan R. Dynner
---------------------------------------
Alan R. Dynner
Vice President and Chief Legal Officer
Date: April 27, 2001
49
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3 Copy of Limited Liability Company Agreement of the Fund
dated March 17, 2000 and First Amendment thereto dated
September 1, 1999. (Note: the LLC Agreement also defines the
rights of the holders of Shares of the Fund)
4 Copy of Revolving Credit and Security Agreement dated as of
March 17, 2000; Agreement of Amendment thereto dated as of
May 16, 2000; Agreement of Amendment thereto dated as of
July 19, 2000; Agreement of Amendment thereto dated as of
September 27, 2000; Agreement of Amendment thereto dated as
of November 29, 2000; Agreement of Amendment thereto dated
as of February 22, 2001; and Agreement of Amendment thereto
dated as of March 15, 2001.
9 Not applicable and not filed.
10(1) Copy of Investment Advisory and Administration Agreement
between the Fund and Boston Management and Research dated
March 10, 2000.
10(2) Copy of Management Agreement between Belmar Realty
Corporation and Boston Management and Research dated March
10, 2000.
10(3) Copy of Investor Servicing Agreement between the Fund and
Eaton Vance Distributors, Inc. dated December 15, 1999.
10(4) Copy of Custody and Transfer Agency Agreement between the
Fund and Investors Bank & Trust Company dated December 15,
1999.
11 Not applicable and not filed.
12 Not applicable and not filed.
21 List of Subsidiaries of the Fund.
24 Not applicable and not filed.
99 Form N-SAR of Eaton Vance Tax-Managed Growth Portfolio (File
No. 811-7409) for its fiscal year ended December 31, 2000
filed electronically with the Securities and Exchange
Commission under the Investment Company Act of 1940 on March
1, 2001 (Accession No. 0000940394-01-000043) (incorporated
herein by reference pursuant to Rule 12b-32).
50