<PAGE>
[LOGO]
EATON VANCE(R)
==============
[Photo of Bridge with Buildings]
Annual Report October 31, 2000
EATON VANCE
FLOATING-RATE
HIGH INCOME
FUND
[Photo of Pillars and Steps]
<PAGE>
Eaton Vance Floating-Rate High Income Fund as of October 31, 2000
LETTER TO SHAREHOLDERS
[PHOTO -- JAMES B. HAWKES]
James B. Hawkes
President
We welcome shareholders of Eaton Vance Floating-Rate High Income Fund with this
initial shareholder report. The Fund began operations in early September, as
many of the fixed-income markets were still characterized by severe market
volatility. However, we believe this climate was potentially beneficial to the
newly-launched Fund as it created what we believe were unusually attractive
buying opportunities.
Based on a net asset value per share of $9.93, the Fund's Class B shares had a
distribution rate of 8.49% at October 31, 2000.(1) The SEC 30-day yield for the
Fund's Class B shares was 8.91% at October 31.(2)
Based on a net asset value per share of $9.93, the Fund's Class C shares had a
distribution rate of 8.49% at October 31, 2000.(1) The SEC 30-day yield for the
Fund's Class C shares was 8.95% at October 31.(2)
Based on a net asset value per share of $9.93, the Fund's Advisers Class shares
had a distribution rate of 8.59% at October 31, 2000.(1) The SEC 30-day yield
for the Fund's Advisers Class shares was 8.96% at October 31.(2)
Based on a net asset value per share of $9.94, the Fund's Institutional shares
had a distribution rate of 8.63% at October 31, 2000.(1) The SEC 30-day yield
for the Fund's Institutional shares was 9.06% at October 31.(2)
Eaton Vance Floating-Rate High
Income Fund sees good income
opportunities in the
year ahead...
In the recent market volatility, many fixed-income investors have seen their
investment returns diminished. Historically, floating-rate loans have maintained
an attractive yield advantage over other short-term fixed-income vehicles. By
investing primarily in senior, secured, floating-rate loans, Eaton Vance
Floating-Rate High Income Fund is designed to address that need: to provide a
high level of current yield while limiting price volatility caused by interest
rate fluctuations.
In addition, by providing daily liquidity, we believe that Eaton Vance
Floating-Rate High Income Fund offers new flexibility to investors in this
unique segment of the fixed-income market. Moreover, we are confident that this
asset class will provide good opportunities in the coming year. In the following
pages, co-portfolio managers Scott Page and Payson Swaffield review the
Portfolio's first two months and look ahead to 2001.
Sincerely,
/s/ James B. Hawkes
James B. Hawkes
President
December 7, 2000
FUND INFORMATION
AS OF OCTOBER 31, 2000
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Performance(3) Class B Class C Class I Advisers
Class
-------------------------------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
-------------------------------------------------------------------------------------------------------
Life of Fund+ 0.55% 0.57% 0.36% 0.44%
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
-------------------------------------------------------------------------------------------------------
Life of Fund+ -4.42% -0.42% 0.36% 0.44%
+Inception Dates -- Class B: 9/5/00; Class C: 9/5/00; Class I: 9/15/00; Advisers Class: 9/7/00
</TABLE>
Ten Largest Holdings(4)
-------------------------------------------
Jefferson Smurfit Corp. 2.1%
Nextel Communications, Inc. 2.1
Charter Communications Operating, LLC 2.1
Starwood Hotels & Resorts 1.7
Voicestream Vendor Facility 1.7
Western Resources 1.2
HIF Corp. 1.2
Lin Television 1.0
Century Cable Holdings 1.0
Lyondell Petroleum Co. 0.9
(1) The Fund's distribution rate represents actual distributions paid to
shareholders and is calculated daily by dividing the last distribution per
share (annualized) by the offering price. (2) 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. (3) 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. SEC 1-Year return for Class C reflects a 1% CDSC.
Advisers Class shares redeemed within 3 months of purchase, including
exchanges, are subject to a 1% redemption fee, which is not reflected in
this return. (4) Ten largest holdings account for 15.0% of the Portfolio's
investments, determined by dividing the total market value of the holdings
by the total net assets 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.
<PAGE>
Eaton Vance Floating-Rate High Income Fund as of October 31, 2000
MANAGEMENT DISCUSSION
[PHOTO -- SCOTT H. PAGE]
Scott H. Page
[PHOTO -- PAYSON F. SWAFFIELD]
Payson F. Swaffield
An interview with Scott H. Page
and Payson F. Swaffield,
co-portfolio managers of
Floating Rate Portfolio.
Q: Scott, how would you describe the market environment in the first months of
the Portfolio's operations?
A: MR. PAGE: This has been a very volatile period for most capital markets, as
uncertainty about the economy, weaker corporate profits and rising default
rates have created a challenging investment climate. The volatility has
been severe in both the equity and bond markets.
While the floating-rate loan universe has not been entirely immune to these
pressures, the impact has been much less dramatic. Floating-rate loans have
benefited from their re-set provisions, which enables them to adjust
interest rates in response to changes in prevailing interest rate levels.
That feature makes these loans less vulnerable to changes in rates than
bonds. In fact, unlike other fixed-income vehicles, which tend to decline
in price in reaction to a rise in rates, floating-rate loans can actually
respond favorably.
Q: Payson, what were the major developments in the loan market in 2000?
A: MR. SWAFFIELD: The loan market has continued to expand in 2000. According
to Loan Pricing Corp., syndicated lending is on a $300 billion pace in
2000. The growth in the market has resulted from several factors. First,
merger and acquisition activity has been very brisk, which has increased
financing needs; second, the number of non-bank market participants has
increased significantly, and includes mutual funds and other institutional
investors; and finally, with the difficulties in the corporate bond
markets, senior, secured loans have become an increasingly attractive
alternative for corporate borrowers.
Another major development in the loan market has been the emergence of
market pricing. While the new pricing mechanism has resulted in slightly
increased daily volatility, we believe that the trend toward market pricing
will, over time, bring better liquidity and market efficiency, qualities
that will contribute to the further maturation of the bank loan market.
Moreover, market pricing will bring more flexibility to this asset class
and, in the long run, more opportunities for investors.
Q: What significance does the term "senior, secured" have for investors?
A: MR. PAGE: Unlike bonds, which may be junior debt obligations, loans are
typically both senior and secured. Senior refers to the fact that loan
lenders have the highest claim on a borrower's cash flow. In effect,
lenders are first in line before junior lenders such as bondholders.
Secured refers to the fact that loan agreements require that the loans are
collateralized. Collateral securing the loan may include accounts
receivable, inventory, machinery and equipment, property and plant, a lien
on any significant asset or the common stock of a company. The senior
status of these loans generally affords lenders an additional measure of
protection over subordinated debt.
Q: Has the market decline created any opportunities for the Portfolio?
A: MR. SWAFFIELD: Yes, in two major ways. First, the Portfolio made its debut
during a period when loan prices were modestly lower. While the most
dramatic price declines were among distressed companies, many financially
sound companies felt the impact of the decline as well. As a result, we
have been able to take advantage of some attractively priced opportunities
in the Portfolio's initial months of operation.
The second way has been through stricter loan agreements. With a slightly
higher default rate, loan deals have been structured with significantly
more conservative financial covenants. As a result, the loans coming to
market in recent months have been more attractive from the standpoint of
the lender, meaning that the Portfolio has been able to buy better quality
loans at more advantageous prices.
Q: How have you positioned the Portfolio in its initial months of operation?
A: MR. PAGE: We've initially focused the Portfolio's investments on large,
liquid companies that we believe are best able to withstand a difficult
credit environment. We've emphasized broad diversification. At October 31,
the Portfolio's investments included 76 different borrowers spanning 36
different industries. Over time, our goal is to expand that range even
further.
The Portfolio's three largest sector weightings at October 31 were
telecommunications, cable television and publishing. These industries
include many companies that have been able to sustain relatively high
revenue growth rates independent of fluctuations in the overall economy.
That is an increasingly important criterion as we see more evidence that
the economy may be slowing.
Q: Could we discuss some of the Portfolio's largest investments?
A: MR. SWAFFIELD: Yes. The Portfolio's largest investment at October 31 was
Jefferson Smurfit, a major producer of container board and packaging
products. The company saw revenues rise 31% in the first half of 2000, due
to improved pricing in the U.S. and continued strong demand in Europe.
Jefferson has also been helped by recent strategic global acquisitions and
by rationalization of the industry's excess capacity.
Another large holding was Charter Communi-cations, the nation's fourth
largest cable television operator, with 6.2 million customers. While
continuing to build subscriber growth in its core cable business, the
company has begun to offer bandwidth services, including high-speed
Internet service, and has indicated plans to add interactive services.
Charter saw revenues rise 175% in the first nine months of 2000, primarily
due to its successful acquisition strategy.
Another major holding, Starwood Hotels & Resorts, is among the world's
largest hotel operators. The company owns or leases 716 vacation resorts in
70 countries under major hotel brands, including Westin, Sheraton, and St.
Regis, among others. Starwood enjoyed an 18% increase in earnings for the
first nine months of 2000, benefiting from higher room rates and the
successful integration of new acquisitions
Q: Do you expect to take advantage of the Portfolio's flexibility to invest in
high-yield bonds?
A: MR. PAGE: Yes. The Portfolio may invest up to 20% of its assets in
high-yield bonds through High Income Portfolio. The high-yield market has
historically been an important provider of financing for many industries.
Naturally, high-yield bonds involve higher risk, but they have historically
provided a significant yield advantage over other fixed-income investments.
The high-yield bond market has been under severe pressures in 2000 due to
uneven earnings and rising financing needs within the telecom industry. Due
to the current, uncertain market environment, the Portfolio's exposure to
high-yield bonds was limited to 3.8% at October 31, 2000. We do believe,
however, that the high-yield sector can provide significant value over
time, and we will continue to monitor market conditions for buying
opportunities.
Q: What is your outlook for the loan market in the coming year?
A: MR. SWAFFIELD: The Federal Reserve is likely to continue to closely monitor
inflation. That could argue against a precipitous decline in rates, even in
a slowing economy. Whatever the direction of interest rates, the unique
re-set feature of these loans sets them apart, and, with their yield
advantage, helps make them a compelling alternative to other short-term
fixed-income vehicles.
Moreover, Eaton Vance has been a pioneer in the loan market. With 18
investment professionals dedicated to this market, we believe we have the
industry's most experienced and the deepest resources. Now, with the
introduction of this open-ended mutual fund, Eaton Vance has made this
unique asset class more readily available to investors. We're excited about
this innovation and believe that Eaton Vance Floating-Rate High Income Fund
is well-positioned to pursue new opportunities in the coming year.
Five Largest Sector Weightings(1)
--------------------------------------------
By total net assets
Telecommunications - Wireless 9.6%
Cable Television 6.1%
Publishing & Printing 5.4%
Broadcast Media 4.2%
Containers & Packaging 3.7%
Portfolio Overview1
--------------------------------------------
Total net assets $145.9 million
Number of borrowers 76
Industries represented 36
Days-to-interest rate reset 41 days
Average maturity 5.6 years
Average size per borrowing $1.326 million
As % of total net assets 0.90%
(1) Five largest sector weightings account for 29.0% of the Portfolio's net
assets, determined by dividing the total market value of the holdings by
the total net assets of the Portfolio. Sector weightings, Portfolio
Overview and holdings are as of 10/31/00 and are subject to change.
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.
Eaton Vance Floating Rate High Income Fund versus
The DLJ Leveraged Loan Index
Date Eaton Vance Class B DLJ Index
9/30/00 10,000 10,000
10/31/00 10,044 10,005
Date Eaton Vance Class C DLJ Index
9/30/00 10,000 10,000
10/31/00 10,045 10,005
Date Eaton Vance Class I DLJ Index
9/30/00 10,000 10,000
10/31/00 10,045 10,005
Date Eaton Vance Advisor ClassB DLJ Index
9/30/00 10,000 10,000
10/31/00 10,045 10,005
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Performance(3) Class B Class C Class I Advisers
Class
-------------------------------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
-------------------------------------------------------------------------------------------------------
Life of Fund+ 0.55% 0.57% 0.36% 0.44%
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
-------------------------------------------------------------------------------------------------------
Life of Fund+ -4.42% -0.42% 0.36% 0.44%
+Inception Dates -- Class B: 9/5/00; Class C: 9/5/00; Class I: 9/15/00; Advisers Class: 9/7/00
</TABLE>
* Sources: TowersData, Bethesda, MD.; Donaldson, Lufkin & Jenrette. The chart
compares the Fund's total return with that of the Donaldson, Lufkin &
Jenrette (DLJ) Leveraged Loan Index Plus - a representative index of
tradable, senior, secured, U.S. dollar-denominated leveraged loans. Returns
are calculated by determining the percentage change in net asset value
(NAV) with all distributions reinvested. The lines on the chart represent
the total returns of $10,000 hypothetical investments in the Fund and the
DLJ Index.The Index's total return does not reflect commissions or expenses
that would have been incurred if an investor individually purchased or sold
the securities represented in the Index. It is not possible to invest
directly in an Index.
** 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 a 1% CDSC.
*** This figure represents the performance of the Fund's Class B and Class C
shares, inlcuding the Fund's applicable 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.
The returns shown are for a very limited period during which Fund expenses
were subsidized.
<PAGE>
Eaton Vance Floating-Rate High Income Fund as of October 31, 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AS OF OCTOBER 31, 2000
Assets
--------------------------------------------------------------------------------
Investment in Floating Rate Portfolio, at value (identified
cost, $145,963,809) $145,795,060
Investment in High Income Portfolio, at value (identified
cost, $6,333,643) 6,027,131
Receivable for Fund shares sold 5,497,650
Receivable from the Administrator 48,712
--------------------------------------------------------------------------------
Total assets $157,368,553
--------------------------------------------------------------------------------
Liabilities
--------------------------------------------------------------------------------
Payable for Fund shares redeemed $ 146,079
Dividends payable 145,077
Payable to affiliate for service fees 54
Accrued expenses 51,846
--------------------------------------------------------------------------------
Total liabilities $ 343,056
--------------------------------------------------------------------------------
Net Assets $157,025,497
--------------------------------------------------------------------------------
Sources of Net Assets
--------------------------------------------------------------------------------
Paid-in capital $157,531,288
Accumulated net realized loss from Portfolio (computed on the
basis of identified cost) (28,283)
Accumulated undistributed net investment income (2,247)
Net unrealized depreciation from Portfolio (ccomputed on the
basis of identified cost) (475,261)
--------------------------------------------------------------------------------
Total $157,025,497
--------------------------------------------------------------------------------
Advisers Shares
--------------------------------------------------------------------------------
Net Assets $ 7,073,698
Shares Outstanding 712,588
Net Asset Value, Offering Price and Redemption
Price Per Share
(net assets / shares of beneficial interest outstanding) $ 9.93
--------------------------------------------------------------------------------
Class B Shares
--------------------------------------------------------------------------------
Net Assets $ 20,007,839
Shares Outstanding 2,015,112
Net Asset Value, Offering Price and Redemption
Price Per Share
(net assets / shares of beneficial interest outstanding) $ 9.93
--------------------------------------------------------------------------------
Class C Shares
--------------------------------------------------------------------------------
Net Assets $ 84,091,778
Shares Outstanding 8,471,305
Net Asset Value, Offering Price and Redemption
Price Per Share
(net assets / shares of beneficial interest outstanding) $ 9.93
--------------------------------------------------------------------------------
Institutional Shares
--------------------------------------------------------------------------------
Net Assets $ 45,852,182
Shares Outstanding 4,614,826
Net Asset Value, Offering Price and Redemption
Price Per Share
(net assets / shares of beneficial interest outstanding) $ 9.94
--------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED
OCTOBER 31, 2000(1)
Investment Income
--------------------------------------------------------------------------------
Interest allocated from Portfolios $1,048,961
Dividends allocated from Portfolio 3,526
Expenses allocated from Portfolios (8,001)
--------------------------------------------------------------------------------
Net investment income from Portfolios $1,044,486
--------------------------------------------------------------------------------
Expenses
--------------------------------------------------------------------------------
Administration fee $ 18,313
Distribution and service fees
Advisers 1,289
Class B 12,161
Class C 69,888
Registration fees 47,520
Legal and accounting services 7,000
Miscellaneous 7,205
--------------------------------------------------------------------------------
Total expenses $ 163,376
--------------------------------------------------------------------------------
Deduct --
Reduction of administration fee $ 17,136
Reduction of distribution and service fees 80,914
Allocation of expenses to the Administrator 61,332
--------------------------------------------------------------------------------
Total expense reductions $ 159,382
--------------------------------------------------------------------------------
Net expenses $ 3,994
--------------------------------------------------------------------------------
Net investment income $1,040,492
--------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss) from Portfolios
--------------------------------------------------------------------------------
Net realized (loss) -- Investment transactions
(identified cost basis) $ (77,064)
--------------------------------------------------------------------------------
Net realized loss $ (77,064)
--------------------------------------------------------------------------------
Change in unrealized (depreciation) --
Investments (identified cost basis) $ (475,261)
--------------------------------------------------------------------------------
Net change in unrealized (depreciation) $ (475,261)
--------------------------------------------------------------------------------
Net realized and unrealized loss $ (552,325)
--------------------------------------------------------------------------------
Net increase in net assets from operations $ 488,167
--------------------------------------------------------------------------------
(1) For the period from the start of business, September 5, 2000, to October
31, 2000.
<PAGE>
Eaton Vance Floating-Rate High Income Fund as of October 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENT OF CHANGES IN NET ASSETS
Increase (Decrease)
in Net Assets
--------------------------------------------------------------------------------
From operations --
Net investment income $ 1,040,492
Net realized loss (77,064)
Net change in unrealized appreciation (depreciation) (475,261)
--------------------------------------------------------------------------------
Net increase in net assets from operations $ 488,167
--------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Advisers $ (39,023)
Class B (91,425)
Class C (588,507)
Institutional (319,635)
In excess of net investment income
Class C (951)
--------------------------------------------------------------------------------
Total distributions to shareholders $ (1,039,541)
--------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Advisers $ 7,330,094
Class B 20,114,013
Class C 90,155,407
Institutional 45,707,022
Net asset value of shares issued to shareholders in payment of
distributions declared
Advisers 25,309
Class B 64,007
Class C 475,592
Institutional 301,688
Cost of shares redeemed
Advisers (258,604)
Class B (114,940)
Class C (6,222,717)
--------------------------------------------------------------------------------
Net increase in net assets from Fund share transactions $157,576,871
--------------------------------------------------------------------------------
Net increase in net assets $157,025,497
--------------------------------------------------------------------------------
Net Assets
--------------------------------------------------------------------------------
At beginning of period $ --
--------------------------------------------------------------------------------
At end of period $157,025,497
--------------------------------------------------------------------------------
Accumulated distributions in excess of
net investment income included in net assets
--------------------------------------------------------------------------------
At end of period $ (2,247)
--------------------------------------------------------------------------------
(1) For the period from the start of business, September 5, 2000, to October
31, 2000.
<PAGE>
Eaton Vance Floating-Rate High Income Fund as of October 31, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, 2000(1)
------------------------------
CLASS B(6) CLASS C(6)
-----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value -- Beginning of period $ 10.000 $ 10.000
-----------------------------------------------------------------------------------------------------
Income (loss) from operations
-----------------------------------------------------------------------------------------------------
Net investment income $ 0.125 $ 0.126
Net realized and unrealized loss (0.070) (0.069)
-----------------------------------------------------------------------------------------------------
Total income from operations $ 0.055 $ 0.057
-----------------------------------------------------------------------------------------------------
Less distributions
-----------------------------------------------------------------------------------------------------
From net investment income $ (0.125) $ (0.127)
In excess of net investment income -- --
-----------------------------------------------------------------------------------------------------
Total distributions $ (0.125) $ (0.127)
-----------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 9.930 $ 9.930
-----------------------------------------------------------------------------------------------------
Total Return(3) 0.55% 0.57%
-----------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
Net assets, end of period (000's omitted) $ 20,008 $ 84,092
Ratios (As a percentage of average daily net assets):
Net expenses(4) 0.12%(5) 0.10%(5)
Net investment income 7.29%(5) 8.16%(5)
Portfolio Turnover of the Floating Rate Portfolio 3% 3%
-----------------------------------------------------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio may reflect a
reduction of the investment adviser fee, an allocation of expenses
to the Investment Adviser and/Administrator, or both. Had such
actions not been taken, the ratios and net investment income per
share would have been as follows:
Ratios (As a percentage of average daily net assets):
Expenses(4) 2.41%(5) 2.41%(5)
Net investment income 4.99%(5) 5.85%(5)
Net investment income per share $ 0.086 $ 0.090
-----------------------------------------------------------------------------------------------------
</TABLE>
(1) For the period from the start of business, September 5, 2000, to October
31, 2000.
(2) Distributions in excess of net investment income are less than $0.001 per
share.
(3) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(4) Includes the Fund's share of the Portfolio's allocated expenses.
(5) Annualized.
(6) Net investment income per share was computed using average shares
outstanding.
<PAGE>
Eaton Vance Floating-Rate High Income Fund as of October 31, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
YEAR ENDED OCTOBER 31, 2000
----------------------------------------------------------------------------------------------------
INSTITUTIONAL(1)(6) ADVISERS(2)(6)
----------------------------------------------------------------------------------------------------
<S> <C> <C>
Net asset value -- Beginning of period $10.000 $10.000
----------------------------------------------------------------------------------------------------
Income (loss) from operations
----------------------------------------------------------------------------------------------------
Net investment income $ 0.097 $ 0.115
Net realized and unrealized loss (0.061) (0.070)
----------------------------------------------------------------------------------------------------
Total income from operations $ 0.036 $ 0.045
----------------------------------------------------------------------------------------------------
Less distributions
----------------------------------------------------------------------------------------------------
From net investment income $(0.096) $(0.115)
----------------------------------------------------------------------------------------------------
Total distributions $(0.096) $(0.115)
----------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 9.940 $ 9.930
----------------------------------------------------------------------------------------------------
Total Return(3) 0.36% 0.44%
----------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
----------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 45,852 $ 7,074
Ratios (As a percentage of average daily net assets):
Net expenses(4) 0.08%(5) 0.08%(5)
Net investment income 8.87%(5) 7.31%(5)
Portfolio Turnover of the Floating-Rate Portfolio 3% 3%
----------------------------------------------------------------------------------------------------
+ The operating expenses of the Fund and the Portfolio may reflect a
reduction of the investment adviser fee, an allocation of expenses
to the Investment Adviser and/Administrator, or both. Had such
actions not been taken, the ratios and net investment income per
share would have been as follows:
Ratios (As a percentage of average daily net assets):
Expenses(4) 1.45%(5) 1.68%(5)
Net investment income 7.50%(5) 5.71%(5)
Net investment income per share $ 0.082 $ 0.090
----------------------------------------------------------------------------------------------------
(1) For the period from the start of business, September 15, 2000, to October
31, 2000.
(2) For the period from the start of business, September 7, 2000, to October
31, 2000.
(3) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(4) Includes the Fund's share of the Portfolio's allocated expenses.
(5) Annualized.
(6) Net investment income per share was computed using average shares
outstanding.
</TABLE>
<PAGE>
Eaton Vance Floating-Rate High Income Fund as of October 31, 2000
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
--------------------------------------------------------------------------------
Eaton Vance Floating-Rate High Income Fund (the Fund) is a non-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 four classes of shares.
The Advisers and Institutional Classes of shares are generally sold at net
asset value per share and assess a redemption fee of 1% for shares redeemed
or exchanged within three months of purchase. Class B and Class C shares are
sold at net asset value and are generally 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 two Portfolios, Floating Rate Portfolio
and High Income Portfolio (the Portfolios), New York trusts having the same
investment objectives as the Fund. The value of the Fund's investment in the
Portfolios reflects the Fund's proportionate interest in the net assets of
the Floating Rate Portfolio and the High Income Portfolio (99.9% and 0.01%
at October 31, 2000, respectively). The performance of the Fund is directly
affected by the performance of the Portfolios. The financial statements of
the Floating Rate Portfolio, including the portfolio of investments, are
included elsewhere in this report and should be read in conjunction with the
Fund's financial statements. See Note 8 for further information on the
results of operations of High Income Portfolio. A copy of the financial
statements of High Income Portfolio is available upon request from Eaton
Vance Distributors, Inc.
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 Floating Rate
Portfolio is discussed in Note 1A of the Portfolio's Notes to Financial
Statements, which are included elsewhere in this report. High Income
Portfolio's valuation policies are as follows: 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.
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. 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 fair 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 -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolios, less all actual and
accrued expenses of the Fund determined in accordance with generally
accepted accounting principles.
C Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including
any net realized gain on investments. Accordingly, no provision for Federal
income or excise tax is necessary. At October 31, 2000, the Fund, for
Federal income tax purposes, had a capital loss carryover of $9,059, which
will reduce the Fund's taxable income arising from future net realized gains
on investments, if any, to the extent permitted by the Internal Revenue
Code, and thus will reduce the amount of the distributions to shareholders
which would otherwise be necessary to relieve the Fund of any liability for
federal income or excise tax. Such capital loss carryovers will expire on
October 31, 2008.
D 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. Distributions are paid monthly. Distributions of
allocated 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 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.
3 Shares of Beneficial Interest
--------------------------------------------------------------------------------
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in Fund shares were as follows:
PERIOD ENDED
ADVISERS OCTOBER 31, 2000(1)
------------------------------------------------------------------
Sales 736,082
Issued to shareholders electing to receive 2,549
payments of distributions in Fund shares
Redemptions (26,043)
------------------------------------------------------------------
NET INCREASE 712,588
------------------------------------------------------------------
PERIOD ENDED
CLASS B OCTOBER 31, 2000(2)
------------------------------------------------------------------
Sales 2,020,226
Issued to shareholders electing to receive 6,446
payments of distributions in Fund shares
Redemptions (11,560)
------------------------------------------------------------------
NET INCREASE 2,015,112
------------------------------------------------------------------
PERIOD ENDED
CLASS C OCTOBER 31, 2000(2)
------------------------------------------------------------------
Sales 9,048,939
Issued to shareholders electing to receive 47,894
payments of distributions in Fund shares
Redemptions (625,528)
------------------------------------------------------------------
NET INCREASE 8,471,305
------------------------------------------------------------------
PERIOD ENDED
INSTITUTIONAL OCTOBER 31, 2000(3)
------------------------------------------------------------------
Sales 4,584,475
Issued to shareholders electing to receive 30,351
payments of distributions in Fund shares
------------------------------------------------------------------
NET INCREASE 4,614,826
------------------------------------------------------------------
(1) For the period from the start of business, September 7, 2000, to
October 31, 2000.
(2) For the period from the start of business, September 5, 2000, to
October 31, 2000.
(3) For the period from the start of business, September 15, 2000 to
October 31, 2000.
4 Transactions with Affiliates
--------------------------------------------------------------------------------
The Fund is authorized to pay Eaton Vance Management, (EVM), a fee as
compensation for administrative services necessary to conduct the Fund's
business. The fee is computed at the annual rate of 0.15% of the Fund's
average daily net assets. For the period from the start of business,
September 5, 2000 to October 31, 2000, the fee amounted to $18,313. To
enhance the net income of the fund, EVM waived $17,136 of the administration
fee. In addition, EVM was allocated $61,332 of the Fund's operating
expenses. The Portfolios have engaged Boston Management and Research (BMR),
a subsidiary of EVM, to render investment advisory services. See Note 2 of
each of the Portfolio's Notes to financial statements. Except as to Trustees
of the Fund and the Portfolios who are not members of EVM'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 Portfolios are officers of the above organizations.
5 Distribution and Service Plans
--------------------------------------------------------------------------------
The Fund has in effect distribution plans for Class B shares (Class B Plan)
and Class C shares (Class C Plan) pursuant to Rule 12b-1 under the
Investment Company Act of 1940 and a service plan for the Advisers shares
(Advisers Plan) (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% (annualized) 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) 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 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.
For the period from the start of business, September 5, 2000 to October 31,
2000, the Fund paid or accrued $9,121 and $52,416, respectively, to or
payable to EVD representing 0.75% (annualized) of average daily net assets
of Class B and Class C shares, respectively. At October 31, 2000, the amount
of Uncovered Distribution Charges of EVD calculated under the Plan was
approximately $931,000 and $2,832,000 for Class B and Class C shares,
respectively. To enhance the net income of the fund, EVD waived $8,674 and
$50,493, respectively, of the distribution fee 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 equal to 0.25% of the Fund's
average daily net assets attributable to the Advisers Class, Class B, and
Class C shares for each fiscal year. Service fee payments will be made for
personal services and/or the maintenance of shareholder accounts. Service
fees are separate and distinct from the sales and 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 period from the
start of business, September 5, 2000 to October 31, 2000 amounted to $1,289,
$3,040, and $17,472 for Advisers Class, Class B and Class C shares,
respectively. To enhance the net income of the fund, EVD waived $1,235,
$3,040 and $17,472, respectively, of the service fees for Advisers Class,
Class B and Class C shares, respectively.
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 on the lower of the net asset value at the date of
redemption or date of purchase. No charge is levied on shares acquired by
reinvestment of dividends or capital gains distributions. The Class B CDSC
is imposed at declining rates that begin at 5% in the case of redemptions in
the first and second years of redemption after purchase, declining one
percentage point each subsequent year. Class C shares will be subject to a
1% CDSC if redeemed within one year of purchase. No CDSC is levied on shares
which have been sold to EVM or its affiliates or to their respective
employees or clients and may be waived under certain other limited
conditions. CDSC charges are paid to EVD. The Fund has been informed that
EVD received approximately $4,800 and $1,700 of CDSC paid by shareholders of
Class B and Class C shares, respectively, from September 5, 2000, the start of
business to October 31, 2000.
7 Investment Transactions
--------------------------------------------------------------------------------
Increases and decreases in the Fund's investment in the Floating Rate
Portfolio for the period from the start of business, September 5, 2000 to
October 31, 2000, aggregated $145,838,790 and $861,605, respectively.
Increases and decreases in the Fund's investment in the High Income
Portfolio for the period from the start of business, September 5, 2000 to
October 31, 2000, aggregated $6,398,193 and $45,348, respectively.
8 Investment in Portfolios
--------------------------------------------------------------------------------
For the period from the start of business, September 5, 2000 to October 31,
2000, the Fund was allocated net investment income and realized and
unrealized gain (loss) from the Portfolios as follows:
FLOATING HIGH
RATE INCOME
PORTFOLIO PORTFOLIO TOTAL
----------------------------------------------------------------------------
Dividend Income $ -- $ 3,526 $ 3,526
Interest income 996,772 52,189 1,048,961
Expenses (4,601) (3,400) (8,001)
----------------------------------------------------------------------------
NET INVESTMENT INCOME $992,171 $ 52,315 $1,044,486
----------------------------------------------------------------------------
Net realized loss --
Investments (identified
cost basis) $ (5,546) $ (71,518) $ (77,064)
----------------------------------------------------------------------------
NET REALIZED LOSS ON
INVESTMENTS $ (5,546) $ (71,518) $ (77,064)
----------------------------------------------------------------------------
Change in unrealized
depreciation investment $
transactions $ (168,749) $ (306,512) (475,261)
----------------------------------------------------------------------------
NET REALIZED AND UNREALIZED $
LOSS $ (174,295) $ (378,030) (552,325)
----------------------------------------------------------------------------
<PAGE>
Eaton Vance Floating-Rate High Income Fund as of October 31, 2000
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders
of Eaton Vance Floating-Rate High Income Fund:
--------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of Eaton
Vance Floating-Rate High Income Fund (the Fund) as of October 31, 2000, and
the related statements of operations, changes in net assets, and the
financials highlights for the period from the start of business, September 5,
2000, to October 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 audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements 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 audit provides 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 Eaton Vance
Floating-Rate High Income Fund at October 31, 2000, the results of its
operations, the changes in its net assets and its financial highlights for the
period from the start of business, September 5, 2000, to October 31, 2000, in
conformity with accounting principles generally accepted in the United States
of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 15, 2000
<PAGE>
<TABLE>
Floating Rate Portfolio as of October 31, 2000
PORTFOLIO OF INVESTMENTS
SENIOR, SECURED, FLOATING RATE
INTERESTS -- 69.1%(1)
<CAPTION>
PRINCIPAL
AMOUNT BORROWER/TRANCHE DESCRIPTION VALUE
-------------------------------------------------------------------------------------------
Advertising -- 0.8%
-------------------------------------------------------------------------------------------
LAMAR MEDIA CORP.
<S> <C> <C>
$ 1,220,000 Term loan, maturing 3/1/06 $ 1,224,575
-------------------------------------------------------------------------------------------
$ 1,224,575
-------------------------------------------------------------------------------------------
Aerospace & Defense -- 0.8%
-------------------------------------------------------------------------------------------
UNITED DEFENSE INDUSTRIES, INC.
$ 610,000 Term loan, maturing 10/6/05 $ 606,950
610,000 Term loan, maturing 10/6/06 606,950
-------------------------------------------------------------------------------------------
$ 1,213,900
-------------------------------------------------------------------------------------------
Auto Components -- 0.8%
-------------------------------------------------------------------------------------------
AMERICAN AXLE & MANUFACTURING, INC.
$ 1,230,000 Term loan, maturing 4/30/06 $ 1,225,772
-------------------------------------------------------------------------------------------
$ 1,225,772
-------------------------------------------------------------------------------------------
Broadcast Media -- 4.2%
-------------------------------------------------------------------------------------------
BLACK ENTERTAINMENT TELEVISION
$ 1,227,520 Term loan, maturing 6/30/06 $ 1,212,688
DISCOVERY COMMUNICATIONS, INC.
1,000,000 Term loan, maturing 5/13/04 982,500
ENTRAVISION COMMUNICATIONS CORP.
1,200,000 Term loan, maturing 12/31/08 1,211,813
LIN TELEVISION CORP.
1,500,000 Term loan, maturing 3/31/07 1,496,562
SUSQUEHANNA MEDIA CO.
1,230,000 Term loan, maturing 6/30/08 1,231,922
-------------------------------------------------------------------------------------------
$ 6,135,485
-------------------------------------------------------------------------------------------
Cable Television -- 6.1%
-------------------------------------------------------------------------------------------
CENTURY CABLE HOLDINGS, LLC
$ 1,500,000 Term loan, maturing 12/31/09 $ 1,496,016
CHARTER COMMUNICATIONS OPERATING, LLC.
3,000,000 Term loan, maturing 3/18/08 2,992,233
CHELSEA COMMUNICATIONS, INC.
1,000,000 Term loan, maturing 12/31/04 997,500
FALCON HOLDING GROUP, L.P.
1,000,000 Term loan, maturing 12/31/07 994,792
FRONTIERVISION OPERATING PARTNERS, L.P.
1,220,000 Term loan, maturing 3/31/06 1,216,950
INSIGHT KENTUCKY PARTNERS I, L.P.
1,220,000 Term loan, maturing 4/30/08 1,213,646
-------------------------------------------------------------------------------------------
$ 8,911,137
-------------------------------------------------------------------------------------------
Casinos & Gaming -- 1.7%
-------------------------------------------------------------------------------------------
BOYD GAMING CORPORATION
$ 1,230,000 Term loan, maturing 6/15/05 $ 1,232,813
ISLE OF CAPRI CASINOS
649,036 Term loan, maturing 3/2/06 653,549
567,906 Term loan, maturing 3/2/07 571,855
-------------------------------------------------------------------------------------------
$ 2,458,217
-------------------------------------------------------------------------------------------
Chemicals -- 3.4%
-------------------------------------------------------------------------------------------
ARTEVA B.V. (KOSA)
$ 1,230,000 Term loan, maturing 12/31/06 $ 1,236,791
HUNTSMAN CORPORATION
1,220,000 Term loan, maturing 12/31/04 1,203,225
HUNTSMAN ICI CHEMICALS LLC
610,000 Term loan, maturing 6/30/07 615,234
610,000 Term loan, maturing 6/30/08 612,496
LYONDELL PETROCHEMICAL COMPANY
1,230,000 Term loan, maturing 6/30/07 1,271,800
-------------------------------------------------------------------------------------------
$ 4,939,546
-------------------------------------------------------------------------------------------
Commercial Services -- 0.8%
-------------------------------------------------------------------------------------------
VOLUME SERVICES, INC.
$ 1,230,000 Term loan, maturing 12/31/02 $ 1,233,844
-------------------------------------------------------------------------------------------
$ 1,233,844
-------------------------------------------------------------------------------------------
Communications Equipment -- 0.8%
-------------------------------------------------------------------------------------------
AMPHENOL CORPORATION
$ 1,230,000 Term loan, maturing 5/19/06 $ 1,225,217
-------------------------------------------------------------------------------------------
$ 1,225,217
-------------------------------------------------------------------------------------------
Computer Software & Services -- 0.8%
-------------------------------------------------------------------------------------------
PAUL G. ALLEN
$ 1,230,000 Term loan, maturing 6/10/03 $ 1,221,160
-------------------------------------------------------------------------------------------
$ 1,221,160
-------------------------------------------------------------------------------------------
Containers & Packaging - Metal & Glass -- 1.7%
-------------------------------------------------------------------------------------------
BALL CORPORATION
$ 1,230,000 Term loan, maturing 3/10/06 $ 1,231,986
SILGAN HOLDINGS INC.
1,230,000 Term loan, maturing 6/30/05 1,209,244
-------------------------------------------------------------------------------------------
$ 2,441,230
-------------------------------------------------------------------------------------------
Containers & Packaging - Paper -- 3.7%
-------------------------------------------------------------------------------------------
JEFFERSON SMURFIT CORPORATION
$ 1,500,000 Term loan, maturing 3/31/05 $ 1,495,500
1,500,000 Term loan, maturing 3/24/06 1,503,647
RIC HOLDING, INC.
610,000 Term loan, maturing 2/28/04 612,357
610,000 Term loan, maturing 8/28/04 612,357
STONE CONTAINER CORPORATION
410,000 Term loan, maturing 10/1/04 411,153
410,000 Term loan, maturing 12/31/06 410,366
410,000 Term loan, maturing 12/31/06 410,366
-------------------------------------------------------------------------------------------
$ 5,455,746
-------------------------------------------------------------------------------------------
Educational Services -- 0.8%
-------------------------------------------------------------------------------------------
JOSTENS, INC.
$ 1,220,000 Term loan, maturing 5/31/08 $ 1,226,016
-------------------------------------------------------------------------------------------
$ 1,226,016
-------------------------------------------------------------------------------------------
Electronic Equipment & Instruments -- 0.8%
-------------------------------------------------------------------------------------------
GENTEK, INC.
$ 1,220,000 Term loan, maturing 4/30/07 $ 1,221,144
-------------------------------------------------------------------------------------------
$ 1,221,144
-------------------------------------------------------------------------------------------
Entertainment -- 1.7%
-------------------------------------------------------------------------------------------
DREAMWORKS FILM TRUST
$ 1,220,000 Term loan, maturing 12/31/06 $ 1,228,769
METRO-GOLDWYN-MAYER STUDIOS INC.
1,230,000 Term loan, maturing 3/31/04 1,220,314
-------------------------------------------------------------------------------------------
$ 2,449,083
-------------------------------------------------------------------------------------------
Food, Beverages & Tobacco -- 2.5%
-------------------------------------------------------------------------------------------
DEL MONTE CORPORATION
$ 1,220,000 Term loan, maturing 3/25/05 $ 1,223,559
FLEMING COMPANIES, INC.
1,220,000 Term loan, maturing 7/25/04 1,162,638
SWEETENERS HOLDINGS, INC.
1,230,000 Term loan, maturing 6/30/07 1,230,769
-------------------------------------------------------------------------------------------
$ 3,616,966
-------------------------------------------------------------------------------------------
Health Care - Equipment & Supplies -- 1.5%
-------------------------------------------------------------------------------------------
FISHER SCIENTIFIC INTERNATIONAL INC
$ 610,000 Term loan, maturing 1/21/06 $ 611,634
610,000 Term loan, maturing 1/21/07 611,634
STRYKER CORPORATION
1,010,116 Term loan, maturing 12/10/06 1,015,483
-------------------------------------------------------------------------------------------
$ 2,238,751
-------------------------------------------------------------------------------------------
Health Care - Providers & Services -- 0.8%
-------------------------------------------------------------------------------------------
COMMUNITY HEALTH SYSTEMS, INC.
$ 410,000 Term loan, maturing 12/31/03 $ 406,626
410,000 Term loan, maturing 12/31/04 406,541
410,000 Term loan, maturing 12/31/05 407,395
-------------------------------------------------------------------------------------------
$ 1,220,562
-------------------------------------------------------------------------------------------
Hotels -- 2.6%
-------------------------------------------------------------------------------------------
STARWOOD HOTELS & RESORTS
$ 2,500,000 Term loan, maturing 2/23/03 $ 2,505,730
Wyndham International, Inc.
1,230,000 Term loan, maturing 6/30/04 1,229,146
-------------------------------------------------------------------------------------------
$ 3,734,876
-------------------------------------------------------------------------------------------
Household Furnish & Appliances -- 1.7%
-------------------------------------------------------------------------------------------
SEALY MATTRESS COMPANY
$ 410,000 Term loan, maturing 12/15/04 $ 410,555
410,000 Term loan, maturing 12/15/05 410,769
410,000 Term loan, maturing 12/15/06 410,555
SIMMONS COMPANY
610,000 Term loan, maturing 10/30/05 611,754
610,000 Term loan, maturing 10/30/06 611,754
-------------------------------------------------------------------------------------------
$ 2,455,387
-------------------------------------------------------------------------------------------
Household Products -- 0.8%
-------------------------------------------------------------------------------------------
THE SCOTTS COMPANY
$ 1,230,000 Term loan, maturing 6/30/06 $ 1,236,689
-------------------------------------------------------------------------------------------
$ 1,236,689
-------------------------------------------------------------------------------------------
Insurance -- 1.5%
-------------------------------------------------------------------------------------------
ACORDIA, INC.
$ 1,000,000 Term loan, maturing 12/31/04 $ 999,647
WILLIS CORROON CORPORATION
610,000 Term loan, maturing 2/19/08 610,254
610,000 Term loan, maturing 8/19/08 610,254
-------------------------------------------------------------------------------------------
$ 2,220,155
-------------------------------------------------------------------------------------------
Machinery -- 0.8%
-------------------------------------------------------------------------------------------
FLOWSERVE CORPORATION
$ 1,220,000 Term loan, maturing 6/30/08 $ 1,225,084
-------------------------------------------------------------------------------------------
$ 1,225,084
-------------------------------------------------------------------------------------------
Manufacturing -- 1.3%
-------------------------------------------------------------------------------------------
DAYTON SUPERIOR CORPORATION
$ 610,000 Term loan, maturing 9/29/05 $ 612,288
SPX CORPORATION
1,230,000 Term loan, maturing 12/31/06 1,234,613
-------------------------------------------------------------------------------------------
$ 1,846,901
-------------------------------------------------------------------------------------------
Office Equipment & Supplies -- 0.8%
-------------------------------------------------------------------------------------------
IRON MOUNTAIN, INC.
$ 1,220,000 Term loan, maturing 2/28/06 $ 1,230,675
-------------------------------------------------------------------------------------------
$ 1,230,675
-------------------------------------------------------------------------------------------
Paper & Forest Products -- 0.8%
-------------------------------------------------------------------------------------------
PACIFICA PAPERS, INC.
$ 1,230,000 Term loan, maturing 3/5/06 $ 1,236,535
-------------------------------------------------------------------------------------------
$ 1,236,535
-------------------------------------------------------------------------------------------
Pharmaceuticals & Biotechnology -- 0.8%
-------------------------------------------------------------------------------------------
BERGEN BRUNSWIG CORPORATION
$ 1,230,000 Term loan, maturing 10/19/01 $ 1,231,154
-------------------------------------------------------------------------------------------
$ 1,231,154
-------------------------------------------------------------------------------------------
Publishing & Printing -- 5.4%
-------------------------------------------------------------------------------------------
AMERICAN MEDIA OPERATIONS INC.
$ 1,230,000 Term loan, maturing 4/1/07 $ 1,233,998
HIF CORP.
1,720,000 Term loan, maturing 12/31/04 1,724,300
JOURNAL REGISTER COMPANY
1,218,778 Term loan, maturing 9/30/06 1,208,113
PRIMEDIA INC.
1,230,000 Term loan, maturing 6/30/04 1,227,694
REIMAN PUBLICATIONS
1,230,000 Term loan, maturing 11/30/05 1,237,432
THE MCCLATCHY COMPANY
1,230,000 Term loan, maturing 9/10/07 1,225,810
-------------------------------------------------------------------------------------------
$ 7,857,347
-------------------------------------------------------------------------------------------
Real Estate -- 2.5%
-------------------------------------------------------------------------------------------
AMERICAN TOWER, L.P.
$ 1,230,000 Term loan, maturing 12/31/07 $ 1,237,623
CROWN CASTLE OPERATING COMPANY
1,220,000 Term loan, maturing 3/31/08 1,224,957
LENNAR CORPORATION
1,216,950 Term loan, maturing 5/2/07 1,220,500
-------------------------------------------------------------------------------------------
$ 3,683,080
-------------------------------------------------------------------------------------------
REIT's -- 0.8%
-------------------------------------------------------------------------------------------
CRESCENT REAL ESTATE FUNDING VIII
$ 1,230,000 Term loan, maturing 5/30/08 $ 1,223,850
-------------------------------------------------------------------------------------------
$ 1,223,850
-------------------------------------------------------------------------------------------
Restaurants -- 0.8%
-------------------------------------------------------------------------------------------
AFC ENTERPRISES INC
$ 1,230,000 Term loan, maturing 6/30/04 $ 1,225,388
-------------------------------------------------------------------------------------------
$ 1,225,388
-------------------------------------------------------------------------------------------
Retail - Food & Drug -- 1.7%
-------------------------------------------------------------------------------------------
PATHMARK STORES, INC.
$ 1,230,000 Term loan, maturing 7/15/07 $ 1,223,542
SHOPPERS ACQUISITION CORPORATION
610,000 Term loan, maturing 3/30/08 612,070
610,000 Term loan, maturing 3/30/09 612,070
-------------------------------------------------------------------------------------------
$ 2,447,682
-------------------------------------------------------------------------------------------
Semiconductor Equipment & Products -- 0.8%
-------------------------------------------------------------------------------------------
SEMICONDUCTOR COMPONENTS INDUSTRIES, LLC
$ 610,000 Term loan, maturing 8/4/06 $ 615,083
610,000 Term loan, maturing 8/4/07 615,083
-------------------------------------------------------------------------------------------
$ 1,230,166
-------------------------------------------------------------------------------------------
Telecommunications - Wireline -- 0.8%
-------------------------------------------------------------------------------------------
CINCINNATI BELL, INC.
$ 1,230,000 Term loan, maturing 12/31/05 $ 1,233,417
-------------------------------------------------------------------------------------------
$ 1,233,417
-------------------------------------------------------------------------------------------
Telecommunications-Wireless -- 9.6%
-------------------------------------------------------------------------------------------
AMERICAN CELLULAR CORPORATION
$ 610,000 Term loan, maturing 3/31/07 $ 610,648
610,000 Term loan, maturing 3/31/08 610,648
CENTENNIAL CELLULAR CORP.
610,000 Term loan, maturing 11/30/07 611,620
610,000 Term loan, maturing 11/30/06 611,748
DOBSON OPERATING COMPANY
1,220,000 Term loan, maturing 12/31/07 1,220,889
MICROCELL CONNEXIONS
1,230,000 Term loan, maturing 3/1/06 1,227,310
NEXTEL COMMUNICATIONS, INC.
3,000,000 Term loan, maturing 3/31/09 2,994,546
RURAL CELLULAR CORPORATION
610,000 Term loan, maturing 4/6/08 610,191
610,000 Term loan, maturing 4/6/09 610,191
TELECORP PCS
1,220,000 Term loan, maturing 1/17/07 1,218,729
VOICESTREAM VENDOR FACILITY
2,500,000 Term loan, maturing 6/30/09 2,486,720
WESTERN WIRELESS
1,230,000 Term loan, maturing 9/30/08 1,234,173
-------------------------------------------------------------------------------------------
$ 14,047,413
-------------------------------------------------------------------------------------------
Utilities -- 1.2%
-------------------------------------------------------------------------------------------
WESTERN RESOURCES INC.
$ 1,730,000 Term loan, maturing 3/17/03 $ 1,742,975
-------------------------------------------------------------------------------------------
$ 1,742,975
-------------------------------------------------------------------------------------------
Total Senior, Secured, Floating Rate Interests
(identified cost, $100,936,009) $100,767,125
-------------------------------------------------------------------------------------------
COMMERCIAL PAPER - 29.0%
PRINCIPAL
AMOUNT SECURITY VALUE
-------------------------------------------------------------------------------------------
$ 6,355,000 American Express, 6.5%, 11/9/00 $ 6,345,820
6,301,000 CIT Group Holdings, 6.64%, 11/1/00 6,301,000
6,355,000 Delaware Funding Corp., 6.51%, 11/16/00 6,337,762
6,000,000 Ford Motor Credit Corp., 6.5%, 11/10/00 5,990,250
6,302,000 General Electric Capital, 6.65%, 11/1/00 6,302,000
6,000,000 General Motors Acceptance Corp., 6.5%, 11/7/00 5,993,500
5,055,000 Prudential Funding Corp., 6.5%, 11/3/00 5,053,175
-------------------------------------------------------------------------------------------
Total Commercial Paper
(amortized cost, $42,323,507) $ 42,323,507
-------------------------------------------------------------------------------------------
Total Investments
(identified cost, $143,259,516) $143,090,632
-------------------------------------------------------------------------------------------
Other Assets, Less Liabilities -- 1.9% $ 2,805,448
-------------------------------------------------------------------------------------------
Total Net Assets -- 100.0% $145,896,080
-------------------------------------------------------------------------------------------
</TABLE>
(1) Senior secured floating rate interests often require prepayments from
excess cash flows or permit the borrower to repay at its election. The
degree to which borrowers repay, whether as a contractual requirement or at
the election, cannot be predicted with accuracy. As a result, the actual
remaining maturity may be substantially less than the stated maturities
shown. However, it is anticipated that the senior secured floating rate
interests will have an expected average life of approximately three years.
<PAGE>
Floating Rate Portfolio as of October 31, 2000
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
AS OF OCTOBER 31, 2000
Assets
-------------------------------------------------------------------------------
Investments, at value
(identified cost, $143,259,516) $143,090,632
Cash 2,041,328
Receivable for investments sold 222,364
Interest receivable 546,360
Receivable from the Investment Adviser 27,282
-------------------------------------------------------------------------------
Total assets $145,927,966
-------------------------------------------------------------------------------
Liabilities
--------------------------------------------------------------------------------
Accrued expenses $ 31,886
-------------------------------------------------------------------------------
Total liabilities $ 31,886
-------------------------------------------------------------------------------
Net Assets applicable to investors' interest in Portfolio $145,896,080
-------------------------------------------------------------------------------
Sources of Net Assets
-------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $146,064,964
Net unrealized depreciation (computed on the
basis on identified cost) (168,884)
-------------------------------------------------------------------------------
Total $145,896,080
-------------------------------------------------------------------------------
STATEMENT OF OPERATIONS
FOR THE PERIOD ENDED
OCTOBER 31, 2000(1)
Investment Income
-------------------------------------------------------------------------------
Interest $ 994,205
Miscellaneous 3,718
-------------------------------------------------------------------------------
Total investment income $ 997,923
-------------------------------------------------------------------------------
Expenses
--------------------------------------------------------------------------------
Investment adviser fee $ 64,976
Legal and accounting services 22,000
Miscellaneous 5,650
-------------------------------------------------------------------------------
Total expenses $ 92,626
-------------------------------------------------------------------------------
Deduct --
Reduction of investment adviser fee $ 60,740
Allocation of expenses to the Investment Adviser 27,282
-------------------------------------------------------------------------------
Total expense reductions $ 88,022
-------------------------------------------------------------------------------
Net expenses $ 4,604
-------------------------------------------------------------------------------
Net investment income $ 993,319
-------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
-------------------------------------------------------------------------------
Net realized (loss) --
Investments transactions (identified cost basis) $ (5,550)
-------------------------------------------------------------------------------
Net realized loss $ (5,550)
-------------------------------------------------------------------------------
Change in unrealized (depreciation) --
Investments (identified cost basis) $ (168,884)
-------------------------------------------------------------------------------
Net change in unrealized (depreciation) $ (168,884)
-------------------------------------------------------------------------------
Net realized and unrealized loss $ (174,434)
-------------------------------------------------------------------------------
Net increase in net assets from operations $ 818,885
-------------------------------------------------------------------------------
(1) For the period from the start of business, September 5, 2000, to October
31, 2000.
<PAGE>
Floating Rate Portfolio as of October 31, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
INCREASE (DECREASE) PERIOD ENDED
IN NET ASSETS OCTOBER 31, 2000(1)
-------------------------------------------------------------------------------
From operations --
Net investment income $ 993,319
Net realized loss (5,550)
Net change in unrealized (depreciation) (168,884)
-------------------------------------------------------------------------------
Net increase in net assets from operations $ 818,885
-------------------------------------------------------------------------------
Capital transactions --
Contributions $ 145,938,800
Withdrawals (861,605)
-------------------------------------------------------------------------------
Net increase in net assets from
capital transactions $ 145,077,195
-------------------------------------------------------------------------------
Net increase in net assets $ 145,896,080
-------------------------------------------------------------------------------
Net Assets
-------------------------------------------------------------------------------
At beginning of period $ --
-------------------------------------------------------------------------------
At end of period $ 145,896,080
-------------------------------------------------------------------------------
(1) For the period from the start of business, September 5, 2000, to October
31, 2000.
<PAGE>
Floating Rate Portfolio as of October 31, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
<S> <C>
PERIOD ENDED
Ratios/Supplementary Data+ OCTOBER 31, 2000(1)
----------------------------------------------------------------------------------------
Ratios (As a percentage of average daily net assets):
Net expenses 0.04%(2)
Net investment income 8.49%(2)
Portfolio Turnover 3%
--------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $145,896
--------------------------------------------------------------------------------------
+ The operating expenses of the Portfolio reflect a reduction of the
investment adviser fee and a allocation of expenses to the
Investment Adviser. Had such actions not been taken, the ratios
would have been as follows:
Ratios (As a percentage of average daily net assets):
Expenses 0.79%(2)
Net investment income 7.74%(2)
--------------------------------------------------------------------------------------
</TABLE>
(1) For the period from the start of business, September 5, 2000, to
October 31, 2000.
(2) Annualized.
<PAGE>
Floating Rate Portfolio as of October 31, 2000
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
--------------------------------------------------------------------------------
The Floating Rate Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940 as a non-diversified open-end management
investment company. The Portfolio, which was organized as a trust under the
laws of the State of New York on June 19, 2000, seeks to provide a high
level of current income by investing primarily in senior secured floating
rate loans. 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 generally
accepted accounting principles.
A Investment Valuation -- The Portfolio's investments are in interests in
senior secured floating rate loans (Senior Loans). The Portfolio's
investment adviser, Boston Management and Research (BMR), a wholly-owned
subsidiary of Eaton Vance Management (EVM), has characterized certain Senior
Loans as liquid based on a predetermined acceptable number and range of
market quotations available. Such loans are valued on the basis of market
valuations furnished by a pricing service. Other Senior Loans are valued at
fair value by BMR under procedures established by the Trustees as permitted
by Section 2(a)(41) of the Investment Company Act of 1940. Such procedures
include the consideration of relevant factors, data and information relating
to fair value, including (i) the characteristics of and fundamental
analytical data relating to the Senior Loan, including the cost, size,
current interest rate, period until next interest rate reset, maturity and
base lending rate of the Senior Loan, the terms and conditions of the Senior
Loan and any related agreements, and the position of the Senior Loan in the
Borrower's debt structure; (ii) the nature, adequacy and value of the
collateral, including the Portfolio's rights, remedies and interests with
respect to the collateral; (iii) the creditworthiness of the Borrower, based
on an evaluation of its financial condition, financial statements and
information about the Borrower's business, cash flows, capital structure and
future prospects; (iv) information relating to the market for the Senior
Loan including price quotations for and trading in the Senior Loan, and
interests in similar Senior Loans and the market environment and investor
attitudes towards the Senior Loan and interests in similar Senior Loans; (v)
the reputation and financial condition of the agent and any intermediate
participant in the Senior Loan; and (vi) general economic and market
conditions affecting the fair value of the Senior Loan. Fair valued
securities are marked daily as well. Other portfolio securities (other than
short-term obligations, but including listed issues) may be valued on the
basis of prices furnished by one or more pricing services which determine
prices for normal, institutional-size trading units of such securities using
market information, transactions for comparable securities and various
relationships between securities which are generally recognized by
institutional traders. In certain circumstances, portfolio securities will
be valued at the last sales price on the exchange that is the primary market
for such securities, or the last quoted bid price for those securities for
which the over-the-counter market is the primary market or for listed
securities in which there were no sales during the day. The value of
interest rate swaps will be determined in accordance with a discounted
present value formula and then confirmed by obtaining a bank quotation.
Short-term obligations which mature in sixty days or less are valued at
amortized cost, if their original term to maturity when acquired by the
Portfolio was 60 days or less or are valued at amortized cost using their
value on the 61st day prior to maturity, if their original term to maturity
when acquired by the Portfolio was more then 60 days, unless in each case
this is determined not to represent fair value. Repurchase agreements are
valued at cost plus accrued interest. Other portfolio securities for which
there are no quotations or valuations are valued at fair value as determined
in good faith by or on behalf of the Trustees.
B Income -- Interest income from Senior Loans is recorded on the accrual
basis at the then-current interest rate, while all other interest income is
determined on the basis of interest accrued, adjusted for amortization of
premium or discount when required for federal income tax purposes. Facility
fees received are recognized as income over the expected term of the loan.
C Income Taxes -- The Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes
on any taxable income of the Portfolio because each investor in the
Portfolio is ultimately responsible for the payment of any taxes. Since at
least one of the Portfolio's investors is a regulated investment company
that invests all or substantially all of its assets in the Portfolio, the
Portfolio normally must satisfy the applicable source of income and
diversification requirements (under the Internal Revenue Code) in order for
its investors to satisfy them. The Portfolio will allocate at least annually
among its investors each investor's distributive share of the Portfolio's
net investment income, net realized capital gains, and any other items of
income, gain, loss, deduction or credit.
D Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT
receives a fee reduced by credits which are determined based on the average
daily cash balance the Portfolio maintains with IBT. All significant credits
used to reduce the Portfolio's custodian fees are reported separately as a
reduction of total expenses in the Statement of Operations.
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 revenue and expense during the reporting period. Actual results
could differ from those estimates.
F Other -- Investment transactions are accounted for on a trade date basis.
2 Investment Adviser Fee and Other Transactions with Affiliates
--------------------------------------------------------------------------------
The investment adviser fee is earned by BMR as compensation for management
and investment advisory services rendered to the Portfolio. The fee is
equivalent to 0.575% annually of the Portfolio's average daily net assets up
to $1 billion and at reduced rates as daily net assets exceed that level.
For the period from the start of business, September 5, 2000 to October 31,
2000, the fee was equivalent to 0.575% (annualized) of the Portfolio's
average net assets for such period and amounted to $64,976. To enhance the
net income of the Portfolio the Adviser made a reduction of the investment
adviser fee of $60,740. In addition, the investment adviser was allocated
$27,282 of the Portfolio's operating expenses.
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. 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 period from
the start of business, September 5, 2000 to October 31, 2000, no significant
amounts have been deferred. Certain officers and Trustees of the Portfolio
are officers of the above organizations.
During the period ended October 31, 2000 the Portfolio engaged in purchase
transactions with other funds that also utilize BMR, or an affiliate of BMR,
as an investment adviser. These purchase transactions complied with Rule
17a-7 under the Investment Company Act of 1940 and amounted to 97,540,000.
3 Investments
--------------------------------------------------------------------------------
The Portfolio invests primarily in Senior Loans. The ability of the issuers
of the Senior Loans to meet their obligations may be affected by economic
developments in a specific industry. The cost of purchases and the proceeds
from principal repayments and sales of Senior Loans for the period from the
start of business, September 5, 2000 to October 31, 2000 aggregated
$102,405,878 and $1,462,000 respectively.
4 Line of Credit
--------------------------------------------------------------------------------
The Portfolio participates with another portfolio managed by BMR in a $600
million unsecured line of credit with a group of banks to permit the
Portfolio to invest in accordance with its investment practices. Interest is
charged under the credit agreement at the bank's base rate or at an amount
above LIBOR. In addition, a fee computed at the annual rate of 0.10% of the
daily unused portion of the line of credit is allocated among the
participating portfolios at the end of each quarter. As of October 31, 2000,
the Portfolio had no borrowings outstanding. The Portfolio did not have any
significant borrowings or allocated fees during the period from the start of
business, September 5, 2000 to October 31, 2000.
5 Federal Income Tax Basis of Investments
--------------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in the value of the
investments owned at October 31, 2000, as computed on a federal income tax
basis, were as follows:
AGGREGATE COST $143,259,516
---------------------------------------------------------------------------
GROSS UNREALIZED APPRECIATION $ 29,830
GROSS UNREALIZED DEPRECIATION (198,714)
---------------------------------------------------------------------------
NET UNREALIZED DEPRECIATION $ (168,884)
---------------------------------------------------------------------------
<PAGE>
Floating Rate Portfolio as of October 31, 2000
INDEPENDENT AUDITORS' REPORT
To the Trustees and Investors of
Floating Rate Portfolio:
--------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities,
including the portfolio of investments, of Floating Rate Portfolio (the
Portfolio) as of October 31, 2000, and the related statements of operations,
the changes in net assets, and the supplementary data for the period from the
start of business, September 5, 2000 to October 31, 2000. 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 audit.
We conducted our audit in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements 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 and Senior Loans owned at October 31, 2000 by
correspondence with the custodian and selling or agent banks; where replies
were not received from selling or agent banks, 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 audit provides 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 Floating Rate
Portfolio at October 31, 2000, the results of its operations, the changes in
its net assets and the supplementary data for the period from the start of
business, September 5, 2000 to October 31, 2000 in conformity with accounting
principles generally accepted in the United States of America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
December 15, 2000
