<PAGE>
[LOGO] INVESTING [Picture of Calculator]
FOR THE
21ST
CENTURY
Annual Report December 31, 1999
[Picture of Flag]
EATON VANCE
UTILITIES
FUND
Global Management-Global Distribution
[Picture of Stock Market]
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------
LETTER TO SHAREHOLDERS
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[PHOTO]
JAMES B. HAWKES
PRESIDENT
For the year ended December 31, 1999, Eaton Vance Utilities Fund had a total
return of 40.75% for Class A shares.(1) This return resulted from an increase in
net asset value (NAV) to $11.65 per share on December 31, 1999 from $10.15 per
share on December 31, 1998, and the reinvestment of $0.162 in income dividends
and $2.261 per share in capital gains distributions.
For Class B, the total return was 39.71% based on an increase in NAV from $11.61
to $13.68 and the reinvestment of $0.082 in income dividends and $2.261 per
share in capital gains distributions.(1)
For Class C, the total return was 39.67% based on an increase in NAV from $12.27
to $14.58 and the reinvestment of $0.096 in income dividends and $2.261 per
share in capital gains distributions.(1)
By comparison, the average total return for mutual funds in the Lipper Utility
Funds Classification(2) was 15.82% for the period.
A robust economy and tame inflation provided the backdrop for U.S. equity
markets in 1999...
The U.S. economy continued to expand strongly in the past year, with gross
domestic product rising at a 5.8% annual pace in the fourth quarter. With
unemployment at a 30-year low, consumer confidence remained high, providing a
boost to retail activity. Interestingly, the robust economy and ebullient
consumer attitudes have not resulted in higher inflation. The Federal Reserve
raised its benchmark Federal Funds rate three times during the year in a
preemptive strike. However, continuing global competition, increased
productivity, and the enhanced use of technology have generally helped keep
inflation pressures in check.
U.S. equity markets, undeterred over recent months by interest rate activity,
continued to break new ground, with all major indices reaching record highs. It
is notable, however, that the majority of the markets' returns were from a very
narrow group of stocks in the high-flying and volatile technology sector.
In the utilities universe, telecommunications stocks were the clear winners,
buoyed by merger activity and indirect Internet business. However, the electric
companies, historically interest rate-sensitive, were vulnerable to the Fed
actions. In the pages that follow, Portfolio Manager Judy Saryan provides
background information on the utility industries and discusses the performance
of Eaton Vance Utilities Fund in 1999.
Sincerely,
/s/ James B. Hawkes
James B. Hawkes
President
February 9, 2000
<TABLE>
<CAPTION>
PERFORMANCE(3) CLASS A CLASS B CLASS C
- --------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS (AT NET ASSET VALUE)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 40.75% 39.71% 39.67%
Five Years 22.53 21.51 20.89
Ten Years 13.35 N.A. N.A.
Life of Fund+ 15.55 14.55 14.18
<CAPTION>
SEC AVERAGE ANNUAL TOTAL RETURNS (INCLUDING SALES CHARGE OR APPLICABLE CDSC)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 32.65% 34.71% 38.67%
Five Years 21.08 21.33 20.89
Ten Years 12.68 N.A. N.A.
Life of Fund+ 15.18 14.55 14.18
+Inception Dates -- Class A: 12/18/81; Class B: 11/1/93; Class C:11/1/93
<CAPTION>
TEN LARGEST EQUITY HOLDINGS(4)
- --------------------------------------------------------------------------------
<S> <C>
SBC Communications, Inc. 9.3%
Omnipoint Corp. 8.1
Energis PLC 6.8
Sprint Corp. 6.4
GTE Corp. 4.3
Bell Atlantic Corp. 2.9
DQE, Inc. 2.7
El Paso Energy Capital Trust 2.6
Pinnacle West Capital Corp. 2.1
Illinova Corp. 1.9
</TABLE>
(1)These returns do not include the 5.75% maximum sales charge for the Fund's
Class A shares or the applicable contingent deferred sales charges (CDSC)
for Class B and Class C shares. (2) It is not possible to invest directly in
a Lipper Classification. (3) Returns are historical and are calculated by
determining the percentage change in net asset value with all distributions
reinvested. SEC returns for Class A reflect the maximum 5.75% sales charge.
SEC returns for Class B reflect applicable CDSC based on the following
schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2% - 5th
year; 1% - 6th year. SEC 1-Year return for Class C reflects 1% CDSC. (4) Ten
largest equity holdings accounted for 47.1% of the Portfolio's net assets.
Holdings are subject to change.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth
more or less than their original cost.
- --------------------------------------------------------------------------------
MUTUAL FUND SHARES ARE NOT INSURED BY THE FDIC AND ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTED.
- --------------------------------------------------------------------------------
2
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
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MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
AN INTERVIEW WITH JUDITH A. SARYAN,
PORTFOLIO MANAGER OF UTILITIES FUND
[PHOTO]
JUDITH A. SARYAN
PORTFOLIO MANAGER
Q: Judy, can you give us an overview of the Portfolio under your management in
1999?
A: The Portfolio is made up of telecommunications, electric utilities, natural
gas distribution companies, pipelines, and a smattering of related companies,
such as telecom equipment. The emphasis continued to be on telecommunications
stocks. We added to the natural gas stocks during 1999 to take advantage of
consolidation opportunities, and we reduced our exposure to REITs.
Going forward, we plan to maintain a similar strategy. We will continue to
emphasize telecommunications; we will buy those electrics that benefit from
consolidation in the industry and those that are pursuing strategies that
create shareholder value.We always look for opportunities to benefit from the
restructuring and deregulation of the electric, telecom, and natural gas
industries.
Q: You mentioned that the telecommunications sector was the focus of the
Portfolio this year. Would you elaborate?
A: The telecom area is tremendously important to the Portfolio. The sector did
well in 1999, which is why the Portfolio's performance was excellent relative
to the overall utilities sector. Within that group, we maintained core
holdings in the regional "Bells" and independent telephone companies.
I characterize these companies as conservative telecom plays. In addition to
the Bells, we focused a portion of the Portfolio on faster-growing, "new
entrant" telecommunications companies.
Q: The top five holdings in the Portfolio are telecom stocks. Tell us more about
them.
A: The top five holdings represent our investment themes in telecom. The local
exchange companies, which include the regional Bells and independents, are
benefitting from the strong growth in wireless and data services and the
stocks sell at reasonable valuations.
Included in our top positions are SBC Communications, a regional Bell that is
our largest holding, and GTE, an independent phone company that Bell Atlantic
is in the process of acquiring. Energis is a U.K. company that fits into the
new-entrant category. It continued to be a large holding, although we did
reduce the size of the position after strong price appreciation. I like the
outlook for this company very much, especially the prospects for its
expansion from the U.K. into Continental Europe. We expect that Sprint, our
third-largest holding at year-end, will provide a very attractive return upon
completion of its merger into WorldCom. A major beneficiary of the growth in
the wireless industry is Omnipoint, a top-five holding, which is slated to
become part of VoiceStream soon.
LARGEST EQUITY INDUSTRIES
- --------------------------------------------------------------------------------
AS A PERCENTAGE OF TOTAL EQUITIES
[CHART]
<TABLE>
<S> <C>
Telephone Utilities 53.6%
Electric Utilities 17.2%
Telecommunications Services 8.1%
Gas Utilities 5.5%
Computer Software 3.9%
</TABLE>
+Industry allocation is subject to change due to active management.
3
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
- --------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
- --------------------------------------------------------------------------------
Q: What about the electric utility industry? How did this area perform?
A: Electric utilities stocks, by themselves, were down sharply for the year, but
we think that there are many positive catalysts that could help improve the
group's performance in 2000. Some of these factors include improving
fundamentals, consolidation in the industry, and restructuring. Some
companies are selling off assets to raise cash to invest in areas that have
attractive growth opportunities and create shareholder value. On the other
hand, income opportunities in utilities have declined, so the income
component is less of a contributor to total return. That said, the income
level should remain fairly stable over the next year.
One of the Portfolio's top 10 holdings is an electric utility company called
DQE, which is creating shareholder value by selling off its generating plant
and buying up water companies, as well as buying back its own shares. In
addition, DQE has invested some seed capital and become involved in new,
Internet-related businesses.
Q: What is your outlook for the electric utility and telecommunications
industries in 2000?
A: Overall, I'm bullish on the outlook for the electric and telecommunications
sectors in 2000. We expect the trends of deregulation and consolidation to
continue on a global basis in these industries, which will be positive for
stock prices. A countervailing force could be the impact of higher interest
rates. Historically, the electrics perform poorly in a period of rising
interest rates, which was the case last year. Interest rates are expected
to increase again this year, and to some extent the electric utilities have
already discounted a small increase. If rates continue a sharp ascent, then
the electric utility shares would be hurt.
We believe the positive trends in telecommunications should remain: growth in
wireless, growth in data, internationalization of the industry, and
consolidation. We have increased our exposure to telecommunications companies
outside the U.S., even as we reduced our exposure to Energis, because we see
some of the best opportunities for growth in these areas. We remain sensitive
to valuation in the telecom group, but continue to believe it will perform
well in the immediate future.
4
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
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FUND PERFORMANCE
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[GRAPH]
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
EATON VANCE UTILITIES FUND CLASS A VS. THE
STANDARD & POOR'S 500 AND STANDARD & POOR'S UTILITIES INDEX*
DECEMBER 31, 1989 - DECEMBER 31, 1999
- --------------------------------------------------------------------------------
DATE FUND/NAV FUND/MOP S&P 500 S&P UTILITIES
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
12/31/89 $10,000 $9,422 $10,000 $10,000
1/31/90 $9,376 $8,834 $9,329 $9,148
2/28/90 $9,366 $8,825 $9,449 $9,005
3/31/90 $9,427 $8,882 $9,699 $9,254
4/30/90 $9,101 $8,574 $9,458 $8,852
5/31/90 $9,488 $8,940 $10,378 $9,410
6/30/90 $9,366 $8,824 $10,308 $9,302
7/31/90 $9,469 $8,922 $10,275 $9,226
8/31/90 $8,973 $8,454 $9,347 $8,450
9/30/90 $9,181 $8,650 $8,893 $8,883
10/31/90 $9,811 $9,244 $8,855 $9,417
11/30/90 $9,948 $9,373 $9,427 $9,552
12/31/90 $10,015 $9,436 $9,689 $9,740
1/31/91 $9,827 $9,259 $10,110 $9,399
2/28/91 $10,181 $9,592 $10,832 $9,680
3/31/91 $10,438 $9,834 $11,094 $9,817
4/30/91 $10,404 $9,803 $11,121 $9,745
5/31/91 $10,203 $9,613 $11,599 $9,570
6/30/91 $10,102 $9,518 $11,068 $9,542
7/31/91 $10,522 $9,914 $11,583 $9,786
8/31/91 $10,852 $10,224 $11,857 $9,990
9/30/91 $11,346 $10,690 $11,658 $10,300
10/31/91 $11,496 $10,831 $11,815 $10,455
11/30/91 $11,669 $10,994 $11,340 $10,302
12/31/91 $12,380 $11,664 $12,635 $11,167
1/31/92 $11,783 $11,102 $12,399 $10,517
2/28/92 $11,656 $10,982 $12,560 $10,178
3/31/92 $11,477 $10,814 $12,316 $10,127
4/30/92 $11,799 $11,117 $12,677 $10,727
5/31/92 $12,083 $11,384 $12,739 $10,660
6/30/92 $12,096 $11,397 $12,550 $10,915
7/31/92 $12,867 $12,123 $13,062 $11,723
8/31/92 $12,775 $12,037 $12,795 $11,583
9/30/92 $12,843 $12,100 $12,946 $11,774
10/31/92 $12,737 $12,000 $12,990 $11,610
11/30/92 $12,830 $12,088 $13,431 $11,540
12/31/92 $13,196 $12,433 $13,596 $12,067
1/31/93 $13,563 $12,779 $13,709 $12,203
2/28/93 $14,437 $13,602 $13,896 $13,028
3/31/93 $14,580 $13,737 $14,189 $13,364
4/30/93 $14,523 $13,683 $13,846 $13,028
5/31/93 $14,423 $13,589 $14,216 $12,965
6/30/93 $14,841 $13,983 $14,257 $13,675
7/31/93 $15,202 $14,323 $14,200 $13,928
8/31/93 $15,679 $14,772 $14,737 $14,545
9/30/93 $15,591 $14,689 $14,624 $14,630
10/31/93 $15,284 $14,400 $14,927 $14,542
11/30/93 $14,277 $13,451 $14,784 $13,748
12/31/93 $14,449 $13,613 $14,963 $13,799
1/31/94 $14,220 $13,398 $15,471 $13,841
2/28/94 $13,640 $12,852 $15,052 $12,998
3/31/94 $13,344 $12,572 $14,397 $12,666
4/30/94 $13,574 $12,790 $14,581 $12,917
5/31/94 $13,018 $12,265 $14,820 $12,510
6/30/94 $12,649 $11,918 $14,457 $12,664
7/31/94 $12,833 $12,091 $14,931 $13,029
8/31/94 $12,740 $12,003 $15,542 $12,931
9/30/94 $12,513 $11,790 $15,162 $12,726
10/31/94 $12,528 $11,803 $15,503 $12,774
11/30/94 $12,511 $11,787 $14,939 $12,525
12/31/94 $12,674 $11,941 $15,160 $12,713
1/31/95 $13,039 $12,285 $15,553 $13,640
2/28/95 $12,937 $12,189 $16,158 $13,557
3/31/95 $12,919 $12,172 $16,634 $13,591
4/30/95 $13,119 $12,361 $17,124 $14,023
5/31/95 $13,760 $12,964 $17,807 $14,402
6/30/95 $13,843 $13,043 $18,220 $14,598
7/31/95 $14,199 $13,378 $18,824 $14,905
8/31/95 $14,385 $13,554 $18,871 $15,141
9/30/95 $15,069 $14,198 $19,667 $16,226
10/31/95 $15,222 $14,342 $19,597 $16,545
11/30/95 $15,462 $14,568 $20,456 $16,704
12/31/95 $16,164 $15,230 $20,850 $18,031
1/31/96 $16,553 $15,596 $21,559 $18,196
2/28/96 $16,443 $15,493 $21,759 $17,408
3/31/96 $16,371 $15,425 $21,969 $17,179
4/30/96 $16,245 $15,306 $22,293 $17,299
5/31/96 $16,672 $15,708 $22,867 $17,186
6/30/96 $16,958 $15,977 $22,954 $18,039
7/31/96 $16,142 $15,208 $21,940 $16,828
8/31/96 $16,699 $15,734 $22,404 $17,108
9/30/96 $16,822 $15,850 $23,663 $17,481
10/31/96 $17,075 $16,087 $24,316 $18,236
11/30/96 $17,308 $16,307 $26,152 $18,541
12/31/96 $17,295 $16,295 $25,634 $18,590
1/31/97 $17,607 $16,589 $27,235 $18,637
2/28/97 $17,702 $16,678 $27,448 $18,381
3/31/97 $17,195 $16,200 $26,323 $17,969
4/30/97 $16,888 $15,912 $27,893 $17,621
5/31/97 $17,749 $16,723 $29,590 $18,287
6/30/97 $18,250 $17,195 $30,915 $19,017
7/31/97 $18,902 $17,809 $33,373 $19,373
8/31/97 $18,613 $17,537 $31,505 $18,937
9/30/97 $19,764 $18,621 $33,229 $19,925
10/31/97 $19,018 $17,919 $32,121 $20,036
11/30/97 $19,591 $18,459 $33,606 $21,369
12/31/97 $20,093 $18,931 $34,183 $23,146
1/31/98 $20,677 $19,481 $34,561 $22,147
2/28/98 $21,413 $20,175 $37,052 $22,815
3/31/98 $22,843 $21,522 $38,948 $24,435
4/30/98 $22,621 $21,313 $39,340 $23,877
5/31/98 $22,811 $21,492 $38,664 $23,671
6/30/98 $23,122 $21,785 $40,234 $24,724
7/31/98 $22,776 $21,459 $39,806 $23,419
8/31/98 $20,702 $19,505 $34,057 $23,709
9/30/98 $21,746 $20,489 $36,239 $25,853
10/31/98 $21,718 $20,463 $39,184 $25,341
11/30/98 $23,047 $21,715 $41,558 $25,595
12/31/98 $24,873 $23,435 $43,951 $26,523
1/31/99 $26,612 $25,074 $45,788 $25,242
2/28/99 $25,580 $24,101 $44,366 $24,237
3/31/99 $26,329 $24,807 $46,140 $24,046
4/30/99 $27,298 $25,720 $47,927 $26,085
5/31/99 $27,171 $25,600 $46,797 $27,588
6/30/99 $28,142 $26,515 $49,392 $26,840
7/31/99 $29,113 $27,429 $47,851 $26,449
8/31/99 $27,485 $25,896 $47,614 $26,672
9/30/99 $28,333 $26,695 $46,310 $25,561
10/31/99 $31,653 $29,823 $49,240 $25,874
11/30/99 $32,517 $30,637 $50,241 $23,789
12/31/99 $35,010 $32,986 $53,198 $24,186
</TABLE>
<TABLE>
<CAPTION>
PERFORMANCE**+ CLASS A CLASS B CLASS C
AVERAGE ANNUAL TOTAL RETURNS (AT NET ASSET VALUE)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 40.75% 39.71% 39.67%
Five Years 22.53 21.51 20.89
Ten Years 13.35 N.A. N.A.
Life of Fund+ 15.55 14.55 14.18
<CAPTION>
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year 32.65% 34.71% 38.67%
Five Years 21.08 21.33 20.89
Ten Years 12.68 N.A. N.A.
Life of Fund+ 15.18 14.55 14.18
</TABLE>
+Inception Dates -- Class A: 12/18/81; Class B: 11/1/93; Class C:11/1/93
* Source: TowersData, Bethesda, MD.
The chart compares the Fund's total return with that of the S&P 500 Index, an
unmanaged index of 500 stocks commonly used as a measure of U.S. stock
performance, and the S&P Utilities Index. Returns are calculated by
determining the percentage change in net asset value with all distributions
reinvested. The lines on the chart represent the total returns of $10,000
hypothetical investments in the Fund and the Indexes. An investment in the
Fund's Class B shares on 11/1/93 would have been worth $23,124 on December 31,
1999. An investment in the Fund's Class C shares on 11/1/93 would have been
worth $22,658 on December 31, 1999. The Indexes' total returns do not reflect
any commissions or expenses that would have been incurred if an investor
individually purchased or sold the securities represented in the Indexes.
It is not possible to invest directly in an Index.
**Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. SEC returns for
Class A reflect the maximum 5.75% sales charge. SEC returns for Class B
reflect applicable CDSC based on the following schedule: 5% - 1st and 2nd
years; 4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year. SEC 1-Year
return for Class C reflects 1% CDSC. Past performance is no guarantee of
future results. Investment return and principal value will fluctuate so that
shares, when redeemed, may be worth more or less than their original cost.
5
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
<S> <C>
Assets
- ------------------------------------------------------
Investment in Utilities Portfolio, at
value
(identified cost, $393,281,916) $579,090,334
Receivable for Fund shares sold 322,646
- ------------------------------------------------------
TOTAL ASSETS $579,412,980
- ------------------------------------------------------
Liabilities
- ------------------------------------------------------
Payable for Fund shares redeemed $ 527,171
Payable to affiliate for service fees 15,835
Payable to affiliate for Trustee's fees 1,131
Accrued expenses 390,263
- ------------------------------------------------------
TOTAL LIABILITIES $ 934,400
- ------------------------------------------------------
NET ASSETS $578,478,580
- ------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------
Paid-in capital $307,211,610
Accumulated undistributed net realized
gain from Portfolio (computed on the
basis of identified cost) 32,754,387
Accumulated undistributed net investment
income 52,704,165
Net unrealized appreciation from
Portfolio (computed on the basis of
identified cost) 185,808,418
- ------------------------------------------------------
TOTAL $578,478,580
- ------------------------------------------------------
Class A Shares
- ------------------------------------------------------
NET ASSETS $509,845,102
SHARES OUTSTANDING 43,748,320
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 11.65
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 94.25 of $11.65) $ 12.36
- ------------------------------------------------------
Class B Shares
- ------------------------------------------------------
NET ASSETS $ 62,284,672
SHARES OUTSTANDING 4,553,989
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE (NOTE 6)
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 13.68
- ------------------------------------------------------
Class C Shares
- ------------------------------------------------------
NET ASSETS $ 6,348,806
SHARES OUTSTANDING 435,434
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE (NOTE 6)
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 14.58
- ------------------------------------------------------
</TABLE>
On sales of $50,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1999
<S> <C>
Investment Income
- ------------------------------------------------------
Dividends allocated from Portfolio (net
of foreign taxes, $44,938) $ 10,759,911
Interest allocated from Portfolio 1,189,780
Miscellaneous income allocated from
Portfolio 52,643
Expenses allocated from Portfolio (3,598,984)
- ------------------------------------------------------
NET INVESTMENT INCOME FROM PORTFOLIO $ 8,403,350
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Trustees' fees and expenses $ 5,323
Distribution and service fees
Class A 1,012,405
Class B 495,990
Class C 44,733
Transfer and dividend disbursing agent
fees 465,881
Printing and postage 54,220
Registration fees 40,787
Custodian fee 28,222
Legal and accounting services 27,473
Amortization of organization expenses 7,906
Miscellaneous 26,162
- ------------------------------------------------------
TOTAL EXPENSES $ 2,209,102
- ------------------------------------------------------
NET INVESTMENT INCOME $ 6,194,248
- ------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolio
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $125,097,008
Foreign currency transactions (17,452)
- ------------------------------------------------------
NET REALIZED GAIN $125,079,556
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 43,688,316
Foreign currency (5,793)
- ------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $ 43,682,523
- ------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $168,762,079
- ------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $174,956,327
- ------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED YEAR ENDED
IN NET ASSETS DECEMBER 31, 1999 DECEMBER 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------
From operations --
Net investment income $ 6,194,248 $ 11,445,332
Net realized gain 125,079,556 5,496,806
Net change in unrealized appreciation
(depreciation) 43,682,523 75,228,988
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 174,956,327 $ 92,171,126
- ------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (6,244,986) $ (9,905,578)
Class B (299,749) (845,623)
Class C (30,087) (61,649)
In excess of net investment income
Class B (22,519) --
Class C (1,552) --
From net realized gain
Class A (85,788,426) (1,582,078)
Class B (8,971,252) (157,576)
Class C (783,772) (12,962)
- ------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (102,142,343) $ (12,565,466)
- ------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $ 7,215,976 $ 4,777,604
Class B 9,756,289 3,716,353
Class C 2,447,477 610,654
Issued in reorganization of
EV Classic and Marathon Total
Return Funds
Class B -- 42,228,739
Class C -- 3,724,892
Net asset value of shares issued to
shareholders in payment of
distributions declared
Class A 73,428,828 8,677,027
Class B 7,735,663 805,844
Class C 668,605 62,598
Cost of shares redeemed
Class A (43,507,543) (45,654,104)
Class B (9,661,613) (8,794,964)
Class C (1,290,706) (1,346,110)
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS $ 46,792,976 $ 8,808,533
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 119,606,960 $ 88,414,193
- ------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED YEAR ENDED
NET ASSETS DECEMBER 31, 1999 DECEMBER 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------
At beginning of year $ 458,871,620 $ 370,457,427
- ------------------------------------------------------------------------------
AT END OF YEAR $ 578,478,580 $ 458,871,620
- ------------------------------------------------------------------------------
Accumulated undistributed
net investment income
included in net assets
- ------------------------------------------------------------------------------
AT END OF YEAR $ 52,704,165 $ 52,951,704
- ------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
---------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------------
1999(1) 1998(1) 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Net asset value -- Beginning
of year $ 10.150 $ 8.450 $ 8.770 $ 9.130 $ 7.630
- ---------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------------------------------------------------------
Net investment income $ 0.150 $ 0.251 $ 0.409 $ 0.626 $ 0.523
Net realized and unrealized
gain (loss) 3.773 1.721 0.887 (0.014)(2) 1.520
- ---------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 3.923 $ 1.972 $ 1.296 $ 0.612 $ 2.043
- ---------------------------------------------------------------------------------------------------------
Less distributions
- ---------------------------------------------------------------------------------------------------------
From net investment income $ (0.162) $ (0.235) $ (0.331) $ (0.522) $ (0.364)
In excess of net investment
income -- -- -- -- (0.039)
From net realized gain (2.261) (0.037) (1.243) (0.450) (0.078)
In excess of net realized gain -- -- (0.042) -- (0.062)
- ---------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (2.423) $ (0.272) $ (1.616) $ (0.972) $ (0.543)
- ---------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 11.650 $ 10.150 $ 8.450 $ 8.770 $ 9.130
- ---------------------------------------------------------------------------------------------------------
TOTAL RETURN(3) 40.75% 23.78% 16.18% 7.00% 27.52%
- ---------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------------------
Net assets, end of year (000's
omitted) $509,845 $409,178 $370,457 $401,974 $457,879
Ratios (As a percentage of
average daily net assets):
Operating expenses(4) 1.08% 1.11% 1.12% 1.20% 1.16%
Interest expense(4) --(5) 0.16% 0.01% 0.03% 0.03%
Net investment income 1.33% 2.75% 4.06% 5.59% 4.49%
Portfolio Turnover of the
Portfolio 93% 78% 169% 166% 103%
- ---------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(2) The per share amounts are not in accord with the net realized and
unrealized gain (loss) for the period because of the timing of sales of
Fund shares and the amount of the per share realized and unrealized
gains and losses at such time.
(3) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(4) Includes the Fund's share of the Portfolio's allocated expenses.
(5) Less than 0.01%.
Certain prior year ratios have been restated to conform to the current
year presentation.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
-----------------------
YEAR ENDED DECEMBER 31,
-----------------------
1999(1) 1998(1)
<S> <C> <C>
- ----------------------------------------------------------
Net asset value -- Beginning
of year $11.610 $ 9.670
- ----------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------
Net investment income $ 0.076 $ 0.209
Net realized and unrealized
gain 4.337 1.970
- ----------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 4.413 $ 2.179
- ----------------------------------------------------------
Less distributions
- ----------------------------------------------------------
From net investment income $(0.076) $(0.202)
In excess of net investment
income (0.006) --
From net realized gain (2.261) (0.037)
- ----------------------------------------------------------
TOTAL DISTRIBUTIONS $(2.343) $(0.239)
- ----------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $13.680 $11.610
- ----------------------------------------------------------
TOTAL RETURN(2) 39.71% 22.89%
- ----------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------
Net assets, end of year (000's
omitted) $62,285 $45,958
Ratios (As a percentage of
average daily net assets):
Operating expenses(3) 1.82% 1.85%
Interest expenses(3) --(4) 0.16%
Net investment income 0.59% 2.01%
Portfolio Turnover of the
Portfolio 93% 78%
- ----------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(2) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(3) Includes the Fund's share of the Portfolio's allocated expenses.
(4) Less than 0.01%.
Certain prior year ratios have been restated to conform to the current
year presentation.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
-----------------------
YEAR ENDED DECEMBER 31,
-----------------------
1999(1) 1998(1)
<S> <C> <C>
- ----------------------------------------------------------
Net asset value -- Beginning
of year $ 12.270 $ 10.190
- ----------------------------------------------------------
Income (loss) from operations
- ----------------------------------------------------------
Net investment income $ 0.078 $ 0.220
Net realized and unrealized
gain 4.589 2.082
- ----------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 4.667 $ 2.302
- ----------------------------------------------------------
Less distributions
- ----------------------------------------------------------
From net investment income $ (0.091) $ (0.185)
In excess of net investment
income (0.005) --
From net realized gain (2.261) (0.037)
- ----------------------------------------------------------
TOTAL DISTRIBUTIONS $ (2.357) $ (0.222)
- ----------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 14.580 $ 12.270
- ----------------------------------------------------------
TOTAL RETURN(2) 39.67% 22.88%
- ----------------------------------------------------------
Ratios/Supplemental Data
- ----------------------------------------------------------
Net assets, end of year
(000's omitted) $ 6,349 $ 3,736
Ratios (As a percentage of
average daily net assets):
Operating expenses(3) 1.85% 1.89%
Interest expenses(3) --(4) 0.16%
Net investment income 0.57% 1.99%
Portfolio Turnover of the
Portfolio 93% 78%
- ----------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(2) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(3) Includes the Fund's share of the Portfolio's allocated expenses.
(4) Less than 0.01%.
Certain prior year ratios have been restated to conform to the current
year presentation.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
- -------------------------------------------
Eaton Vance Utilities Fund (the Fund), is a diversified series of Eaton Vance
Special Investment Trust (the Trust). The Trust is an entity of the type
commonly known as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund offers three classes of shares: Class A,
Class B and Class C shares. Class A shares are generally sold subject to a
sales charge imposed at time of purchase. Class B and Class C shares are sold
at net asset value and are subject to a contingent deferred sales charge (see
Note 6). Each class represents a pro rata interest in the Fund, but votes
separately on class-specific matters and (as noted below) is subject to
different expenses. Realized and unrealized gains and losses and net
investment income, other than class specific expenses, are allocated daily to
each class of shares based on the relative net assets of each class to the
total net assets of the Fund. Each class of shares differs in its
distribution plan and certain other class specific expenses. The Fund invests
all of its investable assets in interests in the Utilities Portfolio (the
Portfolio), a New York trust, having the same investment objective as the
Fund. The value of the Fund's investment in the Portfolio reflects the Fund's
proportionate interest in the net assets of the Portfolio (99.9% at December
31, 1999). The performance of the Fund is directly affected by the
performance of the Portfolio. The financial statements of the Portfolio,
including the portfolio of investments, are included elsewhere in this report
and should be read in conjunction with the Fund's financial statements.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles.
A Investment Valuation -- Valuation of securities by the Portfolio is discussed
in Note 1A of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B Income -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and
accrued expenses of the Fund determined in accordance with generally accepted
accounting principles. Prior to the Fund's investment in the Portfolio, the
Fund held its investment directly.
C Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments. Accordingly, no provision for federal
income or excise tax is necessary. Pursuant to Section 852 of the Internal
Revenue Code, the Fund designates $82,031,415 as a long-term capital gain
distribution for its taxable year ended December 31, 1999.
D Deferred Organization Expenses -- Costs incurred by the Fund in connection
with its organization, including registration costs, were amortized on a
straight-line basis over five years and are fully amortized at December 31,
1999.
E Other -- Investment transactions are accounted for on a trade-date basis.
F 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 Distributions to Shareholders
- -------------------------------------------
The Fund's policy is to distribute monthly substantially all of the net
investment income allocated to the Fund by the Portfolio (less the Fund's
direct expenses) and to distribute at least annually substantially all of its
net realized capital gains so allocated. Distributions are paid in the form
of additional shares of the same class or, at the election of the
shareholder, in cash. The Fund distinguishes between distributions on a tax
basis and a financial reporting basis. Generally accepted accounting
principles require that only distributions in excess of tax basis earnings
and profits be reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the
financial statements and tax earnings and profits which result in over
distributions only for financial statement purposes are classified as
distributions in excess of net investment income or net realized gain on
investments. Permanent differences between book and tax accounting relating
to distributions are reclassified to paid-in capital.
3 Shares of Beneficial Interest
- -------------------------------------------
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of
11
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
beneficial interest (without par value). Such shares may be issued in a
number of different series (such as the Fund) and classes. Transactions in
Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
CLASS A 1999 1998
<S> <C> <C>
------------------------------------------------------------------
Sales 637,060 513,278
Issued to shareholders electing to
receive payments of distributions in
Fund shares 6,712,318 961,346
Redemptions (3,894,436) (5,003,117)
------------------------------------------------------------------
NET INCREASE (DECREASE) 3,454,942 (3,528,493)
------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
CLASS B 1999 1998
<S> <C> <C>
------------------------------------------------------------------
Sales 736,414 354,812
Issued to shareholders electing to
receive payments of distributions in
Fund shares 603,765 78,426
Redemptions (744,478) (839,996)
Issued to EV Marathon Total Return
Fund shareholders -- 4,365,046
------------------------------------------------------------------
NET INCREASE 595,701 3,958,288
------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------
CLASS C 1999 1998
<S> <C> <C>
------------------------------------------------------------------
Sales 176,541 54,891
Issued to shareholders electing to
receive payments of distributions in
Fund shares 49,012 5,721
Redemptions (94,581) (121,642)
Issued to EV Classic Total Return Fund
shareholders -- 365,492
------------------------------------------------------------------
NET INCREASE 130,972 304,462
------------------------------------------------------------------
</TABLE>
4 Transactions with Affiliates
- -------------------------------------------
Eaton Vance Management (EVM) serves as the administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services.
See Note 2 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report. Except as to Trustees of the Fund and the
Portfolio who are not members of EVM's or BMR's organization, officers and
Trustees receive remuneration for their services to the Fund out of such
investment adviser fee. The Fund was informed that Eaton Vance Distributors,
Inc. (EVD), a subsidiary of EVM and the Fund's principal underwriter,
received $20,744 from the Fund as its portion of the sales charge on sales of
Class A shares for the year ended December 31, 1999.
Certain officers and Trustees of the Fund and of the Portfolio are officers
of the above organizations.
5 Distribution and Service Plans
- -------------------------------------------
The Fund has in effect distribution plans for Class B shares (Class B Plan)
and Class C shares (Class C Plan) pursuant to Rule 12b-1 under the Investment
Company Act of 1940 and a service plan for Class A shares (Class A Plan)
(collectively, the Plans). The Class B and Class C Plans require the Fund to
pay EVD amounts equal to 1/365 of 0.75% of the Fund's average daily net
assets attributable to Class B and Class C shares for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no
outstanding Uncovered Distribution Charges, which are equivalent to the sum
of (i) 5% and 6.25% of the aggregate amount received by the Fund for the
Class B and Class C shares sold, respectively, plus (ii) interest calculated
by applying the rate of 1% over the prevailing prime rate to the outstanding
balance of Uncovered Distribution Charges of EVD of each respective class,
reduced by the aggregate amount of contingent deferred sales charges (see
Note 6) and daily amounts theretofore paid to EVD by each respective class.
The Fund paid or accrued $383,010 and $33,550 for Class B and Class C shares,
respectively, to or payable to EVD for the year ended December 31, 1999,
representing 0.75% of the average daily net assets for Class B and Class C
shares. At December 31, 1999, the amount of Uncovered Distribution Charges
EVD calculated under the Plan were approximately $338,000 and $935,000 for
Class B and Class C shares, respectively.
The Plans authorize the Fund to make payments of service fees to EVD,
investment dealers and other persons in amounts not exceeding 0.25% of the
Fund's average daily net assets attributable to Class A, Class B, and
Class C shares for any fiscal year. The Trustees initially implemented the
Plans by authorizing the Fund to make quarterly payments of service fees to
EVD and investment dealers equal to 0.25% per annum of the Fund's average
daily net assets attributable to Class A and Class B shares based on the
value of Fund shares sold by such persons and remaining outstanding for at
least one year. On October 4, 1999, the Trustees approved service fee
payments equal to 0.25% per annum of the Fund's average daily net assets
attributable to Class A and Class B shares for any fiscal year on shares of
the Fund sold on or
12
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
after October 12, 1999. The Class C Plan permits the Fund to make monthly
payments of service fees in amounts not expected to exceed 0.25% of the
Fund's average daily net assets attributable to Class C shares for any fiscal
year. Service fee payments will be made for personal services and/or the
maintenance of shareholder accounts. Service fees are separate and distinct
from the sales commissions and distribution fees payable by the Fund to EVD,
and, as such are not subject to automatic discontinuance when there are no
outstanding Uncovered Distribution Charges of EVD. Service fee payments for
the year ended December 31, 1999 amounted to $1,012,405, $112,980, and
$11,183 for Class A, Class B, and Class C shares, respectively.
Certain officers and Trustees of the Fund are officers of the above
organizations.
6 Contingent Deferred Sales Charge
- -------------------------------------------
A contingent deferred sales charge (CDSC) generally is imposed on redemptions
of Class B shares made within six years of purchase and on redemptions of
Class C shares made within one year of purchase. A CDSC of 1% is imposed on
any redemption of Class A shares made within 12 months of purchase that were
acquired at net asset value if the purchase amount was $1 million or more.
Generally, the CDSC is based upon the lower of the net asset value at date of
redemption or date of purchase. No charge is levied on shares acquired by
reinvestment of dividends or capital gains distributions. The Class B CDSC is
imposed at declining rates that begin at 5% in the case of redemptions in the
first and second year after purchase, declining one percentage point each
subsequent year. Class C shares will be subject to a 1% CDSC if redeemed
within one year of purchase. No CDSC is levied on shares which have been sold
to EVM or its affiliates or to their respective employees or clients and may
be waived under certain other limited conditions. CDSC charges are paid to
EVD to reduce the amount of Uncovered Distribution Charges calculated under
the Fund's Distribution Plan (See Note 5). CDSC charges received when no
Uncovered Distribution Charges exist will be retained by the Fund. The Fund
was informed that EVD received approximately $46,000 and $1,000 of CDSC paid
by shareholders for Class B and Class C shares, respectively, for the year
ended December 31, 1999.
7 Investment Transactions
- -------------------------------------------
Increases and decreases in the Fund's investments in the Portfolio for the
year ended December 31, 1999, aggregated $20,219,337 and $77,910,493,
respectively.
8 Transfer of Net Assets
- -------------------------------------------
On January 1, 1998, the Fund, formerly known as the EV Traditional Total
Return Fund, acquired the net assets of EV Marathon Total Return Fund and EV
Classic Total Return Fund pursuant to an Agreement and Plan of Reorganization
dated June 23, 1997. In accordance with the agreement, the Fund, at the
closing, issued 4,365,046 Class B shares and 365,492 Class C shares of the
Fund having an aggregate value of $42,228,739 and $3,724,892, respectively.
As a result, the Fund issued one Class B share for each share of EV Marathon
Total Return Fund and one Class C share for each share of EV Classic Total
Return Fund. The transaction was structured for tax purposes to qualify as a
tax free reorganization under the Internal Revenue Code. The EV Marathon
Total Return Fund's and EV Classic Total Return Fund's net assets at the date
of the transaction were $42,228,739 and $3,724,892, respectively, including
$6,799,057 and $627,601 of unrealized appreciation. Directly after the
merger, the combined net assets of the Fund were $416,411,058 with a net
asset value of $8.45, $9.67, and $10.19 for Class A, Class B and Class C
shares, respectively.
13
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
INDEPENDENT ACCOUNTANTS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS
OF EATON VANCE UTILITIES FUND
- ---------------------------------------------
In our opinion, the accompanying statement of assets and liabilities, and the
related statements of operations and of changes in net assets and financial
highlights present fairly, in all material respects, the financial position of
Eaton Vance Utilities Fund (the "Fund") at December 31, 1999 and the results of
its operations, the changes in its net assets and the financial highlights for
the periods indicated, in conformity with accounting principles generally
accepted in the United States. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with auditing standards
generally accepted in the United States, which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 9, 2000
14
<PAGE>
UTILITIES PORTFOLIO AS OF DECEMBER 31, 1999
PORTFOLIO OF INVESTMENTS
COMMON STOCKS -- 86.4%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
Broadcasting and Cable -- 1.2%
- -----------------------------------------------------------------------
Ovation, Inc.(1)(2) 285,787 $ 2,857,870
Young Broadcasting, Inc., Class A(2) 80,000 4,080,000
- -----------------------------------------------------------------------
$ 6,937,870
- -----------------------------------------------------------------------
Communications Equipment -- 2.3%
- -----------------------------------------------------------------------
Alcatel ADR 75,000 $ 3,375,000
LM Ericsson Telephone Co., ADR 85,000 5,583,437
Nokia Corp. ADR 10,000 1,900,000
TranSwitch Corp.(2) 35,000 2,539,687
- -----------------------------------------------------------------------
$ 13,398,124
- -----------------------------------------------------------------------
Computer Software -- 3.7%
- -----------------------------------------------------------------------
BCE, Inc. 105,000 $ 9,469,687
Netcom Systems, AB(3) 100,000 6,999,860
SilverStream Software, Inc.(2) 20,000 2,380,000
SonicWALL, Inc.(2) 20,000 805,000
Wind River Systems, Inc.(2) 50,000 1,831,250
- -----------------------------------------------------------------------
$ 21,485,797
- -----------------------------------------------------------------------
Electric Utilities -- 16.3%
- -----------------------------------------------------------------------
Calpine Corp.(2) 70,500 $ 4,512,000
Cleco Corp. 300,000 9,618,750
DPL, Inc. 600,000 10,387,500
DQE, Inc. 450,000 15,581,250
Edison International 50,000 1,309,375
Illinova Corp. 315,000 10,946,250
Kansas City Power and Light Co. 115,000 2,537,187
LG & E Energy Corp. 120,000 2,092,500
National Grid Group plc(3) 800,000 6,072,880
Niagra Mohawk Holdings, Inc.(2) 120,000 1,672,500
Nisource, Inc. 600,000 10,725,000
Pinnacle West Capital Corp. 400,000 12,225,000
PowerGen plc(3) 57,530 412,611
ScottishPower plc ADR 140,500 3,934,000
Sierra Pacific Resources 144,000 2,493,000
- -----------------------------------------------------------------------
$ 94,519,803
- -----------------------------------------------------------------------
Gas Utilities -- 5.2%
- -----------------------------------------------------------------------
Columbia Energy Group 75,000 $ 4,743,750
El Paso Energy Corp. 75,000 2,910,938
MCN Energy Group, Inc. 100,000 2,375,000
Mitchell Energy & Development Corp.,
Class B 67,400 1,453,313
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
Gas Utilities (continued)
- -----------------------------------------------------------------------
National Fuel Gas Co. 100,000 $ 4,650,000
NICOR, Inc. 155,000 5,037,500
Peoples Energy Corp. 110,000 3,685,000
San Juan Basin Royalty Trust 500,000 5,187,500
- -----------------------------------------------------------------------
$ 30,043,001
- -----------------------------------------------------------------------
Machinery and Engineering -- 1.3%
- -----------------------------------------------------------------------
Mannesmann AG(3) 30,000 $ 7,276,704
- -----------------------------------------------------------------------
$ 7,276,704
- -----------------------------------------------------------------------
REITS -- 0.5%
- -----------------------------------------------------------------------
Annaly Mortgage, Inc. 144A(2)(4) 350,000 $ 3,062,500
- -----------------------------------------------------------------------
$ 3,062,500
- -----------------------------------------------------------------------
Telecommunications Services -- 7.7%
- -----------------------------------------------------------------------
Adelphia Business Solutions, Inc.(2) 115,000 $ 5,520,000
BEA Systems, Inc.(2) 30,000 2,098,125
Broadwing, Inc. 100,000 3,687,500
Digex, Inc.(2) 65,000 4,468,750
Equant NV(2) 40,000 4,480,000
GRIC Communications, Inc.(2) 15,000 380,625
Infonet Services Corp. ADR(2) 80,000 2,100,000
ITC DeltaCom, Inc.(2) 50,000 1,381,250
Jazztel plc ADR(2) 5,000 325,625
NBC Internet, Inc.(2) 10,000 772,500
PSINet, Inc.(2) 25,000 1,543,750
Sonera Corp. ADR(2) 85,000 5,886,250
Thus plc(3) 350,000 2,205,595
Verio, Inc.(2) 25,000 1,154,688
Versatel Telecom International NV ADR(2) 250,000 8,734,375
- -----------------------------------------------------------------------
$ 44,739,033
- -----------------------------------------------------------------------
Telephone Utilities -- 44.9%
- -----------------------------------------------------------------------
Airgate PCS, Inc.(2) 20,000 $ 1,055,000
Alltel Corp. 110,000 9,095,625
Bell Atlantic Corp. 275,000 16,929,688
BellSouth Corp. 85,000 3,979,063
Call-Net Enterprises Inc.-B 160,000 535,008
CenturyTel, Inc. 80,000 3,790,000
Clearnet Communications, Inc.(2) 40,000 1,375,000
Energis(2)(3) 816,259 39,124,926
Esat Telecom Group plc ADR(2) 40,000 3,660,000
GTE Corp. 350,000 24,696,875
Helsingin Puhelin Oyj(3) 73,850 6,121,449
MCI Worldcom, Inc.(2) 52,500 2,785,781
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
UTILITIES PORTFOLIO AS OF DECEMBER 31, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
Telephone Utilities (continued)
- -----------------------------------------------------------------------
Microcell Telecommunications, Inc.(2) 120,000 $ 3,945,000
Nippon Telegraph and Telephone Corp. 70,000 6,028,750
Omnipoint Corp.(2) 95,000 11,459,375
Portugal Telecom SA(3) 100,000 1,091,510
Primus Telecommunications Group, Inc.(2) 105,000 4,016,250
RSL Communications, Ltd.(2) 92,500 1,584,063
SBC Communications, Inc. 1,107,960 54,013,050
Sprint Corp. 550,000 37,021,875
Tele Danmark(3) 15,350 1,135,071
Telecom Italia SpA(3) 900,000 10,003,950
US West, Inc. 140,000 10,080,000
Vodafone AirTouch plc ADR 50,000 2,475,000
Western Wireless Corp., Class A(2) 45,000 3,003,750
Z-Tel Technologies, Inc.(2) 15,625 630,859
- -----------------------------------------------------------------------
$259,636,918
- -----------------------------------------------------------------------
Utilities - Electrical and Gas -- 3.3%
- -----------------------------------------------------------------------
Constellation Energy Group 90,000 $ 2,610,000
MDU Resources Group, Inc. 100,000 2,000,000
Montana Power Co. 100,000 3,606,250
NSTAR 75,000 3,037,500
PG&E Corp. 50,000 1,025,000
SCANA Corp. 260,000 6,987,500
- -----------------------------------------------------------------------
$ 19,266,250
- -----------------------------------------------------------------------
Total Common Stocks
(identified cost $347,633,607) $500,366,000
- -----------------------------------------------------------------------
</TABLE>
CONVERTIBLE PREFERRED STOCKS -- 8.8%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
Gas Utilities -- 2.6%
- -----------------------------------------------------------------------
El Paso Energy Capital Trust 300,000 $ 15,112,500
- -----------------------------------------------------------------------
$ 15,112,500
- -----------------------------------------------------------------------
Telephone Utilities -- 6.2%
- -----------------------------------------------------------------------
Omnipoint Corp.(4) 180,000 $ 35,550,000
- -----------------------------------------------------------------------
$ 35,550,000
- -----------------------------------------------------------------------
Total Convertible Preferred Stocks
(identified cost $23,725,147) $ 50,662,500
- -----------------------------------------------------------------------
</TABLE>
WARRANTS -- 0.0%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
REITS -- 0.0%
- -----------------------------------------------------------------------
Walden Residential(2) 340,000 $ 1,700
- -----------------------------------------------------------------------
$ 1,700
- -----------------------------------------------------------------------
Total Warrants
(identified cost $0) $ 1,700
- -----------------------------------------------------------------------
</TABLE>
CONVERTIBLE BONDS -- 3.3%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
Bell Atlantic Financial, 4.25%,
9/15/05(4) $ 5,500 $ 6,765,000
NTL, Inc., 7.00%, 12/15/08(4) 3,500 9,152,500
Ovation, Inc. (PIK), 9.75%, 2/23/01(1) 3,117 3,116,808
- -----------------------------------------------------------------------
Total Convertible Bonds
(identified cost, $12,893,058) $ 19,034,308
- -----------------------------------------------------------------------
</TABLE>
COMMERCIAL PAPER -- 1.6%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- -----------------------------------------------------------------------
SBC Communications, Inc., 4.70%, 1/3/00 $ 9,476 $ 9,473,526
- -----------------------------------------------------------------------
Total Commercial Paper
(at amortized cost, $9,473,526) $ 9,473,526
- -----------------------------------------------------------------------
Total Investments -- 100.1%
(identified cost $393,725,338) $579,538,034
- -----------------------------------------------------------------------
Other Assets, Less Liabilities -- (0.1)% $ (447,665)
- -----------------------------------------------------------------------
Net Assets -- 100.0% $579,090,369
- -----------------------------------------------------------------------
</TABLE>
ADR - American Depositary Receipt
(PIK) - Payment in kind.
(1) Security valued at fair value using methods determined in good faith by
or at the direction of the Trustees.
(2) Non-income producing security.
(3) Foreign security.
(4) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
UTILITIES PORTFOLIO AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1999
<S> <C>
Assets
- ------------------------------------------------------
Investments, at value (identified cost,
$393,725,338) $579,538,034
Cash 4,672
Receivable for investments sold 1,127,766
Dividends and interest receivable 1,250,660
Miscellaneous receivable 15,211
Tax reclaim receivable 7,099
- ------------------------------------------------------
TOTAL ASSETS $581,943,442
- ------------------------------------------------------
Liabilities
- ------------------------------------------------------
Payable for investments purchased $ 2,813,238
Payable to affiliate for Trustee's fees 6,362
Accrued expenses 33,473
- ------------------------------------------------------
TOTAL LIABILITIES $ 2,853,073
- ------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $579,090,369
- ------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------
Net proceeds from capital contributions
and withdrawals $393,281,944
Net unrealized appreciation (computed on
the basis of identified cost) 185,808,425
- ------------------------------------------------------
TOTAL $579,090,369
- ------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, 1999
<S> <C>
Investment Income
- ------------------------------------------------------
Dividends (net of foreign taxes,
$44,938) $ 10,759,912
Interest 1,189,780
Miscellaneous 52,643
- ------------------------------------------------------
TOTAL INVESTMENT INCOME $ 12,002,335
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Investment adviser fee $ 3,236,300
Trustees' fees and expenses 29,845
Custodian fee 254,760
Legal and accounting services 47,629
Interest expense 26,348
Miscellaneous 4,102
- ------------------------------------------------------
TOTAL EXPENSES $ 3,598,984
- ------------------------------------------------------
NET INVESTMENT INCOME $ 8,403,351
- ------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $125,097,015
Foreign currency transactions (17,451)
- ------------------------------------------------------
NET REALIZED GAIN $125,079,564
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 43,688,318
Foreign currency (5,793)
- ------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $ 43,682,525
- ------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $168,762,089
- ------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $177,165,440
- ------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
UTILITIES PORTFOLIO AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED YEAR ENDED
IN NET ASSETS DECEMBER 31, 1999 DECEMBER 31, 1998
<S> <C> <C>
- ------------------------------------------------------------------------------
From operations --
Net investment income $ 8,403,351 $ 13,457,660
Net realized gain 125,079,564 5,496,806
Net change in unrealized appreciation
(depreciation) 43,682,525 75,228,993
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 177,165,440 $ 94,183,459
- ------------------------------------------------------------------------------
Capital transactions --
Contributions $ 20,219,337 $ 17,840,966
Withdrawals (77,910,493) (65,817,239)
- ------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM
CAPITAL TRANSACTIONS $ (57,691,156) $ (47,976,273)
- ------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 119,474,284 $ 46,207,186
- ------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------
At beginning of year $ 459,616,085 $ 413,408,899
- ------------------------------------------------------------------------------
AT END OF YEAR $ 579,090,369 $ 459,616,085
- ------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
UTILITIES PORTFOLIO AS OF DECEMBER 31, 1999
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------
Ratios to average daily net assets
- ------------------------------------------------------------------------------------------
Operating expenses 0.72% 0.72% 0.74% 0.82% 0.81%
Interest expense --(1) 0.16% 0.01% 0.03(1) 0.03(1)
Net investment income 1.68% 3.13% 4.42% 5.94% 4.83%
Portfolio Turnover 93% 78% 169% 166% 103%
- ------------------------------------------------------------------------------------------
Net assets, end of year (000's
omitted) $579,090 $459,616 $413,409 $455,067 $521,670
- ------------------------------------------------------------------------------------------
</TABLE>
Certain prior year ratios have been restated to conform to the current year
presentation.
(1) Less than 0.01%.
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
UTILITIES PORTFOLIO AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
- -------------------------------------------
Utilities Portfolio (the Portfolio), is registered under the Investment
Company Act of 1940 as a diversified open-end management investment company
which was organized as a trust under the laws of the State of New York on May
1, 1992. Under normal circumstances the Portfolio invests at least 65% of its
total assets in common stocks of utilities companies. The Declaration of
Trust permits the Trustees to issue beneficial interests in the Portfolio.
The following is a summary of significant accounting policies of the
Portfolio. The policies are in conformity with generally accepted accounting
principles.
A Investment Valuation -- Securities listed on securities exchanges or in the
NASDAQ National Market are valued at closing sales prices or, if there has
been no sale, at the mean between the closing bid and asked prices. Unlisted
securities are valued at the mean between the latest available bid and asked
prices. Options and financial futures contracts are valued at the last sale
price, as quoted on the principal exchange or board of trade on which such
options or contracts are traded or, in the absence of a sale, the mean
between the last bid and asked prices. Short-term obligations, maturing in 60
days or less, are valued at amortized cost, which approximates value. Other
fixed income and debt securities, including listed securities and securities
for which price quotations are available, will normally be valued on the
basis of valuations furnished by a pricing service. Securities for which
market quotations are unavailable are appraised at their fair value as
determined in good faith by or at the direction of
the Trustees.
B Income -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes. Dividend income is recorded on the ex-dividend date for
dividends received in cash and/or securities. 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. Dividend income may
include dividends that represent returns of capital for federal income tax
purposes.
C 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. Since one of the
Portfolio's investors is a regulated investment company that invests all or
substantially all of its 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. Withholding taxes on foreign dividends and capital gains have been
provided for in accordance with the Portfolio's understanding of the
applicable countries' tax rules and rates.
D Foreign Currency Translation -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing on
the respective dates of such transactions. Recognized gains or losses on
investment transactions attributable to changes in foreign currency exchange
rates are recorded for financial statement purposes as net realized gains and
losses on investments. That portion of unrealized gains and losses on
investments that results from fluctuations in foreign currency exchange rates
is not separately disclosed.
E Option Accounting Principles -- Upon the writing of a covered call option, an
amount equal to the premium received by the Portfolio 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 market
value of the option written in accordance with the Portfolio's policies on
investment valuations discussed above. Premiums received from writing call
options which expire are treated as realized gains. Premiums received from
writing call options which 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, as writer of a call option, may have no
control over whether the underlying securities may be sold and, as a result,
bears the market risk for an unfavorable change in the price of the
securities underlying the written option.
F Financial Futures Contracts -- Upon the entering of a financial futures
contract, the Portfolio is required to deposit an amount (initial margin)
either in cash or securities 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
the daily fluctuations in the value of the underlying security, and are
recorded for book purposes as unrealized
20
<PAGE>
UTILITIES PORTFOLIO AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
gains or losses by the Portfolio. The Portfolio's investment in financial
futures contracts is designed only to hedge against anticipated future
changes in interest rates, security prices, commodity prices or currency
exchange rates. Should interest rates, security prices, commodity prices or
currency exchange rates move unexpectedly, the Portfolio may not achieve the
anticipated benefits of the financial futures contracts and may realize a
loss. If the Portfolio enters into a closing transaction, the Portfolio will
realize for book purposes a gain or loss equal to the difference between the
value of the financial futures contract to sell and the financial futures
contract to buy.
G Delayed Delivery Transactions -- The Portfolio may purchase or sell
securities on a when-issued or forward commitment basis. Payment and delivery
may take place at a period in time after the date of the transaction. At the
time the transaction is negotiated, the price of the security that will be
delivered and paid for is fixed. Losses may arise due to changes in the
market value of the underlying securities if the counterparty does not
perform under the contract.
H Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
to the Portfolio. Pursuant to the respective custodian agreements, IBT
receives a fee reduced by credits which are determined based on the average
daily cash balances the Portfolio maintains with IBT. All significant credit
balances used to reduce the Portfolio's custodian fees are reported as a
reduction of expenses on the Statement of Operations. For the year ended
December 31, 1999, $3,021 credit balances were used to reduce the Portfolio's
custodian fee.
I Other -- Investment transactions are accounted for on a trade date basis.
Realized gains and losses are computed based on the specific identification
of the securities sold.
J 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.
The fee is at the annual rate of 0.75% of the Portfolio's average daily net
assets up to $500 million and at reduced rates as daily net assets exceed
that level. In addition, the Trustees voted to accept a waiver of BMR's
compensation so that advisory fees paid will not exceed 0.65% on an annual
basis on assets up to $500 million and at reduced rates thereafter. For the
year ended December 31, 1999, the fee was equivalent to 0.65% of the
Portfolio's average daily net assets for such period and amounted to
$3,236,300. Except as to Trustees of the Portfolio who are not members of
EVM's or BMR's organization, officers and Trustees receive remuneration for
their services to the Portfolio out of such investment adviser fee. Certain
officers and Trustees of the Portfolio are officers of the above
organizations. Trustees of the Portfolio that are not affiliated with the
Investment Adviser may elect to defer receipt of all or a percentage of their
annual fees in accordance with the terms of the Trustees Deferred
Compensation Plan. For the year ended December 31, 1999, no significant
amounts have been deferred.
3 Investment Transactions
- -------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $444,761,865 and
$481,690,394, respectively.
4 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at December 31, 1999, as computed on a federal income tax
basis, were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $ 394,393,450
-------------------------------------------------------
Gross unrealized appreciation $ 190,151,085
Gross unrealized depreciation (5,006,501)
-------------------------------------------------------
NET UNREALIZED APPRECIATION $ 185,144,584
-------------------------------------------------------
</TABLE>
5 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. The Portfolio may temporarily borrow from the line of
credit to satisfy redemption requests or settle investment transactions.
Interest is charged to each portfolio or fund based on its borrowings at an
amount above 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
21
<PAGE>
UTILITIES PORTFOLIO AS OF DECEMBER 31, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
the line of credit is allocated among the participating portfolios and funds
at the end of each quarter. The average daily loan balance for the year ended
December 31, 1999 was $476,088 and the average interest rate was 5.53%. At
December 31, 1999, the Portfolio did not have a loan outstanding under this
agreement.
6 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. At December 31,
1999 there were no outstanding obligations under these financial instruments.
22
<PAGE>
UTILITIES PORTFOLIO AS OF DECEMBER 31, 1999
INDEPENDENT ACCOUNTANTS' REPORT
TO THE TRUSTEES AND INVESTORS
OF UTILITIES PORTFOLIO
- ---------------------------------------------
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and supplementary data present fairly, in all material
respects, the financial position of Utilities Portfolio (the "Portfolio") at
December 31, 1999, and the results of its operations, the changes in its net
assets and the supplementary data for the periods indicated, in conformity with
accounting principles generally accepted in the United States. These financial
statements and supplementary data (hereafter referred to as "financial
statements") are the responsibility of the Portfolio's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with auditing standards generally accepted in the United States, which 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, assessing the accounting principles used and
significant estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included confirmation
of securities at December 31, 1999 by correspondence with the custodian and
brokers, provide a reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
February 9, 2000
23
<PAGE>
EATON VANCE UTILITIES FUND AS OF DECEMBER 31, 1999
INVESTMENT MANAGEMENT
EATON VANCE UTILITIES FUND
Officers
James B. Hawkes
President and Trustee
Edward E. Smiley, Jr.
Vice President
Michael B. Terry
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
UTILITIES PORTFOLIO
Officers
James B. Hawkes
President and Trustee
Judith A. Saryan
Vice President and
Portfolio Manager
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
24
<PAGE>
INVESTMENT ADVISER OF
UTILITIES PORTFOLIO
BOSTON MANAGEMENT AND RESEARCH
The Eaton Vance Building
255 State Street
Boston, MA 02109
ADMINISTRATOR OF
EATON VANCE UTILITIES FUND
Eaton Vance Management
The Eaton Vance Building
255 State Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
EATON VANCE DISTRIBUTORS, INC.
The Eaton Vance Building
255 State Street
Boston, MA 02109
(617) 482-8260
CUSTODIAN
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
PFPC GLOBAL FUND SERVICES
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
INDEPENDENT ACCOUNTANTS
PRICEWATERHOUSECOOPERS LLP
160 Federal Street
Boston, MA 02110
EATON VANCE UTILITIES FUND
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its sales
charges and expenses. Please read the prospectus carefully before
you invest or send money.
- --------------------------------------------------------------------------------
159-12/99 UTSRC-12/99
