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[Logo] Investing [Photo of Stock Certificate]
EATON VANCE for the
================ 21st
Mutual Funds Century
Annual Report September 30, 1997
[Photo of Paul Revere Statue]
EATON VANCE
INCOME FUND OF BOSTON
Global Management-Global Distribution
[Photo of Boston Skyline]
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Eaton Vance Income Fund of Boston as of September 30, 1997
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LETTER TO SHAREHOLDERS
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[Photo of M. Dozier Gardner]
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M. Dozier Gardner,
President
Eaton Vance Income Fund of Boston had a total return of 17.7% for the year ended
September 30, 1997.(1) That return was the result of a rise in net asset value
per share from $8.12 on September 30, 1996 to $8.70 on September 30, 1997, and
the reinvestment of $0.780 in dividends. By comparison, the Lehman Brothers High
Yield Bond Index - a widely recognized, unmanaged index of high-yield corporate
bonds - had a total return of 14.5% for the same period.(2)
Based on the Fund's most recent dividend and a net asset value per share of
$8.70, the Fund had a distribution rate of 8.83% on September 30.(3) The Fund's
SEC yield was 8.10% on September 30.(4)
A sound economy boosted the high-yield sector amid record issuance...
The strong performance of the high-yield bond market was aided by a vigorous
economy, low inflation and relatively stable interest rates. Third quarter GDP
grew at an impressive 3.5%, according to preliminary figures, while inflation
remained a manageable 2.5%. The good economic news was welcomed by high-yield
investors, even as issuance of high-yield bonds rose to record levels. Through
September alone, $100 billion in high-yield bonds had been brought to market,
eclipsing the $75 billion issued for all of 1996.
A planned management transition...
Hooker Talcott, Jr. announced his retirement,
effective October 31, 1997. Under his management since 1986, Eaton Vance Income
Fund of Boston has established an excellent long-term record. As a measure of
that record, the Fund's risk-adjusted performance earned it a Five-Star Overall
rating among taxable bond funds covered by Morningstar, Inc.(5) - a nationally
recognized monitor of mutual fund performance for the period ended September 30.
We thank Hooker for his superior stewardship of Income Fund of Boston and wish
him well. Michael Weilheimer, with whom he has shared Fund management for the
past twenty-one months, has now assumed sole management responsibility.
1998 should bring more opportunities for high-yield investors...
With high-yield bonds continuing to offer an attractive yield advantage over
Treasury bonds, a moderate-growth economy is expected provide a supportive
environment for the high-yield market. In the pages that follow, Hooker Talcott,
Jr. and Michael Weilheimer review the past year and offer their thoughts on the
year ahead.
Sincerely,
/s/ M. Dozier Gardner
M. Dozier Gardner
President
November 9, 1997
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Fund Information
as of September 30, 1997
Performance(6) -
Average Annual Total Returns (at net asset value)
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One year 17.7%
Five years 11.8
Ten years 11.3
SEC Average Annual Total Returns (including max. 4.75% sales charge)
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One year 12.2%
Five years 10.7
Ten years 10.7
Ten Largest Holdings(7) By total net assets
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Cablevision System Corp. 1.8%
United International Holdings, Inc. 1.7
Nextlink Communications, Inc. 1.6
Mariner Energy Corp. 1.3
Chancellor Radio Broadcasting, Inc. 1.2
AFC Enterprises, Inc. 1.2
Dial Call Communications, Inc. 1.2
International Home Foods, Inc. 1.2
Marcus Cable, Inc. 1.2
Newsquest Capital Corp. 1.1
(1) This return does not include the Fund's maximum 4.75% sales charge.(2) It is
not possible to invest directly in an Index.(3) The Fund's distribution rate
represents actual distributions paid to shareholders and is calcaulated
daily by dividing the last distribution per share (annualized) by the net
asset value.(4) The Fund's SEC yield is calculated by dividing the net
investment income per share for the 30-day period by the offering price at
the end of the period and annualizing the result.(5) Morningstar ratings
reflect historical risk-adjusted performance through 9/30/97 and are subject
to change. Past performance is no guarantee of future results. Funds are
assigned ratings from 1 star (lowest) to 5 stars (highest). Ratings are
calculated from the funds' 3-,5-, and 10-year returns (with fee adjustment)
in excess of 90-day Treasury bill returns. The top 10% of the funds in a
category receive 5 stars. For the 3-year period, the Fund was rated 5 stars
(1309 funds); for the 5-year period, 5 stars (713 funds); and for the
10-year period, 5 stars (301 funds).(6) Returns are calculated by
determining the percentage change in net asset value with all distributions
reinvested. SEC returns reflect maximum sales charge as noted.(7) Ten
largest holdings account for 13.5% 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 Income Fund of Boston as of September 30, 1997
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MANAGEMENT DISCUSSION
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[Photo of Hooker Talcott, Jr.]
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Hooker Talcott, Jr.
Portfolio Manager
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[Photo of Michael Weilheimer]
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Michael Weilheimer,
Portfolio Manager
An interview with Hooker Talcott, Jr., and Michael Weilheimer, co-portfolio
managers.
Q: Hooker, how would you characterize the bond market during the past year?
A: MR. TALCOTT: This has been a good year for bonds in general, as evidenced by
the strength in the Treasury market. Ten-year Treasury yields declined from
6.7% a year ago to 6.1% at September 30. However, these numbers alone
disguise the volatility of the market during the year. Yields soared as high
as 7.0% in late March before declining to the 6.0% level in July.
Q: Mike, how did the high-yield market fare in comparison?
A: MR. WEILHEIMER: The high-yield sector outperformed the Treasury market but
featured similar volatility. Quality spreads - the yield difference between
Treasuries and high-yield corporate bonds - fluctuated widely during the
period. Spreads were as high as 350 basis points (3.5%) and as narrow as 270
basis points (2.7%). That is a very large fluctuation by historical
standards. There were several reasons for the high-yield outperformance.
First, the economy appeared to stay on track; second, corporate earnings
continued to improve, giving issuers better interest coverage and improved
balance sheets; and finally, the strong performance of the stock market
increased the equity capitalization of these companies, thereby improving
their debt-to-equity ratios.
Q: To what do you attribute the Fund's strong performance during the past year?
A: MR. WEILHEIMER: We've continued to focus on solid, B-rated credits -
companies with strong earnings growth with an emphasis on industries that
have been consolidating. That has been a major driver of Fund performance.
Industry consolidations have eliminated excess costs and made companies more
efficient operators. That trend creates greater economies of scale while
also giving companies additional pricing flexibility. That was especially
true of our largest industry weightings, communications and broadcasting,
which performed very well during the year.
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Five Largest Industry Positions(1)
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By total net assets
Communication Services 12.5%
Broadcast/Cable 7.4%
Foods 5.9%
Oil/Gas 5.0%
Manufacturing 4.3%
Ratings Distribution(1)
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By total net assets
Aaa 1.1%
Ba 5.9%
B1 12.7%
B2 19.8%
B3 41.6%
Caa 6.9%
Non-Rated 12.0%
(1) Because the Portfolio is actively managed, sector weightings and ratings are
subject to change. Ratings are issued by Moody's Investors Service, a major
independent ratings agency.
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Mutual fund shares are not insured by the FDIC and are not deposits or
other obligations of, or guaranteed by, any depository institution.
Shares are subject to investment risks, including possible loss of
principal invested.
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Q: Why is the communications sector so important to the high-yield market?
A: MR. TALCOTT: A major portion of the newly issued bonds have been in the
media and communications areas, including cable, telecommunications,
broadcasting, direct broadcast satellite, and wireless. The capital
requirements of these companies are enormous, and, therefore, make them
natural candidates for the high-yield market. While the growth potential of
the sector is staggering, the competition is very keen. But, interestingly,
it has become apparent that the media pie is expanding.
For example, even as they face competition from direct satellite
broadcasters, cable television providers have enjoyed modest subscriber
growth. And competitive local telephone exchange providers (CLECs) have
managed to gain market share from the Bell operating companies, which have
heretofore enjoyed monopolies within their regions. Thus, many of the
companies in our investment universe are poised to benefit from the changes
overtaking the communications industry.
Q: Could you give some examples of your media-related holdings?
A: MR. WEILHEIMER: Yes. Brooks Fiber Properties is one of the competitive local
exchange companies that have become an important part of the
telecommunications mix. The deregulation of the telecom industry has given
these small operators access to territories that were once the sole province
of the Baby Bells. Brooks has recently agreed to be acquired by Worldcom,
Inc., an investment-grade company.
Elsewhere, in the cable sector, Cablevision Systems is one of the largest
providers in the country. The company has continued to build its subscriber
base, even as competition has intensified. In addition, Cablevision has
increased its product offerings by providing its customers internet access.
Q: What are some of the other areas represented in the Portfolio?
A: MR. TALCOTT: The Portfolio is diversified across a wide array of industries
and is, therefore, fairly representative of the economy. For example, in the
consumer area, the Portfolio has several investments in food companies. One
such holding, Keebler Corp., makes cookies and crackers and enjoys a very
high brand recognition among consumers, largely due to the company's
long-running "Keebler elves" commercials. Keebler has improved its balance
sheet in recent years and is very likely headed for an upgrade.
Another large holding is Allied Waste North America. The waste disposal
sector has seen its share of consolidation, as the sector currently favors
stronger companies that can meet tighter environmental regulations. Allied
has grown its business through a series of acquisitions that has emphasized
coordinating the location of landfills with hauling routes. That strategy
has proven very successful.
Q: You suggested that the strong stock market has helped the high-yield market.
Could you expand on that?
A: MR. WEILHEIMER: Yes. A strong stock market helps these high-yield issuers
deleverage their balance sheets. As stock prices increase, some companies
may issue additional stock. In other cases, some previously privately-held
companies have had initial public offerings. Finally, still other companies
have used stock to finance mergers and acquisitions instead of relying
solely on debt. In those situations, a strong stock market has helped raise
the value of equity as currency for these purchases.
Q: Hooker, you've seen the high-yield market undergo major changes in the
course of your career. How has the market matured in recent years?
A: MR. TALCOTT: The most obvious change is the growth of the market to its
present size of around $400 billion. That growth has been accompanied by
improved market liquidity, a very favorable development, especially in the
wake of the market shakeout earlier in the decade.
Perhaps the most important trend has been a growing demand from
institutional and crossover investors, including mutual funds, pension
plans, endowment funds, and insurance companies. Some of these investors
have historically restricted their investment focus to Treasuries and
investment-grade corporate bonds. There has been a sea change in the sense
that high-yield bonds are now viewed as a legitimate asset class and
investment alternative for this important group of investors. Their
participation represents a real vote of confidence in this market's future.
Q: Mike, what is your outlook for the high-yield market in the coming year?
A: MR. WEILHEIMER: The outlook for the economy appears to be fairly good, and
inflation remains under control. Corporate profits continue to grow as
companies reap the benefits of industry consolidation. These are all
positive influences on the high-yield market. It's very likely that we will
continue to experience some periodic volatility from time to time, given the
many influences on the financial markets. And of course, past trends don't
guarantee future performance.
As Hooker has consistently emphasized over the years, the compounding of
high-yield spreads year-after-year has proven to be a sound, long-term
investment strategy. While spreads have declined from their peak, they
continue to offer good value to income-oriented investors. I believe that an
economy characterized by modest growth and low inflation is an ideal
environment for high-yield bonds, affording good opportunities for the year
ahead. Income Fund of Boston will continue its efforts to share in those
opportunities.
Comparison of Change in Value of a $10,000 Investment
in the Fund vs. the Lehman Brothers High Yield Bond Index*
From September 30, 1987, through September 30, 1997
Date Fund/NAV Fund/Off Pr LHYBI
9/30/87 $10,000 $9,527 $10,000
10/31/87 $9,484 $9,035 $9,673
11/30/87 $9,662 $9,205 $9,952
12/31/87 $9,755 $9,293 $10,191
1/31/88 $10,045 $9,570 $10,532
2/28/88 $10,324 $9,835 $10,873
3/31/88 $10,322 $9,834 $10,760
4/30/88 $10,399 $9,907 $10,842
5/31/88 $10,488 $9,992 $10,858
6/30/88 $10,686 $10,180 $11,017
7/31/88 $10,788 $10,277 $11,089
8/31/88 $10,799 $10,288 $11,073
9/30/88 $10,935 $10,418 $11,212
10/31/88 $11,075 $10,551 $11,348
11/30/88 $11,110 $10,584 $11,415
12/31/88 $11,238 $10,707 $11,468
1/31/89 $11,430 $10,890 $11,670
2/28/89 $11,466 $10,924 $11,696
3/31/89 $11,502 $10,958 $11,605
4/30/89 $11,600 $11,052 $11,653
5/31/89 $11,802 $11,243 $11,879
6/30/89 $11,885 $11,323 $12,027
7/31/89 $11,971 $11,404 $12,011
8/31/89 $12,031 $11,462 $12,052
9/30/89 $12,003 $11,435 $11,850
10/31/89 $11,802 $11,243 $11,569
11/30/89 $11,704 $11,151 $11,546
12/31/89 $11,714 $11,160 $11,564
1/31/90 $11,437 $10,896 $11,315
2/28/90 $10,939 $10,421 $11,082
3/31/90 $10,852 $10,339 $11,373
4/30/90 $10,905 $10,389 $11,353
5/31/90 $11,144 $10,617 $11,572
6/30/90 $11,386 $10,847 $11,852
7/31/90 $11,646 $11,095 $12,171
8/31/90 $11,120 $10,594 $11,479
9/30/90 $10,435 $9,941 $10,641
10/31/90 $10,112 $9,634 $10,082
11/30/90 $9,938 $9,468 $10,397
12/31/90 $9,899 $9,430 $10,455
1/31/91 $9,874 $9,407 $10,742
2/28/91 $10,508 $10,011 $11,918
3/31/91 $11,076 $10,552 $12,620
4/30/91 $11,944 $11,379 $13,137
5/31/91 $12,008 $11,440 $13,161
6/30/91 $12,355 $11,771 $13,550
7/31/91 $12,865 $12,257 $13,984
8/31/91 $13,070 $12,452 $14,306
9/30/91 $13,412 $12,778 $14,504
10/31/91 $13,887 $13,231 $14,989
11/30/91 $14,055 $13,390 $15,067
12/31/91 $14,139 $13,470 $15,284
1/31/92 $14,732 $14,035 $15,822
2/28/92 $15,081 $14,367 $16,212
3/31/92 $15,437 $14,707 $16,414
4/30/92 $15,641 $14,901 $16,476
5/31/92 $15,813 $15,065 $16,708
6/30/92 $16,060 $15,300 $16,865
7/31/92 $16,313 $15,542 $17,120
8/31/92 $16,530 $15,748 $17,344
9/30/92 $16,665 $15,877 $17,521
10/31/92 $16,486 $15,706 $17,274
11/30/92 $16,562 $15,779 $17,492
12/31/92 $16,723 $15,932 $17,691
1/31/92 $17,112 $16,303 $18,206
2/28/93 $17,468 $16,642 $18,526
3/31/93 $17,718 $16,880 $18,765
4/30/93 $17,880 $17,034 $18,929
5/31/93 $18,155 $17,296 $19,154
6/30/93 $18,530 $17,654 $19,556
7/31/93 $18,718 $17,833 $19,746
8/31/93 $18,776 $17,888 $19,912
9/30/93 $18,763 $17,875 $19,963
10/31/93 $19,179 $18,272 $20,367
11/30/93 $19,436 $18,517 $20,464
12/31/93 $19,729 $18,795 $20,718
1/31/94 $20,186 $19,231 $21,168
2/28/94 $20,340 $19,378 $21,113
3/31/94 $19,743 $18,809 $20,315
4/30/94 $19,512 $18,589 $20,177
5/31/94 $19,616 $18,688 $20,187
6/30/94 $19,707 $18,775 $20,249
7/31/94 $19,636 $18,707 $20,421
8/31/94 $19,564 $18,639 $20,566
9/30/94 $19,560 $18,635 $20,567
10/31/94 $19,586 $18,659 $20,616
11/30/94 $19,352 $18,437 $20,356
12/31/94 $19,475 $18,554 $20,506
1/31/95 $19,650 $18,721 $20,784
2/28/95 $20,118 $19,166 $21,496
3/31/95 $20,218 $19,261 $21,728
4/30/95 $20,783 $19,800 $22,281
5/31/95 $21,310 $20,302 $22,905
6/30/95 $21,332 $20,323 $23,058
7/31/95 $21,708 $20,681 $23,342
8/31/95 $21,628 $20,605 $23,415
9/30/95 $21,760 $20,730 $23,703
10/31/95 $21,871 $20,836 $23,781
11/30/95 $22,088 $21,043 $24,059
12/31/95 $22,453 $21,391 $24,438
1/31/96 $22,871 $21,789 $24,868
2/28/96 $23,251 $22,151 $24,887
3/31/96 $23,103 $22,010 $24,870
4/30/96 $23,265 $22,164 $24,925
5/31/96 $23,522 $22,409 $25,075
6/30/96 $23,539 $22,426 $25,282
7/31/96 $23,709 $22,588 $25,400
8/31/96 $24,090 $22,950 $25,675
9/30/96 $24,678 $23,511 $26,293
10/31/96 $24,761 $23,590 $26,495
11/30/96 $25,176 $23,985 $27,018
12/31/96 $25,538 $24,330 $27,212
1/31/97 $25,842 $24,619 $27,477
2/28/97 $26,316 $25,071 $27,932
3/31/97 $25,770 $24,551 $27,516
4/30/97 $26,067 $24,834 $27,806
5/31/97 $26,791 $25,524 $28,401
6/30/97 $27,352 $26,058 $28,795
7/31/97 $28,153 $26,821 $29,585
8/31/97 $28,334 $26,994 $29,518
9/30/97 $29,041 $27,667 $30,103
Performance+
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Average Annual Total Returns (At Net Asset Value)
One year 17.7%
Five years 11.8
Ten years 11.3
SEC Average Annual Total Returns (Including maximum 4.75% Sales Charge)
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One year 12.2%
Five years 10.7
Ten years 10.7
* Source: Towers Data Systems, Bethesda, MD. The chart compares the Fund's
total return with that of a broad-based, unmanaged securities market index of
high-yield corporate bonds. 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 Lehman Brothers High Yield Bond 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.
** This figure represents the Fund's performance including the Fund's maximum
4.75% sales charge.
+ Returns are calculated by determining the percentage change in net asset
value (NAV) with all distributions reinvested. SEC returns reflect maximum
sales charge as noted. 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 their original cost.
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<TABLE>
Eaton Vance Income Fund of Boston as of September 30, 1997
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PORTFOLIO OF INVESTMENTS
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Corporate Bonds & Notes -- 90.6%
<CAPTION>
Principal
Amount
Security (000 omitted) Value
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<S> <C> <C>
Advertising -- 0.7%
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Outdoor Systems, Inc., Sr. Sub. Notes, 8.875%, 6/15/07 $ 1,400 $ 1,428,000
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$ 1,428,000
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Apparel -- 2.3%
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Dan River Inc., Sr. Sub. Notes, 10.125%,
12/15/03 $ 1,450 $ 1,555,125
Glenoit Corp., Sr. Sub. Notes, 11.00%,
4/15/07(1) 1,200 1,287,000
Polysindo International Finance, Inc., Co. Gty. Notes,
9.375%, 7/30/07 300 294,750
William Carter Co., Sr. Sub. Notes, 10.375%,
12/1/06 1,575 1,645,875
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$ 4,782,750
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Auto and Parts -- 0.9%
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Key Plastics Inc., Sr. Notes, 14.00%, 11/15/99 $ 1,500 $ 1,665,000
Key Plastics, Inc., Sr. Sub. Notes, 10.25%,
3/15/07 200 210,000
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$ 1,875,000
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Banks - Regional -- 1.2%
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First Nationwide Holdings, Inc., Sr. Sub. Notes, 10.625%,
10/1/03 $ 1,800 $ 1,980,000
First Nationwide, Inc. Sr. Notes, 12.50%,
4/15/03 400 450,000
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$ 2,430,000
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Banks and Money Services -- 0.7%
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Intertek Finance PLC, Sr. Sub. Notes, 10.25%,
11/1/06 $ 1,400 $ 1,470,000
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$ 1,470,000
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Broadcasting and Cable -- 7.4%
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Adelphia Communications Corp., Sr. Notes, 10.50%, 7/15/04(1) $ 660 $ 699,600
Adelphia Communications Corp., Sr. Disc. Notes, 9.875%, 3/1/07 1,120 1,156,400
Austrailis Holdings, Sr. Sec. Disc. Notes,
15%, (0% until 2000), 11/1/02 459 367,200
Cablevision Systems Corp., Sr. Sub. Notes, 9.25%, 11/1/05 850 888,250
Diamond Cable Communications Co., Sr. Disc. Notes, 13.25%,
(0% until 1999), 9/30/04 $ 400 $ 350,000
Diamond Cable Communications Co., Sr. Disc. Notes, 11.75%,
(0% until 2000), 12/15/05 100 74,875
Digital Television Services, Inc., Sr. Sub. Notes, 12.50%,
8/1/07(1) 1,440 1,508,400
International Cabletel, Inc., Sr. Disc. Notes, 11.5%, (0%
until 2001), 2/1/06 850 635,375
Marcus Cable Co., Sr. Debs., 11.875%, 10/1/05 200 218,750
Marcus Cable Co., Sr. Disc. Notes, 14.25%,
(0% until 2000), 12/15/05 2,500 2,075,000
Marcus Cable Operating Co., Sr. Disc. Notes, 13.5%, (0%
until 1999), 8/1/04 200 180,250
NTL, Inc., Sr. Notes, 10.00%, 2/15/07 1,100 1,149,500
Sullivan Broadcasting Co., Inc., Sr. Sub. Notes, 10.25%, 12/
15/05 1,350 1,415,813
UIH Australia/Pacific, Inc., Sr. Disc. Notes, 14%, (0% until
2001), 5/15/06(1) 400 287,000
UIH Australia/Pacific, Inc., Sr. Disc. Notes, 14%, (0% until
2001), 5/15/06 500 358,750
United International Holdings, Inc. -Series B, Sr. Sec
Disc. Notes, 0.00%, 11/15/99 700 572,250
United International Holdings Inc., Sr. Sec. Disc. Notes,
0.00%, 11/15/99 2,910 2,378,925
Videotron Holdings PLC, Inc., Sr. Disc. Notes, 11%, (0%
until 1999), 8/15/05 1,300 1,121,250
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$ 15,437,588
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Building Materials -- 2.0%
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Commemorative Brands, Inc., Sr. Sub. Notes, 11.00%, 1/15/07 $ 500 $ 519,375
Kaiser Aluminum and Chemical, Sr. Notes, 10.875%, 10/15/06 500 541,250
Nortek, Inc., Sr. Notes, 9.125%, 9/1/07(1) 1,200 1,212,000
Overhead Door Corp., Sr. Notes, 12.25%, 2/1/00 900 934,875
Tarkett International, AG., Sr. Sub. Notes, 9.00%, 3/1/02 900 911,250
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$ 4,118,750
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Business Services -- 0.7%
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Kindercare Learning Ctrs., Inc., Sr. Sub. Notes, 9.50%, 2/15/09 $ 1,500 $ 1,466,250
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$ 1,466,250
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Business Services - Miscellaneous -- 1.7%
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Allied Waste Industries, Inc., Sr. Disc. Notes, 11.3%, (0%
until 2002), 6/1/07(1) $ 1,950 $ 1,321,125
Allied Waste North America, Inc., Sr. Sub Notes, LOC,
10.25%, 12/1/06 2,050 2,244,750
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$ 3,565,875
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Chemicals -- 3.3%
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Huntsman Corp., Sr. Sub. Notes, 9.50%, 7/1/07(1) $ 1,050 $ 1,102,500
NL Industries, Inc., Sr. Notes, 11.75%, 10/15/03 1,260 1,382,850
Plastic Containers, Inc., Sr. Notes, 10.00%, 12/15/06 600 639,000
Plastic Specialties and Tech., Inc., Sr. Sec. Notes, 11.25%,
12/1/03 1,550 1,681,750
Sovereign Specialties, Sr. Sub. Notes, 9.50%, 8/1/07(1) 780 795,600
Sterling Chemical Holdings, Inc., Sr. Disc. Notes, 13.50%
(0% until 2001), 8/15/08 600 423,000
UCC Investors, Inc., Sr. Sub. Notes, 11.00%, 5/1/03 800 860,000
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$ 6,884,700
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Coal -- 0.2%
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Anker Coal Group, Inc., Sr. Sub. Notes, 9.75%, 10/1/07 $ 360 $ 365,400
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$ 365,400
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Communications Equipment -- 3.8%
- -----------------------------------------------------------------------------------------------
Echostar Communications, Sr. Sub. Notes, 12.875%, (0% until
1999), 6/1/04 $ 800 $ 724,000
Hyperion Telecommunications, Inc., Sr. Disc. Notes, 13%, (0%
until 2001), 4/15/03 1,250 876,563
Hyperion Telecommunications, Inc., Sr. Sec. Notes, 12.25%,
9/1/04(1) 1,950 2,135,250
MGC Communications, Inc., Sr. Sec. Notes and Warrants,
13.00%, 10/1/04 1,300 1,352,000
Omnipoint Corp., Sr. Notes, 11.625%, 8/15/06 610 628,300
Pricellular Wireless Communications Corp., Sr. Notes,
10.75%, 11/1/04 600 648,000
Pricellular Wireless Communications Corp., Sr. Sub. Disc
Nts., 12.25%, (0% until 1998), 10/1/03 1,620 1,603,800
- -----------------------------------------------------------------------------------------------
$ 7,967,913
- -----------------------------------------------------------------------------------------------
Communications Services -- 12.5%
- -----------------------------------------------------------------------------------------------
Australis Media Ltd., Sub. Disc. Notes, 14%, (0% until 2000),
5/15/03 $ 1,113 $ 924,036
Brooks Fiber Properties, Inc., Sr. Disc. Notes, 11.875%, (0%
until 2001), 11/1/06 600 462,000
Brooks Fiber Properties, Inc., Sr. Sub. Notes, 10.00%, 6/1/07 200 226,500
Brooks Fiber Properties. Inc., Sr. Disc. Notes, 10.875%, (0%
until 2001), 3/1/06 1,500 1,200,000
Cell-net Enterprises, Inc., Sr. Disc. Notes, 9.27%, (0%
until 2002), 8/15/07 700 465,500
Cellnet Data Systems, Inc., Sr. Disc. Notes and Warrants
14%, (0% until 2003), 10/1/07 2,000 1,020,000
Dial Call Communications Inc., Sr. Red. Notes, 12.25%, (0%
until 1999), 4/15/04 2,680 2,505,799
Diamond Cable Communications, PLC, Sr. Disc. Notes, 10.75%,
(0% until 2002), 2/15/07 1,500 976,875
Dobson Communications Corp., Sr. Notes, 11.75%, 4/15/07 500 496,875
Echostar DBS Corp., Sr. Sec. Notes, 12.50%,
7/1/02(1) 950 1,046,188
Echostar Satellite Broadcasting Corp., Sr. Disc. Notes,
13.125%, (0% until 2000), 3/15/04 2,075 1,735,219
Esat Holdings, Ltd., Sr. Deferred Notes, 12.50% (0% until
2002), 2/1/07(1) 900 585,000
Esat Telecom Group PLC, Sr. Deferred Coupon Notes, 12.50%
(0% until 2002), 2/1/07 2,500 1,625,000
Intermedia Communications, Inc., Sr. Disc. Notes, 11.25% (0%
until 2002), 7/15/07(1) 1,960 1,357,300
Metronet Commerce, Sr. Notes, 12.00%,
8/15/07(1) 450 499,500
Microcell Telecommunication, Sr. Disc. Notes, 14%, (0% until
2001), 6/1/06 2,450 1,678,250
Millicom International Cellular, Inc., Sr. Disc. Notes,
13.5%, (0% until 2001), 6/1/06 1,800 1,395,000
Nextel Communications, Inc., Sr. Disc. Notes, 10.65%, 9/15/07(1) 360 221,850
Nextlink Communications, Inc., Sr. Notes, 9.625%, 10/1/07 1,330 1,379,875
Nextlink Communications, Inc., Sr. Notes, 12.50%, 4/15/06 1,680 1,932,000
Primus Telecom Group, Sr. Notes, 11.75%, 8/1/04 1,800 1,926,000
Telesystem International Wireless, Inc., Sr. Disc. Notes,
13.25%, (0% until 2002), 6/30/07(1) 950 596,125
Telewest PLC, Debs., 11%, (0% until 2002), 10/1/07 2,250 1,687,500
- -----------------------------------------------------------------------------------------------
$ 25,942,392
- -----------------------------------------------------------------------------------------------
Computer Software -- 1.0%
- -----------------------------------------------------------------------------------------------
Unisys Corp., Sr. Notes, 11.75%, 10/15/04 $ 400 $ 452,000
Unisys Corp., Sr. Notes, 12.00%, 4/15/03 1,400 1,571,500
- -----------------------------------------------------------------------------------------------
$ 2,023,500
- -----------------------------------------------------------------------------------------------
Containers and Packaging -- 3.4%
- -----------------------------------------------------------------------------------------------
American Pad and Paper Co., Sr. Sub. Notes, 13.00%, 11/15/05 $ 650 $ 767,000
Asia Pulp and Paper, Cum. Gty. Notes, 12.00%, 12/29/49 1,500 1,531,875
Container Corp., Sr. Notes, 10.75%, 5/1/02 1,000 1,105,000
Gaylord Container Corp., Sr. Sub. Disc. Debs., 12.75%, 5/15/05 1,700 1,859,375
S.D. Warren Co., Sr. Sub. Notes, 12.00%, 12/15/04 1,200 1,356,000
US Can Corp., Sr. Sub. Notes, 10.125%, 10/15/06 400 424,500
- -----------------------------------------------------------------------------------------------
$ 7,043,750
- -----------------------------------------------------------------------------------------------
Electric Utilities -- 0.1%
- -----------------------------------------------------------------------------------------------
AES Corp., Sr. Sub. Notes, 8.375%, 8/15/07 $ 300 $ 301,500
- -----------------------------------------------------------------------------------------------
$ 301,500
- -----------------------------------------------------------------------------------------------
Electrical Equipment -- 0.4%
- -----------------------------------------------------------------------------------------------
Wavetek Corp., Sr. Sub. Notes, 10.125%, 6/15/07(1) $ 840 $ 869,400
- -----------------------------------------------------------------------------------------------
$ 869,400
- -----------------------------------------------------------------------------------------------
Electronics - Instruments -- 2.2%
- -----------------------------------------------------------------------------------------------
Blue Bell Funding Inc., Sec. Ext. Notes, 11.85%, 5/1/99 $ 1,138 $ 1,177,830
GS Technologies Corp., Sr. Notes, 12.25%, 10/1/05 1,900 2,118,500
HCC Industries, Inc., Sr. Sub. Notes, 10.75%, 5/15/07(1) 1,275 1,351,500
- -----------------------------------------------------------------------------------------------
$ 4,647,830
- -----------------------------------------------------------------------------------------------
Entertainment -- 1.1%
- -----------------------------------------------------------------------------------------------
All American Communications, Inc., Sr. Sub. Notes, 10.875%,
10/15/01 $ 1,100 $ 1,190,750
Cinemark USA, Sr. Sub. Notes, 9.625%, 8/1/08 1,000 1,028,750
- -----------------------------------------------------------------------------------------------
$ 2,219,500
- -----------------------------------------------------------------------------------------------
Foods -- 5.9%
- -----------------------------------------------------------------------------------------------
Aurora Foods, Inc., Sr. Sub Notes, 9.875%, 2/15/07(1) $ 1,400 $ 1,456,000
B and G Foods, Inc., Sr. Sub. Notes, 9.625%, 8/1/07(1) 980 983,675
Del Monte Corp., Sr. Sub. Notes, 12.25%, 4/15/07 1,600 1,748,000
Inflo Holdings Corp., Promissory Notes, 10%,
(0% until 1999), 1/27/07+ 1,100 990,000
International Home Foods, Inc., Sr. Sub. Notes,
10.375%, 11/1/06 2,250 2,480,625
Keebler Corp., Sr. Sub. Notes, 10.75%, 7/1/06 1,430 1,608,750
PM Holdings Corp., Sr. Sub. Notes, 11.5%,
(0% until 2000), 9/1/05 600 472,500
Van De Kamps, Inc., Sr. Sub. Notes, 12.00%, 9/15/05 1,575 1,736,438
Windy Hill Pet Food Products, Inc., Sr. Sub Notes,
9.75%, 5/15/07(1) 750 780,000
- -----------------------------------------------------------------------------------------------
$ 12,255,988
- -----------------------------------------------------------------------------------------------
Health Services -- 1.7%
- -----------------------------------------------------------------------------------------------
Dade International, Inc., Sr. Sub. Notes, 11.125%, 5/1/06 $ 1,200 $ 1,351,500
Genesis Eldercare Acquisition Corp., Sr. Sub. Notes, 9.00%,
8/1/07(1) 1,530 1,522,350
Vencor, Inc., Sr. Sub. Notes, 8.625%, 7/15/07 700 710,500
- -----------------------------------------------------------------------------------------------
$ 3,584,350
- -----------------------------------------------------------------------------------------------
Household Products -- 1.7%
- -----------------------------------------------------------------------------------------------
Communications Instruments, Inc., Sr. Sub Notes, 10.00%,
9/15/04(1) $ 440 $ 450,450
Hedstrom Holdings, Inc., Sr. Disc. Notes, 12%, (0% until
2002), 6/1/09(1) 350 224,000
Icon Fitness Corp., Sr. Disc. Notes, 14%,(0% until 2001),
11/15/06 400 236,000
Icon Health and Fitness, Inc., Sr. Sub. Notes, 13.00%,
7/15/02 1,000 1,135,000
Pillowtex Corp., Sr. Sub Notes, 10.00%, 11/15/06 600 633,000
Ridell Sports, Inc., Sr. Notes, 10.50%, 7/15/07 790 828,513
- -----------------------------------------------------------------------------------------------
$ 3,506,963
- -----------------------------------------------------------------------------------------------
Industrial Development Revenue / Pollution
Control Revenue -- 0.5%
- -------------------------------------------------------------------------------------------------
Federal Data Corp., Sr. Sub. Notes, 10.125%,
8/1/05(1) $ 1,080 $ 1,107,000
- -----------------------------------------------------------------------------------------------
$ 1,107,000
- -----------------------------------------------------------------------------------------------
Information Services -- 3.0%
- -----------------------------------------------------------------------------------------------
Icg Holdings, Inc., Sr. Disc. Notes, 12.5%,
(0% until 2001), 5/1/06 $ 310 $ 232,500
Icg Holdings, Inc., Sr. Disc. Notes, 11.625%,
(0% until 2002), 3/15/07 1,775 1,207,000
Intermedia Capital Partners, Sr. Sub. Notes, 11.25%, 8/1/06 500 548,750
ITC Deltacom, Inc., Sr. Notes, 11.00%, 6/1/07(1) 1,000 1,097,500
ITT Publimedia, Sr. Notes, 9.375%, 9/15/07(1) 360 377,100
Mcleod Usa, Inc., Sr. Notes, 9.25%, 7/15/07(1) 920 977,500
Orion Network Systems, Inc., Sr. Disc. Notes, 12.50%, (0%
until 2002), 1/15/07 400 268,000
Orion Network Systems, Inc., Sr. Notes, 11.25%, 1/15/07 1,400 1,533,000
- -----------------------------------------------------------------------------------------------
$ 6,241,350
- -----------------------------------------------------------------------------------------------
Investment Services -- 1.5%
- -----------------------------------------------------------------------------------------------
DVI, Inc., Sr. Notes, 9.875%, 2/1/04 $ 1,100 $ 1,138,500
IHF Holdings, Inc., Sr. Disc. Notes, 15%, (0% until 1999),
11/15/04 740 643,800
ISP Holdings, Inc., Sr. Notes, 9.75%, 2/15/02 1,215 1,312,200
- -----------------------------------------------------------------------------------------------
$ 3,094,500
- -----------------------------------------------------------------------------------------------
Lodging and Gaming -- 4.1%
- -----------------------------------------------------------------------------------------------
Aztar Corp., Sr. Sub. Notes, 13.75%, 10/1/04 $ 1,000 $ 1,146,250
Capstar Hotel, Co., Sr. Sub. Notes, 8.75%, 8/15/07(1) 750 758,438
Harvey Casinos Resorts, Sr. Sub. Notes, 10.625%, 6/1/06 1,500 1,642,500
Horseshoe Gaming LLC., Sr. Sub. Notes, 9.375%, 6/15/07(1) 800 826,000
Showboat Marina Casino, 1st Mtg. Notes, 13.50%, 3/15/03 1,500 1,725,000
Trump Atlantic City Associates, Co., 1st Mtg. Notes, 11.25%,
5/1/06 1,300 1,261,000
Trump Holdings & Funding Inc., Sr. Notes, 15.50%, 6/15/05 1,000 1,167,500
- -----------------------------------------------------------------------------------------------
$ 8,526,688
- -----------------------------------------------------------------------------------------------
Machinery -- 2.1%
- -----------------------------------------------------------------------------------------------
Alvey Systems, Inc., Sr. Sub. Notes, 11.375%, 1/31/03 $ 600 $ 630,000
Amtrol Acquisition, Inc., Sr. Sub. Notes, 10.625%,
12/31/06 900 931,500
Cambridge Industries, Inc., Sr. Sub. Notes, 10.25%, 7/15/07(1) $ 630 $ 658,350
IMO Industries, Sr. Sub. Notes, 11.75%, 5/1/06 2,070 2,209,725
- -----------------------------------------------------------------------------------------------
$ 4,429,575
- -----------------------------------------------------------------------------------------------
Manufacturing -- 4.3%
- -----------------------------------------------------------------------------------------------
Consumers International, Inc., Sr. Sub. Notes, 10.25%,4/1/05(1) $ 985 $ 1,073,650
Energy Corp., Sr. Sub. Notes, 9.50%, 5/15/07 1,350 1,356,750
Motors and Gears, Inc., Sr. Notes, 10.75%, 11/15/06 1,000 1,070,000
Roller Bearing Co. America, Inc., Sr. Sub. Notes, 9.625%,
6/15/07(1) 400 410,000
Roller Bearing Holdings Co., Sr. Disc. Debts, 13%, (0% until
2002), 6/15/09(1) 1,000 595,000
Telex Communication Group, Inc., Sr. Sub Notes, 10.50%, 5/1/07(1) 1,275 1,308,469
Tjiwi Kimia Finance Mauritius, Ltd., Guaranteed Sr. Sub
Notes, 10.00%, 8/1/04(1) 950 932,188
United Refining Co. Gty. Notes, 10.75%, 6/15/07(1) 800 800,000
Viasystems, Inc., Sr. Sub. Notes, 9.75%, 6/1/07(1) 1,250 1,300,000
- -----------------------------------------------------------------------------------------------
$ 8,846,057
- -----------------------------------------------------------------------------------------------
Medical Products -- 0.7%
- -----------------------------------------------------------------------------------------------
Maxxim Medical, Inc., Sr. Sub. Notes, 10.50%, 8/1/06 $ 1,300 $ 1,417,000
- -----------------------------------------------------------------------------------------------
$ 1,417,000
- -----------------------------------------------------------------------------------------------
Metals - Industrial -- 2.8%
- -----------------------------------------------------------------------------------------------
Applied Extrusion Inc., Sr. Notes, 11.50%, 4/1/02 $ 1,500 $ 1,590,000
Howmet Corp., Sr. Sub. Notes, 10.00%, 12/1/03 650 708,500
Kaiser Aluminum Corp., Sr. Sub. Notes, 12.75%, 2/1/03 1,900 2,052,000
Newflo Corp., Sub. Notes, 13.25%, 11/15/02 1,400 1,484,280
- -----------------------------------------------------------------------------------------------
$ 5,834,780
- -----------------------------------------------------------------------------------------------
Miscellaneous -- 1.6%
- -----------------------------------------------------------------------------------------------
Alliant Tech Systems Inc., Sr. Sub. Notes, 11.75%, 3/1/03 $ 1,000 $ 1,107,500
Day International Group, Inc., Sr. Sub. Notes, 11.125%,
6/1/05 1,000 1,080,000
Selmer Co., Inc., Sr. Sub. Notes, 11.00%,
5/15/05 $ 1,000 $ 1,090,000
- -----------------------------------------------------------------------------------------------
$ 3,277,500
- -----------------------------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 5.0%
- -----------------------------------------------------------------------------------------------
AES Corp., Sr. Sub. Notes, 10.25%, 7/15/06 $ 400 $ 437,000
Belden and Blake Corp., Sr. Sub. Notes, 9.875%, 6/15/07(1) 1,300 1,306,500
Cal Energy Company, Inc., Sr. Notes, 9.50%, 9/15/06 1,500 1,618,680
Dawson Product Services, Inc., Sr. Notes, 9.375%, 2/1/07 700 729,750
DI Industries, Inc., Sr. Sub. Notes, 8.875%, 7/1/07 1,200 1,236,000
Mariner Energy Corp., Sr. Sub. Notes, 10.50%, 8/1/06 2,700 2,753,999
Midland Funding II, Sec. Lease Oblig., 11.75%, 7/23/05 200 237,380
Rutherford-Moran Oil Corp., Sr. Sub. Notes, 10.75%, 10/1/04 1,170 1,213,875
Veritas DGC, Inc., Sr. Notes, 9.75%, 10/15/03 800 850,000
- -----------------------------------------------------------------------------------------------
$ 10,383,184
- -----------------------------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 0.6%
- -----------------------------------------------------------------------------------------------
Dailey Petroleum Service Corp., Sr. Disc. Notes, 9.75%,
8/15/07(1) $ 1,125 $ 1,170,000
- -----------------------------------------------------------------------------------------------
$ 1,170,000
- -----------------------------------------------------------------------------------------------
Paper and Forest Products -- 0.7%
- -----------------------------------------------------------------------------------------------
Pindo Deli Finance Mauritius, Ltd., Guaranteed Sr. Notes,
10.75%, 10/1/07(1) $ 1,000 $ 1,021,250
Stone Container Corp., Sr. Sub. Notes, 12.25%, 4/1/02 350 363,125
- -----------------------------------------------------------------------------------------------
$ 1,384,375
- -----------------------------------------------------------------------------------------------
Printing and Business Products -- 0.4%
- -----------------------------------------------------------------------------------------------
MDC Communications Corp., Sr. Sub. Notes, 10.50%, 12/1/06 $ 800 $ 859,000
- -----------------------------------------------------------------------------------------------
$ 859,000
- -----------------------------------------------------------------------------------------------
Publishing -- 1.7%
- -----------------------------------------------------------------------------------------------
Newsquest Capital Corp., Sr. Sub. Notes, 11.00%, 5/1/06 $ 2,095 $ 2,335,925
Von Hoffman Press, Inc., Sr. Sub. Notes, 10.375%, 5/15/07(1) $ 1,200 $ 1,272,000
- -----------------------------------------------------------------------------------------------
$ 3,607,925
- -----------------------------------------------------------------------------------------------
Retail - Food and Drug -- 3.3%
- -----------------------------------------------------------------------------------------------
AFC Enterprises, Inc. Sr Notes, 10.25%, 5/15/07 $ 2,400 $ 2,519,999
Duane Reade, G.P., Sr. Notes, 12.00%, 9/15/02 1,200 1,260,000
Jitney-Jungle Stores America, Inc., Sr. Sub. Notes, 10.375%,
9/15/07(1) 760 782,800
Randalls Food Products Markets, Inc., Sr. Sub. Notes,
9.375%, 7/1/07(1) 530 535,300
Star Markets Co., Sr. Sub. Notes, 13.00%, 11/1/04 1,550 1,767,000
- -----------------------------------------------------------------------------------------------
$ 6,865,099
- -----------------------------------------------------------------------------------------------
Retail - General -- 0.3%
- -----------------------------------------------------------------------------------------------
Knoll, Inc., Sr. Sub. Notes, 10.875%, 3/15/06 $ 525 $ 582,750
- -----------------------------------------------------------------------------------------------
$ 582,750
- -----------------------------------------------------------------------------------------------
Retail - Specialty and Apparel -- 0.6%
- -----------------------------------------------------------------------------------------------
Specialty Retailers, Inc., Sr. Sub. Notes, 9.00%, 7/15/07 $ 200 $ 203,250
Stage Stores, Inc., Notes, 8.50%, 7/15/05 1,000 1,023,750
- -----------------------------------------------------------------------------------------------
$ 1,227,000
- -----------------------------------------------------------------------------------------------
Telephone Utilities -- 0.8%
- -----------------------------------------------------------------------------------------------
Jordan Telecom Products, Inc., Sr. Disc. Notes, 11.75% (0%
until 2000), 8/1/07(1) $ 2,000 $ 1,560,000
- -----------------------------------------------------------------------------------------------
$ 1,560,000
- -----------------------------------------------------------------------------------------------
Textiles -- 1.0%
- -----------------------------------------------------------------------------------------------
Clark-Schwebel Holdings, Inc., Sr. Sub. Notes, 12.50%,
7/15/07(1) $ 598 $ 645,756
Clark-Schwebel Holdings, Inc., Sr. Notes, 10.50%, 4/15/06 1,300 1,423,500
- -----------------------------------------------------------------------------------------------
$ 2,069,256
- -----------------------------------------------------------------------------------------------
Transportation -- 0.7%
- -----------------------------------------------------------------------------------------------
Hermes Europe Railtel, Sr. Sub. Notes, 11.50%, 8/15/07(1) $ 1,315 $ 1,433,350
- -----------------------------------------------------------------------------------------------
$ 1,433,350
- -----------------------------------------------------------------------------------------------
Total Corporate Bonds & Notes
(identified cost $177,190,037) $188,103,788
- -----------------------------------------------------------------------------------------------
Preferred Stocks -- 5.4%
Security Shares Value
- -----------------------------------------------------------------------------------------------
Broadcasting and Cable -- 3.6%
- -----------------------------------------------------------------------------------------------
Adelphia Communications, Corp. 13% (1) 10,000 $ 1,110,000
Cablevision Systems Corp. 11.125%, (PIK)(1) 25,696 2,890,775
Chancellor Radio Broadcasting, Inc. 12% (1) 22,299 2,567,171
Echostar Communications 12.125%, (PIK)(1) 800 839,000
- -----------------------------------------------------------------------------------------------
$ 7,406,946
- -----------------------------------------------------------------------------------------------
Communications Services -- 1.2%
- -----------------------------------------------------------------------------------------------
IXC Communications, Inc. 12.5%(1) 2,100 $ 2,436,000
Nextlink Communications, 14%, (PIK)(1) 201 13,166
- -----------------------------------------------------------------------------------------------
$ 2,449,166
- -----------------------------------------------------------------------------------------------
Containers and Packaging -- 0.2%
- -----------------------------------------------------------------------------------------------
S.D. Warren Co. w / Warrants, 14%, 12/15/06 12,000 $ 540,000
- -----------------------------------------------------------------------------------------------
$ 540,000
- -----------------------------------------------------------------------------------------------
Telephone Utilities -- 0.4%
- -----------------------------------------------------------------------------------------------
Jordan Telecom Products, Inc. 13.25%, (PIK)(1) 700 $ 752,500
- -----------------------------------------------------------------------------------------------
$ 752,500
- -----------------------------------------------------------------------------------------------
Total Preferred Stocks
(identified cost $9,747,898) $ 11,148,612
- -----------------------------------------------------------------------------------------------
Common Stocks and Warrants -- 0.6%
Broadcasting and Cable -- 0.0%
- -----------------------------------------------------------------------------------------------
American Telecasting, Inc. Warrants+* 1,400 $ 14
Australis Holdings, Ltd., Warrants+* 459 --
Australis Media Ltd., Warrants+* 900 --
United International Holdings, Inc., Warrants Exp. 11/15/99+* 1,960 14,210
- -----------------------------------------------------------------------------------------------
$ 14,224
- -----------------------------------------------------------------------------------------------
Chemicals -- 0.1%
- -----------------------------------------------------------------------------------------------
Crompton & Knowles Corp., Common 7,116 $ 189,015
Sterling Chemicals Holdings, Warrants+* 800 28,000
- -----------------------------------------------------------------------------------------------
$ 217,015
- -----------------------------------------------------------------------------------------------
Communications Equipment -- 0.0%
- -----------------------------------------------------------------------------------------------
In Flight Phone Corp., Warrants Exp. 8/31/02+* 400 $ --
- -----------------------------------------------------------------------------------------------
$ --
- -----------------------------------------------------------------------------------------------
Communications Services -- 0.3%
- -----------------------------------------------------------------------------------------------
CS Wireless Systems, Inc., Common+* 198 $ --
Esat Holdings, Ltd., Warrants+ 900 22,500
Hyperion Communications, Inc., Warrants Exp. 4/15/01+* 1,000 22,500
Microcell Telecommunication, Warrants+* 14,600 346,750
Microcell Telecommunication, Contingent Warrants+* 14,600 146
Nextel Communications Warrants Exp. 04/25/99+* 1,800 20,700
Nextel Communications, Inc., Common+ 2,788 80,504
- -----------------------------------------------------------------------------------------------
$ 493,100
- -----------------------------------------------------------------------------------------------
Containers and Packaging -- 0.0%
- -----------------------------------------------------------------------------------------------
SD Warren Company, Warrants Exp. 12/15/06+* 12,000 $ 63,000
- -----------------------------------------------------------------------------------------------
$ 63,000
- -----------------------------------------------------------------------------------------------
Foods -- 0.0%
- -----------------------------------------------------------------------------------------------
Servam Corp., $2.00 Warrants Exp. 4/1/01+* 7,864 $ --
Servam Corp., $4.50 Warrants Exp. 4/1/01+* 1,768 --
Servam Corp., Common+* 884 --
Specialty Foods Acquisition Corp., Common+* 12,000 3,000
- -----------------------------------------------------------------------------------------------
$ 3,000
- -----------------------------------------------------------------------------------------------
Information Services -- 0.0%
- -----------------------------------------------------------------------------------------------
Orion Network Warrants Expire 01/15/07* 1,800 $ --
- -----------------------------------------------------------------------------------------------
$ --
- -----------------------------------------------------------------------------------------------
Machinery -- 0.2%
- -----------------------------------------------------------------------------------------------
Terex Corp., Common* 19,280 $ 400,060
Thermadyne Holdings Corp., Common+* 777 23,310
- -----------------------------------------------------------------------------------------------
$ 423,370
- -----------------------------------------------------------------------------------------------
Metals - Industrial -- 0.0%
- -----------------------------------------------------------------------------------------------
Gulf States Steel, Warrants+* 600 $ 30
- -----------------------------------------------------------------------------------------------
$ 30
- -----------------------------------------------------------------------------------------------
Total Common Stocks and Warrants
(identified cost $366,142) $ 1,213,739
- -----------------------------------------------------------------------------------------------
Commercial Paper -- 1.0%
Principal
Amount
Security (000 omitted) Value
- -----------------------------------------------------------------------------------------------
Associates Corporation of America, 6.36%, 10/1/97 $ 2,033 $ 2,033,000
- -----------------------------------------------------------------------------------------------
Total Commercial Paper
(identified cost $2,033,000) $ 2,033,000
- -----------------------------------------------------------------------------------------------
Total Investments -- 97.6%
(identified cost $189,337,077) $202,499,139
- -----------------------------------------------------------------------------------------------
Other Assets, Less Liabilities -- 2.4% $ 5,022,865
- -----------------------------------------------------------------------------------------------
Net Assets -- 100% $207,522,004
- -----------------------------------------------------------------------------------------------
(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.
+ Restricted Security (Note 8).
* Non-income producing security. (PIK) Payment in kind.
See notes to financial statements
</TABLE>
<PAGE>
Eaton Vance Income Fund of Boston as of September 30, 1997
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS CONT'D
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
As of September 30, 1997
Assets
- -------------------------------------------------------------------------------
Investments, at value (Note 1A)
(identified cost, $189,337,077) $202,499,139
Cash 1,040
Receivable for investments sold 3,214,566
Receivable for Trust shares sold 3,346,327
Interest receivable 4,218,170
- -------------------------------------------------------------------------------
Total assets $213,279,242
- -------------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------------
Payable for investments purchased $ 4,536,486
Payable for Trust shares redeemed 283,148
Dividends payable 821,736
Payable to affiliate for Trustee fees (Note 4) 1,353
Accrued expenses 114,515
- -------------------------------------------------------------------------------
Total liabilities $ 5,757,238
- -------------------------------------------------------------------------------
Net Assets for 23,847,792 shares of beneficial
interest outstanding $207,522,004
- -------------------------------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------------------------------
Paid-in capital $209,919,144
Accumulated net realized loss on investments
(computed on the basis of identified cost) (14,548,095)
Accumulated distributions in excess of net investment income (1,011,107)
Net unrealized appreciation of investments
(computed on the basis of identified cost) 13,162,062
- -------------------------------------------------------------------------------
Total $207,522,004
- -------------------------------------------------------------------------------
Net Asset Value and Redemption
Price Per Share
- -------------------------------------------------------------------------------
($207,522,004 / 23,847,792 shares of
beneficial interest outstanding) $ 8.70
- -------------------------------------------------------------------------------
Computation of Offering Price
- -------------------------------------------------------------------------------
Offering price per share (100 / 95.25 of $8.70) $ 9.13
- -------------------------------------------------------------------------------
On sales of $50,000 or more, the offering price is reduced.
See notes to financial statements
<PAGE>
Eaton Vance Income Fund of Boston as of September 30, 1997
- -------------------------------------------------------------------------------
FINANCIAL STATEMENTS CONT'D
- -------------------------------------------------------------------------------
Statement of Operations
For the Year Ended
September 30, 1997
Investment Income (Note 1B)
- -------------------------------------------------------------------------------
Dividends $ 55,930
Interest 17,476,572
Miscellaneous 342,456
- -------------------------------------------------------------------------------
Total investment income $ 17,874,958
- -------------------------------------------------------------------------------
Expenses
- -------------------------------------------------------------------------------
Investment adviser fee (Note 4) $ 1,076,121
Compensation of Trustees not members of the Investment Adviser's
organization (Note 4) 20,055
Service fees (Note 5) 211,643
Custodian fee 120,857
Transfer and dividend disbursing agent fees 162,221
Registration fees 70,710
Printing and postage 67,056
Legal and accounting services 40,642
Miscellaneous 35,263
- -------------------------------------------------------------------------------
Total expenses $ 1,804,568
- -------------------------------------------------------------------------------
Net investment income $ 16,070,390
- -------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- -------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 1,829,861
- -------------------------------------------------------------------------------
Net realized gain on investment transactions $ 1,829,861
- -------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 10,934,314
- -------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $ 10,934,314
- -------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 12,764,175
- -------------------------------------------------------------------------------
Net increase in net assets from operations $ 28,834,565
- -------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
Eaton Vance Income Fund of Boston as of September 30, 1997
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS CONT'D
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
Year Ended
Increase (Decrease) September 30, Year Ended
in Net Assets 1997 September 30, 1996
- --------------------------------------------------------------------------------
From operations --
Net investment income $ 16,070,390 $ 12,162,914
Net realized gain (loss) on investments 1,829,861 (1,311,602)
Net change in unrealized appreciation
(depreciation) of investments 10,934,314 4,839,422
- -------------------------------------------------------------------------------
Net increase in net assets from
operations $ 28,834,565 $ 15,690,734
- -------------------------------------------------------------------------------
Distributions to shareholders (Note 1D) --
From net investment income $(16,070,390) $(12,162,914)
In excess of net investment income (106,072) (180,838)
- -------------------------------------------------------------------------------
Total distributions to shareholders $(16,176,462) $(12,343,752)
- -------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 2) --
Proceeds from sale of shares $ 80,417,886 $ 45,698,870
Net asset value of shares issued to
shareholders in payment of
distributions declared 7,492,221 6,333,668
Cost of shares redeemed (36,889,924) (17,949,773)
- -------------------------------------------------------------------------------
Net increase in net assets from Trust
share transactions $ 51,020,183 $ 34,082,765
- -------------------------------------------------------------------------------
Net increase in net assets $ 63,678,286 $ 37,429,747
- -------------------------------------------------------------------------------
Net Assets
- -------------------------------------------------------------------------------
At beginning of year $143,843,718 $106,413,971
- -------------------------------------------------------------------------------
At end of year $207,522,004 $143,843,718
- -------------------------------------------------------------------------------
Accumulated
distributions in excess of
net investment income
included in net assets
- -------------------------------------------------------------------------------
At end of year $ (1,011,107) $ (905,035)
- -------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
Eaton Vance Income Fund of Boston as of September 30, 1997
<TABLE>
- -----------------------------------------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS CONT'D
- -----------------------------------------------------------------------------------------------------------------------------------
Financial Highlights
<CAPTION>
Year Ended September 30,
----------------------------------------------------------------------
1997 1996 1995 1994 1993
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of year $ 8.12 $ 7.92 $ 7.90 $ 8.40 $ 8.33
- -----------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.79 $ 0.80 $ 0.82 $ 0.83 $ 0.92
Net realized and unrealized gain (loss) on investments 0.57 0.21 0.02 (0.47) 0.07
- -----------------------------------------------------------------------------------------------------------------------------------
Total income from operations $ 1.36 $ 1.01 $ 0.84 $ 0.36 $ 0.99
- -----------------------------------------------------------------------------------------------------------------------------------
Less distributions
- -----------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.77) $ (0.80) $ (0.82) $ (0.81) $ (0.92)
In excess of net investment income (0.01) (0.01) -- (0.05) --
- -----------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.78) $ (0.81) $ (0.82) $ (0.86) $ (0.92)
- -----------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of year $ 8.70 $ 8.12 $ 7.92 $ 7.90 $ 8.40
- -----------------------------------------------------------------------------------------------------------------------------------
Total Return(1) 17.68% 13.41% 11.25% 4.25% 12.59%
- -----------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- -----------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $207,522 $143,844 $106,414 $103,482 $ 95,123
Ratio of net expenses to average daily net assets 1.05% 1.07% 1.09% 1.04% 1.03%
Ratio of net investment income to average daily net assets 9.32% 9.96% 10.50% 9.75% 11.01%
Portfolio Turnover 105% 81% 84% 70% 102%
- -----------------------------------------------------------------------------------------------------------------------------------
(1) Total investment 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 to be reinvested at the net
asset value on the payable date. Total return is not computed on an annualized basis.
</TABLE>
See notes to financial statements
<PAGE>
Eaton Vance Income Fund of Boston as of September 30, 1997
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
1 Significant Accounting Policies
------------------------------------------------------------------------------
Eaton Vance Income Fund of Boston (the Trust), a Massachusetts business
trust, is registered under the Investment Company Act of 1940, as amended,
as a diversified, open-end, management investment company. The following is
a summary of significant accounting policies consistently followed by the
Trust in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
A Investment Valuations -- Investments listed on securities exchanges or
NASDAQ 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. Short-term obligations,
maturing in sixty days or less, are valued at amortized cost, which
approximates value. Investments for which there is no quotation or valuation
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.
C Federal Taxes -- The Trust's policy is to comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies and
to distribute to shareholders all of its taxable income, including any net
realized gain on investments. Accordingly, no provision for federal income
or excise tax is necessary. At September 30, 1997, the Trust, for federal
income tax purposes, had a capital loss carryover of $14,514,179 which will
reduce the Trust'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 Trust of any liability for
federal income or excise tax. Such capital loss carryover will expire on
September 30, 1999 ($6,918,026), 2000 ($5,148,498), 2003 ($1,177) and 2004
($2,446,478).
D Distributions to Shareholders -- The net investment income of the Trust is
determined daily, and substantially all of the net investment income so
determined is declared daily as a dividend to shareholders of record at the
time of declaration. Distributions 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 Trust at the
net asset value as of the ex-dividend date. Distributions are paid in the
form of additional shares of the Trust or, at the election of the
shareholder, in cash. The Trust 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 temporary
over-distributions for financial statement purposes 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.
E Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
F Other -- Investment transactions are accounted for on the date the
investments are purchased or sold. Gains and losses on securities sold are
determined on the basis of identified cost.
G Expense Reduction -- Investors Bank and Trust Company (IBT) serves as
custodian to the Funds and of the Portfolio. Pursuant to the Custodian
Agreement, IBT receives a fee reduced by the credits which are determined
based on the average daily cash balance the Trust maintains with IBT. All
significant credit balances used to reduce the Portfolio's custodian fees
are reflected as a reduction of operating expenses in the Statement of
Operations.
2 Shares of Beneficial Interest
------------------------------------------------------------------------------
The Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional shares of beneficial interest (without par value).
Transactions in Trust shares were as follows:
Year Ended September 30,
--------------------------
1997 1996
- --------------------------------------------------------------------------------
Sales 9,696,558 5,726,284
Issued to shareholders electing to receive payments
of distributions in Trust shares 901,943 793,091
Redemptions (4,456,378) (2,248,018)
- --------------------------------------------------------------------------------
Net increase 6,142,123 4,271,357
- --------------------------------------------------------------------------------
3 Purchases and Sales of Investments
------------------------------------------------------------------------------
The Trust invests primarily in debt securities. The ability of the issuers
of the debt securities held by the Trust 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 $221,587,355 and $174,141,060, respectively, for the
year ended September 30, 1997.
4 Investment Adviser Fee and Other Transactions with Affiliates
------------------------------------------------------------------------------
The investment adviser fee, computed at a monthly rate of 5/96 of 1% (5/8 of
1% annually) of the Trust's average monthly net assets, was earned by Eaton
Vance Management (EVM) as compensation for management and investment
advisory services rendered to the Trust. Except as to Trustees of the Trust
who are not members of EVM's organization, officers and Trustees receive
remuneration for their services to the Trust out of such investment adviser
fee. Eaton Vance Distributors, Inc. (EVD), a subsidiary of EVM and the
Trust's principal underwriter, did not receive any of the sales charge on
sales of Trust shares during the year ended September 30, 1997. Certain of
the officers and Trustees of the Trust are officers and directors/trustees
of the above organizations.
5 Service Plan
------------------------------------------------------------------------------
The Trustees on behalf of the Trust have adopted a Service Plan (the Plan)
designed to meet the requirements of the revised sales charge rule of The
National Association of Securities Dealers Inc. The Service Plan provides
that the Trust may make service fee payments to the Principal Underwriter,
Eaton Vance Distributors, Inc., a subsidiary of Eaton Vance Management,
Authorized Firms or other persons in amounts not exceeding 0.25% of the
Trust's average daily net assets for any fiscal year. The Trustees have
initially implemented the Plan by authorizing the Trust to make quarterly
service fee payments to the Principal Underwriter and Authorized Firms in
amounts not expected to exceed 0.25% of that portion of the Trust's average
daily net assets for any fiscal year which is attributable to shares of the
Trust sold on or after May 22, 1989 by such persons and remaining
outstanding for at least twelve months. Such payments are made for personal
services and/or the maintenance of shareholder accounts. Pursuant to the
Plan, the Trust made provisions of $211,643 under the Plan to the Principal
Underwriter and Authorized Firms during the year ended September 30, 1997.
6 Line of Credit
------------------------------------------------------------------------------
The Trust participates with other funds and portfolios managed by BMR and
EVM and its affiliates in a $120 million unsecured line of credit agreement
with a group of banks. The Trust may temporarily borrow from the line of
credit to satisfy redemption requests or settle investment transactions.
Interest is charged to each fund based on its borrowings at an amount above
the banks' adjusted certificate of deposit rate, Eurodollar rate or federal
funds effective rate. In addition, a fee computed at an annual rate of 0.15%
on the daily unused portion of the line of credit is allocated among the
participating funds and portfolios at the end of each quarter. The Trust did
not have any significant borrowings or allocated fees during the year ended
September 30, 1997.
7 Federal Income Tax Basis of Investments
------------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in value of the
investments owned at September 30, 1997, as computed on a federal income tax
basis, were as follows:
Aggregate cost $189,370,993
------------------------------------------------------------------------------
Gross unrealized appreciation $ 13,367,271
Gross unrealized depreciation (239,125)
------------------------------------------------------------------------------
Net unrealized appreciation $ 13,128,146
------------------------------------------------------------------------------
8 Restricted Securities
------------------------------------------------------------------------------
At September 30, 1997, The Trust owned the following securities
(representing 0.78% of net assets) which were restricted as to public resale
and not registered under the Securities Act of 1933 (excluding Rule 144A
securities). The Trust 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
- ------------------------------------------------------------------------------------------------------------------------------------
Corporate Note
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Inflo Holdings Corp., Promissory Notes, 10%, 1/27/07 9/13/96 1,100,000 $ 773,226 $ 990,000
Common Stocks, Warrants, and Rights
- ------------------------------------------------------------------------------------------------------------------------------------
American Telecasting, Inc., Wts 1/16/96 1,400 $ 38,500 $ 14
Australis Holdings, Ltd. 4/3/97 459 0 0
Australis Media Ltd., Wts 5/26/95 900 0 0
CS Wireless Systems, Inc., Common 1/14/97 198 0 0
Esat Holdings, Ltd. 1/24/97 --
5/28/97 900 495,788 22,500
Gulf States Steel, Wts 8/23/95 600 0 30
Hyperian Communications, 7/30/97- 1,000 22,500 22,500
Inc., Exp. 4/15/01 8/4/97
In Flight Phone Corp., Wts., Exp. 8/31/02 11/28/95 400 0 0
Microcell Telecommunication, Wts 10/29/96 14,600 0 346,750
Microcell Telecommunication, Contingent Wts 10/29/96 14,600 0 146
Nextel Communications, Inc. 9/05/97 2,788 45,000 80,504
Nextel Communications Wts., Exp. 4/25/99 10/4/94 1,800 0 20,700
SD Warren Co., Wts., Exp. 12/15/06 5/15/95 12,000 0 63,000
Servam Corp., $2.00 Wts., Exp. 4/1/01 12/15/87 7,864 0 0
Servam Corp., $4.50 Wts., Exp. 4/1/01 12/15/87 1,768 0 0
Servam Corp., Common 12/15/87 884 0 0
Specialty Foods Acq. Corp., Common 8/10/93 12,000 8,722 3,000
Sterling Chemicals Holdings, Wts 10/11/96 800 0 28,000
Thermadyne Holdings Corp., Common 5/17/94 777 18,900 23,310
United International Holdings, Inc., Wts., Exp. 11/15/99 11/16/94 1,960 55,546 14,210
- ------------------------------------------------------------------------------------------------------------------------------------
$1,458,182 $1,614,664
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
Eaton Vance Income Fund of Boston as of September 30, 1997
- --------------------------------------------------------------------------------
INDEPENDENT AUDITORS' REPORT
- --------------------------------------------------------------------------------
To the Trustees and Shareholders
of Eaton Vance Income Fund of Boston:
- --------------------------------------------------------------------------------
We have audited the accompanying statement of assets and liabilities of Eaton
Vance Income Fund of Boston, including the portfolio of investments, as of
September 30, 1997, and the related statement of operations, the statements of
changes in net assets and the financial highlights for each of the periods
indicated therein. These financial statements and financial highlights are the
responsibility of the Trust'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 generally accepted auditing
standards. 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. Our procedures included confirmation of securities
held as of September 30, 1997 by correspondence with the custodian and
brokers. 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, the financial statements and financial highlights present
fairly, in all material respects, the financial position of the Eaton Vance
Income Fund of Boston at September 30, 1997, and the results of its
operations, the changes in its net assets and financial highlights for each of
the periods indicated therein, in conformity with generally accepted
accounting principles.
Coopers & Lybrand L.L.P.
Boston, Massachusetts
October 31, 1997
<PAGE>
Eaton Vance Income Fund of Boston as of September 30, 1997
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT
- --------------------------------------------------------------------------------
<TABLE>
Eaton Vance Income Fund of Boston
<S> <C>
Officers Independent Trustees
M. DOZIER GARDNER KENNETH C. KNIGHT
President and Trustee Consultant
HOOKER TALCOTT, JR. DONALD R. DWIGHT
Vice President and President, Dwight Partners, Inc.
Co-Portfolio Manager Chairman, Newspapers of New England, Inc.
MICHAEL W. WEILHEIMER ROBERT GLUCK
Vice President and Management Consultant
Co-Portfolio Manager
SAMUEL L. HAYES, III
JAMES L. O'CONNOR Jacob H. Schiff Professor of Investment
Treasurer Banking, Harvard University Graduate School of
Business Administration
ALAN R. DYNNER
Secretary NORTON H. REAMER
President and Director, United Asset
Management Corporation
JOHN L. THORNDIKE
Formerly Director, Fiduciary Company Incorporated
</TABLE>
<PAGE>
Investment Advisor of Eaton Vance
Income Fund of Boston
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617)482-8260
Custodian
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02110
Transfer Agent
First Data Investor Services Group, Inc.
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, NY 10036
Independent Accountants
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
Eaton Vance Income Fund of Boston
24 Federal Street
Boston, MA 02110
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus
which contains more complete information on the Fund, including its
sales charges and expenses. Please read the prospectus carefully before
you invest or send money.
- --------------------------------------------------------------------------------
T-IBSRC-11/97
