<PAGE>
[LOGO OF EV DOOR APPEARS HERE]
Investing [PHOTO OF STOCK CERTIFICATES APPEARS HERE]
for the
21st
Century
Semiannual Report September 30, 1998
Eaton Vance
High Income
Fund
[PHOTO OF PAUL REVERE APPEARS HERE]
Global Management-Global Distribution
[PHOTO OF BOSTON SKYLINE APPEARS HERE]
<PAGE>
Eaton Vance High Income Fund as of September 30, 1998
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INVESTMENT UPDATE
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[PHOTO OF MICHAEL WEILHEIMER APPEARS HERE]
MICHAEL W. WEILHEIMER,
PORTFOLIO MANAGER
Investment Environment
- -----------------------------
. The six-month period was marked by extraordinary volatility, as Asian
weakness, signs of a slowing domestic economy, and weaker corporate profits
dragged the high-yield market lower. In a preemptive strike, the Federal
Reserve twice lowered interest rates. Ten-year Treasury bond yields declined
from 5.7% at March 31, 1998 to around 4.4% by September 30, 1998.
. Reflecting a "flight to quality," the high-yield bond market underperformed
the investment-grade bond market. The Lehman Brothers High-Yield Bond Index
posted a return of -3.5%, while the Lehman Brothers Government/Corporate Bond
Index returned 7.7%./1/
. Despite a dramatic decline in new issuance late in the period, the high-yield
market has continued to expand in 1998. Market capitalization totaled
approximately $600 billion at September 30, 1998.
The Fund
- -----------------------------
Performance for the Past Six Months
. During the six months ended September 30, 1998, the Fund's Class B shares had
a total return of -7.0%. This return resulted from a decline in net asset
value (NAV) to $7.16 per share on September 30, 1998 from $8.03 on March 31,
1998 and the reinvestment of $0.329 in dividends./2/
. The Fund's Class C shares had a total return of -7.1% during the period, the
result of a decline in NAV to $9.41 per share from $10.56 per share and the
reinvestment of $0.432 in dividends./2/ * Based on the Fund's most recent
dividends and NAVs on September 30, 1998 of $7.16 per share for Class B and
$9.41 for Class C, the distribution rates were 9.29% and 9.25%,
respectively./3/ The SEC30-day yields for Class B and C shares at September
30 were 9.13% and 9.08%, respectively./4/
Recent Portfolio Developments
. For their risk-adjusted performance through September 30, 1998 the Fund's C
shares earned a Four-Star Overall Morningstar/TM/ Rating among 1491 taxable
bond funds/5/ - a nationally recognized monitor of mutual fund performance.
. Communications and cable companies were the Portfolio's largest industry
weightings at September 30, 1998. These are areas of the economy that
typically generate strong cash flow even as overall economic activity is
slowing. The Portfolio also had an exposure to food packaging and retailing
companies, which are also relatively recession-resistant.
. Foreign companies played an increasing role in the Portfolio's
telecom-related holdings. Esprit Telecom Group PLC is building a strong
customer base and network in the European market. Another large holding,
London-based Telewest PLC is partially owned by U.S. West. The company is
increasing its profile in the valuable London market, where its primary
competitor is British Telecom.
. The Portfolio found some promising opportunities among operators of movie
theaters, including Regal Cinemas, Inc., Cinemark USA, Inc., and Cineplex
Entertainment. The industry has enjoyed record box office receipts in recent
years and strong demand has helped fuel theater expansion. The theater
industry has tended to be less affected by a slower economy, an attractive
quality in an uncertain environment.
. Among the Portfolio's food-related holdings were companies that produce
household favorites, including Del Monte Corp. and International Home Foods,
which makes Gulden's Mustard and Chef Boyardee products. Among food
retailers, New England-based Star Market Co. has been especially successful
in targeting new store locations. Star's new products and services have
contributed to strong revenue growth.
- --------------------------------------------------------------------------------
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
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- --------------------------------------------------------------------------------
Fund Information
as of September 30, 1998
Performance/6/ Class B Class C
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Average Annual Total Returns (at net asset value)
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One Year 0.0 -0.2%
Five Years 8.6 N.A.
Ten Years 8.8 N.A.
Life of Fund+ 8.9 8.5
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
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One Year -4.6% -1.0%
Five Years 8.3 N.A.
Ten Years 8.8 N.A.
Life of Fund+ 8.9 8.5
Ten Largest Holdings/7/
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Nextel Communications 2.6%
Allegiance Telecommunications Corp. 2.2
Esprit Telecommunications Group PLC 2.0
Echostar Corp. 1.8
Nextlink Communications Corp. 1.6
Allied Waste North America 1.6
Hyperion Telecommunications, Inc. 1.5
CSCHoldings, Inc. 1.5
Level 3 Communications Corp. 1.4
Telewest Communications Corp. 1.4
/1/It is not possible to invest directly in an Index. /2/Return does not reflect
applicable contingent deferred sales charge (CDSC). /3/The Fund's distribution
rate represents actual distributions paid to shareholders and is calculated by
dividing the last distribution per share (annualized) by the net asset value.
/4/The Fund's SEC yield is calculated by dividing the net investment income per
share for the 30-day period by the offering price at the end of the period and
annualizing the result. /5/Morningstar ratings reflect historical risk-adjusted
performance through 9/30/98 and are subject to change every month. Past
performance is no guarantee of future results. Funds are assigned ratings from 1
star (lowest) to 5 stars (highest). Ratings are calculated from the funds'
3-,5-, and 10-year average annual returns (with fee adjustment) in excess of
90-day Treasury bill returns, and a risk factor that reflects fund performance
below 90-day Treasury bill returns. The top 10% of the funds in a category
receive 5 stars; the next 22.5% receive 4 stars. For the 3-year period, the Fund
was rated 4 stars (1491 funds). Rating is for Class C only; ratings for other
Class may vary. Morningstar ratings for Class B shares have been lower and
higher over selected periods. /6/Returns are calculated by determining the
percentage change in net asset value with all distributions reinvested. Class B
SEC returns reflect applicable CDSC based on following schedule: 5% - 1st year;
5% - 2nd year; 4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year. Class
C 1-year return reflects 1% CDSC. /7/Ten largest holdings represent 17.6% of the
Portfolio's investments, determined by dividing the total market value of the
holdings by the Portfolio's total investments. 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.
/+/Inception dates: Class B: 8/19/86; Class C: 6/8/94
2
<PAGE>
Eaton Vance High Income Fund as of September 30, 1998
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
As of September 30, 1998
Assets
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Investment in High Income Portfolio, at value
(identified cost, $693,603,327) $ 654,617,748
Receivable for Fund shares sold 1,162,490
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Total assets $ 655,780,238
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Liabilities
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Dividends payable $ 2,412,145
Payable for Fund shares redeemed 1,333,244
Payable to affiliate for Trustees' fees 176
Other accrued expenses 464,019
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Total liabilities $ 4,209,584
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Net Assets $ 651,570,654
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Sources of Net Assets
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Paid-in capital $ 723,723,031
Accumulated undistributed net realized loss from Portfolio
(computed on the basis of identified cost) (34,844,845)
Accumulated distributions in excess of net investment income 1,678,047
Net unrealized depreciation from Portfolio (computed on the
basis of identified cost) (38,985,579)
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Total $ 651,570,654
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Class B Shares
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Net Assets $ 611,828,034
Shares Outstanding 85,448,640
Net Asset Value, Offering Price and Redemption Price Per Share
(Net assets / shares of beneficial interest outstanding) $ 7.16
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Class C Shares
- -------------------------------------------------------------------------------
Net Assets $ 39,742,620
Shares Outstanding 4,223,073
Net Asset Value, Offering Price and Redemption Price Per Share
(Net assets / shares of beneficial interest
outstanding) $ 9.41
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Statement of Operations
For the Six Months Ended
September 30, 1998
Investment Income
- -------------------------------------------------------------------------------
Interest allocated from Portfolio $ 34,064,411
Dividends allocated from Portfolio 2,622,709
Miscellaneous income allocated from Portfolio 405,120
Expenses allocated from Portfolio (2,286,303)
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Net investment income from Portfolio $ 34,805,937
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Expenses
- -------------------------------------------------------------------------------
Trustees fees and expenses $ 2,082
Custodian fee 17,862
Distribution and service fees
Class B 3,230,261
Class C 191,571
Transfer and dividend disbursing agent fees 435,633
Registration fees 36,246
Printing and postage 22,951
Legal and accounting services 9,660
Amortization of organization expenses 3,363
Miscellaneous 27,466
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Total expenses $ 3,977,095
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Net investment income $ 30,828,842
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Realized and Unrealized
Gain (Loss) from Portfolio
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Net realized gain (loss) --
Investment transactions (identified cost basis) $ 2,602,083
Foreign currency transactions 3,331
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Net realized gain $ 2,605,414
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Change in unrealized appreciation (depreciation) --
Investments $ (83,067,456)
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Net change in unrealized appreciation (depreciation) $ (83,067,456)
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Net realized and unrealized loss $ (80,462,042)
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Net decrease in net assets from operations $ (49,633,200)
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See notes to financial statements
3
<PAGE>
Eaton Vance High Income Fund as of September 30, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
Six Months Ended
Increase (Decrease) September 30, 1998 Year Ended
in Net Assets (Unaudited) March 31, 1998
- --------------------------------------------------------------------------------
From operations --
Net investment income $ 30,828,842 $ 55,767,094
Net realized gain 2,605,414 33,998,876
Net change in unrealized
appreciation (depreciation) (83,067,456) 31,499,701
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Net increase (decrease) in net
assets from operations $ (49,633,200) $ 121,265,671
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Distributions to shareholders --
From net investment income
Class B $ (28,447,013) $ (52,767,916)
Class C (1,613,995) --
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Total distributions to shareholders $ (30,061,008) $ (52,767,916)
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Transactions in shares of
beneficial interest --
Proceeds from sale of shares
Class B $ 70,896,688 $ 134,879,881
Class C 21,385,705 --
Issued in reorganization of EV
Classic High Income Fund
Class C 33,094,017 --
Net asset value of shares
issued to shareholders in
payment of distributions
declared
Class B 9,209,061 16,511,135
Class C 1,031,611 --
Cost of shares redeemed
Class B (87,088,619) (124,344,122)
Class C (11,081,212) --
- --------------------------------------------------------------------------------
Net increase in net assets from
Fund share transactions $ 37,447,251 $ 27,046,894
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Net increase (decrease) in net assets $ (42,246,957) $ 95,544,649
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Net Assets
- --------------------------------------------------------------------------------
At beginning of period $ 693,817,611 $ 598,272,962
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At end of period $ 651,570,654 $ 693,817,611
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Accumulated
distributions in excess of
net investment income
included in net assets
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At end of period $ 1,678,047 $ 910,213
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See notes to financial statements
4
<PAGE>
Eaton Vance High Income Fund as of September 30, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Six Months Ended Year Ended March 31,
September 30, 1998 -------------------------------------
(Unaudited) 1998 1997 1996
-------------------------- -------------------------------------
Class B Class C Class B Class B Class B
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<S> <C> <C> <C> <C> <C>
Net asset value -- Beginning of period $ 8.030 $ 10.560 $ 7.220 $ 7.100 $ 6.920
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Income from operations
- ---------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.339 $ 0.449 $ 0.658 $ 0.652 $ 0.665
Net realized and unrealized gain (loss) (0.878) (1.167) 0.774 0.120 0.189
- ---------------------------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ (0.539) $ (0.718) $ 1.432 $ 0.772 $ 0.854
- ---------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ---------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.331) $ (0.432) $ (0.622) $ (0.646) $ (0.665)
In excess of net investment income -- -- -- (0.006) (0.009)
- ---------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.331) $ (0.432) $ (0.622) $ (0.652) $ (0.674)
- ---------------------------------------------------------------------------------------------------------------------------------
Net asset value-- End of period $ 7.160 $ 9.410 $ 8.030 $ 7.220 $ 7.100
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Total Return /(1)/ (6.99)% (7.05)% 20.59% 11.37% 12.80%
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Ratios/Supplemental Data
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Net assets, end of period (000's omitted) $ 611,828 $ 39,743 $ 693,818 $ 598,273 $ 496,966
Ratios (As a percentage of average daily net assets):
Expenses /(2)/ 1.76%/(3)/ 1.80%/(3)/ 1.73% 1.77% 1.78%
Net investment income 8.67%/(3)/ 8.74%/(3)/ 8.58% 8.97% 9.38%
Portfolio Turnover /(4)/ -- -- -- -- --
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<CAPTION>
Year Ended March 31,
-----------------------------
1995 1994
-----------------------------
Class B Class B
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<S> <C> <C>
Net asset value -- Beginning of period $ 7.450 $ 7.480
- ---------------------------------------------------------------------------------------------
Income from operations
- ---------------------------------------------------------------------------------------------
Net investment income $ 0.671 $ 0.697
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Net realized and unrealized gain (loss) (0.507) 0.047
- ---------------------------------------------------------------------------------------------
Total income (loss) from operations $ 0.164 $ 0.744
- ---------------------------------------------------------------------------------------------
Less distributions
- ---------------------------------------------------------------------------------------------
From net investment income $ (0.671) $ (0.697)
In excess of net investment income (0.023) (0.077)
- ---------------------------------------------------------------------------------------------
Total distributions $ (0.694) $ (0.774)
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Net asset value -- End of period $ 6.920 $ 7.450
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Total Return /(1)/ 2.51% 10.28 %
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Ratios/Supplemental Data
- ---------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 439,171 $ 399,259
Ratios (As a percentage of average daily net assets):
Expenses /(2)/ 1.78% 1.82 %
Net investment income 9.52% 9.09 %
Portfolio Turnover /(4)/ 11% 96 %
- ---------------------------------------------------------------------------------------------
</TABLE>
/(1)/ 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.
/(2)/ Includes the Fund's share of its Portfolio's allocated expenses for the
period the Fund was investing in the Portfolio.
/(3)/ Annualized.
/(4)/ Portfolio Turnover represents the rate of portfolio activity for the
period while the Fund was making investments directly in securities. The
portfolio turnover rate for the period since the Fund transferred all of
its investable assets to the Portfolio is shown in the Portfolio's
financial statements which are included elsewhere in this report.
See notes to financial statements
5
<PAGE>
Eaton Vance High Income Fund as of September 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
----------------------------------------------------------------------------
Eaton Vance High Income Fund (the Fund) is a diversified series of Eaton
Vance Mutual Funds 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 two classes of shares. Class B shares
and Class C shares are sold at net asset value and are subject to a
contingent deferred sales charge (see Note 6). All classes of shares have
equal rights to assets and voting privileges. 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 High
Income 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 (72.6% at September 30, 1998). 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 Valuations -- 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.
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. At March 31, 1998, the Fund, for federal
income tax purposes, had a capital loss carryover of $37,116,868, which will
reduce the Fund's taxable income arising from future net realized gain on
investments, if any, to the extent permitted by the Internal Revenue Code
and thus will reduce the amount of distributions to shareholders which would
otherwise be necessary to relieve the Fund of any liability for federal
income or excise tax. Such capital loss carryover will expire on March 31,
2000 ($11,538,107), 2003 ($12,690,352), 2004 ($5,868,015) and 2005
($7,020,394), respectively.
D Other -- Investment transactions are accounted for on a trade date basis.
E Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
F Interim Financial Information -- The interim financial statements relating
to September 30, 1998 and for the six-month period then ended have not been
audited by independent certified public accountants, but in the opinion of
the Fund's management, reflect all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the financial
statements.
2 Distributions to Shareholders
----------------------------------------------------------------------------
The net income of the Fund is determined daily and substantially all of the
net income so determined is declared as a dividend to shareholders of record
at the time of declaration. Such daily dividends will be paid monthly.
Distributions of realized capital gains, if any, are made at least annually.
Shareholders may reinvest capital gain distributions in additional shares of
the Fund at the net asset value as of the ex-dividend date. Distributions
are paid in the form of additional shares of the Fund 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
6
<PAGE>
Eaton Vance High Income Fund as of September 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
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 for financial statement purposes only are
classified as distributions in excess of net investment income or
accumulated net realized gains. Permanent differences between book and tax
accounting relating to distributions are reclassified to paid-in capital.
3 Shares of Beneficial Interest
----------------------------------------------------------------------------
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
Six Months Ended
September 30, 1998 Year Ended
Class B (Unaudited) March 31, 1998
----------------------------------------------------------------------------
Sales 9,090,250 17,727,309
Issued to shareholders electing
to receive payments of
distributions in Fund shares 1,183,810 2,155,159
Redemptions (11,207,809) (16,307,730)
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Net increase (decrease) (933,749) 3,574,738
----------------------------------------------------------------------------
Six Months Ended
Class C September 30, 1998
----------------------------------------------------------------------------
Sales 2,082,248
Issued to shareholders electing to
receive payment of distribution in Fund shares 101,179
Redemptions (1,095,388)
Issued to EV Classic High Income Fund
Shareholders 3,135,034
----------------------------------------------------------------------------
Net increase 4,223,073
----------------------------------------------------------------------------
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.
Certain of the officers and Trustees of the Fund and the Portfolio are
officers and directors/trustees of the above organizations.
5 Distribution and Service Plans
----------------------------------------------------------------------------
The Fund has adopted distribution plans (the Class B Plan and Class C Plan)
pursuant to Rule 12b-1 under the Investment Company Act of 1940 for the
Fund's Class B and Class C shares. The Plan requires the Fund to pay the
Principal Underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal
to 1/365 of 0.75% of the Fund's daily net assets attributable to both 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) distribution fees 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 $2,523,641 and $143,678 for Class B and Class C shares,
respectively, to EVD for the six months ended September 30, 1998,
representing 0.75% (annualized) of average daily net assets for Class B and
Class C shares. At September 30, 1998 the amount of Uncovered Distribution
Charges of EVD calculated under the Plan was approximately $16,427,000 and
$3,076,000 for Class B and Class C shares, respectively.
In addition, the Plans also authorize each class to make payments of service
fees to EVD, Authorized Firms and other persons in amounts not exceeding
0.25% of the Fund's average daily net assets attributable to Class B and
Class C shares for each fiscal year. The Trustees have implemented the Plans
by authorizing each class to make quarterly payments of service fees to EVD
and Authorized Firms in amounts not to exceed 0.25% per annum of the Fund's
average daily net assets attributable to Class B and
7
<PAGE>
Eaton Vance High Income Fund as of September 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
Class C shares based on the value of Fund shares sold by such persons and
remaining outstanding for at least one year. Service fee payments for the
six months ended September 30, 1998 amounted to $706,620 and $47,893 for
Class B and Class C, respectively. Service fee payments are made for
personal services and/or the maintenance of shareholder accounts. Service
fees paid to EVD and Authorized Firms 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 where there are no
outstanding Uncovered Distribution Charges of EVD.
Certain officers and Trustees of the Fund are officers or directors of EVD.
6 Contingent Deferred Sales Charge
----------------------------------------------------------------------------
A contingent deferred sales charge (CDSC) is imposed on any redemption of
Class B shares made within six years of purchase. A CDSC of 1% is imposed on
any redemption of Class C shares made within one year of purchase.
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. 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. No CDSC is levied on shares which have been sold to
the EVM or its affiliates or to their respective employees or clients. CDSC
charges are paid to EVD to reduce the amount of Uncovered Distribution
Charges calculated under the Fund's Distribution Plan. CDSC charges received
when no Uncovered Distribution Charges exist will be retained by the Fund.
EVD received approximately $939,000 and $4,000 of CDSC paid by shareholders
for Class B shares and Class C shares, respectively, for the six months
ended September 30, 1998.
7 Investment Transactions
----------------------------------------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio for the
six months ended September 30, 1998, aggregated $84,657,707 and
$114,642,412, respectively.
8 Transfer of Net Assets
----------------------------------------------------------------------------
On April 1, 1998, EV Marathon High Income Fund acquired the net assets of
the EV Classic High Income Fund pursuant to an Agreement and Plan of
Reorganization dated June 23, 1997. In accordance with the agreement, EV
Marathon High Income Fund, at the closing, issued 3,135,034 Class C shares
of the Fund having an aggregate value of $33,094,017. As a result, the Fund
issued one Class C share for each share of EV Marathon High Income Fund. The
transaction was structured for tax purposes to qualify as a tax free
reorganization under the Internal Revenue Code. The EV Classic High Income
Fund's net assets at the date of the transaction were $33,094,017, including
$1,444,205 of unrealized appreciation. Directly after the merger, the
combined net assets of the Eaton Vance High Income Fund (formerly "EV
Marathon High Income Fund") were $726,911,628 with a net asset value of
$8.03 and $10.56 for Class B shares and Class C shares, respectively.
9 Name Change
----------------------------------------------------------------------------
Effective April 1, 1998, EV Marathon High Income Fund changed its name to
Eaton Vance High Income Fund.
8
<PAGE>
High Income Portfolio as of September 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
(Expressed in United States Dollars)
Corporate Bonds & Notes -- 91.3%
Principal
Amount
Security (000's omitted) Value
- --------------------------------------------------------------------------------
Apparel -- 2.2%
- --------------------------------------------------------------------------------
Cluett American Corp., Sr. Sub. Notes,
10.125%, 5/15/08/(1)/ $ 5,280 $ 4,857,600
Glenoit Corp., Sr. Sub. Notes,
11.00%, 4/15/07 8,600 8,428,000
William Carter Co., Sr. Sub. Notes,
10.375%, 12/1/06 6,275 6,588,750
- --------------------------------------------------------------------------------
$ 19,874,350
- --------------------------------------------------------------------------------
Auto and Parts -- 1.6%
- --------------------------------------------------------------------------------
Cambridge Industries, Inc., Sr. Sub.
Notes, 10.25%, 7/15/07 $ 2,520 $ 2,368,800
Key Plastics, Inc., Sr. Notes,
14.00%, 11/15/99 5,500 5,940,000
Talon Automotive Group, Sr. Sub. Notes,
9.625%, 5/1/08/(1)/ 6,100 5,764,500
- --------------------------------------------------------------------------------
$ 14,073,300
- --------------------------------------------------------------------------------
Banks - Regional -- 0.2%
- --------------------------------------------------------------------------------
First Nationwide Holdings, Inc., Sr.
Notes, 12.50%, 4/15/03 $ 1,600 $ 1,838,000
- --------------------------------------------------------------------------------
$ 1,838,000
- --------------------------------------------------------------------------------
Broadcasting and Cable -- 10.0%
- --------------------------------------------------------------------------------
Adelphia Communications Corp., Sr. Notes,
9.875%, 3/1/07 $ 4,480 $ 4,838,400
Adelphia Communications Corp., Sr. Notes,
10.50%, 7/15/04 2,640 2,884,200
Century Communications, Sr. Notes,
8.75%, 10/1/07 2,400 2,526,000
Chancellor Media Corp., Sr. Sub. Notes,
9.00%, 10/1/08/(1)/ 7,200 7,272,000
Digital Television Services, Inc.,
Guaranteed Notes, 12.50%, 8/1/07 6,410 6,826,650
Echostar DBS Corp., Sr. Sec. Notes,
12.50%, 7/1/02 11,885 12,449,537
Golden Sky Systems, Sr. Sub. Notes,
12.375%, 8/1/06/(1)/ 5,360 5,386,800
Intermedia Capital Partners, Sr. Sub.
Notes, 11.25%, 8/1/06 2,625 2,926,875
Marcus Cable Co., Sr. Debs.,
11.875%, 10/1/05 2,800 2,954,000
Marcus Cable Co., Sr. Disc. Notes,
14.25%, (0% until 2000), 12/15/05 8,500 7,926,250
NTL, Inc., Sr. Notes, 9.75%, (0%
until 2003), 4/1/08/(1)/ 3,700 2,238,500
NTL, Inc., Sr. Notes, 10.00%, 2/15/07 4,400 4,477,000
Star Choice Communications, Sr. Sec.
Notes, 13.00%, 12/15/05 800 764,000
Telewest PLC, Debs., 9.625%, 10/1/06 6,260 6,322,600
Telewest PLC, Debs., 11.00%, (0% until
2002), 10/1/07 7,000 5,810,000
UIH Australia/Pacific, Inc., Sr. Disc.
Notes, Series B, 14.00%,
(0% until 2001), 5/15/06 1,600 680,000
UIH Australia/Pacific, Inc., Sr. Disc.
Notes, Series D, 14.00%,
(0% until 2001), 5/15/06 2,000 850,000
United International Holdings, Inc., Sr.
Disc. Notes, 10.75%, (0% until 2003),
2/15/08 22,300 10,815,500
- --------------------------------------------------------------------------------
$ 87,948,312
- --------------------------------------------------------------------------------
Business Services -- 3.7%
- --------------------------------------------------------------------------------
AP Holdings, Inc., Sr. Disc. Notes,
11.25%, (0% until 2003), 3/15/08 $ 8,550 $ 4,104,000
Apcoa, Inc., Sr. Sub. Notes,
9.25%, 3/15/08 1,200 1,086,000
Apcoa, Inc., Sr. Sub. Notes,
9.25%, 3/15/08 2,120 1,886,800
Federal Data Corp., Sr. Sub. Notes,
10.125%, 8/1/05 4,320 3,974,400
Geologistics Corp., Sr. Notes,
9.75%, 10/15/07 3,680 3,404,000
Intertek Finance PLC, Sr. Sub. Notes,
10.25%, 11/1/06 5,600 5,264,000
Spin Cycle, Inc., Sr. Disc. Notes,
12.75%, 3,400 1,836,000
(0% until 2001), 5/1/05/(1)/
Viasystems, Inc., Sr. Sub. Notes,
9.75%, 6/1/07 3,565 3,315,450
Viasystems, Inc., Sr. Sub. Notes, Series
B, 9.75%, 6/1/07 3,600 3,348,000
Wesco International, Inc., Sr. Disc.
Notes, 11.125%, (0% until 2003), 6/1/08 8,600 4,687,000
- --------------------------------------------------------------------------------
$ 32,905,650
- --------------------------------------------------------------------------------
Business Services - Miscellaneous -- 5.3%
- --------------------------------------------------------------------------------
Allied Waste Industries, Inc., Sr. Disc.
Notes, 11.30%, (0% until 2002), 6/1/07 $ 6,550 $ 4,879,750
Allied Waste North America, Inc., Sr. Sub
Notes, LOC, 10.25%, 12/1/06 8,200 8,979,000
Anthony Crane Rentals, Sr. Notes,
10.375%, 8/1/08/(1)/ 6,400 6,112,000
Crown Castle International Corp., Sr.
Disc. Notes, 10.625%, (0% until
2002), 11/15/07 5,400 3,375,000
See notes to financial statements
9
<PAGE>
High Income Portfolio as of September 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
Principal
Amount
Security (000's omitted) Value
- --------------------------------------------------------------------------------
Business Services - Miscellaneous (continued)
- --------------------------------------------------------------------------------
Pinnacle Holdings, Inc., Sr. Disc. Notes,
10.00%, (0% until 2003), 3/15/08 $ 4,020 $ 2,130,600
Richmont Marketing Special, Sr. Sub.
Notes, 10.125%, 12/15/07/(1)/ 10,970 9,873,000
Spectrasite Holdings, Inc., Sr. Disc.
Notes, 12.00%, (0% until 2003), 7/15/08/(1)/ 12,800 6,080,000
Unisite, Inc., Sub. Notes, 13.00%, (0%
until 2000), 12/15/04/(1)/ 4,500 4,966,875
- --------------------------------------------------------------------------------
$ 46,396,225
- --------------------------------------------------------------------------------
Chemicals -- 1.3%
- --------------------------------------------------------------------------------
Huntsman Corp., Sr. Sub. Notes,
9.50%, 7/1/07/(1)/ $ 1,000 $ 965,000
NL Industries, Inc., Sr. Notes,
11.75%, 10/15/03 5,040 5,468,400
Sterling Chemicals Holdings, Inc., Sr.
Sub. Notes, 11.75%, 8/15/06 6,240 5,397,600
- --------------------------------------------------------------------------------
$ 11,831,000
- --------------------------------------------------------------------------------
Communications Equipment -- 0.6%
- --------------------------------------------------------------------------------
Jordan Telecom Products, Inc., Sr. Disc.
Notes, 11.75%, (0% until 2000), 8/1/07 $ 7,700 $ 5,698,000
- --------------------------------------------------------------------------------
$ 5,698,000
- --------------------------------------------------------------------------------
Computer Equipment -- 1.0%
- --------------------------------------------------------------------------------
Unisys Corp., Sr. Notes,
11.75%, 10/15/04 $ 2,600 $ 2,938,000
Unisys Corp., Sr. Notes, 12.00%, 4/15/03 5,600 6,272,000
- --------------------------------------------------------------------------------
$ 9,210,000
- --------------------------------------------------------------------------------
Containers and Packaging -- 1.6%
- --------------------------------------------------------------------------------
Applied Extrusion Inc., Sr. Notes,
11.50%, 4/1/02 $ 6,000 $ 6,090,000
Consumers International, Inc., Sr. Notes,
10.25%, 4/1/05 3,935 4,072,725
S.D. Warren Co., Sr. Sub. Notes,
12.00%, 12/15/04 3,800 4,132,500
- --------------------------------------------------------------------------------
$ 14,295,225
- --------------------------------------------------------------------------------
Electric Utilities -- 1.6%
- --------------------------------------------------------------------------------
Cal Energy Company, Inc., Sr. Notes,
9.50%, 9/15/06 $ 5,500 $ 6,130,795
Calpine Corp., Sr. Notes, 7.875%, 4/1/08 8,000 7,800,000
- --------------------------------------------------------------------------------
$ 13,930,795
- --------------------------------------------------------------------------------
Electrical Equipment -- 0.4%
- --------------------------------------------------------------------------------
Wavetek Corp., Sr. Sub. Notes,
10.125%, 6/15/07 $ 3,360 $ 3,192,000
- --------------------------------------------------------------------------------
$ 3,192,000
- --------------------------------------------------------------------------------
Engineering and Construction -- 1.4%
- --------------------------------------------------------------------------------
Level 3 Communications, Inc., Sr. Notes,
9.125%, 5/1/08 $ 13,260 $ 12,596,999
- --------------------------------------------------------------------------------
$ 12,596,999
- --------------------------------------------------------------------------------
Entertainment -- 4.2%
- --------------------------------------------------------------------------------
Australis Media Ltd., Sub. Disc. Notes,
15.75%, (0% until 2000), 5/15/03/(2)/ $ 4,490 $ 56,120
Cinemark USA, Inc., Sr. Sub. Notes,
8.50%, 8/1/08 6,640 6,374,400
Loews Cineplex Entertain, Sr. Sub. Notes,
8.875%, 8/1/08/(1)/ 6,800 6,757,500
Premier Parks, Inc., Sr. Disc. Notes,
10.00%, (0% until 2003), 4/1/08 4,800 3,012,000
Premier Parks, Inc., Sr. Notes,
9.25%, 4/1/06 5,600 5,551,000
Regal Cinemas, Inc., Sr. Sub. Notes,
9.50%, 6/1/08/(1)/ 8,280 8,404,200
SFX Entertainment, Inc., Sr. Sub. Notes,
9.125%, 2/1/08 1,480 1,383,800
Telemundo Holdings, Inc., Sr. Disc.
Notes, 11.50%, (0% until 2003), 8/15/08/(1)/ 9,800 5,194,000
- --------------------------------------------------------------------------------
$ 36,733,020
- --------------------------------------------------------------------------------
Foods -- 3.0%
- --------------------------------------------------------------------------------
B & G Foods, Inc., Sub. Notes,
9.625%, 8/1/07 $ 4,645 $ 4,412,750
Del Monte Corp., Sr. Notes,
12.25%, 4/15/07 4,400 4,818,000
Del Monte Foods Co., Sr. Disc. Notes,
12.50%, (0% until 2002), 12/15/07 5,400 3,078,000
Grupo Azucarero Mexico, Sr. Notes,
11.50%, 1/15/05 4,800 1,440,000
International Home Foods, Inc., Sr. Sub.
Notes, 10.375%, 11/1/06 9,000 9,540,000
RAB Enterprises, Inc., Sr. Notes,
10.50%, 5/1/05/(1)/ 3,840 3,628,800
- --------------------------------------------------------------------------------
$ 26,917,550
- --------------------------------------------------------------------------------
See notes to financial statements
10
<PAGE>
High Income Portfolio as of September 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
Principal
Amount
Security (000's omitted) Value
- --------------------------------------------------------------------------------
Health Services -- 0.6%
- --------------------------------------------------------------------------------
Dade International, Inc., Sr. Sub. Notes,
11.125%, 5/1/06 $ 4,800 $ 5,184,000
- --------------------------------------------------------------------------------
$ 5,184,000
- --------------------------------------------------------------------------------
Household Products -- 2.0%
- --------------------------------------------------------------------------------
Amscan Holdings, Inc., Sr. Sub. Notes,
9.875%, 12/15/07 $ 4,480 $ 4,032,000
Corning Consumer Product, Inc., Sr. Sub.
Notes, 9.625%, 5/1/08/(1)/ 2,785 2,269,775
Diamond Brands, Inc., Debs., 12.875%, (0%
until 2003), 4/15/09/(1)/ 2,800 1,176,000
Diamond Brands, Inc., Sr. Sub. Notes,
10.125%, 4/15/08/(1)/ 4,480 4,166,400
Icon Health and Fitness, Inc., Sr. Sub.
Notes, 13.00%, 7/15/02 4,000 2,080,000
Jafra Cosmetics International, Inc., Sr.
Sub. Notes, 11.75%, 5/1/08/(1)/ 4,000 3,680,000
- --------------------------------------------------------------------------------
$ 17,404,175
- --------------------------------------------------------------------------------
Information Services -- 3.6%
- --------------------------------------------------------------------------------
Cellnet Data Systems, Inc., Sr. Disc.
Notes, 14.00%, (0% until 2002), 10/1/07 $ 10,400 $ 4,160,000
Diva Systems Corp., Sr. Disc. Notes,
12.625%, (0% until 2003), 3/1/08/(1)/ 6,000 2,160,000
Orbital Imaging Corp., Sr. Notes,
11.625%, 3/1/05 3,760 3,384,000
Psinet, Inc., Sr. Notes, 10.00%, 2/15/05 9,800 9,849,000
Splitrock Services, Inc., Sr. Notes,
11.75%, 7/15/08/(1)/ 4,000 3,660,000
Verio, Inc., Sr. Notes, 10.375%, 4/1/05 5,360 5,333,200
Verio, Inc., Sr. Notes, 13.50%, 6/15/04 3,200 3,536,000
- --------------------------------------------------------------------------------
$ 32,082,200
- --------------------------------------------------------------------------------
Lodging and Gaming -- 5.9%
- --------------------------------------------------------------------------------
Aztar Corp., Sr. Sub. Notes,
13.75%, 10/1/04 $ 5,000 $ 5,425,000
Empress Entertainment, Sr. Sub. Notes,
8.125%, 7/1/06/(1)/ 2,000 1,990,000
Extended Stay America, Sr. Sub. Notes,
9.15%, 3/15/08 10,950 10,238,250
Harvey Casinos Resorts, Sr. Sub. Notes,
10.625%, 6/1/06 8,550 9,105,750
HMH Properties, Sr. Notes,
7.875%, 8/1/05 3,700 3,718,500
HMH Properties, Sr. Notes,
7.875%, 8/1/08 8,000 7,940,000
Horseshoe Gaming L.L.C., Sr. Sub. Notes,
9.375%, 6/15/07 $ 6,800 $ 6,664,000
Showboat Marina Casino, 1st Mtg. Notes,
13.50%, 3/15/03 6,000 6,570,000
- --------------------------------------------------------------------------------
$ 51,651,500
- --------------------------------------------------------------------------------
Machinery -- 0.3%
- --------------------------------------------------------------------------------
Alvey Systems, Inc., Sr. Sub. Notes,
11.375%, 1/31/03 $ 2,400 $ 2,502,000
- --------------------------------------------------------------------------------
$ 2,502,000
- --------------------------------------------------------------------------------
Manufacturing -- 3.7%
- --------------------------------------------------------------------------------
GSI Group, Inc., Sr. Sub. Notes,
10.25%, 11/1/07 $ 3,680 $ 3,128,000
IMO Industries, Sr. Sub. Notes,
11.75%, 5/1/06 4,680 5,054,400
Iron Age Corp., Sr. Sub. Notes,
9.875%, 5/1/08/(1)/ 5,000 4,375,000
MCMS, Inc., Sr. Sub. Notes,
9.75%, 3/1/08 3,330 1,998,000
P & L Coal Holdings Corp., Sr. Sub.
Notes, 9.625%, 5/15/08/(1)/ 9,920 9,920,000
Roller Bearing Holdings Co., Sr. Disc.
Notes, 13.00%, (0% until 2002), 6/15/09/(1)/ 12,875 7,918,125
- --------------------------------------------------------------------------------
$ 32,393,525
- --------------------------------------------------------------------------------
Medical Products -- 0.3%
- --------------------------------------------------------------------------------
Alliance Imaging, Sr. Sub Notes,
9.625%, 12/15/05 $ 2,700 $ 2,598,750
- --------------------------------------------------------------------------------
$ 2,598,750
- --------------------------------------------------------------------------------
Metals - Industrial -- 0.6%
- --------------------------------------------------------------------------------
GS Technologies Corp., Sr. Notes,
12.25%, 10/1/05 $ 5,500 $ 5,005,000
- --------------------------------------------------------------------------------
$ 5,005,000
- --------------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 2.4%
- --------------------------------------------------------------------------------
Dailey International, Inc., Sr. Notes,
9.50%, 2/15/08 $ 9,120 $ 5,563,200
Grant Geophysical, Inc., Sr. Notes,
9.75%, 2/15/08 5,600 4,480,000
Ocean Energy, Inc., Sr. Sub. Notes,
8.875%, 7/15/07 1,000 1,005,000
See notes to financial statements
11
<PAGE>
High Income Portfolio as of September 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
Principal
Amount
Security (000's omitted) Value
- --------------------------------------------------------------------------------
Oil and Gas - Equipment and Services
(continued)
- --------------------------------------------------------------------------------
Ocean Energy, Inc., Sr. Sub. Notes,
10.375%, 10/15/05 $ 3,950 $ 4,167,250
Universal Compression, Inc., Sr. Disc.
Notes, 9.875%, (0% until 2003), 2/15/08/(1)/ 9,400 5,546,000
- --------------------------------------------------------------------------------
$ 20,761,450
- --------------------------------------------------------------------------------
Oil and Gas - Exploration
and Production -- 1.1%
- --------------------------------------------------------------------------------
Coho Energy, Inc., Sr. Sub. Notes,
8.875%, 10/15/07 $ 4,000 $ 3,740,000
Energy Corp. of America, Sr. Sub. Notes,
9.50%, 5/15/07 3,600 3,258,000
United Refining Co., Sr. Notes,
10.75%, 6/15/07 3,200 2,624,000
- --------------------------------------------------------------------------------
$ 9,622,000
- --------------------------------------------------------------------------------
Paper and Forest Products -- 0.8%
- --------------------------------------------------------------------------------
Asia Pulp and Paper, Debs,
12.00%, 12/29/49 $ 6,000 $ 3,012,660
Indah Kiat Finance Mauritius, Sr. Unsec.
Notes, 10.00%, 7/1/07 3,400 1,479,000
Pindo Deli Finance Mauritius, Ltd.,
Guaranteed Sr. Notes, 10.75%, 10/1/07 2,400 1,056,000
Tjiwi Kimia Finance Mauritus, Ltd.,
Guaranteed Sr. Sub. Notes, 10.00%, 8/1/04 3,800 1,634,000
- --------------------------------------------------------------------------------
$ 7,181,660
- --------------------------------------------------------------------------------
Printing and Business Products -- 1.0%
- --------------------------------------------------------------------------------
MDC Communications Corp., Sr. Sub. Notes,
10.50%, 12/1/06 $ 6,600 $ 6,501,000
US Office Products Co., Sr. Sub. Notes,
9.75%, 6/15/08/(1)/ 3,000 2,520,000
- --------------------------------------------------------------------------------
$ 9,021,000
- --------------------------------------------------------------------------------
Publishing -- 1.4%
- --------------------------------------------------------------------------------
American Lawyer Media Corp., Sr. Disc.
Notes, 12.25%, (0% until 2002), 12/15/08 $ 2,920 $ 1,781,200
Newsquest Capital Corp., Sr. Sub. Notes,
11.00%, 5/1/06 4,441 5,007,228
Newsquest Capital Corp., Sr. Sub. Notes,
11.00%, 5/1/06 605 683,650
Von Hoffman Press, Inc., Sr. Sub Notes,
10.375%, 5/15/07/(1)/ 4,800 4,848,000
- --------------------------------------------------------------------------------
$ 12,320,078
- --------------------------------------------------------------------------------
Retail - Food and Drug -- 2.9%
- --------------------------------------------------------------------------------
AFC Enterprises, Inc., Sr. Sub Notes,
10.25%, 5/15/07 $ 9,600 $ 9,792,000
Pantry, Inc., Sr. Sub. Notes,
10.25%, 10/15/07 8,745 8,613,825
Star Markets Co., Sr. Sub. Notes,
13.00%, 11/1/04 6,200 6,804,500
- --------------------------------------------------------------------------------
$ 25,210,325
- --------------------------------------------------------------------------------
Retail - General -- 2.8%
- --------------------------------------------------------------------------------
Advance Holding Corp., Debs., 12.875%,
(0% until 2003), 4/15/09/(1)/ $ 4,000 $ 2,300,000
Advance Stores Co., Inc., Sr. Sub. Notes,
10.25%, 4/15/08/(1)/ 8,400 8,190,000
Franks Nursery and Crafts, Sr. Sub.
Notes, 10.25%, 3/1/08 4,000 3,940,000
Kindercare Learning Ctrs., Inc., Sr. Sub.
Notes, 9.50%, 2/15/09 8,100 7,654,500
Tuesday Morning Corp., Sr. Sub. Notes,
11.00%, 12/15/07 3,000 3,045,000
- --------------------------------------------------------------------------------
$ 25,129,500
- --------------------------------------------------------------------------------
Transportation -- 0.2%
- --------------------------------------------------------------------------------
MTL, Inc., Sr. Sub. Notes, Variable
Rate, 6/15/06/(1)/ $ 1,600 $ 1,520,000
- --------------------------------------------------------------------------------
$ 1,520,000
- --------------------------------------------------------------------------------
Wireless Communication Services -- 7.2%
- --------------------------------------------------------------------------------
America Mobile/ AMSC Acquisition Corp.,
Sr. Notes, 12.25%, 4/1/08 $ 4,100 $ 2,480,500
Dobson Communications Corp., Sr. Notes,
11.75%, 4/15/07 7,830 7,869,150
Exodus Communications, Inc., Sr. Notes,
11.25%, 7/1/08/(1)/ 6,800 6,120,000
Ionica PLC, Sr. Notes, 13.50%, 8/15/06 1,600 512,000
Millicom International Cellular, Sr. Disc
Notes, 13.50%, (0% until 2001), 6/1/06 7,200 4,644,000
Mobile Telecom Technology, Sr. Notes,
13.50%, 12/15/02 4,000 4,500,000
Nextel Communications, Inc., Sr. Disc.
Notes, 9.75%, (0% until 1999), 8/15/04 8,345 8,032,063
Nextel Communications, Inc., Sr. Disc.
Notes, 9.75%, (0% until 2002), 10/31/07 4,800 2,892,000
See notes to financial statements
12
<PAGE>
High Income Portfolio as of September 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
Principal
Amount
Security (000's omitted) Value
- --------------------------------------------------------------------------------
Wireless Communication Services (continued)
- --------------------------------------------------------------------------------
Nextel Communications, Inc., Sr. Disc.
Notes, 10.65%, (0% until 2002), 9/15/07 $ 250 $ 158,125
Nextel International, Inc., Sr. Disc.
Notes, 12.125%, (0% until 2003), 4/15/08 15,000 6,825,000
Omnipoint Corp., Sr. Notes,
11.625%, 8/15/06 2,580 1,612,500
Orange PLC, Sr. Notes, 8.00%, 8/1/08 1,200 1,176,000
Orion Network Systems, Inc., Sr. Disc.
Notes, 12.50%, (0% until 2002), 1/15/07 1,600 1,128,000
Orion Network Systems, Inc., Sr. Notes,
11.25%, 1/15/07 5,600 5,432,000
USA Mobile Communications, Sr. Notes,
9.50%, 2/1/04 1,500 1,350,000
Viatel, Inc., Sr. Disc. Notes, 12.50%,
(0% until 2003), 4/15/08 5,050 2,424,000
Viatel, Inc., Sr. Notes, 11.25%, 4/15/08 7,525 6,810,125
- --------------------------------------------------------------------------------
$ 63,965,463
- --------------------------------------------------------------------------------
Wireline Communication Services -- 16.4%
- --------------------------------------------------------------------------------
Allegiance Telecom, Inc., Sr. Disc.
Notes, 11.75%, (0% until 2003), 2/15/08 $ 17,125 $ 7,535,000
Allegiance Telecom, Inc., Sr. Notes,
12.875%, 5/15/08 12,375 11,756,250
Call-Net Enterprises, Inc., Sr. Disc.
Notes, 8.94%, (0% until 2003), 8/15/08 11,720 6,856,200
Call-Net Enterprises, Inc., Sr. Notes,
8.00%, 8/15/08 720 684,000
Esat Telecom Group PLC, Sr. Deferred
Coupon Notes, 12.50%, (0% until 2002),
2/1/07 3,875 2,480,000
Esat Telecom Group PLC, Sr. Deferred
Coupon Notes, 12.50%, (0% until 2002),
2/1/07 3,600 2,304,000
Esprit Telecom Group PLC, Sr. Notes,
10.875%, 6/15/08/(1)/ 8,900 8,054,500
Esprit Telecom Group PLC, Sr. Notes,
11.50%, 12/15/07 10,200 9,562,500
Facilicom International, Sr. Notes,
10.50%, 1/15/08 4,640 4,036,800
Global Crossing Holding Ltd., Sr. Notes,
9.625%, 5/15/08/(1)/ 11,630 11,368,325
GST Telecommunications, Sr. Sub. Notes,
12.75%, 11/15/07 3,700 3,478,000
Hyperion Telecommunications, Inc., Sr.
Notes, 12.25%, 9/1/04 13,100 12,936,249
Icg Holdings, Inc., Sr. Disc. Notes,
12.50%, (0% until 2001), 5/1/06 8,755 6,281,713
Intermedia Communications, Inc., Sr.
Notes, 8.60%, 6/1/08 7,915 7,875,425
Metronet Communications, Sr. Disc. Notes,
10.75%, (0% until 2002), 11/1/07 4,800 2,928,000
Metronet Communications, Sr. Notes,
12.00%, 8/15/07 5,000 5,350,000
MGC Communications, Inc., Sr. Notes,
13.00%, 10/1/04 2,100 1,785,000
Netia Holdings B.V., Sr. Disc. Notes,
11.25%, (0% until 2001), 11/1/07 1,200 492,000
Nextlink Communications, Inc., Sr. Notes,
9.625%, 10/1/07 6,280 6,154,400
Nextlink Communications, Inc., Sr. Notes,
12.50%, 4/15/06 6,720 7,274,400
Primus Telecom Group, Sr. Notes,
9.875%, 5/15/08 2,400 2,100,000
Primus Telecom Group, Sr. Notes,
11.75%, 8/1/04 4,600 4,462,000
RSL Commerce, Ltd., Sr. Notes,
12.25%, 11/15/06 4,565 4,724,775
SBA Communications Corp., Sr. Disc.
Notes, 12.00%, (0% until 2003), 3/1/08 11,705 6,262,175
Versatel Telecom B.V., Sr. Notes,
13.25%, 5/15/08/(1)/ 7,840 7,604,800
- --------------------------------------------------------------------------------
$ 144,346,512
- --------------------------------------------------------------------------------
Total Corporate Bonds & Notes
(identified cost $868,591,913) $ 805,339,564
- --------------------------------------------------------------------------------
Common Stocks, Warrants and
Rights-- 0.4%
Security Shares Value
- --------------------------------------------------------------------------------
Broadcasting and Cable -- 0.0%
- --------------------------------------------------------------------------------
21st Century Telecom Group, Warrants/(2)//(3)/ 800 $ --
Star Choice Communications, Warrants/(2)//(3)/ 18,528 --
UIH Australia/Pacific, Inc.,
Warrants/(2)//(3)/ 3,600 36
United International Holdings, Inc.,
Warrants Exp. 11/15/99/(2)//(3)/ 7,840 19,600
- --------------------------------------------------------------------------------
$ 19,636
- --------------------------------------------------------------------------------
Business Services - Miscellaneous -- 0.0%
- --------------------------------------------------------------------------------
Unisite, Inc., Warrants/(2)//(3)/ 2,252 $ --
- --------------------------------------------------------------------------------
$ --
- --------------------------------------------------------------------------------
See notes to financial statements
13
<PAGE>
High Income Portfolio as of September 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
Security Shares Value
- --------------------------------------------------------------------------------
Chemicals -- 0.0%
- --------------------------------------------------------------------------------
Sterling Chemicals Holdings, Common/(2)//(3)/ 9,600 $ 85,200
- --------------------------------------------------------------------------------
$ 85,200
- --------------------------------------------------------------------------------
Communications Equipment -- 0.0%
- --------------------------------------------------------------------------------
Jordan Telecom Products, Inc., Common/(2)//(3)/ 2,500 $ --
- --------------------------------------------------------------------------------
$ --
- --------------------------------------------------------------------------------
Foods -- 0.0%
- --------------------------------------------------------------------------------
Specialty Foods Acquisition
Corp., Common/(2)//(3)/ 48,000 $ 480
- --------------------------------------------------------------------------------
$ 480
- --------------------------------------------------------------------------------
Information Services -- 0.1%
- --------------------------------------------------------------------------------
Cellnet Data Systems, Inc., Warrants
Exp. 10/1/07/(2)//(3)/ 8,000 $ 80
Concentric Network Corp., Warrants/(2)//(3)/ 3,200 169,184
Orbital Imaging Corp., Warrants/(2)//(3)/ 3,760 --
Verio, Inc., Warrants/(2)//(3)/ 25,600 1,003,776
- --------------------------------------------------------------------------------
$ 1,173,040
- --------------------------------------------------------------------------------
Metals - Industrial -- 0.0%
- --------------------------------------------------------------------------------
Gulf States Steel, Warrants/(2)//(3)/ 2,400 $ 120
- --------------------------------------------------------------------------------
$ 120
- --------------------------------------------------------------------------------
Wireless Communication Services -- 0.1%
- --------------------------------------------------------------------------------
America Mobile, Warrants
Exp. 4/01/08/(2)//(3)/ 4,100 $ --
Loral Space and Communications
Ltd., Common/(2)//(3)/ 4,149 63,791
Microcell Telecommunication, 58,400 782,428
Warrants/(2)//(3)/
Nextel Communications, Inc.,
Class A, Common/(2)//(3)/ 11,154 224,463
Nextel Communications, Inc., Warrants
Exp. 4/25/99/(2)//(3)/ 7,200 4,320
- --------------------------------------------------------------------------------
$ 1,075,002
- --------------------------------------------------------------------------------
Wireline Communication Services -- 0.2%
- --------------------------------------------------------------------------------
Allegiance Telecom, Inc., Warrants
Exp. 2/15/08/(2)//(3)/ 26,555 $ 289,184
Esat Holdings, Ltd., Warrants/(2)//(3)/ 3,600 126,000
Hyperion Telecommunications,
Inc., Common/(2)//(3)/ 24,240 133,562
Intermedia Communications,
Inc., Common/(2)//(3)/ 6,788 $ 166,926
Metronet Communications
Corp., Common/(2)//(3)/ 3,086 55,164
MGC Communications, Inc., Warrants
Exp. 10/01/04/(2)/ 5,680 247,932
Optel, Inc., Common/(2)/ 5,840 116,800
Primus Telecom Group, Warrants
Exp. 8/1/04/(2)//(3)/ 4,600 161,000
Versatel Telecom B.V., Warrants/(2)//(3)/ 7,840 --
- --------------------------------------------------------------------------------
$ 1,296,568
- --------------------------------------------------------------------------------
Total Common Stocks, Warrants and Rights
(identified cost $2,381,027) $ 3,650,046
- --------------------------------------------------------------------------------
Preferred Stocks-- 7.4%
Security Shares Value
- --------------------------------------------------------------------------------
Apparel -- 0.4%
- --------------------------------------------------------------------------------
Cluett American Corp., 12.50% (PIK)/(1)/ 4,000 $ 3,720,000
- --------------------------------------------------------------------------------
$ 3,720,000
- --------------------------------------------------------------------------------
Broadcasting and Cable -- 2.6%
- --------------------------------------------------------------------------------
21st Century Telecom Group, 13.75% (PIK) 829 $ 663,200
Adelphia Communications Corp., 13% (PIK) 48,000 5,580,000
CSC Holdings, Inc., Series M, 11.125% (PIK) 116,881 12,915,350
Echostar Communications, 12.125% (PIK) 3,498 3,323,014
- --------------------------------------------------------------------------------
$ 22,481,564
- --------------------------------------------------------------------------------
Business Services - Miscellaneous -- 0.2%
- --------------------------------------------------------------------------------
Unisite, Inc., 8.5% (PIK)/(3)/ 3,239 $ 1,603,058
- --------------------------------------------------------------------------------
$ 1,603,058
- --------------------------------------------------------------------------------
Communications Equipment -- 0.3%
- --------------------------------------------------------------------------------
Jordan Telecom Products, Inc., 13.25% (PIK)/(1)/ 2,500 $ 2,875,000
- --------------------------------------------------------------------------------
$ 2,875,000
- --------------------------------------------------------------------------------
Machinery -- 0.2%
- --------------------------------------------------------------------------------
MMH Holdings, Inc., 12% (PIK) 1,630 $ 1,393,650
- --------------------------------------------------------------------------------
$ 1,393,650
- --------------------------------------------------------------------------------
See notes to financial statements
14
<PAGE>
High Income Portfolio as of September 30, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
Security Shares Value
- --------------------------------------------------------------------------------
Wireless Communication Services -- 1.8%
- --------------------------------------------------------------------------------
Dobson Communications Corp., 12.25% (PIK) 4,027 $ 3,624,300
E.spire Communications, Inc., 12.75% (PIK) 4,422 3,669,915
Nextel Communications, Inc., 11.125% (PIK) 5,076 4,568,400
Rural Cellular Corp., 11.375% (PIK) 4,114 3,702,320
Viatel, Inc., 10% (PIK) 6,273 439,110
- --------------------------------------------------------------------------------
$ 16,004,045
- --------------------------------------------------------------------------------
Wireline Communication Services -- 1.9%
- --------------------------------------------------------------------------------
Intermedia Communications, Inc., 7% (PIK) 185,000 $ 4,497,813
IXC Communications, Inc., Series B,
12.5% (PIK) 10,770 11,470,050
Nextlink Communications, 14% (PIK) 20,897 1,086,644
- --------------------------------------------------------------------------------
$ 17,054,507
- --------------------------------------------------------------------------------
Total Preferred Stocks
(identified cost $67,407,932) $ 65,131,824
- --------------------------------------------------------------------------------
Short-Term Investments -- 0.9%
Principal
Amount
Security (000's omitted) Value
- --------------------------------------------------------------------------------
Corporate Recreation Corp., 5.75%, 10/1/98 $ 7,514 $ 7,514,000
- --------------------------------------------------------------------------------
Total Short-Term Investments
(at amortized cost $7,514,000) $ 7,514,000
- --------------------------------------------------------------------------------
Total Investments -- 100.0%
(identified cost $945,894,872) $ 881,635,434
- --------------------------------------------------------------------------------
(PIK) Payment-in-kind.
(1) 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. It is the
Portfolio's intention to hold this security until maturity.
(2) Non-income producing security.
(3) Restricted security.
See notes to financial statements
15
<PAGE>
High Income Portfolio as of September 30, 1998
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
As of September 30, 1998
(Expressed in United States Dollars)
Assets
- --------------------------------------------------------------------------------
Investments, at value (identified cost,
$945,894,872) $ 881,635,434
Cash 1,894
Receivable for investments sold 412,400
Interest and dividends receivable 22,428,742
Deferred organization expenses 2,989
- --------------------------------------------------------------------------------
Total assets $ 904,481,459
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for investments purchased $ 2,744,060
Payable to affiliate for Trustees' fees 1,040
Other accrued expenses 41,011
- --------------------------------------------------------------------------------
Total liabilities $ 2,786,111
- --------------------------------------------------------------------------------
Net Assets applicable to investors' interest in
Portfolio $ 901,695,348
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Net proceeds from capital contributions and
withdrawals $ 965,954,786
Net unrealized depreciation (computed on the basis
of identified cost) (64,259,438)
- --------------------------------------------------------------------------------
Total $ 901,695,348
- --------------------------------------------------------------------------------
Statement of Operations
For the Six Months Ended
September 30, 1998
(Expressed in United States Dollars)
Investment Income
- --------------------------------------------------------------------------------
Interest $ 46,919,855
Dividends 3,929,786
Miscellaneous 556,577
- --------------------------------------------------------------------------------
Total investment income $ 51,406,218
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Investment adviser fee $ 2,931,571
Trustees fees and expenses 12,643
Custodian fee 146,395
Legal and accounting services 52,728
Amortization of organization expenses 2,265
Miscellaneous 2,175
- --------------------------------------------------------------------------------
Total expenses $ 3,147,777
- --------------------------------------------------------------------------------
Net investment income $ 48,258,441
- --------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 3,257,760
Foreign currency transactions 4,653
- --------------------------------------------------------------------------------
Net realized gain $ 3,262,413
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $(116,235,937)
- --------------------------------------------------------------------------------
Net change in unrealized appreciation
(depreciation) $(116,235,937)
- --------------------------------------------------------------------------------
Net realized and unrealized loss $(112,973,524)
- --------------------------------------------------------------------------------
Net decrease in net assets from operations $ (64,715,083)
- --------------------------------------------------------------------------------
See notes to financial statements
16
<PAGE>
High Income Portfolio as of September 30, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
(Expressed in United States Dollars)
Six Months Ended
Increase (Decrease) September 30, 1998 Year Ended
in Net Assets (Unaudited) March 31, 1998
- --------------------------------------------------------------------------------
From operations --
Net investment income $ 48,258,441 $ 78,751,905
Net realized gain 3,262,413 40,197,991
Net change in unrealized
appreciation (depreciation) (116,235,937) 41,198,260
- --------------------------------------------------------------------------------
Net increase (decrease) in net
assets from operations $ (64,715,083) $ 160,148,156
- --------------------------------------------------------------------------------
Capital transactions --
Contributions $ 174,851,243 $ 306,797,835
Withdrawals (168,941,522) (213,156,743)
- --------------------------------------------------------------------------------
Net increase in net assets from
capital transactions $ 5,909,721 $ 93,641,092
- --------------------------------------------------------------------------------
Net increase (decrease) in
net assets $ (58,805,362) $ 253,789,248
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $ 960,500,710 $ 706,711,462
- --------------------------------------------------------------------------------
At end of period $ 901,695,348 $ 960,500,710
- --------------------------------------------------------------------------------
See notes to financial statements
17
<PAGE>
High Income Portfolio as of September 30, 1998
FINANCIAL STATEMENTS CONT'D
Supplementary Data
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Six Months Ended Year Ended March 31,
September 30, 1998 ---------------------------------------------------------
(Unaudited) 1998 1997 1996 1995/(1)/
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets
- -----------------------------------------------------------------------------------------------------------------------------
Expenses 0.64%/(2)/ 0.63% 0.67% 0.71% 0.70%/(2)/
Net investment income 9.82%/(2)/ 9.63% 10.02% 10.41% 10.63%/(2)/
Portfolio Turnover 65% 137% 78% 88% 53%
- -----------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $901,695 $960,501 $706,711 $511,347 $442,552
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
/(1)/ For the period from the start of business, June 1, 1994, to March 31,
1995.
/(2)/ Annualized.
See notes to financial statements
18
<PAGE>
High Income Portfolio as of September 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited)
(Expressed in United States Dollars)
1 Significant Accounting Policies
----------------------------------------------------------------------------
High Income 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. The Declaration of Trust permits the Trustees to issue
interests in the Portfolio. The following is a summary of significant
accounting policies of the Portfolio. The policies are in conformity with
accounting principles generally accepted in the United States of America.
A Investment Valuations -- Investments listed on securities exchanges or in
the NASDAQ National Market are valued at closing sale prices. Listed or
unlisted investments for which closing sale prices are not available are
valued at the mean between the latest bid and asked prices. Fixed income
investments (other than short-term obligations), including listed
investments and investments for which price quotations are available, will
normally be valued on the basis of market valuations furnished by a pricing
service. Financial futures contracts listed on commodity exchanges are
valued at closing settlement prices. Short-term obligations, maturing in
sixty days or less, are valued at amortized cost, which approximates value.
Investments for which there are no quotations or valuations are valued at
fair value using methods 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.
C Income Taxes -- The Portfolio has elected to be treated as a partnership
for United States 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 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 taxable investment income, net realized capital gains, and
any other items of income, gain, loss, deduction or credit.
D Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
E Financial Futures Contracts -- Upon the entering of a financial futures
contract, the Portfolio is required to deposit ("initial margin") either in
cash or securities an amount 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 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. Should
interest rates move unexpectedly, the Portfolio may not achieve the
anticipated benefits of the financial futures contracts and may realize a
loss.
F Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expense during the
reporting period. Actual results could differ from those estimates.
G Other -- Investment transactions are accounted for on a trade date basis.
H Interim Financial Information -- The interim financial statements relating
to September 30, 1998 and for the six-month period then ended have not been
audited by independent certified public accountants, but in the opinion of
the Fund's management, reflect all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the financial
statements.
19
<PAGE>
High Income Portfolio as of September 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
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 based upon a percentage of average daily net assets
plus a percentage of gross income (i.e., income other than gains from the
sale of securities). For the six months ended September 30, 1998, the fee
was equivalent to 0.60% (annualized) of the Portfolio's average daily net
assets and amounted to $2,931,571. 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 of the officers and Trustees of the
Portfolio are officers and directors/trustees 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 portion of their annual fees
in accordance with the terms of the Trustees Deferred Compensation Plan. For
the six months ended September 30, 1998, no significant amounts have been
deferred.
3 Investments
----------------------------------------------------------------------------
The Portfolio invests primarily in debt securities. The ability of the
issuers of the debt securities held by the Portfolio to meet their
obligations may be affected by economic developments in a specific industry.
Purchases and sales of investments, other than U.S. Government securities
and short-term obligations, aggregated $635,779,620 and $607,445,913,
respectively, for the six months ended September 30, 1998.
4 Line of Credit
----------------------------------------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR
and EVM and its affiliates in a $100 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 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 quarter. The Portfolio did not have
any significant borrowings or allocated fees during the six months ended
September 30, 1998.
5 Federal Income Tax Basis of Investments
----------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in value of the
investments owned at September 30, 1998, as computed on a federal income tax
basis, were as follows:
Aggregate cost $ 945,894,872
----------------------------------------------------------------------------
Gross unrealized appreciation $ 79,222,579
Gross unrealized depreciation (143,482,017)
----------------------------------------------------------------------------
Net unrealized depreciation $ (64,259,438)
----------------------------------------------------------------------------
6 Restricted Securities
----------------------------------------------------------------------------
At September 30, 1998, the Portfolio owned the following securities
(constituting 0.54% of net assets) which were restricted as to public resale
and not registered under the Securities Act of 1933 (excluding Rule 144A
Securities). The Portfolio has various registration rights (exercisable
under a variety of circumstances) with respect to certain of these
securities. The fair value of these securities is determined based on
valuations provided by brokers when available, or if not available, they 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, Warrants, and Rights
----------------------------------------------------------------------------
Allegiance Telecom, Inc.,
Wts., Exp. 2/15/08 1/29/98 26,555 $ 0 $ 289,184
America Mobile, Wts., 3/26/98 4,100 0 0
Exp. 4/1/08
Cellnet Data Systems, Inc.,
Wts., Exp. 10/1/07 9/24/98 8,000 0 80
Concentric Network
Corp., Wts. 7/16/98 3,200 0 169,184
Esat Holdings, Ltd., Wts. 6/19/97 3,600 0 126,000
Gulf States Steel, Wts. 8/22/95 2,400 0 120
Hyperion
Telecommunications,
Inc., Common 6/24/98 24,240 75 133,562
Intermedia Communications,
Inc., Common 5/21/98 6,788 231,907 166,926
Jordan Telecom Products,
Inc., Common 1/9/98 2,500 0 0
20
<PAGE>
High Income Portfolio as of September 30, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
(Expressed in United States Dollars)
Date of
Description Acquisition Shares/Face Cost Fair Value
----------------------------------------------------------------------------
Common Stocks, Warrants, and Rights (continued)
----------------------------------------------------------------------------
Loral Space &
Communications
Ltd., Common 6/23/98 4,149 $ 101 $ 63,791
Metronet Communications,
Common 6/04/98 3,086 36 55,164
Microcell Telecommunication,
Wts. 10/30/96 58,400 647,700 782,428
Nextel Communications,
Inc., Common 8/25/98 11,154 180,000 224,463
Nextel Communications, Inc.,
Wts., Exp.4/25/99 10/04/96 7,200 0 4,320
Orbital Imaging Corp., Wts. 5/28/98 3,760 0 0
Primus Telecommunications,
Wts., Exp. 8/1/04 5/14/98 4,600 0 161,000
Specialty Foods Acq.
Corp., Common 8/10/93 48,000 34,886 480
Star Choice
Communication, Wts. 4/29/98 18,528 0 0
Sterling Chemicals
Hldgs., Inc., Common 10/07/96 9,600 96 85,200
21st Century Telecom
Grp., Wts. 2/02/98 800 0 0
UIH Australia/Pacific,
Inc., Wts. 2/05/98 3,600 0 36
Unisite, Inc., Wts. 12/9/97 2,252 0 0
United International Holdings,
Inc., Wts.,
Exp. 11/15/99 11/16/94 7,840 222,186 19,600
Verio, Inc., Wts. 5/5/98 25,600 1,064,000 1,003,776
Versatel Telecom B.V., Wts. 5/20/98 7,840 0 0
----------------------------------------------------------------------------
$2,380,987 $3,285,314
Preferred Stock
----------------------------------------------------------------------------
Unisite, Inc., 8.5% (PIK) 12/9/97 3,239 1,499,847 1,603,058
----------------------------------------------------------------------------
$3,880,834 $4,888,372
----------------------------------------------------------------------------
21
<PAGE>
Eaton Vance High Income Fund as of September 30, 1998
INVESTMENT MANAGEMENT
<TABLE>
Eaton Vance High Income Fund
<S> <C> <C>
Officers Independent Trustees
M. Dozier Gardner Donald R. Dwight
President and Trustee President, Dwight Partners, Inc.
James B. Hawkes Samuel L. Hayes, III
Vice President and Trustee Jacob H. Schiff Professor of Investment
Banking, Harvard University Graduate School of
William H. Ahern, Jr. Business Administration
Vice President
Norton H. Reamer
Thomas J. Fetter Chairman and Chief Executive Officer, United Asset
Vice President Management Corporation
Robert B. MacIntosh John L. Thorndike
Vice President Formerly Director, Fiduciary Company Incorporated
Michael B. Terry Jack L. Treynor
Vice President Investment Adviser and Consultant
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
High Income Portfolio
Officers Independent Trustees
M. Dozier Gardner Donald R. Dwight
President and Trustee President, Dwight Partners, Inc.
James B. Hawkes Samuel L. Hayes, III
Vice President and Trustee Jacob H. Schiff Professor of Investment
Banking, Harvard University Graduate School of
Michael W. Weilheimer Business Administration
Vice President and
Portfolio Manager Norton H. Reamer
Chairman and Chief Executive Officer, United Asset
Raymond O'Neill Management Corporation
Vice President
John L. Thorndike
Michel Normandeau Formerly Director, Fiduciary Company Incorporated
Vice President
Jack L. Treynor
James L. O'Connor Investment Adviser and Consultant
Treasurer
Alan R. Dynner
Secretary
</TABLE>
22
<PAGE>
This Page Intentionally Left Blank
<PAGE>
Investment Advisor of High Income Portfolio
Boston Management and Research
24 Federal Street
Boston, MA 02110
Administrator of Eaton Vance High Income Fund
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
Custodian
Investors Bank & Trust Company
200 Clarendon Street, 16th Floor
Boston, MA 02116
Transfer and Dividend
Disbursing Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
Eaton Vance High Income Fund
24 Federal Street
Boston, MA 02110
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
- --------------------------------------------------------------------------------
HISRC-11/98
