<PAGE>
[EATON VANCE MUTUAL FUNDS LOGO]
INVESTING
[LOGO] FOR THE
21ST
CENTURY-registration mark-
[PHOTO OF STOCK CERTIFICATE & PHONE]
Annual Report March 31, 2000
EATON VANCE
[PHOTO OF PAUL REVERE ON HORSE] HIGH INCOME
FUND
[LOGO "75 YEARS OF EXCELLENCE
EATON 75TH VANCE
ANNIVERSARY"]
[PHOTO OF BOSTON WATERFRONT FINANCIAL DISTRICT]
<PAGE>
EATON VANCE HIGH INCOME FUND as of March 31, 2000
LETTER TO SHAREHOLDERS
Eaton Vance High Income Fund,
Class B shares, had a total return
of 6.36% for the year ended
March 31, 2000.(1) That return was
the result of a decrease in net
asset value per share to $7.27 on
March 31, 2000 from $7.51 on
March 31, 1999, and the reinvest
James B. Hawkes ment of $0.699 in dividends.
President
Class C shares had a total return of 6.26% for
the year, the result of a decline in NAV to $9.56
from $9.88, and the reinvestment of $0.913 in
dividends.(1)
Based on closing NAVs on March 31, 2000 of $7.27
for Class B shares and $9.56 for Class C shares, the
distribution rates were 9.49% and 9.41%, respec-
tively.(2) The SEC 30-day yields at March 31, 2000
were 10.17% and 10.14%, respectively.(3)
Despite good corporate earnings and improved
interest coverage, the high-yield market competed
with a robust stock market...
With the past fiscal year demonstrating the relent-
less strength of the U.S. economy, high-yield bond
issuers benefited as the favorable economic climate
led to excellent corporate earnings and improved
interest coverage. Meanwhile, on the inflation
front, the Federal Reserve continued to monitor
the economy closely, raising its benchmark
Federal funds rates on five occasions to keep
potential inflationary forces at bay. The
high-yield market was characteristically
resistant to rising interest rates. However, as
has so often been the case in recent years, the
high-yield market again competed with a buoyant
stock market for investor's attentions, producing
pressures on asset values within the high-yield
sector throughout the fiscal period.
In a difficult market, the Fund
produced solid returns and again
outperformed its Lipper category...
In a volatile investment climate, High Income
Fund's Class B shares far outperformed the average
0.06% return of its High Current Yield Classifica-
tion peer group, according to Lipper Inc., a nation-
ally recognized monitor of mutual fund perfor-
mance.(4)
High Income Fund has achieved these results by
applying sound fundamental research and time-
tested investment discliplines. The Fund will con-
tinue seeking attractive, high-yielding opportunities
in this exciting market. In the pages that follow,
co-portfolio managers Michael Weilheimer and
Thomas Huggins review the past year in the high-
yield markets and offer their insights for the year
ahead.
Sincerely,
JAMES B. HAWKES
James B. Hawkes
President
May 9, 2000
Fund Information
as of March 31, 2000
Performance(5) Class B Class C
Average Annual Total Returns (at net asset value)
----------------------------------------------------------------------------
One Year 6.36% 6.26%
Five Years 10.47 10.28
Ten Years 10.97 N.A.
Life of Fund+ 9.07 9.12
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
----------------------------------------------------------------------------
One Year 1.52% 5.29%
Five Years 10.20 10.28
Ten Years 10.97 N.A.
Life of Fund+ 9.07 9.12
+Inception dates: Class B: 8/19/86; Class C: 6/8/94
Ten Largest Holdings(6)
-------------------------------------
Carrier1 International, Inc.. 2.1%
Global Crossing Holdings Ltd. 1.8
Telewest Communications PLC 1.8
PSINet, Inc. 1.8
United Pan-Europe Communications 1.7
NTL Communications Corp. 1.7
Nextel Communications, Inc. 1.7
Spectrasite Holdings, Inc. 1.6
Hollywood Casino Corp. 1.6
Versatel Telecom B.V. 1.5
(1) These returns do not include the applicable
contingent deferred sales charge (CDSC) for Class
B or C shares. (2) 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. (3) 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. (4) It is not possible to invest
directly in an Index or Lipper Classification.
(5) Returns are historical and are calculated by
determining the percentage change in net asset
value with all distributions reinvested. 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. Class C 1-year SEC return
reflects 1% CDSC. (6) Ten largest holdings
account for 17.3% of the Portfolio's investments,
determined by dividing the total market value of
the holdings by the total investments of the
Portfolio. 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.
2
<PAGE>
EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 2000
MANAGEMENT DISCUSSION
AN INTERVIEW WITH
MICHAEL W. WEILHEIMER AND
THOMAS HUGGINS,
CO-PORTFOLIO MANAGERS OF
HIGH INCOME PORTFOLIO
Q: Mike, interest rates rose
Michael W. Weilheimer throughtout the fiscal year.
Co-Portfolio Manager How did that trend affect the
high-yield bond market?
A: Mr. Weilheimer: The rise in
interest rates has had little
impact on the B-rated portion
of the high-yield market, the
primary investment universe
of the Portfolio. This segment
of the market has tended to
perform much like equities,
Thomas Huggins responding more to funda-
Co-Portfolio Manager mentals, such as changes in a
company's cash flow outlook
or balance sheet, than to fluc-
tuations in interest rates.
As short-term rates continued to rise in the
second half of the fiscal year, the yield curve
became increasingly inverted. That is, long-
term rates fell well below short-term rates.
However, rates in the 10-year range - the
benchmark duration of the high-yield market -
remained fairly stable. Thus, the impact of ris-
ing rates on our universe was limited.
Q: The Fund outpaced its benchmark index
during the fiscal year. To what do you attribute
that outperformance?
A: Mr. Huggins: The Fund benefited from an
overweighting in telecommunications and
cable television, especially in Europe, as well as
an increased exposure to technology. The
Portfolio also increased its investments in the
energy services sector, which has seen
increased drilling activity in response to rising
energy prices. Finally, the Fund benefited from
a significant cash position. While we had
underweighted the interest rate-sensitive
BB-rated segment in the first half of the fiscal
year, our large cash position allowed us to
take advantage of buying opportunities among
BB-rated bonds as spreads widened later in
the period.
Q: You mentioned an overweighting in telecom-
munication bonds. What companies have you
found attractive in that area?
A: Mr. Weilheimer: The Portfolio's emphasized
international wireline services over the past
year. The European telecom sector has been
generally characterized by a more favorable
competitive environment. With phone usage in
Europe well below that in the U.S., we believe
the growth prospects for European carriers
have been significantly better than companies
in the more mature U.S. market.
Portfolio Credit Quality Ratings(1)
--------------------------------------------------------------
[PIE CHART]
AAA 3.4% Non-Rated
BB 3.1% 8.1%
B 67.5%
CCC 17.90
Five Largest Sector Weightings(1)
--------------------------------------------------------------
Wireline Comm. Services Intl. 12.9%
Broadcasting & Cable 10.9%
Information Technology Services 8.9%
Wireless Comm. Services - No. America 7.3%
Wireline Comm. Services - No. America 5.1%
(1) Five largest Sector Weightings account for 45.1% of the Portfolio's
investments, determined by dividing the total market value of the
holdings by the total net assets of the Portfolio. Because the Fund is
actively managed, Credit Quality Ratings and Sector Weightings are
subject to change. Credit ratings are those provided by Moody's, Inc.,
a nationally recognized bond rating service.
-------------------------------------------------------------------------------
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. Yield will
vary.
-------------------------------------------------------------------------------
3
<PAGE>
EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 2000
MANAGEMENT DISCUSSION CONT'D
Versatel Telecom BV is a leading provider of
voice, data and Internet services in Belgium
and The Netherlands. The company is building
an advanced fiber optic network and will soon
be able to offer an expanded variety of broad-
band services for business and residential cus-
tomers. Elsewhere in Europe, Esat Telecom
Group PLC is a fixed-line and wireless telecom
company in Ireland, as well as a leading
Internet service provider. Esat recently agreed
to be purchased by British Telecom, which
resulted in a premium tender offer for out-
standing Esat bonds.
Mr. Huggins: In addition to owning the carri-
ers themselves, the Portfolio has diversified into
companies that are building the telecom infra-
structure. Those investments included Spectra-
site Holdings and Crown Castle International,
which own and operate cellular phone towers;
Jordan Telecom Products, which manufactures
ducting for fiber optic networks; and Verio,
Inc. and PSINet, Inc., Internet service providers
that we believe should benefit from increased
web traffic.
Q: Broadcast and cable was another major
emphasis of the Portfolio. Where did you
invest in the those areas?
A: Mr. Huggins: In Europe, the Portfolio owned
a position in Telewest Communication PLC,
a U.K.-based cable television operator. The
company controls, wholly or in part, 41 cable
franchises, representing 33% of the U.K.
cable audience. In March, Telewest achieved a
leg-up on its competitors with the launching of
Blueyonder, a premium, high-speed cable
Internet service.
A smaller holding, U.S.-based Charter
Communications, offers a full array of cable
services, including digital television, high-speed
Internet access and interactive programming.
Under the leadership of Microsoft co-founder
Paul Allen, Charter has pursued an aggressive
acquisition strategy in recent years. Following
recent transactions, Charter is the fourth largest
cable operator in the U.S., with 6.2 million
customers.
Q: You indicated that you increased your expo-
sure to the technology sector. What aspects of
technology did you emphasize?
A: Mr. Weilheimer: One area was the semicon-
ductor sector. Semiconductor packaging com-
panies have enjoyed strong growth, reflecting a
recently improving industry product cycle as
well as a secular trend toward a more expen-
sive, new generation of chips. Companies such
as Asat Finance LLC, Amkor Technology, Inc.,
Intersil Corp. and SCG Holding Corp. serve as
subcontractors to chip manufacturers, provid-
ing a range of services that include packaging,
wafer fabrication and final stage testing. Asat,
for example, has regional offices in Europe,
Hong Kong and the U.S. and appears well-
positioned in the event of a global upturn for
the industry.
Mr. Huggins: When these companies came
to the high-yield market in the fall of 1999,
market conditions were very difficult. As an
enhancement for investors, some of the bonds
were issued as units, with an equity compo-
nent attached to the high-coupon bonds. The
companies' equity IPOs early in 2000 were
very well received by investors. As a result,
prices of the previously issued bonds rose sig-
nificantly because of their high coupons and, in
some cases, the attached equity component.
Q: You increased the Portfolio's exposure to
energy services. What companies did you
find attractive?
A: Mr. Weilheimer: As oil and gas prices rose in
late 1999 and early 2000, exploration compa-
nies began to increase their budgets, a trend
that bodes well for the energy service sector.
R&B Falcon Corp. is among the oil and gas
industry's largest and most diverse drilling
companies. The company currently operates a
fleet of 140 rigs, including shallow water, deep-
water and inland drilling sites. Falcon's deep-
water drillships have the capability of drilling in
water depths of up to 10,000 feet. The compa-
ny's units are currently active in Europe, North
America, South America, Africa and the Pacific.
Among exploration companies, Chesapeake
4
<PAGE>
EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 2000
MANAGEMENT DISCUSSION CONT'D
Energy Corp. is one of the top 20 independent
energy producers in the U.S. The company has
interests in 5,300 oil and gas producing wells
along the Gulf Coast, the southwest U.S. and
northeastern British Columbia. Like many
energy companies, Chesapeake is also attractive
for its large assets, having increased its proved
reserves by 11% in 1999.
Q: Were there any areas of the market that the
Portfolio avoided?
A: Mr. Huggins: Yes. We avoided health care
bonds, which have performed very poorly in
the past year. Long-term care and nursing
home facilities have felt the pressure of stricter
Medicare reimbursement rules, which changed
reimbursement for these facilities from a cost
basis to a prospective payment basis. As a
result, long-term health care providers have
suffered a significant revenue shortfall.
We were also very selective with respect to cer-
tain cyclical sectors. For example, we avoided
steel companies altogether. The companies
have lost pricing flexibility because of a flood of
cheap imports from Pacific Rim nations.
Finally, we avoided the more speculative areas
in telecommunications, such as satellite-based
phone services. These issues fared very badly
during the period, with the failure of Iridium
and dramatic price cuts by widely-held
Globalstar reflecting the increasing competition
within the industry.
Q: What is your outlook for the high-yield bond
market in the coming year?
A: Mr. Weilheimer: The high-yield market is like-
ly to remain fairly volatile in the near term, but
we believe that should provide ample opportu-
nities in large-cap, BB-rated bonds. Longer-
term, we believe the outlook is very favorable.
High-yield spreads are unusually wide by his-
torical standards -around 600 basis points
(6.0%) - and with the recent volatility of the
stock market, it's likely that investors may
reconsider the high-yield area. In our view,
that is a healthy development, as investors
become more value-oriented. With the econo-
my in a growth mode and inflation under con-
trol, the outlook appears positive for the high-
yield sector.
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN
EATON VANCE HIGH INCOME FUND CLASS B VS.
THE CS FIRST BOSTON HIGH YIELD BOND INDEX*
CSFB Eaton Vance
High Yield High Income Fund
Date Bond Index Class B
3/31/90 $10,000 $10,000
4/30/90 $10,042 $9,983
5/31/90 $10,251 $10,176
6/30/90 $10,574 $10,422
7/31/90 $10,915 $10,702
8/31/90 $10,411 $10,093
9/30/90 $9,618 $9,357
10/31/90 $9,375 $8,865
11/30/90 $9,564 $9,142
12/31/90 $9,610 $9,193
1/31/91 $9,873 $9,446
2/28/91 $10,724 $10,479
3/31/91 $11,389 $11,096
4/30/91 $11,862 $11,551
5/31/91 $11,921 $11,572
6/30/91 $12,233 $11,915
7/31/91 $12,647 $12,296
8/31/91 $12,877 $12,579
9/30/91 $13,169 $12,754
10/31/91 $13,605 $13,180
11/30/91 $13,714 $13,248
12/31/91 $13,814 $13,439
1/31/92 $14,376 $13,912
2/28/92 $14,726 $14,256
3/31/92 $14,945 $14,432
4/30/92 $14,958 $14,487
5/31/92 $15,162 $14,692
6/30/92 $15,312 $14,830
7/31/92 $15,548 $15,054
8/31/92 $15,762 $15,251
9/30/92 $15,865 $15,406
10/31/92 $15,700 $15,189
11/30/92 $15,935 $15,381
12/31/92 $16,115 $15,556
1/31/92 $16,555 $16,009
2/28/93 $16,883 $16,290
3/31/93 $17,239 $16,500
4/30/93 $17,338 $16,644
5/31/93 $17,591 $16,842
6/30/93 $17,909 $17,196
7/31/93 $18,095 $17,363
8/31/93 $18,249 $17,508
9/30/93 $18,353 $17,554
10/31/93 $18,689 $17,908
11/30/93 $18,925 $17,994
12/31/93 $19,163 $18,218
1/31/94 $19,504 $18,613
2/28/94 $19,533 $18,564
3/31/94 $18,959 $17,863
4/30/94 $18,705 $17,741
5/31/94 $18,812 $17,751
6/30/94 $18,686 $17,805
7/31/94 $18,773 $17,957
8/31/94 $18,909 $18,084
9/30/94 $18,984 $18,085
10/31/94 $18,998 $18,128
11/30/94 $18,777 $17,899
12/31/94 $18,976 $18,031
1/31/95 $19,175 $18,275
2/28/95 $19,647 $18,902
3/31/95 $19,869 $19,105
4/30/95 $20,310 $19,591
5/31/95 $20,883 $20,141
6/30/95 $21,021 $20,275
7/31/95 $21,347 $20,525
8/31/95 $21,406 $20,589
9/30/95 $21,653 $20,842
10/31/95 $21,893 $20,911
11/30/95 $21,996 $21,155
12/31/95 $22,275 $21,488
1/31/96 $22,698 $21,866
2/28/96 $22,819 $21,883
3/31/96 $22,757 $21,869
4/30/96 $22,880 $21,917
5/31/96 $23,065 $22,048
6/30/96 $23,116 $22,231
7/31/96 $23,324 $22,334
8/31/96 $23,578 $22,576
9/30/96 $23,984 $23,120
10/31/96 $24,185 $23,298
11/30/96 $24,563 $23,757
12/31/96 $25,042 $23,927
1/31/97 $25,224 $24,161
2/28/97 $25,699 $24,560
3/31/97 $25,411 $24,195
4/30/97 $25,637 $24,450
5/31/97 $26,152 $24,973
6/30/97 $26,508 $25,319
7/31/97 $27,070 $26,014
8/31/97 $27,216 $25,955
9/30/97 $27,755 $26,470
10/31/97 $27,752 $26,493
11/30/97 $27,949 $26,746
12/31/97 $28,204 $26,981
1/31/98 $28,683 $27,467
2/28/98 $28,907 $27,628
3/31/98 $29,051 $27,887
4/30/98 $29,269 $27,997
5/31/98 $29,357 $28,094
6/30/98 $29,419 $28,195
7/31/98 $29,625 $28,356
8/31/98 $27,613 $26,791
9/30/98 $27,610 $26,912
10/31/98 $27,061 $26,361
11/30/98 $28,433 $27,455
12/31/98 $28,368 $27,485
1/31/99 $28,634 $27,893
2/28/99 $28,574 $27,729
3/31/99 $28,834 $27,993
4/30/99 $29,471 $28,536
5/31/99 $29,153 $28,149
6/30/99 $29,168 $28,089
7/31/99 $29,182 $28,202
8/31/99 $28,922 $27,891
9/30/99 $28,700 $27,690
10/31/99 $28,559 $27,506
11/30/99 $28,948 $27,827
12/31/99 $29,298 $28,142
1/31/00 $29,181 $28,021
2/29/00 $29,361 $28,075
3/31/00 $28,921 $27,485
Performance** Class B Class C
Average Annual Total Returns (at net asset value)
----------------------------------------------------------------------------
One Year 6.36% 6.26%
Five Years 10.47 10.28
Ten Years 10.97 N.A.
Life of Fund+ 9.07 9.12
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
----------------------------------------------------------------------------
One Year 1.52% 5.29%
Five Years 10.20 10.28
Ten Years 10.97 N.A.
Life of Fund+ 9.07 9.12
+Inception dates: Class B: 8/19/86; Class C: 6/8/94
* Source: TowersData, Bethesda, MD.; CSFirst Boston, Inc.
The chart compares the Fund's total return with that of the CS First Boston
High Yield Bond Index, a broad-based, unmanaged market index of high-yield
corporate bonds. The lines on the chart represent the total returns of
$10,000 hypothetical investments in the Fund and the Indices. The Indices'
total returns do not reflect commissions or expenses that would have been
incurred if an investor individually purchased or sold the securities
represented in the Indices. It is not possible to invest directly in an
Index. An investment in the Fund's Class C shares on 6/8/94 at net asset
value would have been worth $16,615 on March 31, 2000.
**Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. 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 HIGH INCOME FUND AS OF MARCH 31, 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF MARCH 31, 2000
<S> <C>
Assets
------------------------------------------------------
Investment in High Income Portfolio, at
value
(identified cost, $934,901,230) $897,418,912
Receivable for Fund shares sold 5,048,943
------------------------------------------------------
TOTAL ASSETS $902,467,855
------------------------------------------------------
Liabilities
------------------------------------------------------
Dividends payable $ 3,654,940
Payable for Fund shares redeemed 2,751,505
Accrued expenses 523,905
------------------------------------------------------
TOTAL LIABILITIES $ 6,930,350
------------------------------------------------------
NET ASSETS $895,537,505
------------------------------------------------------
Sources of Net Assets
------------------------------------------------------
Paid-in capital $957,581,889
Accumulated net realized loss from
Portfolio (computed on the basis of
identified cost) (30,877,655)
Accumulated undistributed net investment
income 6,315,589
Net unrealized depreciation from
Portfolio (computed on the basis of
identified cost) (37,482,318)
------------------------------------------------------
TOTAL $895,537,505
------------------------------------------------------
Class B Shares
------------------------------------------------------
NET ASSETS $758,686,388
SHARES OUTSTANDING 104,322,686
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 7.27
------------------------------------------------------
Class C Shares
------------------------------------------------------
NET ASSETS $136,851,117
SHARES OUTSTANDING 14,311,853
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 9.56
------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
MARCH 31, 2000
<S> <C>
Investment Income
------------------------------------------------------
Interest allocated from Portfolio $ 82,381,241
Dividends allocated from Portfolio 8,311,935
Miscellaneous income allocated from
Portfolio 1,175,160
Expenses allocated from Portfolio (5,285,547)
------------------------------------------------------
NET INVESTMENT INCOME FROM PORTFOLIO $ 86,582,789
------------------------------------------------------
Expenses
------------------------------------------------------
Trustees fees and expenses $ 4,724
Distribution and service fees
Class B 6,870,991
Class C 946,179
Transfer and dividend disbursing agent
fees 866,080
Registration fees 88,733
Printing and postage 75,280
Custodian fee 31,016
Legal and accounting services 27,896
Miscellaneous 77,195
------------------------------------------------------
TOTAL EXPENSES $ 8,988,094
------------------------------------------------------
NET INVESTMENT INCOME $ 77,594,695
------------------------------------------------------
Realized and Unrealized
Gain (Loss) from Portfolio
------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ 8,548,220
Foreign currency and forward foreign
currency
exchange contract transactions 4,240,787
------------------------------------------------------
NET REALIZED GAIN $ 12,789,007
------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $(41,114,102)
Foreign currency and forward foreign
currency exchange contracts 1,781,769
------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $(39,332,333)
------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS $(26,543,326)
------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 51,051,369
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
INCREASE (DECREASE) IN YEAR ENDED YEAR ENDED
NET ASSETS MARCH 31, 2000 MARCH 31, 1999
<S> <C> <C>
------------------------------------------------------------------------
From operations --
Net investment income $ 77,594,695 $ 64,032,525
Net realized gain (loss) 12,789,007 (5,306,735)
Net change in unrealized
appreciation (depreciation) (39,332,333) (42,231,862)
------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 51,051,369 $ 16,493,928
------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class B $ (68,703,356) $ (57,887,205)
Class C (8,930,184) (3,801,298)
------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (77,633,540) $ (61,688,503)
------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class B $ 240,920,128 $ 170,794,418
Class C 129,517,104 54,928,047
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 19,726,829 18,897,976
Class C 3,912,531 2,251,108
Cost of shares redeemed
Class B (167,676,291) (151,322,234)
Class C (55,080,525) (26,466,468)
------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS $ 171,319,776 $ 102,176,864
------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 144,737,605 $ 56,982,289
------------------------------------------------------------------------
Net Assets
------------------------------------------------------------------------
AT BEGINNING OF YEAR $ 750,799,900 $ 693,817,611
------------------------------------------------------------------------
AT END OF YEAR $ 895,537,505 $ 750,799,900
------------------------------------------------------------------------
Accumulated undistributed
net investment income
included in net assets
------------------------------------------------------------------------
AT END OF YEAR $ 6,315,589 $ 3,257,567
------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
-------------------------------------------------------------
YEAR ENDED MARCH 31,
-------------------------------------------------------------
2000(1) 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
-----------------------------------------------------------------------------------------------
Net asset value -- Beginning
of year $ 7.510 $ 8.030 $ 7.220 $ 7.100 $ 6.920
-----------------------------------------------------------------------------------------------
Income (loss) from operations
-----------------------------------------------------------------------------------------------
Net investment income $ 0.702 $ 0.685 $ 0.658 $ 0.652 $ 0.665
Net realized and unrealized
gain (loss) (0.242) (0.543) 0.774 0.120 0.189
-----------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 0.460 $ 0.142 $ 1.432 $ 0.772 $ 0.854
-----------------------------------------------------------------------------------------------
Less distributions
-----------------------------------------------------------------------------------------------
From net investment income $ (0.700) $ (0.662) $ (0.622) $ (0.646) $ (0.665)
In excess of net investment
income -- -- -- (0.006) (0.009)
-----------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.700) $ (0.662) $ (0.622) $ (0.652) $ (0.674)
-----------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 7.270 $ 7.510 $ 8.030 $ 7.220 $ 7.100
-----------------------------------------------------------------------------------------------
TOTAL RETURN(2) 6.36% 2.08% 20.59% 11.37% 12.80%
-----------------------------------------------------------------------------------------------
Ratios/Supplemental Data
-----------------------------------------------------------------------------------------------
Net assets, end of year (000's
omitted) $758,686 $689,140 $693,818 $598,273 $496,966
Ratios (As a percentage of
average daily net assets):
Expenses(3) 1.74% 1.75% 1.73% 1.77% 1.78%
Net investment income 9.49% 9.13% 8.58% 8.97% 9.38%
Portfolio Turnover of the
Portfolio 113% 150% 137% 78% 88%
-----------------------------------------------------------------------------------------------
</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.
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
----------------------
YEAR ENDED MARCH 31,
----------------------
2000(1) 1999
<S> <C> <C>
--------------------------------------------------------
Net asset value -- Beginning
of year $ 9.880 $10.560
--------------------------------------------------------
Income (loss) from operations
--------------------------------------------------------
Net investment income $ 0.915 $ 0.901
Net realized and unrealized
loss (0.321) (0.715)
--------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 0.594 $ 0.186
--------------------------------------------------------
Less distributions
--------------------------------------------------------
From net investment income $ (0.914) $(0.866)
--------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.914) $(0.866)
--------------------------------------------------------
NET ASSET VALUE -- END OF YEAR $ 9.560 $ 9.880
--------------------------------------------------------
TOTAL RETURN(2) 6.26% 2.08%
--------------------------------------------------------
Ratios/Supplemental Data
--------------------------------------------------------
Net assets, end of year (000's
omitted) $136,851 $61,660
Ratios (As a percentage of
average daily net assets):
Expenses(3) 1.78% 1.79%
Net investment income 9.42% 9.18%
Portfolio Turnover of the
Portfolio 113% 150%
--------------------------------------------------------
</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.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 2000
NOTES TO FINANCIAL STATEMENTS
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). 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 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. Net investment
income, other than class specific expenses, is allocated daily to each class
of shares based upon the ratio of the value of each class' paid shares to the
total value of all paid shares. 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 (75.7% at
March 31, 2000). 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 accounting
principles generally accepted in the United States of America.
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, 2000, the Fund, for federal
income tax purposes, had a capital loss carryover of $28,921,374, 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,
2003 ($12,690,352), 2004 ($5,868,015), 2005 ($7,020,394) and 2007
($3,342,613), respectively.
D Other -- Investment transactions are accounted for on a trade-date basis.
E 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 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 are 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 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.
10
<PAGE>
EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
3 Shares of Beneficial Interest
-------------------------------------------
The Funds 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:
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------
CLASS B 2000 1999
<S> <C> <C>
--------------------------------------------------------------------
Sales 32,600,657 22,874,813
Issued to shareholders electing to
receive payments of distributions in
Fund shares 2,667,731 2,521,238
Redemptions (22,665,226) (20,058,915)
--------------------------------------------------------------------
NET INCREASE 12,603,162 5,337,136
--------------------------------------------------------------------
<CAPTION>
YEAR ENDED MARCH 31,
--------------------------
CLASS C 2000 1999
<S> <C> <C>
--------------------------------------------------------------------
Sales 13,334,738 5,574,324
Issued to shareholders electing to
receive payments of distributions in
Fund shares 403,015 228,574
Redemptions (5,667,675) (2,696,157)
Issued to EV Classic High Income
Fund shareholders -- 3,135,034
--------------------------------------------------------------------
NET INCREASE 8,070,078 6,241,775
--------------------------------------------------------------------
</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.
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 (the Class B
Plan) and Class C Shares (Class C Plan) pursuant to Rule 12b-1 under the
Investment Company Act of 1940 (collectively, the Plans). The Class B and
Class C Plans require the Fund to pay Eaton Vance Distributors, Inc. (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 $5,426,918 and $709,634 for Class B and Class C shares, respectively,
to or payable to EVD for the year ended March 31, 2000, representing 0.75% of
the average daily net assets for Class B and Class C shares. At March 31,
2000, the amount of Uncovered Distribution Charges of EVD calculated under
the Plan was approximately $23,735,000 and $10,784,000 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 B and Class C shares
for each fiscal year. The Trustees initially implemented the Plans by
authorizing the Fund to make quarterly payments of service fees to EVD and
investment dealers in amounts equal to 0.25% per annum of the Fund's average
daily net assets attributable to 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 B
shares for any fiscal year on shares of the Fund sold on or 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% per annum of the Fund's average
daily net assets attributable to Class C shares. 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 where there are no outstanding Uncovered
Distribution Charges of EVD. Service fee payments for the year ended
March 31, 2000 amounted to $1,444,073 and $236,545 for Class B and Class C,
respectively.
Certain officers and Trustees of the Fund are officers or directors of EVD.
11
<PAGE>
EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
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. 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 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. CDSC
charges received when no Uncovered Distribution Charges exist will be
retained by the Fund. EVD received approximately $1,598,000 and $43,000 of
CDSC paid by shareholders for Class B shares and Class C shares,
respectively, for the year ended March 31, 2000.
7 Investment Transactions
-------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio for the
year ended March 31, 2000, aggregated $367,727,092 and $283,430,632,
respectively.
8 Transfer of Net Assets
-------------------------------------------
On April 1, 1998, Eaton Vance 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, Eaton
Vance 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 Classic 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 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.
12
<PAGE>
EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 2000
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS
OF EATON VANCE HIGH INCOME FUND:
---------------------------------------------
We have audited the accompanying statement of assets and liabilities of Eaton
Vance High Income Fund (the Fund) as of March 31, 2000, the related statement of
operations for the year then ended, the statements of changes in net assets for
the years ended March 31, 2000 and 1999, and the financial highlights for each
of the years in the five-year period ended March 31, 2000. These financial
statements and financial highlights are the responsibility of the Fund's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and financial highlights are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of the Fund at March
31, 2000, the results of its operations, the changes in its net assets and its
financial highlights for the respective stated periods in conformity with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 28, 2000
13
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
PORTFOLIO OF INVESTMENTS
(EXPRESSED IN UNITED STATES DOLLARS)
CORPORATE BONDS & NOTES -- 82.5%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Aerospace and Defense -- 0.7%
--------------------------------------------------------------------------------
Dunlop Stand Aero Holdings, Sr. Notes,
11.875%, 5/15/09 $ 3,900 $ 3,958,500
Transdigm, Inc., 10.375%, 12/1/08 4,800 3,864,000
--------------------------------------------------------------------------------
$ 7,822,500
--------------------------------------------------------------------------------
Apparel -- 0.7%
--------------------------------------------------------------------------------
Coyne International Enterprises, Sr.
Sub. Notes, 11.25%, 6/1/08 $ 2,525 $ 2,057,875
William Carter Co., Sr. Sub. Notes,
10.375%, 12/1/06 7,985 6,747,325
--------------------------------------------------------------------------------
$ 8,805,200
--------------------------------------------------------------------------------
Auto and Parts -- 0.6%
--------------------------------------------------------------------------------
J.L. French Automative Casting,
11.50%, 6/1/09 $ 6,225 $ 6,131,625
Talon Automotive Group, Sr. Sub. Notes,
9.625%, 5/1/08 1,100 544,500
--------------------------------------------------------------------------------
$ 6,676,125
--------------------------------------------------------------------------------
Broadcasting and Cable -- 10.9%
--------------------------------------------------------------------------------
Charter Communication Holdings LLC, Sr.
Disc. Notes, 11.75% (0% until 2005),
1/15/10(1) $ 5,250 $ 2,920,312
Charter Communication Holdings LLC, Sr.
Notes, 8.625%, 4/1/09 5,250 4,659,375
Diamond Cable Communications Co., Sr.
Disc. Notes, 11.75% (0% until 2000),
12/15/05 3,000 2,880,000
EchoStar DBS Corp., Sr. Notes,
9.375%, 2/1/09 3,250 3,152,500
Golden Sky DBS, Inc., Sr. Disc. Notes,
13.50% (0% until 2004), 3/1/07 11,445 7,725,375
Golden Sky Systems, 12.375%, 8/1/06 7,865 8,690,825
Muzak Holdings LLC, 9.875%, 3/15/09 3,400 3,281,000
Muzak Holdings LLC, Sr. Disc. Notes,
13.00% (0% until 2004), 3/15/10 6,563 3,740,910
NTL Communications Corp., Sr. Notes,
9.25%, 11/15/06(1) EUR 3,500 3,303,912
NTL Communications Corp., Sr. Notes,
9.875%, 11/15/09(1) EUR 5,900 5,512,908
NTL Communications Corp., Sr. Notes,
11.50%, 10/1/08 11,600 11,832,000
NTL Communications Corp., Sr. Notes,
12.375% (0% until 2003), 10/1/08 2,175 1,408,312
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Broadcasting and Cable (continued)
--------------------------------------------------------------------------------
Ono Finance PLC, 13.00%, 5/1/09(1) $ 10,870 $ 11,033,050
Ono Finance PLC, 13.00%, 5/1/09(1) EUR 3,800 3,823,816
Pegasus Communications Corp., Sr. Notes,
12.50%, 8/1/07(1) 6,410 6,954,850
RCN Corp., Sr. Disc. Notes, 9.80% (0%
until 2003), 2/15/08 2,250 1,316,250
Telemundo Holdings, Inc., Sr. Disc.
Notes, 11.50% (0% until 2003), 8/15/08 9,050 5,859,875
Telewest Communication PLC, Debs.,
9.625%, 10/1/06 640 620,800
Telewest Communication PLC, Debs.,
11.00% (0% until 2000), 10/1/07 9,390 8,826,600
Telewest Communication PLC, Sr. Disc.
Notes, 9.25% (0% until 2004), 4/15/09(1) 3,600 2,106,000
Telewest Communication PLC, Sr. Disc.
Notes, 9.875% (0% until 2004),
4/15/09(1) GBP 5,575 5,514,500
Telewest Communication PLC, Sr. Notes,
9.875%, 2/1/10(1) GBP 2,725 4,314,859
United Pan-Europe Communications, Sr.
Disc. Notes, 13.375% (0% until 2004),
11/1/09(1) 18,750 9,656,250
United Pan-Europe Communications, Sr.
Notes, 10.875%, 11/1/07(1) EUR 2,250 2,140,115
United Pan-Europe Communications, Sr.
Notes, 11.25%, 11/1/09(1) EUR 6,540 6,236,271
United Pan-Europe Communications, Sr.
Notes, 11.25%, 2/1/10(1) 2,125 2,050,625
--------------------------------------------------------------------------------
$ 129,561,290
--------------------------------------------------------------------------------
Business Services - Miscellaneous -- 1.7%
--------------------------------------------------------------------------------
AP Holdings, Inc., Sr. Disc. Notes,
11.25% (0% until 2003), 3/15/08 $ 8,550 $ 1,752,750
Apcoa, Inc., Guaranteed Sr. Sub. Notes,
9.25%, 3/15/08 3,320 1,846,750
Federal Data Corp., Sr. Sub. Notes,
10.125%, 8/1/05 4,740 3,092,850
Intertek Finance PLC, Sr. Sub. Notes,
10.25%, 11/1/06 5,600 4,676,000
Richmont Marketing Special,
10.125%, 12/15/07 17,770 9,329,250
--------------------------------------------------------------------------------
$ 20,697,600
--------------------------------------------------------------------------------
Business Services - Rental & Leasing -- 3.0%
--------------------------------------------------------------------------------
Anthony Crane Rental LP, Guaranteed Sr.
Notes, 10.375%, 8/1/08 $ 4,000 $ 3,220,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Business Services - Rental & Leasing (continued)
--------------------------------------------------------------------------------
NationsRent, Inc., Guaranteed Sr. Sub.
Notes, 10.375%, 12/15/08 $ 4,600 $ 4,128,500
Neff Corp., 10.25%, 6/1/08 4,050 3,594,375
Neff Corp., Guaranteed Sr. Sub. Notes,
10.25%, 6/1/08 6,150 5,458,125
Spectrasite Holdings, Inc., Sr. Disc.
Notes, 11.25% (0% until 2004), 4/15/09 13,700 7,124,000
Spectrasite Holdings, Inc., Sr. Disc.
Notes, 12.00% (0% until 2003), 7/15/08 6,350 3,841,750
Spectrasite Holdings, Inc., Sr. Disc.
Notes, 12.875% (0% until 2005),
3/15/10(1) 6,870 3,589,575
Spectrasite Holdings, Inc., Sr. Notes,
10.75%, 3/15/10(1) 5,100 4,857,750
--------------------------------------------------------------------------------
$ 35,814,075
--------------------------------------------------------------------------------
Chemicals -- 0.8%
--------------------------------------------------------------------------------
Huntsman Corp., Sr. Sub. Notes,
9.50%, 7/1/07(1) $ 1,000 $ 917,500
PCI Chemicals Canada, Inc.,
9.25%, 10/15/07 3,500 2,887,500
Sterling Chemicals Holdings, Inc., Sr.
Sub. Notes, 11.25%, 4/1/07 250 204,375
Sterling Chemicals Holdings, Inc., Sr.
Sub. Notes, 11.75%, 8/15/06 5,750 4,887,500
--------------------------------------------------------------------------------
$ 8,896,875
--------------------------------------------------------------------------------
Consumer Products -- 0.8%
--------------------------------------------------------------------------------
Amscan Holdings, Inc., Sr. Sub. Notes,
9.875%, 12/15/07 $ 4,480 $ 3,920,000
Glenoit Corp., Sr. Sub. Notes,
11.00%, 4/15/07 9,000 2,565,000
Icon Health and Fitness, Inc.,
12.00%, 9/27/05(1) 1,421 781,440
Polaroid Corp., Sr. Notes,
11.50%, 2/15/06 2,500 2,562,500
--------------------------------------------------------------------------------
$ 9,828,940
--------------------------------------------------------------------------------
Containers and Packaging -- 0.2%
--------------------------------------------------------------------------------
Consumers International, Inc., Sr.
Notes, 10.25%, 4/1/05 $ 3,935 $ 2,695,475
--------------------------------------------------------------------------------
$ 2,695,475
--------------------------------------------------------------------------------
Drugs -- 1.3%
--------------------------------------------------------------------------------
King Pharmaceutical, Inc.,
10.75%, 2/15/09 $ 4,750 $ 4,726,250
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Drugs (continued)
--------------------------------------------------------------------------------
Warner Chilcott, Inc.,
12.625%, 2/15/08(1) $ 10,275 $ 10,146,562
--------------------------------------------------------------------------------
$ 14,872,812
--------------------------------------------------------------------------------
Electronic Equipment -- 1.2%
--------------------------------------------------------------------------------
Cherokee International, Sr. Sub. Notes,
10.50%, 5/1/09 $ 4,875 $ 4,034,062
Viasystems, Inc., Sr. Sub. Notes,
9.75%, 6/1/07 3,600 3,042,000
Viasystems, Inc., Sr. Sub. Notes, Series
B, 9.75%, 6/1/07 3,565 3,012,425
Wavetek Corp., Sr. Sub. Notes,
10.125%, 6/15/07 3,360 3,712,800
--------------------------------------------------------------------------------
$ 13,801,287
--------------------------------------------------------------------------------
Entertainment -- 1.7%
--------------------------------------------------------------------------------
Loews Cineplex Entertainment Corp., Sr.
Sub. Notes, 8.875%, 8/1/08 $ 1,000 $ 635,000
Marvel Enterprise, Inc.,
12.00%, 6/15/09 12,725 10,879,875
Premier Parks, Inc., Sr. Notes,
9.75%, 6/15/07 1,625 1,529,531
Regal Cinemas, Inc., Sr. Sub. Notes,
8.875%, 12/15/10 10,905 4,089,375
Regal Cinemas, Inc., Sr. Sub. Notes,
9.50%, 6/1/08 7,925 3,368,125
--------------------------------------------------------------------------------
$ 20,501,906
--------------------------------------------------------------------------------
Financial Services -- 0.4%
--------------------------------------------------------------------------------
Willis Corroon Corp., 9.00%, 2/1/09 $ 6,400 $ 4,768,000
--------------------------------------------------------------------------------
$ 4,768,000
--------------------------------------------------------------------------------
Foods -- 2.8%
--------------------------------------------------------------------------------
B & G Foods, Inc., Sub. Notes,
9.625%, 8/1/07 $ 7,445 $ 6,067,675
Del Monte Corp., Sr. Notes,
12.25%, 4/15/07 9,979 10,477,950
Del Monte Foods Co., Sr. Disc. Notes,
12.50% (0% until 2002), 12/15/07 3,515 2,636,250
Luigino's, Inc., Sr. Sub. Notes,
10.00%, 2/1/06 3,175 2,651,125
Premier International Foods, Sr. Notes,
12.00%, 9/1/09(1) 12,562 11,871,090
--------------------------------------------------------------------------------
$ 33,704,090
--------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Health Services -- 0.2%
--------------------------------------------------------------------------------
Lifepoint Hospitals Holding,
10.75%, 5/15/09 $ 2,820 $ 2,834,100
--------------------------------------------------------------------------------
$ 2,834,100
--------------------------------------------------------------------------------
Information Technology Services -- 8.9%
--------------------------------------------------------------------------------
Covad Communication Group, Sr. Notes,
12.00%, 2/15/10(1) $ 14,375 $ 13,153,124
Cybernet Internet Services
International, Inc., Sr. Notes,
14.00%, 7/1/09 4,825 3,787,625
Diva Systems Corp., Sr. Notes, 12.625%
(0% until 2003), 3/1/08 9,000 5,175,000
Equinix, Inc., 13.00%, 12/1/07 4,500 4,702,500
Exodus Communications, Inc., Sr. Notes,
10.75%, 12/15/09 2,938 2,923,310
Exodus Communications, Inc., Sr. Notes,
10.75%, 12/15/09(1) EUR 1,156 1,152,167
Exodus Communications, Inc., Sr. Notes,
11.25%, 7/1/08 9,835 9,835,000
Globix Corp., Sr. Notes,
12.50%, 2/1/10(1) 10,600 9,805,000
IPC Information Systems, Sr. Disc.
Notes, 10.875% (0% until 2001), 5/1/08 7,000 6,116,250
Northpoint Communication Group, Inc.,
12.875%, 2/15/10(1) 14,625 13,089,375
PSINet, Inc., Sr. Notes,
10.50%, 12/1/06(1) 1,500 1,440,000
PSINet, Inc., Sr. Notes,
10.50%, 12/1/06(1) EUR 2,850 2,758,610
PSINet, Inc., Sr. Notes, 11.00%, 8/1/09 8,200 7,995,000
PSINet, Inc., Sr. Notes, 11.00%, 8/1/09 EUR 3,000 2,903,800
PSINet, Inc., Sr. Notes,
11.50%, 11/1/08 6,100 6,130,500
Rhythms NetConnections, Sr. Notes,
14.00%, 2/15/10(1) 6,000 5,190,000
Verio, Inc., Sr. Notes,
10.625%, 11/15/09(1) 5,500 5,362,500
Verio, Inc., Sr. Notes, 11.25%, 12/1/08 1,000 995,000
Verio, Inc., Sr. Notes, 13.50%, 6/15/04 3,200 3,452,000
--------------------------------------------------------------------------------
$ 105,966,761
--------------------------------------------------------------------------------
Lodging and Gaming -- 5.1%
--------------------------------------------------------------------------------
HMH Properties, 7.875%, 8/1/08 $ 3,988 $ 3,379,830
Hollywood Casino Corp., 11.25%, 5/1/07 3,350 3,366,750
Hollywood Casino Corp., 12.414%, 5/1/06 6,925 7,167,375
Hollywood Casino Corp., First Mortgage
Bonds, 13.00%, 8/1/06(1) 8,150 8,679,750
Horseshoe Gaming Holding Corp.,
8.625%, 5/15/09 63 57,803
Majestic Star LLC, 10.875%, 7/1/06 7,000 6,545,000
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Lodging and Gaming (continued)
--------------------------------------------------------------------------------
Mandalay Resort Group, Sr. Sub. Notes,
9.25%, 12/1/05 $ 3,250 $ 3,103,750
Sun International Hotels,
8.625%, 12/15/07 8,500 7,777,500
Sun International Hotels, Sr. Sub.
Notes, 9.00%, 3/15/07 6,975 6,312,375
Trump Atlantic City Associates, Inc.,
11.25%, 5/1/06 5,437 3,656,383
Waterford Gaming LLC, Sr. Notes,
9.50%, 3/15/10(1) 10,252 9,790,660
--------------------------------------------------------------------------------
$ 59,837,176
--------------------------------------------------------------------------------
Manufacturing -- 0.6%
--------------------------------------------------------------------------------
Roller Bearing Holdings Co., Sr. Disc.
Notes, 13.00% (0% until 2002),
6/15/09(1) $ 12,875 $ 6,727,188
--------------------------------------------------------------------------------
$ 6,727,188
--------------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 1.9%
--------------------------------------------------------------------------------
DI Industries, Inc., (Grey Wolf, Inc.),
Sr. Notes, 8.875%, 7/1/07 $ 8,524 $ 7,756,840
Grant Geophysical, Inc., Sr. Notes,
9.75%, 2/15/08 4,000 2,540,000
R&B Falcon Corp., 9.50%, 12/15/08 840 810,600
R&B Falcon Corp., 10.25%, 5/15/03 3,250 3,217,500
RBF Finance Co., 11.375%, 3/15/09 2,900 3,088,500
Universal Compression, Inc., Sr. Disc.
Notes, 9.875% (0% until 2003), 2/15/08 9,400 5,405,000
--------------------------------------------------------------------------------
$ 22,818,440
--------------------------------------------------------------------------------
Oil and Gas - Exploration and Development -- 0.5%
--------------------------------------------------------------------------------
Comstock Resources, Inc., 11.25%, 5/1/07 $ 5,850 $ 5,703,750
--------------------------------------------------------------------------------
$ 5,703,750
--------------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 2.0%
--------------------------------------------------------------------------------
Chesapeake Energy Corp., 9.125%, 4/15/06 $ 4,000 $ 3,560,000
Chesapeake Energy Corp., Sr. Notes,
7.875%, 3/15/04 1,320 1,181,400
Chesapeake Energy Corp., Sr. Notes,
8.50%, 3/15/12 8,480 6,911,200
Energy Corp. of America, Sr. Sub. Notes,
9.50%, 5/15/07 2,340 1,696,500
Gothic Production Corp.,
11.125%, 5/1/05 6,500 5,557,500
Plains Resources, Inc., Sr. Sub. Notes,
10.25%, 3/15/06 750 723,750
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Oil and Gas - Exploration and Production (continued)
--------------------------------------------------------------------------------
Plains Resources, Inc., Sr. Sub. Notes,
10.25%, 3/15/06(1) $ 3,750 $ 3,618,750
--------------------------------------------------------------------------------
$ 23,249,100
--------------------------------------------------------------------------------
Oil and Gas - Refining -- 0.1%
--------------------------------------------------------------------------------
Western Gas Resources, 10.00%, 6/15/09 $ 1,050 $ 1,065,750
--------------------------------------------------------------------------------
$ 1,065,750
--------------------------------------------------------------------------------
Packaging -- 0.5%
--------------------------------------------------------------------------------
Clondalkin Industries, Sr. Notes,
10.625%, 1/15/10(1) EUR 375 $ 368,366
IFCO Systems NV, Sr. Sub. Notes,
10.625%, 3/15/10(1) EUR 3,022 2,983,018
Kappa Beheer BV, 10.625%, 7/15/09 EUR 2,500 2,560,591
--------------------------------------------------------------------------------
$ 5,911,975
--------------------------------------------------------------------------------
Paper and Forest Products -- 0.3%
--------------------------------------------------------------------------------
Indah Kiat Finance Mauritius, Sr. Unsec.
Notes, 10.00%, 7/1/07 $ 3,400 $ 2,380,000
Pindo Deli Finance Mauritius, Ltd.,
Guaranteed Sr. Notes, 10.75%, 10/1/07 2,400 1,722,000
--------------------------------------------------------------------------------
$ 4,102,000
--------------------------------------------------------------------------------
Printing and Business Products -- 1.7%
--------------------------------------------------------------------------------
MDC Communications Corp., Sr. Sub.
Notes, 10.50%, 12/1/06 $ 15,600 $ 14,976,000
Merrill Corp., 12.00%, 5/1/09(1) 5,250 5,066,250
--------------------------------------------------------------------------------
$ 20,042,250
--------------------------------------------------------------------------------
Publishing -- 0.6%
--------------------------------------------------------------------------------
American Lawyer Media Corp., Sr. Disc.
Notes, 12.25% (0% to 2002), 12/15/08 $ 2,920 $ 1,876,100
Von Hoffman Press, Inc., Sr. Sub. Notes,
10.875%, 5/15/07(1) 5,095 4,814,775
--------------------------------------------------------------------------------
$ 6,690,875
--------------------------------------------------------------------------------
Restaurants -- 0.8%
--------------------------------------------------------------------------------
AFC Enterprises, Inc., Sr. Sub Notes,
10.25%, 5/15/07 $ 9,600 $ 9,360,000
--------------------------------------------------------------------------------
$ 9,360,000
--------------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Retail - Food and Drug -- 1.5%
--------------------------------------------------------------------------------
Pantry, Inc., Sr. Sub. Notes,
10.25%, 10/15/07 $ 13,105 $ 11,597,925
Pathmark Stores, Inc., Sr. Sub. Notes,
9.625%, 5/1/03 9,000 6,525,000
--------------------------------------------------------------------------------
$ 18,122,925
--------------------------------------------------------------------------------
Retail - General -- 2.2%
--------------------------------------------------------------------------------
Advance Holding Corp., Sr. Debs.,
12.875% (0% until 2003), 4/15/09 $ 4,000 $ 1,985,000
Advance Stores Co., Inc., Sr. Sub.
Notes, 10.25%, 4/15/08 8,400 6,678,000
Ames Department Stores, Sr. Notes,
10.00%, 4/15/06 6,400 6,016,000
Kindercare Learning Ctrs., Inc., Sr.
Sub. Notes, 9.50%, 2/15/09 7,900 7,228,500
Tuesday Morning Corp., Sr. Sub. Notes,
11.00%, 12/15/07 4,057 4,036,715
--------------------------------------------------------------------------------
$ 25,944,215
--------------------------------------------------------------------------------
Semiconductors -- 1.8%
--------------------------------------------------------------------------------
Amkor Technologies, Inc., Sr. Notes,
9.25%, 5/1/06 $ 1,600 $ 1,552,000
Asat Finance LLC, 12.50%, 11/1/06(1) 2,350 2,479,250
Asat Finance LLC, 12.50%, 11/1/06(1) 6,350 7,588,250
Intersil Corp., 13.25%, 8/15/09 815 929,100
SCG Holding Corp., 12.00%, 8/1/09 8,250 8,868,750
--------------------------------------------------------------------------------
$ 21,417,350
--------------------------------------------------------------------------------
Transportation -- 1.3%
--------------------------------------------------------------------------------
Budget Group, Inc., Sr. Notes,
9.125%, 4/1/06 $ 7,760 $ 6,246,800
MTL, Inc., Variable rate, 6/15/06 1,600 1,336,000
Pacer International, Inc.,
11.75%, 6/1/07 7,544 7,506,280
--------------------------------------------------------------------------------
$ 15,089,080
--------------------------------------------------------------------------------
Waste Management -- 0.4%
--------------------------------------------------------------------------------
Stericycle, Inc., 12.375%, 11/15/09 $ 4,400 $ 4,532,000
--------------------------------------------------------------------------------
$ 4,532,000
--------------------------------------------------------------------------------
Wireless Communication Services -- 7.3%
--------------------------------------------------------------------------------
Airgate PCS, Inc., 13.50% (0% until
2004), 10/1/09 $ 2,000 $ 1,110,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
17
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Wireless Communication Services (continued)
--------------------------------------------------------------------------------
Alamosa PCS Holdings, Inc., 12.875% (0%
until 2005), 2/15/10 $ 11,625 $ 5,696,250
Clearnet Communications, Inc.,
10.125%, 7/7/07(1) 4,500 4,500,000
Dolphin Telecom PLC, Sr. Disc. Notes,
14.00% (0% until 2004), 5/15/09 13,375 5,015,625
Leap Wireless, 12.50%, 4/15/10(1) 7,500 7,537,500
Nextel Communications, Inc., Sr. Disc.
Notes, 10.65% (0% until 2002), 9/15/07 4,540 3,325,550
Nextel Communications, Inc., Sr. Notes,
9.375%, 11/15/09 15,285 14,138,625
Nextel International, Inc., Sr. Disc.
Notes, 12.125% (0% until 2003), 4/15/08 2,250 1,400,625
Nextel Partners, Inc., Sr. Notes,
11.00%, 3/15/10(1) 7,925 7,707,063
PTC International Finance II SA,
11.25%, 12/1/09(1) 1,875 1,912,500
PTC International Finance II SA,
11.25%, 12/1/09(1) EUR 3,375 3,426,093
TeleCorp PCS, Inc., 8.50%, 10/15/09 6,500 5,070,000
Teligent, Inc., Sr. Notes,
11.50%, 12/1/07 11,750 10,633,750
US Unwired, Inc., Sr. Disc. Notes,
13.375% (0% until 2004), 11/1/09(1) 4,400 2,365,000
Winstar Communications, Inc., Sr. Disc.
Notes, 14.00% (0% until 2000), 10/15/05 12,150 12,453,750
--------------------------------------------------------------------------------
$ 86,292,331
--------------------------------------------------------------------------------
Wireline Communication Services -
International -- 12.9%
--------------------------------------------------------------------------------
Call-Net Enterprises, Inc., Sr. Notes,
8.00%, 8/15/08 $ 4,000 $ 2,820,000
Call-Net Enterprises, Inc., Sr. Notes,
9.375%, 5/15/09 1,062 801,810
Carrier1 International SA, Sr. Notes,
13.25%, 2/15/09 16,375 17,070,942
Completel Europe NV, 14.00% (0% until
2004), 2/15/09 7,840 3,959,200
Esat Telecom Group PLC, Sr. Notes,
11.875%, 12/1/08 2,200 2,574,000
Esat Telecom Group PLC, Sr. Notes,
12.50% (0% until 2002), 2/1/07 1,440 1,303,200
Esprit Telecom Group PLC, Sr. Notes,
10.875%, 6/15/08 8,825 7,898,375
Esprit Telecom Group PLC, Sr. Notes,
11.50%, 12/15/07 12,600 11,529,000
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Wireline Communication Services -
International (continued)
--------------------------------------------------------------------------------
Flag Telecom Holdings Ltd., Sr. Notes,
11.625%, 3/30/10(1) EUR $ 5,895 $ 5,479,989
Global Crossing Holding Ltd., Sr. Notes,
9.125%, 11/15/06(1) 10,500 10,027,500
Global TeleSystems Group, Inc.,
11.00%, 12/1/09 EUR 3,750 3,439,185
Globenet Communication Group Ltd., Sr.
Notes, 13.00%, 7/15/07 6,625 6,558,750
GT Group Telecom, 13.25% (0% until
2005), 2/1/10(1) 13,900 7,714,500
Jazztel PLC, 14.00%, 4/1/09 2,000 2,050,000
Jazztel PLC, Sr. Notes,
13.25%, 12/15/09(1) EUR 5,813 5,765,870
Level 3 Communications, Inc., Sr. Disc.
Notes, 12.875% (0% until 2005),
3/15/10(1) 2,250 1,130,625
Level 3 Communications, Inc., Sr. Notes,
10.75%, 3/15/08(1) EUR 7,000 6,514,046
Primus Telecom Group, Sr. Notes,
11.25%, 1/15/09 3,750 3,543,750
Primus Telecom Group, Sr. Notes,
11.75%, 8/1/04 4,600 4,393,000
RSL Communications PLC, Guaranteed Sr.
Notes, 10.50%, 11/15/08 2,000 1,700,000
RSL Communications PLC, Sr. Notes,
12.25%, 11/15/06 4,190 4,148,100
Tele1 Europe BV, Sr. Notes,
11.875%, 12/1/09(1) EUR 7,406 7,310,466
Tele1 Europe BV, Sr. Notes,
13.00%, 5/15/09 3,050 3,141,500
Versatel Telecom BV, Sr. Notes,
11.875%, 7/15/09 2,045 2,039,888
Versatel Telecom BV, Sr. Notes,
13.25%, 5/15/08 9,010 9,392,925
Versatel Telecom BV, Sr. Notes,
13.25%, 5/15/08 6,160 6,421,800
Viatel, Inc., Sr. Disc. Notes, 12.50%
(0% until 2003), 4/15/08 6,415 3,544,288
Viatel, Inc., Sr. Notes,
11.25%, 4/15/08 1,805 1,669,625
Viatel, Inc., Sr. Notes,
11.50%, 3/15/09 9,550 8,977,000
--------------------------------------------------------------------------------
$ 152,919,334
--------------------------------------------------------------------------------
Wireline Communication Services -
North America -- 5.1%
--------------------------------------------------------------------------------
Allegiance Telecom, Inc., Sr. Notes,
12.875%, 5/15/08 $ 10,755 $ 11,830,500
Focal Communications Corp., Sr. Notes,
11.875%, 1/15/10(1) 3,275 3,291,375
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
18
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Wireline Communication Services -
North America (continued)
--------------------------------------------------------------------------------
GST Equipment Funding, Sr. Notes,
13.25%, 5/1/07 $ 4,125 $ 2,887,500
GST Telecommunications, Sr. Sub. Notes,
12.75%, 11/15/07 3,700 3,089,500
ICG Holdings, Inc., 12.50% (0% until
2001), 5/1/06 6,325 5,170,688
Intermedia Communications, Inc., Sr.
Disc. Notes, 12.25% (0% until 2004),
3/1/09 6,750 4,083,750
MGC Communications, Inc., Sr. Notes,
13.00%, 4/1/10(1) 10,550 10,233,500
Nextlink Communications, Inc., Sr. Disc.
Notes, 12.125% (0% until 2004),
12/1/09(1) 16,900 8,957,000
Nextlink Communications, Inc., Sr.
Notes, 12.50%, 4/15/06 6,720 6,955,200
Nextlink Communications, Sr. Notes,
10.50%, 12/1/09(1) 250 238,125
World Access, Inc., Sr. Notes,
13.25%, 1/15/08 3,845 3,364,375
--------------------------------------------------------------------------------
$ 60,101,513
--------------------------------------------------------------------------------
Total Corporate Bonds & Notes
(identified cost, $1,064,263,641) $ 977,174,288
--------------------------------------------------------------------------------
</TABLE>
COMMON STOCKS, WARRANTS AND RIGHTS -- 2.8%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Broadcasting and Cable -- 0.1%
--------------------------------------------------------------------------------
Ono Finance PLC, Warrants(2)(3) 10,870 $ 0
Ono Finance PLC, Warrants(2)(3) 3,800 0
Pegasus Communications Corp., Common 10,919 1,535,823
UIH Australia/Pacific, Inc.,
Warrants(2)(3) 3,600 $ 115,200
--------------------------------------------------------------------------------
$ 1,651,023
--------------------------------------------------------------------------------
Chemicals -- 0.0%
--------------------------------------------------------------------------------
Sterling Chemicals Holdings, Inc.,
Common(2) 9,600 $ 53,991
--------------------------------------------------------------------------------
$ 53,991
--------------------------------------------------------------------------------
Consumer Products -- 0.0%
--------------------------------------------------------------------------------
HF Holdings, Inc., Warrants(2)(3) 13,600 $ 0
--------------------------------------------------------------------------------
$ 0
--------------------------------------------------------------------------------
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Electronic Equipment -- 0.0%
--------------------------------------------------------------------------------
Jordan Telecommunications, Deferred
Contingent Cash Rights(2)(3) 2,500 $ 0
--------------------------------------------------------------------------------
$ 0
--------------------------------------------------------------------------------
Information Technology Services -- 0.0%
--------------------------------------------------------------------------------
Cybernet Internet Services
International, Inc., Warrants(2)(3) 4,825 $ 57,900
Diva Systems Corp., Warrants(2)(3) 27,000 0
Verio, Inc., Common(2) 9,134 411,601
--------------------------------------------------------------------------------
$ 469,501
--------------------------------------------------------------------------------
Lodging and Gaming -- 0.0%
--------------------------------------------------------------------------------
Peninsula Gaming LLC, Warrants(2)(3) 25,351 $ 152,107
--------------------------------------------------------------------------------
$ 152,107
--------------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 0.2%
--------------------------------------------------------------------------------
Key Energy Services, Inc.,
Warrants(2)(3) 1,900 $ 171,000
R&B Falcon Corp., Warrants(2) 5,400 1,728,000
--------------------------------------------------------------------------------
$ 1,899,000
--------------------------------------------------------------------------------
Semiconductors -- 0.1%
--------------------------------------------------------------------------------
Intersil Corp., Warrants(2)(3)(4) 1,250 $ 717,151
--------------------------------------------------------------------------------
$ 717,151
--------------------------------------------------------------------------------
Wireline Communication Services -
International -- 2.2%
--------------------------------------------------------------------------------
Carrier1 International SA,
Warrants(2)(3)(4) 16,375 $ 8,339,607
Completel Europe NV, Warrants(2)(3) 78,400 5,488,000
Esat Telecom Group PLC, Common 16,552 712,925
Jazztel PLC, Warrants(3)(4) 10,000 2,479,930
Primus Telecom Group, Warrants, Exp.
8/1/04(2)(3) 4,600 325,993
Tele1 Europe Holding AB-ADR, Common 56,270 1,076,164
Versatel Telecom BV, Warrants(2)(3)(4) 14,000 7,962,533
--------------------------------------------------------------------------------
$ 26,385,152
--------------------------------------------------------------------------------
Wireline Communication Services -
North America -- 0.2%
--------------------------------------------------------------------------------
MGC Communications, Inc., Warrants, Exp.
10/1/04(2)(4) 5,680 $ 1,900,653
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
19
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
PORTFOLIO OF INVESTMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Wireline Communication Services -
North America (continued)
--------------------------------------------------------------------------------
World Access, Inc., Common $ 11,579 $ 221,448
--------------------------------------------------------------------------------
$ 2,122,101
--------------------------------------------------------------------------------
Total Common Stocks, Warrants and Rights
(identified cost, $3,405,998) $ 33,450,026
--------------------------------------------------------------------------------
</TABLE>
PREFERRED STOCKS -- 8.9%
<TABLE>
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Apparel -- 0.0%
--------------------------------------------------------------------------------
Cluett American Corp., 12.50% 337 $ 6,730
--------------------------------------------------------------------------------
$ 6,730
--------------------------------------------------------------------------------
Broadcasting and Cable -- 3.1%
--------------------------------------------------------------------------------
Adelphia Communications Corp., 13% 48,000 $ 5,136,000
CSC Holdings, Inc., Series M, 11.125%
(PIK) 137,790 14,605,740
Granite Broadcasting Corp., 12.75% (PIK) 7,125 7,125,000
Pegasus Communications Corp., 12.75%
(PIK) 9,737 10,321,220
--------------------------------------------------------------------------------
$ 37,187,960
--------------------------------------------------------------------------------
Business Services - Rental & Leasing -- 0.8%
--------------------------------------------------------------------------------
Crown Castle International Corp., 12.75%
(PIK) 9,358 $ 9,358,000
--------------------------------------------------------------------------------
$ 9,358,000
--------------------------------------------------------------------------------
Machinery -- 0.0%
--------------------------------------------------------------------------------
MMH Holdings, Inc., 12% (PIK) 1,940 $ 19,400
--------------------------------------------------------------------------------
$ 19,400
--------------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 0.9%
--------------------------------------------------------------------------------
R&B Falcon Corp., 13.875% (PIK) 9,881 $ 10,869,100
--------------------------------------------------------------------------------
$ 10,869,100
--------------------------------------------------------------------------------
Wireless Communication Services -- 1.7%
--------------------------------------------------------------------------------
Dobson Communications Corp., 12.25%
(PIK) 1,839 $ 1,820,610
Nextel Communications, Inc., 11.125%
(PIK) 5,982 5,742,720
Rural Cellular Corp., 11.375% (PIK) 7,264 7,336,640
Rural Cellular Corp., 12.25% 4,800 4,800,000
--------------------------------------------------------------------------------
$ 19,699,970
--------------------------------------------------------------------------------
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
Wireline Communication Services -
International -- 1.0%
--------------------------------------------------------------------------------
Global Crossing Holding Ltd., 10.5%
(PIK) 11,700 $ 11,700,000
--------------------------------------------------------------------------------
$ 11,700,000
--------------------------------------------------------------------------------
Wireline Communication Services -
North America -- 1.4%
--------------------------------------------------------------------------------
Intermedia Communications, Inc., 7% 135,000 $ 6,480,000
IXC Communications, Inc., Series B,
12.5% 9,547 10,119,820
Nextlink Communications, Inc., 14% (PIK) 868 45,136
--------------------------------------------------------------------------------
$ 16,644,956
--------------------------------------------------------------------------------
Total Preferred Stocks
(identified cost, $104,258,666) $ 105,486,116
--------------------------------------------------------------------------------
</TABLE>
COMMERCIAL PAPER -- 3.2%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
--------------------------------------------------------------------------------
CIT Group Holdings, Inc., 6.28%, 4/3/00 $ 13,217 $ 13,212,389
Prudential Funding Corp., 5.91%, 4/4/00 25,000 24,987,687
--------------------------------------------------------------------------------
Total Commercial Paper
(at amortized cost, $38,200,075) $ 38,200,076
--------------------------------------------------------------------------------
Total Investments -- 97.4%
(identified cost, $1,210,128,380) $1,154,310,506
--------------------------------------------------------------------------------
Other Assets, Less Liabilities -- 2.6% $ 30,687,429
--------------------------------------------------------------------------------
Net Assets -- 100.0% $1,184,997,935
--------------------------------------------------------------------------------
</TABLE>
(PIK) - Payment in kind.
EUR - Euro Dollar
GBP - British Pound
(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.
(2) Non-income producing security.
(3) Restricted security.
(4) Security valued at fair value using methods determined in good faith by
or at the direction of the Trustees.
SEE NOTES TO FINANCIAL STATEMENTS
20
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF MARCH 31, 2000
(EXPRESSED IN UNITED STATES DOLLARS)
<S> <C>
Assets
--------------------------------------------------------
Investments, at value (identified cost,
$1,210,128,380) $1,154,310,506
Cash 6,958
Foreign currency, at value (identified
cost, $1,174,207) 1,105,349
Receivable for investments sold 12,161,356
Interest receivable 27,393,984
Receivable for open forward foreign
currency contracts 2,591,729
--------------------------------------------------------
TOTAL ASSETS $1,197,569,882
--------------------------------------------------------
Liabilities
--------------------------------------------------------
Payable for investments purchased $ 12,497,495
Accrued expenses 74,452
--------------------------------------------------------
TOTAL LIABILITIES $ 12,571,947
--------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $1,184,997,935
--------------------------------------------------------
Sources of Net Assets
--------------------------------------------------------
Net proceeds from capital contributions
and withdrawals $1,238,453,366
Net unrealized depreciation (computed on
the basis of identified cost) (53,455,431)
--------------------------------------------------------
TOTAL $1,184,997,935
--------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
MARCH 31, 2000
(EXPRESSED IN UNITED STATES DOLLARS)
<S> <C>
Investment Income
------------------------------------------------------
Interest $111,585,707
Dividends 11,271,175
Miscellaneous 1,579,587
------------------------------------------------------
TOTAL INVESTMENT INCOME $124,436,469
------------------------------------------------------
Expenses
------------------------------------------------------
Investment adviser fee $ 6,676,593
Trustees fees and expenses 32,571
Custodian fee 315,994
Legal and accounting services 125,602
Amortization of organization expenses 736
Miscellaneous 10,884
------------------------------------------------------
TOTAL EXPENSES $ 7,162,380
------------------------------------------------------
NET INVESTMENT INCOME $117,274,089
------------------------------------------------------
Realized and Unrealized Gain (Loss)
------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ 9,220,755
Foreign currency and forward foreign
currency exchange
contract transactions 5,668,832
------------------------------------------------------
NET REALIZED GAIN $ 14,889,587
------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $(53,816,671)
Foreign currency and forward foreign
currency exchange contracts 2,362,443
------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $(51,454,228)
------------------------------------------------------
NET REALIZED AND UNREALIZED LOSS $(36,564,641)
------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 80,709,448
------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
21
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
INCREASE (DECREASE) YEAR ENDED YEAR ENDED
IN NET ASSETS MARCH 31, 2000 MARCH 31, 1999
<S> <C> <C>
------------------------------------------------------------------------
From operations --
Net investment income $ 117,274,089 $ 99,349,959
Net realized gain (loss) 14,889,587 (13,513,235)
Net change in unrealized
appreciation (depreciation) (51,454,228) (53,977,702)
------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 80,709,448 $ 31,859,022
------------------------------------------------------------------------
Capital transactions --
Contributions $ 465,123,511 $ 376,878,683
Withdrawals (400,057,623) (330,015,816)
------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
CAPITAL TRANSACTIONS $ 65,065,888 $ 46,862,867
------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 145,775,336 $ 78,721,889
------------------------------------------------------------------------
Net Assets
------------------------------------------------------------------------
At beginning of year $1,039,222,599 $ 960,500,710
------------------------------------------------------------------------
AT END OF YEAR $1,184,997,935 $1,039,222,599
------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
22
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
YEAR ENDED MARCH 31,
---------------------------------------------------------------
2000 1999 1998 1997 1996
<S> <C> <C> <C> <C> <C>
-------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
-------------------------------------------------------------------------------------------------
Ratios (As a percentage of
average daily net assets):
Expenses 0.64% 0.65% 0.63% 0.67% 0.71%
Net investment income 10.54% 10.23% 9.63% 10.02% 10.41%
Portfolio Turnover 113% 150% 137% 78% 88%
-------------------------------------------------------------------------------------------------
NET ASSETS, END OF YEAR (000'S
OMITTED) $1,184,998 $1,039,223 $960,501 $706,711 $511,347
-------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
23
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
NOTES TO FINANCIAL STATEMENTS
(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 were amortized on the straight-line basis
over five years and are fully amortized at March 31, 2000
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 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.
G Forward Foreign Currency Exchange Contracts -- The Portfolio may enter into
forward foreign currency exchange contracts for the purchase or sale of a
specific foreign currency at a fixed price on a future date. Risks may arise
upon entering these contracts from the potential inability of counterparties
to meet the terms of their contracts and from movements in the value of a
foreign currency relative to the U.S. dollar. The Portfolio will enter into
forward contracts for hedging purposes as well as non-hedging purposes. The
forward foreign currency exchange contracts are adjusted by the daily
exchange rate of the underlying currency and any
24
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
gains or losses are recorded for financial statement purposes as unrealized
until such time as the contracts have been closed.
H Use of Estimates -- The preparation of the 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 amount of revenue and expense during the
reporting period. Actual results could differ from those estimated.
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.
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 year ended March 31, 2000, the fee was equivalent to
0.60% of the Portfolio's average daily net assets and amounted to $6,676,593.
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 portion of their annual fees in accordance
with the terms of the Trustees Deferred Compensation Plan. For the year ended
March 31, 2000, 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 $1,342,179,050 and $1,190,195,622,
respectively, for the year ended
March 31, 2000.
4 Line of Credit
-------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $150 million unsecured line of credit agreement
with a group of banks. Borrowings will be made by the Portfolio solely to
facilitate the handling of unusual and/or unanticipated short-term cash
requirements. Interest is charged to each participating portfolio or fund
based on its borrowings at an amount above either the Eurodollar rate or
federal funds rate. In addition, a fee computed at an annual rate of 0.10% on
the daily unused portion of the line of credit is allocated among the
participating portfolios and funds at the end of each quarter. The Portfolio
did not have any significant borrowings or allocated fees during the year
ended March 31, 2000.
5 Financial Instruments
-------------------------------------------
The Portfolio regularly trades 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 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. A summary of
obligations under these financial instruments at March 31, 2000 is as
follows:
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
SALES
-------------------------------------------------------------------------
SETTLEMENT IN EXCHANGE FOR NET UNREALIZED
DATE(S) DELIVER (IN U.S. DOLLARS) APPRECIATION
<S> <C> <C> <C>
-------------------------------------------------------------------------
4/17/00 - British Pound Sterling
5/22/00 11,831,425 19,320,911 442,324
4/17/00 - Euro Dollar
6/19/00 75,928,930 75,149,088 2,192,421
-------------------------------------------------------------------------
$94,469,999 $2,634,745
-------------------------------------------------------------------------
</TABLE>
25
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
NOTES TO FINANCIAL STATEMENTS CONT'D
(EXPRESSED IN UNITED STATES DOLLARS)
<TABLE>
<CAPTION>
PURCHASES
-------------------------------------------------------------------------
SETTLEMENT DELIVER NET UNREALIZED
DATE(S) IN EXCHANGE FOR (IN U.S. DOLLARS) DEPRECIATION
<S> <C> <C> <C>
-------------------------------------------------------------------------
4/17/00 British Pound Sterling
5,646,781 9,043,212 (33,522)
4/17/00 Euro Dollar
4,301,833 4,136,922 (9,494)
-------------------------------------------------------------------------
$13,180,134 $ (43,016)
-------------------------------------------------------------------------
</TABLE>
6 Federal Income Tax Basis of Investments
-------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at March 31, 2000 as computed on a federal income tax
basis, were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $1,210,555,535
--------------------------------------------------------
Gross unrealized appreciation $ 47,379,868
Gross unrealized depreciation (103,698,771)
--------------------------------------------------------
NET UNREALIZED DEPRECIATION $ (56,318,903)
--------------------------------------------------------
</TABLE>
7 Restricted Securities
-------------------------------------------
At March 31, 2000, the Portfolio owned the following securities (representing
2.18% 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 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.
<TABLE>
<CAPTION>
DATE OF
DESCRIPTION ACQUISITION SHARES/FACE COST FAIR VALUE
<S> <C> <C> <C> <C>
------------------------------------------------------------------------
COMMON STOCKS, WARRANTS AND RIGHTS
------------------------------------------------------------------------
Carrier1 9/09/99 - 16,375 $1,593,750 $ 8,339,607
International SA, 2/25/00
Warrants
Completel Europe NV, 10/19/99 78,400 0 5,488,000
Warrants
Cybernet Internet 10/20/99 - 4,825 195,000 57,900
Services 10/28/99
International,
Inc., Warrants
Diva Systems Corp., 12/30/98 - 27,000 90 0
Warrants 9/21/99
HF Holdings, Inc., 9/24/97 - 13,600 730,314 0
Warrants 8/04/98
Intersil Corp., 12/10/99 1,250 0 717,151
Warrants
Jazztel PLC, 5/19/99 10,000 0 2,479,930
Warrants
Jordan 3/22/00 2,500 0 0
Telecommunications,
Deferred Contingent
Cash Rights
Key Energy Services, 7/22/99 1,900 28,500 171,000
Inc., Warrants
Ono Finance PLC, 10/12/99 - 14,670 0 0
Warrants 11/5/99
Peninsula Gaming 7/08/99 25,351 0 152,107
LLC, Warrants
Primus Telecom 10/31/97 4,600 0 325,993
Group, Warrants,
Exp. 8/1/04
UIH 3/05/98 3,600 0 115,200
Australia/Pacific,
Inc., Warrants
Versatel Telecom BV, 8/11/98 - 14,000 0 7,962,533
Warrants 1/29/99
------------------------------------------------------------------------
$2,547,654 $25,809,421
------------------------------------------------------------------------
</TABLE>
26
<PAGE>
HIGH INCOME PORTFOLIO AS OF MARCH 31, 2000
INDEPENDENT AUDITORS' REPORT
TO THE TRUSTEES AND INVESTORS
OF HIGH INCOME PORTFOLIO:
---------------------------------------------
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of High Income Portfolio (the Portfolio) as of
March 31, 2000, and the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended March 31, 2000 and
1999 and the supplementary data for each of the years in the five-year period
ended (all expressed in United States dollars). These financial statements and
supplementary data are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
supplementary data based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements and supplementary data are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. Our procedures included confirmation of
securities held as of March 31, 2000 by correspondence with the custodian and
brokers; where replies were not received from brokers, we performed other audit
procedures. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of the Portfolio at March 31,
2000, the results of its operations, the changes in its net assets and the
supplementary data for the respective stated periods in conformity with
accounting principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
April 28, 2000
27
<PAGE>
EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 2000
INVESTMENT MANAGEMENT
EATON VANCE HIGH INCOME FUND
Officers
James B. Hawkes
President and Trustee
Willam H. Ahern, Jr.
Vice President
Thomas J. Fetter
Vice President
Armin J. Lang
Vice President
Michael R. Mach
Vice President
Robert B. MacIntosh
Vice President
Edward E. Smiley, Jr.
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
HIGH INCOME PORTFOLIO
Officers
James B. Hawkes
President and Trustee
Thomas P. Huggins
Vice President and
Co-Portfolio Manager
Michael W. Weilheimer
Vice President and
Co-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
28
<PAGE>
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<PAGE>
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<PAGE>
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<PAGE>
INVESTMENT ADVISER OF
HIGH INCOME PORTFOLIO
BOSTON MANAGEMENT AND RESEARCH
The Eaton Vance Building
255 State Street
Boston, MA 02109
ADMINISTRATOR OF
EATON VANCE HIGH INCOME 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
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
PFPC., INC.
Attention: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02904-9653
INDEPENDENT AUDITORS
DELOITTE & TOUCHE LLP
200 Berkeley Street
Boston, MA 02116-5022
EATON VANCE HIGH INCOME 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.
-------------------------------------------------------------------------------
446-5/00 HISRC-5/00
