<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 30, 1998
1933 ACT FILE NO. 2-42722
1940 ACT FILE NO. 811-02258
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 43 [X]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 20 [X]
EATON VANCE INCOME FUND OF BOSTON
---------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
----------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
617-482-8260
------------------------
(REGISTRANT'S TELEPHONE NUMBER)
ALAN R. DYNNER
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
---------------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective pursuant to rule 485
(check appropriate box):
[ ] immediately upon filing [ ] on (date) pursuant to
pursuant to paragraph (b) paragraph (a)(1)
[X] on February 1, 1998 [ ] 75 days after filing
pursuant to paragraph (b) pursuant to paragraph (a)(2)
[ ] 60 days after filing [ ] on (date) pursuant to
pursuant to paragraph (a)(1) paragraph (a)(2).
If appropriate, check the following box:
[ ] this post effective amendment designates a new effective date for a
previously filed post-effective amendment.
TITLE OF SECURITIES BEING REGISTERED: Shares of Beneficial Interest.
================================================================================
<PAGE>
EATON VANCE INCOME FUND OF BOSTON
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-1A
---------------------------
<TABLE>
<CAPTION>
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- ------ ------------ ---------------------------------------------
<S> <C> <C>
1. .................. Cover Page Cover Page
2. .................. Synopsis Shareholder and Fund Expenses
3. .................. Condensed Financial Information The Fund's Financial Highlights; Performance
Information
4. .................. General Description of Registrant The Fund's Investment Objectives; Investment
Policies and Risks;
Organization of the Fund
5. .................. Management of the Fund Management of the Fund
5a................... Management's Discussion of Fund Not Applicable
Performance
6. .................. Capital Stock and Other Securities Organization of the Fund; The Lifetime
Investing Account/Distribution Options;
Distributions and Taxes
7. .................. Purchase of Securities Being Offered Valuing Shares; How to Buy Shares; The
Lifetime Investing Account/Distribution
Options; Service Plan; The Eaton Vance
Exchange Privilege; Eaton Vance Shareholder
Services
8. .................. Redemption or Repurchase How to Redeem Shares
9. .................. Legal Proceedings Not Applicable
PART B
ITEM NO. ITEM CAPTION STATEMENT OF ADDITIONAL INFORMATION CAPTION
- ------- ------------ ---------------------------------------------
10. .................. Cover Page Cover Page
11. .................. Table of Contents Table of Contents
12. .................. General Information and History General Information and History
13. .................. Investment Objectives and Policies Investment Objectives and Policies;
Investment Restrictions
14. .................. Management of the Fund Officers and Trustees of the Fund
15. .................. Control Persons and Principal Holders of Control Persons and Principal Holders of
Securities Securities
16. .................. Investment Advisory and Other Investment Adviser; Custodian; Service Plan;
Services Other Information
17. .................. Brokerage Allocation and Other Portfolio Security Transactions
Practices
18. .................. Capital Stock and Other Securities Other Information
19. .................. Purchase, Redemption and Pricing of Determination of Net Asset Value; Principal
Securities Being Offered Underwriter; Service for Withdrawal;
Services for Accumulation; Service Plan
20. .................. Tax Status Taxes
21. .................. Underwriters Principal Underwriter
22. .................. Calculations of Performance Data Investment Performance
23. .................. Financial Statements Financial Statements
</TABLE>
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
Investing
for the
[LOGO]
EATON VANCE 21st
============== Eaton Vance
Mutual Funds Century Income Fund of Boston
EATON VANCE INCOME FUND OF BOSTON (THE "FUND") IS A MUTUAL FUND SEEKING AS ITS
PRIMARY OBJECTIVE TO PROVIDE AS MUCH CURRENT INCOME AS POSSIBLE. IN SEEKING
ITS INVESTMENT OBJECTIVE, THE FUND MAY INVEST UP TO 100% OF ITS ASSETS IN
LOWER-RATED BONDS, COMMONLY KNOWN AS "JUNK BONDS", THAT ENTAIL GREATER RISKS,
INCLUDING DEFAULT, THAN THOSE OF HIGHER-RATED SECURITIES. INVESTORS SHOULD
CAREFULLY CONSIDER THESE RISKS AND INVEST FOR THE LONG TERM. SEE "THE FUND'S
INVESTMENT OBJECTIVES" AND "INVESTMENT POLICIES AND RISKS".
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR
ENDORSED BY, ANY BANK OR OTHER INSURED DEPOSITORY INSTITUTION, AND ARE NOT
FEDERALLY INSURED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION, THE FEDERAL
RESERVE BOARD OR ANY OTHER GOVERNMENT AGENCY. SHARES OF THE FUND INVOLVE
INVESTMENT RISKS, INCLUDING FLUCTUATIONS IN VALUE AND THE POSSIBLE LOSS OF
SOME OR ALL OF THE PRINCIPAL INVESTMENT.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A
Statement of Additional Information dated February 1, 1998 for the Fund, as
supplemented from time to time, has been filed with the Securities and
Exchange Commission (the "Commission") and is incorporated herein by
reference. This Statement of Additional Information is available without
charge from the Fund's principal underwriter, Eaton Vance Distributors, Inc.
(the "Principal Underwriter"), 24 Federal Street, Boston, MA 02110 (telephone
(800) 225-6265). The Fund's investment adviser is Eaton Vance Management (the
"Investment Adviser") which is located at the same address.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
CONTENTS
<TABLE>
<CAPTION>
Page Page
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Shareholder and Fund Expenses 2 How to Redeem Shares 10
The Fund's Financial Highlights 3 Reports to Shareholders 11
The Fund's Investment Objectives 4 The Lifetime Investing Account/Distribution Options 11
Investment Policies and Risks 4 The Eaton Vance Exchange Privilege 12
Organization of the Fund 7 Eaton Vance Shareholder Services 13
Management of the Fund 7 Distributions and Taxes 13
Service Plan 8 Performance Information 14
Valuing Shares 8 Appendix A 16
How to Buy Shares 8 Appendix B 18
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Prospectus dated February 1, 1998
<PAGE>
Shareholder and Fund Expenses
Shareholder Transaction Expenses
Maximum Sales Charge Imposed on Purchases (as a percentage of
offering price) 4.75%
Sales Charges Imposed on Reinvested Distributions None
Exchange Fees None
Annual Fund Operating Expenses (as a percentage of average daily net assets)
Investment Adviser Fee 0.625%
Other Expenses (including Service Plan Fees of 0.123%) 0.425
-----
Total Operating Expenses 1.050%
=====
Example
An investor would pay the following maximum initial sales charge and
expenses on a $1,000 investment, assuming (a) 5% annual return and (b)
redemption at the end of each period:
1 Year $ 58
3 Years 79
5 Years 103
10 Years 170
NOTES: The table and Example summarize the aggregate expenses of the Fund and
are designed to help investors understand the costs and expenses they will
bear, directly or indirectly, by investing in the Fund. Information for the
Fund is based on its expenses for the most recent fiscal year.
THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF PAST OR FUTURE
EXPENSES AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN. Federal
regulations require the Example to assume a 5% annual return, but actual
annual return will vary. For further information regarding the expenses of the
Fund see "The Fund's Financial Highlights", "Management of the Fund", "Service
Plan" and "How to Redeem Shares".
No sales charge is payable at the time of purchase on investments of $1
million or more. However, a contingent deferred sales charge ("CDSC") of 1%
will be imposed on such investments in the event of certain redemptions within
12 months of purchase. See "How to Buy Shares" and "How to Redeem Shares".
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
The following information should be read in conjunction with the audited
financial statements included in the Fund's annual report to shareholders
which is incorporated by reference into the Statement of Additional
Information in reliance upon the report of Coopers & Lybrand L.L.P.,
independent accountants, as experts in accounting and auditing. The financial
highlights for each of the four years in the period ending September 30, 1991,
presented herein, were audited by other auditors whose report dated November
5, 1991, expressed an unqualified opinion on such financial highlights.
Further information regarding the performance of the Fund is contained in its
annual report to shareholders which may be obtained without charge by
contacting the Principal Underwriter.
<TABLE>
<CAPTION>
Year Ended September 30,
--------------------------------------------------------------------------------------------------------------
1997 1996 1995 1994 1993 1992 1991+ 1990+ 1989+ 1988+
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value,
beginning of year $ 8.12 $ 7.92 $ 7.90 $ 8.40 $ 8.33 $ 7.56 $ 6.89 $ 9.16 $ 9.39 $ 10.07
-------- -------- -------- ------- ------- ------ ------- ------- ------- -------
Income from
Operations:
Net investment
income $ 0.79 $ 0.80 $ 0.82 $ 0.83 $ 0.92 $ 0.97 $ 1.04 $ 1.15 $ 1.10 $ 1.08
Net realized and
unrealized gain
(loss) on
investments 0.57 0.21 0.02 (0.47) 0.07 0.77 0.71 (2.26) (0.22) (0.25)
-------- -------- -------- ------- ------- ------ ------- ------- ------- -------
Total income
from
operations $ 1.36 $ 1.01 $ 0.84 $ 0.36 $ 0.99 $ 1.74 $ 1.75 $ (1.11) $ 0.88 $ 0.83
-------- -------- -------- ------- ------- ------ ------- ------- ------- -------
Less Distributions:
From net
investment
income $ (0.77) $ (0.80) $ (0.82) $ (0.81) $ (0.92) $(0.97) $ (1.04) $ (1.15) $ (1.10) $ (1.30)
From paid-in
capital -- -- -- -- -- -- -- (0.04) (0.01) (0.01)
In excess of net
investment
income(2) (0.01) (0.01) -- (0.05) -- -- -- -- -- --
-------- -------- -------- ------- ------- ------ ------- ------- ------- -------
Total
distributions $ (0.78) $ (0.81) $ (0.82) $ (0.86) $ (0.92) $(0.97) $ (1.08) $ (1.16) $ (1.11) $ (1.51)
-------- -------- -------- ------- ------- ------ ------- ------- ------- -------
Net Asset Value, end
of year $ 8.70 $ 8.12 $ 7.92 $ 7.90 $ 8.40 $ 8.33 $ 7.56 $ 6.89 $ 9.16 $ 9.39
======== ======== ======== ======= ======= ====== ======= ======= ======= =======
Total Return(1) 17.68% 13.41% 11.25% 4.25% 12.59% 24.25% 28.53% (13.06%) 9.76% 9.35%
Ratios/Supplemental
Data:
Net assets, end of
year (000's
omitted) $207,522 $143,844 $106,414 $103,482 $95,123 $85,778 $70,773 $65,588 $45,852 $44,492
Ratio of net
expenses to
average daily
net assets 1.05% 1.07% 1.09% 1.04% 1.03% 1.08% 1.15% 1.05% 1.39% 1.31%
Ratio of net
investment
income to
average daily
net assets 9.32% 9.96% 10.50% 9.75% 11.01% 12.02% 15.36% 14.26% 11.54% 11.32%
Portfolio Turnover 105% 81% 84% 70% 102% 90% 80% 67% 66% 61%
+ Audited by previous auditors.
(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. Income dividends are assumed to be reinvested at the net asset value on the
payable date Capital gain distributions, if any, are assumed to be reinvested at the net asset value on the ex-dividend date.
Total return is compu ted on a non-annualized basis.
(2) During the year ended September 30, 1993, the Fund adopted Statement of Position (SOP) 93-2: Determination, Disclosure and Fin
ancial Statement Presentation of Income, Capital Gain, and Return of Capital Distributions by Investment Companies. The SOP
requires that differences in the recognition or classification of income between the financial statements and tax earnings and
profits that result in temporary over-distributions for financial statement purposes, are classified as distributions in excess
of net investment inc ome or accumulated net realized gains.
</TABLE>
<PAGE>
THE FUND'S INVESTMENT OBJECTIVES
THE FUND'S PRIMARY INVESTMENT OBJECTIVE IS TO PROVIDE AS MUCH CURRENT INCOME
AS POSSIBLE. In seeking this objective, the Fund currently invests a
significant portion of its assets in high yield, high risk bonds -- i.e.,
those rated lower than investment grade and unrated obligations (commonly
referred to as "junk bonds"). The Fund also seeks reasonable preservation of
capital to the extent attainable from such investments, and growth of income
and capital, as secondary objectives.
The high yield, high risk bonds in which the Fund invests are considered
predominently speculative with respect to the ability of the issuer to meet
principal and interest payments. Achievement of the Fund's objectives, which
cannot be assured, is therefore much more dependent on the Investment
Adviser's own credit analysis than is the case for higher quality bonds. The
Fund may not be appropriate for investors who cannot assume the greater risk
of capital depreciation or loss inherent in seeking higher yields. Investors
are urged to carefully consider the substantial risks of investing in a
portfolio of high yield, high risk bonds before purchasing shares of the Fund.
INVESTMENT POLICIES AND RISKS
During its last fiscal year the Fund invested a significant portion of its
assets in high yield, high risk bonds which were rated lower than investment
grade (i.e., bonds rated lower than Baa by Moody's Investors Service, Inc.
("Moody's") and lower than BBB by Standard & Poor's Ratings Group ("S&P")) or
which were unrated. For a description of the Moody's and S&P's ratings, see
Appendix A to this Prospectus. These obligations are commonly referred to as
"junk bonds", carry a high degree of risk and are considered speculative by
the investment community. For more detailed information about the risks
associated with investing in such securities, see "Risk Considerations" below.
At September 30, 1997, the Fund had approximately 98.9% of its net assets
invested in such bonds. See Appendix B to this Prospectus for the asset
composition information for the most recent fiscal year of the Fund.
A substantial portion of the Fund's assets consists of high yield, high risk
corporate bonds issued in connection with mergers, acquisitions, leveraged
buy-outs, recapitalizations and other highly leveraged transactions. These
bonds are subject to substantially greater credit risks than some of the other
fixed-income securities in which the Fund may invest. These credit risks
include the possibility of default or the bankruptcy of the issuer. These
bonds may also be less liquid than other fixed-income securities. During
periods of deteriorating economic conditions and contraction in the credit
markets, the ability of issuers of such bonds to service their debt, meet
projected goals, or obtain additional financing may be impaired. Because the
Fund seeks, in part, preservation of capital, the Investment Adviser is more
likely to avoid or limit investment in securities with substantial credit
risks than if high current income were the Fund's only objective.
The Fund may also invest a portion of its assets in debt securities that are
not paying current income in anticipation of the receipt of possible future
income or capital appreciation. Interest and/or principal payments thereon
could be in arrears when such securities are acquired, and the issuer may be
in bankruptcy or undergoing a debt restructuring or reorganization. Such
securities may be unrated or the lowest rated obligations (rated C by Moody's
or D by S&P). Bonds rated C by Moody's are regarded as having extremely poor
prospects of ever attaining any real investment standing. Bonds rated D by S&P
are in payment default or a bankruptcy petition has been filed and debt
service payments are jeopardized. The Fund may retain defaulted obligations in
its portfolio when such retention is considered desirable by the Investment
Adviser. The Fund may also acquire other securities issued in exchange for
such obligations or issued in connection with the debt restructuring or
reorganization of the issuers, or where such acquisition, in the judgment of
the Investment Adviser, may enhance the value of such obligations or would
otherwise be consistent with the Fund's investment policies.
Although the Investment Adviser considers security ratings when making
investment decisions, it performs its own credit and investment analysis and
does not rely primarily on the ratings assigned by the rating services. In
evaluating the quality of a particular issue, whether rated or unrated, the
Investment Adviser will normally take into consideration, among other things,
the issuer's financial resources and operating history, its sensitivity to
economic conditions and trends, the ability of its management, its debt
maturity schedules and borrowing requirements, and relative values based on
anticipated cash flow, interest and asset coverages, and earnings prospects.
Because of the greater number of investment considerations involved in
investing in high yield, high risk bonds, the achievement of the Fund's
objectives depends more on the Investment Adviser's judgment and analytical
abilities than would be the case if the Fund were investing primarily in
securities in the higher rating categories.
The Fund's portfolio may be invested in a broad range of securities, including
fixed-income and equity securities and short-term obligations. In addition to
lower rated bonds, the Fund may invest in higher rated securities. The Fund
may also invest in non-dividend paying common stocks and rights and warrants
when the Investment Adviser believes they present opportunities for capital
appreciation.
FIXED-INCOME OBLIGATIONS. The fixed-income securities in which the Fund may
invest include preferred and preference stocks and all types of debt
obligations of both domestic and foreign issuers, such as bonds, debentures,
notes, equipment lease certificates, equipment trust certificates, conditional
sales contracts, commercial paper, and obligations issued or guaranteed by the
U.S. Government, any state or territory of the United States, any foreign
government or any of their respective political subdivisions, agencies or
instrumentalities. Debt securities may bear fixed, fixed and contingent,
floating or variable rates of interest. Investments in foreign securities are
not expected to exceed 25% of total assets.
The Fund may also invest a portion of its assets in loan interests, which are
interests in amounts owed by a corporate, governmental or other borrower to
lenders or lending syndicates. Loan interests purchased by the Fund may have a
maturity of any number of days or years, may be secured or unsecured, and may
be of any credit quality. Loan interests, which may take the form of
participation interests in, assignments of or novations of a loan, may be
acquired from U.S. and foreign banks, insurance companies, finance companies
or other financial institutions which have made loans or are members of a
lending syndicate or from the holders of loan interests. Loan interests
involve the risk of loss in case of default or bankruptcy of the borrower and,
in the case of participation interests, involve a risk of insolvency of the
agent lending bank or other financial intermediary.
The Fund may invest up to 15% of net assets in illiquid securities. Illiquid
securities include securities legally restricted as to resale, such as
commercial paper issued pursuant to Section 4(2) of the Securities Act of
1933, as amended, and securities eligible for resale pursuant to Rule 144A
thereunder. Section 4(2) and Rule 144A securities may, however, be treated as
liquid by the Investment Adviser pursuant to procedures adopted by the
Trustees, which require consideration of factors such as trading activity,
availability of market quotations and number of dealers willing to purchase
the security.
INVESTMENT PRACTICES
DERIVATIVE INSTRUMENTS. The Fund may purchase or sell derivative instruments
(which are instruments that derive their value from another instrument,
security, index or currency) to hedge against fluctuations in interest rates,
securities prices or currency exchange rates, to change the duration of the
Fund's fixed income portfolio or as a substitute for the purchase or sale of
securities or currency. Options may be written to enhance income. The Fund's
transactions in derivative instruments may include the purchase or sale of
futures contracts on securities (such as U.S. Government securities), indices,
other financial instruments (such as certificates of deposit, Euro-dollar time
deposits, and economic indices) or currencies; options on futures contracts;
exchange-traded options on securities, indices or currencies; and forward
contracts to purchase or sell currencies. All of the Fund's transactions in
derivative instruments involve a risk of loss or depreciation due to:
unanticipated adverse changes in interest rates, securities prices or currency
exchange rates; the inability to close out a position; default by the
counterparty; imperfect correlation between a position and the desired hedge;
tax constraints on closing out positions; and portfolio management constraints
on disposing of securities subject to such transactions. The loss on
derivative instruments (other than purchased options) may substantially exceed
the Fund's initial investment in these instruments. In addition, the Fund may
lose the entire premium paid for purchased options that expire before they can
be profitably exercised by the Fund. The Fund incurs transaction costs in
opening and closing positions in derivative instruments. Under regulations of
the Commodity Futures Trading Commission, the use of futures transactions for
nonhedging purposes is limited. There can be no assurance that the Investment
Adviser's use of derivative instruments will be advantageous to the Fund.
The Fund's success in using derivative instruments to hedge portfolio assets
depends on the degree of price correlation between the derivative instrument
and the hedged asset. Imperfect correlation may be caused by several factors,
including temporary price disparities among the trading markets for the
derivative instruments, the assets underlying the derivative instrument and
the Fund's assets. The Fund may write (sell) covered call and put options only
with respect to up to 25% of its net assets.
SHORT-TERM TRADING. Securities may be sold in anticipation of a market
decline (a rise in interest rates) and later purchased, or purchased in
anticipation of a market rise (a decline in interest rates) and later sold. In
addition, a security may be sold and another purchased at approximately the
same time to take advantage of what the Fund believes to be a temporary
disparity in the normal yield relationship between the two securities. Yield
disparities may occur for reasons not directly related to the investment
quality of particular issues or the general movement of interest rates, such
as changes in the overall demand for or supply of various types of fixed-
income securities or changes in the investment objectives of investors. Such
trading may be expected to increase the portfolio turnover rate and the
expenses incurred in connection with such trading. The Fund anticipates that
its annual portfolio turnover rate will generally not exceed 100% (excluding
turnover of securities having a maturity of one year or less).
RISK CONSIDERATIONS
Investors should carefully consider their ability to assume the risks of
owning shares of a mutual fund that invests in below investment grade debt
obligations before making an investment in the Fund. The lower ratings of
certain securities held by the Fund reflect a greater possibility that adverse
changes in the financial condition of an issuer, or in general economic
conditions, or both, or an unanticipated rise in interest rates, may impair
the ability of the issuer to make payments of interest and principal. The
inability (or perceived inability) of issuers to make timely payment of
interest and principal would likely make the values of securities held by the
Fund more volatile and could limit the Fund's ability to sell its securities
at prices approximating the values the Fund has placed on such securities. It
is possible that legislation may be adopted in the future limiting the ability
of certain financial institutions to purchase such securities; such
legislation may adversely affect the liquidity of such securities. In the
absence of a liquid trading market for securities held by it, the Fund may be
unable at times to establish the fair market value of such securities. The
rating assigned to a security by a rating agency does not reflect an
assessment of the volatility of the security's market value or of the
liquidity of an investment in the securities. Credit ratings are based largely
on the issuer's historical financial condition and the rating agency's
investment analysis at the time of rating, and the rating assigned to any
particular security is not necessarily a reflection of the issuer's current
financial condition. Credit quality in the high yield, high risk bond market
can change from time to time, and recently issued credit ratings may not fully
reflect the actual risks posed by a particular high yield security.
While the Investment Adviser will attempt to reduce the risks of investing in
lower rated or unrated securities through active portfolio management,
diversification, credit analysis and attention to current developments and
trends in the economy and the financial markets, there can be no assurance
that a broadly diversified portfolio of such securities would substantially
lessen the risks of defaults brought about by an economic downturn or
recession.
THE NET ASSET VALUE OF THE FUND WILL CHANGE IN RESPONSE TO FLUCTUATIONS IN
PREVAILING INTEREST RATES AND CHANGES IN THE VALUE OF ITS PORTFOLIO
SECURITIES. When interest rates decline, the value of securities already held
in the Fund's portfolio can be expected to rise. Conversely, when interest
rates rise, the value of existing portfolio securities can be expected to
decline. Changes in the credit quality of issuers of debt obligations held in
the Fund's portfolio will affect the principal value (and possibly the income
earned) on such obligations. In addition, the values of such securities are
affected by changes in general economic conditions and business conditions
affecting the specific industries of their issuers. Changes by recognized
rating services in their ratings of any fixed-income security and in the
ability of an issuer to make payments of interest and principal may also
affect the value of these investments. The Fund will not dispose of a security
solely because its rating is reduced below its rating at the time of purchase,
although the Investment Adviser will monitor the investment to determine
whether continued investment in the security will assist in meeting the Fund's
investment objectives.
Interest and/or principal payments on securities in default could be in
arrears when such securities are acquired, and the issuer may be in bankruptcy
or undergoing a debt restructuring or reorganization. In order to enforce its
rights in the event of a default of such securities, the Fund may be required
to take possession of and manage assets securing the issuer's obligation on
such securities, which may increase the Fund's operating expenses and
adversely affect the Fund's net asset value.
Because foreign securities involve foreign currencies, the values of the
assets of the Fund and their net investment income available for distribution
may be affected favorably or unfavorably by changes in currency exchange rates
and exchange control regulations. There may be less information publicly
available about a foreign issuer than about a U.S. issuer, and foreign issuers
are not generally subject to accounting, auditing, and financial reporting
standards and practices comparable to those in the United States. The
willingness and ability of foreign issuers to pay principal and interest on
government securities depends on various economic factors, including among
others the issuer's balance of payments, overall debt level, and cash flow
considerations related to the availability of tax or other revenues to satisfy
the issuer's obligations. The securities of some foreign issuers are less
liquid and at times more volatile than securities of comparable U.S. issuers.
Foreign brokerage commissions and fees are also generally higher than in the
United States. Foreign settlement procedures and trade regulations may involve
certain risks (such as delay in the payment or delivery of securities or in
the recovery of assets held abroad) and expenses not present in the settlement
of domestic investments. Investments may include securities issued by
companies in lesser-developed countries, which are sometimes referred to as
"emerging markets". As a result, the Fund may be exposed to greater risk and
will be more dependent on the Investment Adviser's ability to assess such risk
than if the Fund invested solely in more developed countries. In addition,
there may be a possibility of nationalization or expropriation of assets,
imposition of currency exchange controls, confiscatory taxation, political or
financial instability, armed conflict and diplomatic developments which could
affect the values of the Fund's investments in certain foreign countries.
Legal remedies available to investors in certain foreign countries, including
remedies available in bankruptcy proceedings, may be more limited than those
available with respect to investments in the United States or in other foreign
countries. The laws of some foreign countries may limit the Fund's ability to
invest in securities of certain issuers located in those foreign countries.
Special tax considerations apply to foreign securities.
Certain securities held by the Fund may permit the issuer at its option to
"call", or redeem, its securities. If an issuer were to redeem securities held
by the Fund during a time of declining interest rates, the Fund may not be
able to reinvest the proceeds in securities providing the same investment
return as the securities redeemed. The Fund may also temporarily borrow up to
5% of the value of its total assets to satisfy redemption requests or settle
securities transactions.
Loan interests generally are not rated by any nationally recognized rating
service and are, at present, not readily marketable and may be subject to
contractual restrictions on resale. An investment in restricted securities may
involve relative greater risk and cost to the Fund because of their
illiquidity. Moreover, Rule 144A and Section 4(2) securities determined to be
liquid may increase the level of Fund illiquidity to the extent qualified
institutional buyers become uninterested in purchasing such securities.
Fixed-income securities that the Fund may invest in also include zero coupon
bonds, deferred interest bonds and bonds on which the interest is payable in
kind ("PIK bonds"). Zero coupon and deferred interest bonds are debt
obligations which are issued at a significant discount from face value. While
zero coupon bonds do not require the periodic payment of interest, deferred
interest bonds provide for a period of delay before the regular payment of
interest begins. PIK bonds are debt obligations which provide that the issuer
thereof may, at its option, pay interest on such bonds in cash or in the form
of additional debt obligations. Such investments may experience greater
volatility in market value due to changes in interest rates than debt
obligations which make regular payments of interest. The Fund will accrue
income on such investments for tax and accounting purposes, in accordance with
applicable law, which income is distributable to shareholders. Because no cash
is received at the time such income is accrued, the Fund may be required to
liquidate other portfolio securities to satisfy its distribution obligations.
The Fund has adopted certain fundamental investment restrictions which are
enumerated in detail in the Statement of Additional Information and which may
not be changed unless authorized by a shareholder vote. While the Fund's
investment objectives are not fundamental (i.e., changeable only if authorized
by shareholder vote), the Fund's management believes that any material change
of the investment objectives should be authorized by shareholder vote.
ORGANIZATION OF THE FUND
THE FUND, A BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A
DECLARATION OF TRUST DATED MARCH 27, 1989, AS AMENDED, IS A MUTUAL FUND -- AN
OPEN-END DIVERSIFIED MANAGEMENT INVESTMENT COMPANY. Its predecessor was
organized as a Maryland corporation and commenced operation in 1971. The
Trustees of the Fund are responsible for the overall management and
supervision of its affairs. The Fund has one class of shares of beneficial
interest (no par value per share), an unlimited number of which may be issued.
Each share represents an equal proportionate beneficial interest in the Fund.
When issued and outstanding, the shares are fully paid and nonassessable by
the Fund and redeemable as described under "How to Redeem Shares". There are
no annual meetings of shareholders, but special meetings may be held as
required by law to elect Trustees and consider certain other matters.
Shareholders are entitled to one vote for each full share held. Fractional
shares may be voted proportionately. Shares have no preemptive or conversion
rights and are freely transferable. In the event of the liquidation of the
Fund, shareholders are entitled to share pro rata in the net assets of the
Fund available for distribution to shareholders.
MANAGEMENT OF THE FUND
THE FUND ENGAGES EATON VANCE MANAGEMENT ("EATON VANCE") AS ITS INVESTMENT
ADVISER. EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN
MANAGING ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING
INVESTMENT COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of the Fund,
Eaton Vance manages the Fund's investments and affairs. Eaton Vance also
furnishes for the use of the Fund office space and all necessary office
facilities, equipment and personnel for servicing the investments of the Fund.
Under its investment advisory agreement with the Fund, Eaton Vance receives a
monthly advisory fee of 5/96 of 1% (equivalent to 5/8 of 1% annually) of
average monthly net assets of the Fund. The Fund paid Eaton Vance advisory
fees equivalent to 0.625% of the Fund's average daily net assets for the
fiscal year ended September 30, 1997.
EATON VANCE OR ITS AFFILIATES ACTS AS INVESTMENT ADVISER TO INVESTMENT
COMPANIES AND VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER
MANAGEMENT OF APPROXIMATELY $20 BILLION. Eaton Vance is a wholly-owned
subsidiary of Eaton Vance Corp., a publicly-held holding company which through
its subsidiaries and affiliates engages primarily in investment management,
administration and marketing activities. The Principal Underwriter is a
wholly-owned subsidiary of Eaton Vance.
Michael Weilheimer is the portfolio manager of the Fund. Mr. Weilheimer is a
Vice President of Eaton Vance and has been managing the Fund since January 1,
1996.
Eaton Vance places the Fund's portfolio security transactions for execution
with many broker-dealer firms and uses its best efforts to obtain execution of
such transactions at prices which are advantageous to the Fund and at
reasonably competitive commission rates. The Fund's investment advisory
agreement provides that, subject to the foregoing, Eaton Vance may consider
sales of shares of the Fund or of other investment companies sponsored by
Eaton Vance as a factor in the selection of broker-dealer firms to execute
portfolio trans-
actions.
SERVICE PLAN
In addition to advisory fees and other expenses, the Fund pays service fees
pursuant to a Service Plan (the "Plan") designed to meet the service fee
requirements of the sales charge rule of the National Association of
Securities Dealers, Inc. THE PLAN PROVIDES THAT THE FUND MAY MAKE SERVICE FEE
PAYMENTS FOR PERSONAL SERVICES AND/OR THE MAINTENANCE OF SHAREHOLDER ACCOUNTS
TO THE PRINCIPAL UNDERWRITER, FINANCIAL SERVICE FIRMS ("AUTHORIZED FIRMS") AND
OTHER PERSONS IN AMOUNTS NOT EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET
ASSETS FOR ANY FISCAL YEAR. The Trustees of the Fund have initially
implemented the Plan by authorizing the Fund to make quarterly service fee
payments to the Principal Underwriter and Authorized Firms in amounts not
expected to exceed .25% of the Fund's average daily net assets for any fiscal
year based on the value of Fund shares sold by such persons and remaining
outstanding for at least twelve months. For the fiscal year ended September
30, 1997, the Fund paid or accrued service fees under the Plan equivalent to
0.123% of the Fund's average daily net assets for such year.
VALUING SHARES
THE FUND VALUES ITS SHARES ONCE EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by its custodian, Investors Bank & Trust Company ("IBT"),
(as agent for the Fund) in the manner authorized by the Trustees of the Fund.
Net asset value is computed by dividing the value of the Fund's total assets,
less its liabilities, by the number of shares outstanding. Most debt
securities are valued by an independent pricing service.
Authorized Firms must communicate an investor's order to the Principal
Underwriter by a specific time each day to receive that day's public offering
price per share. It is the Authorized Firms' responsibility to transmit orders
promptly to the Principal Underwriter. The Fund has approved the acceptance of
purchase and redemption orders as of the time of their receipt by certain
Authorized Firms (or their designated intermediaries).
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY SHARES
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
ACCEPTABLE SECURITIES. Investors may purchase shares of the Fund through
Authorized Firms at the effective public offering price, which price is based on
the effective net asset value per share plus the applicable sales charge. The
Fund receives the net asset value, while the sales charge is divided between the
Authorized Firm and the Principal Underwriter. An Authorized Firm may charge its
customers a fee in connection with transactions executed by that Firm. The Fund
may suspend the offering of shares at any time and may refuse an order for the
purchase of shares.
The sales charge may vary depending on the size of the purchase and the number
of shares of Eaton Vance funds the investor may already own, any arrangement
to purchase additional shares during a 13-month period or special purchase
programs. Complete details of how investors may purchase shares at reduced
sales charges under a Statement of Intention, Right of Accumulation, or
various Employee Benefit Plans are available from Authorized Firms or the
Principal Underwriter.
The current sales charges and dealer commissions are:
Sales Charge Sales Charge Dealer Commission
as Percentage of as Percentage of as Percentage of
Amount of Purchase Offering Price Amount Invested Offering Price
- --------------------------------------------------------------------------------
Less than $25,000 4.75% 4.99% 4.50%
$25,000 but less than
$100,000 4.50 4.71 4.25
$100,000 but less
than $250,000 3.75 3.90 3.50
$250,000 but less
than $500,000 3.00 3.09 2.75
$500,000 but less
than $1,000,000 2.00 2.04 2.00
$1,000,000 or more 0.00* 0.00* See Below**
*No sales charge is payable at the time of purchase on investments of
$1 million or more. A CDSC of 1% will be imposed on such investments
in the event of certain redemptions within 12 months of purchase.
**A commission on sales of $1 million or more will be paid as follows:
1.00% on sales of $1 million or more but less than $3 million; plus
0.50% on amounts from $3 million but less than $5 million; plus
0.25% on amounts of $5 million or more. Purchases of $1 million or
more will be aggregated over a 12-month period for purposes of
determining the commission to be paid.
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge,
Authorized Firms may be deemed to be underwriters as that term is defined in
the Securities Act of 1933. The Principal Underwriter may, from time to time,
at its own expense, provide additional incentives to Authorized Firms which
employ registered representatives who sell the Fund's shares and/or shares of
other funds distributed by the Principal Underwriter. In some instances, such
additional incentives may be offered only to Authorized Firms whose
representatives sell or are expected to sell significant amounts of shares.
An initial investment in the Fund must be at least $1,000. Once an account has
been established the investor may send investments of $50 or more at any time
directly to the Fund's transfer agent (the "Transfer Agent") as follows: First
Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123. The
$1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See
"Eaton Vance Shareholder Services".
Shares of the Fund may be sold at net asset value to current and retired
Directors and Trustees of Eaton Vance funds; to clients and current and
retired officers and employees of Eaton Vance, its affiliates and other
investment advisers of Eaton Vance sponsored funds; to registered
representatives and employees of Authorized Firms; to bank employees who refer
customers to registered representatives of Authorized Firms; to officers and
employees of IBT and the Transfer Agent; and to such persons' spouses and
children under the age of 21 and their beneficial accounts. Shares may also be
issued at net asset value (1) in connection with the merger of an investment
company with the Fund, (2) to investors making an investment as part of a
fixed fee program whereby an entity unaffiliated with Eaton Vance provides
multiple investment services, such as management, brokerage and custody, and
(3) to investment advisors, financial planners or other intermediaries who
place trades for their own accounts or the accounts of their clients and who
charge a management, consulting or other fee for their services; clients of
such investment advisors, financial planners or other intermediaries who place
trades for their own accounts if the accounts are linked to the master account
of such investment advisor, financial planner or other intermediary on the
books and records of the broker or agent; and retirement and deferred
compensation plans and trusts used to fund those plans, including, but not
limited to, those defined in Section 401(a), 403(b) or 457 of the Internal
Revenue Code of 1986, as amended (the "Code") ("Eligible Plans") and "rabbi
trusts." The Principal Underwriter may pay commissions to Authorized Firms who
initiate and are responsible for purchases of shares of the Fund by Eligible
Plans of up to 1.00% of the amount invested in such shares.
Until March 31, 1998, no sales charge is payable at the time of purchase where
the amount invested represents redemption proceeds from a mutual fund
unaffiliated with Eaton Vance if the redemption occurred no more than 60 days
prior to the purchase of Fund shares and the redeemed shares were subject to a
sales charge. A CDSC of 0.50% will be imposed on such investments in the event
of certain redemptions within 12 months of purchase and the Authorized Firm
will be paid a commission on such sales of 0.50% of the amount invested.
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Investment Adviser, in
exchange for Fund shares at the applicable public offering price shown above.
The minimum value of securities (or securities and cash) accepted for deposit
is $5,000. Securities accepted will be sold on the day of their receipt or as
soon thereafter as possible. The number of Fund shares to be issued in
exchange for securities will be the aggregate proceeds from the sale of such
securities, divided by the applicable public offering price per Fund share on
the day such proceeds are received. Eaton Vance will use reasonable efforts to
obtain the then current market price for such securities but does not
guarantee the best available price. Eaton Vance will absorb any transaction
costs, such as commissions, on the sale of the securities.
Securities determined to be acceptable should be transferred via book entry or
physically delivered, in proper form for transfer, through an Authorized Firm,
together with a completed and signed Letter of Transmittal in approved form
(available from Authorized Firms), as follows:
<TABLE>
<S> <C>
IN THE CASE OF BOOK ENTRY: IN THE CASE OF PHYSICAL DELIVERY:
Deliver through Depository Trust Co. Investors Bank & Trust Company
Broker #2212 Attention: Eaton Vance Income Fund of Boston
Investors Bank & Trust Company Physical Securities Processing Settlement Area
For A/C Eaton Vance Income Fund of Boston 200 Clarendon Street
Boston, MA 02116
</TABLE>
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities to IBT. Eaton
Vance reserves the right to reject any securities. Exchanging securities for
Fund shares may create a taxable gain or loss. Each investor should consult
his or her tax adviser with respect to the particular federal, state and local
tax consequences of exchanging securities for Fund shares.
STATEMENT OF INTENTION AND ESCROW AGREEMENT. If the investor, on an
application, makes a Statement of Intention to invest a specified amount over
a thirteen month period, then out of the initial purchase (or subsequent
purchases if necessary) 5% of the dollar amount specified on the application
shall be held in escrow by the escrow agent in the form of shares (computed to
the nearest full share at the public offering price applicable to the initial
purchase hereunder) registered in the investor's name. All income dividends
and capital gains distributions on escrowed shares will be paid to the
investor or to the investor's order. When the minimum investment so specified
is completed, the escrowed shares will be delivered to the investor. If the
investor has an accumulation account the shares will remain on deposit under
the account.
If total purchases under this Statement of Intention are less than the amount
specified, the investor will promptly remit to the Principal Underwriter any
difference between the sales charge on the amount specified and on the amount
actually purchased. If the investor does not within 20 days after written
request by the Principal Underwriter or the Authorized Firm pay such
difference in sales charge, the escrow agent will redeem an appropriate number
of the escrowed shares in order to realize such difference. Full shares
remaining after any such redemption together with any excess cash proceeds of
the shares so redeemed will be delivered to the investor or to the investor's
order by the escrow agent.
If total purchases made under this Statement are large enough to qualify for a
lower sales charge than that applicable to the amount specified, all
transactions will be computed at the expiration date of this Statement to give
effect to the lower charge. Any difference in sales charge will be refunded to
the investor in cash, or applied to the purchase of additional shares at the
lower charge if specified by the investor. This refund will be made by the
Authorized Firm and by the Principal Underwriter. If at the time of the
recomputation an Authorized Firm other than the original Firm is placing the
orders, the adjustment will be made only on those shares purchased through the
Firm then handling the investor's account.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM SHARES
A SHAREHOLDER MAY REDEEM FUND SHARES IN ONE OF THREE WAYS -- BY MAIL, BY
TELEPHONE OR THROUGH AN AUTHORIZED FIRM. The redemption price will be based on
the net asset value per Fund share next computed after a redemption request is
received in the proper form as described below. Within seven days after
receipt of a redemption request in good order by the Transfer Agent, the Fund
will make payment in cash for the net asset value of the shares as of the date
determined above, reduced by the amount of any federal income tax required to
be withheld.
REDEMPTION BY MAIL. Shares may be redeemed by delivering to the Transfer
Agent, First Data Investor Services Group, P.O. Box 5123, Westborough,
Massachusetts 01581-5123, during its business hours a written request for
redemption in good order, plus any share certificates with executed stock
powers. Good order means that all relevant documents must be endorsed by the
record owner(s) exactly as the shares are registered and the signature(s) must
be guaranteed by a member of either the Securities Transfer Association's
STAMP program or the New York Stock Exchange's Medallion Signature Program, or
certain banks, savings and loan institutions, credit unions, securities
dealers, securities exchanges, clearing agencies and registered securities
associations as required by a Commission regulation and acceptable to the
Transfer Agent. In addition, in some cases, good order may require the
furnishing of additional documents such as where shares are registered in the
name of a corporation, partnership or fiduciary.
REDEMPTION BY TELEPHONE. Shares may be redeemed by telephone provided the
investor has not disclaimed in writing the use of the privilege. Such
redemptions can be effected by calling the Transfer Agent at 800-262-1122,
Monday through Friday, 9:00 a.m. to 4:00 p.m. (Eastern Standard Time). The
proceeds of a telephone redemption may be no greater than the maximum amount
established by the Principal Underwriter (currently $50,000) and may be mailed
only to the account address of record. Shares held by corporations, trusts or
certain other entities, or subject to fiduciary arrangements, may not be
redeemed by telephone. Neither the Fund, the Principal Underwriter nor the
Transfer Agent will be responsible for the authenticity of redemption
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated by telephone are genuine have been
followed. Telephone instructions will be tape recorded. In times of drastic
economic or market changes, a telephone redemption may be difficult to
implement.
REDEMPTION THROUGH AN AUTHORIZED FIRM. To sell shares at their net asset value
through an Authorized Firm (a repurchase), a shareholder can place a
repurchase order with the Authorized Firm, which may charge a fee. The value
of such shares is based upon the net asset value calculated after the order is
deemed to be received by the Fund or the Principal Underwriter, as the Fund's
agent. It is the Authorized Firm's responsibility to transmit promptly
repurchase orders to the Principal Underwriter. Throughout this Prospectus,
the word "redemption" is generally meant to include a repurchase.
If shares were recently purchased, the proceeds of a redemption will not be
sent until the check (including a certified or cashier's check) received for
the shares purchased has cleared. Payment for shares tendered for redemption
may be delayed up to 15 days from the purchase date when the purchase check
has not yet cleared. Redemptions or repurchases may result in a taxable gain
or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem Fund accounts with balances of less than $750. Prior to such a
redemption, shareholders will be given 60 days' written notice to make an
additional purchase. However, no such redemption would be required if the
cause of the low account balance was a reduction in the net asset value of
Fund shares.
If shares have been purchased at net asset value with no initial sales charge
by virtue of the purchase having been in the amount of $1 million or more and
are redeemed within 12 months of purchase, a CDSC of 1% will be imposed on
such redemption. Until March 31, 1998, if shares have been purchased at net
asset value because the amount invested represents redemption proceeds from a
mutual fund unaffiliated with Eaton Vance (as described under "How to Buy
Shares") and are redeemed within 12 months of purchase, a CDSC of 0.50% will
be imposed on such redemption. The CDSC will be imposed on an amount equal to
the lesser of the current market value or the original purchase price of the
shares redeemed. Accordingly, no CDSC will be imposed on increases in account
value above the initial purchase price, including any dividends or
distributions that have been reinvested in additional shares. In determining
whether a CDSC is applicable to a redemption, the calculation will be made in
a manner that results in the lowest possible rate being charged. It will be
assumed that redemptions are made first from any shares in the shareholder's
account that are not subject to a CDSC. The CDSC will be retained by the
Principal Underwriter.
The CDSC is waived for redemptions involving certain liquidation, merger or
acquisition transactions involving other investment companies. If a
shareholder reinvests redemption proceeds within a 60-day period and in
accordance with the conditions set forth under
"Eaton Vance Shareholder Services -- Reinvestment Privilege," the
shareholder's account will be credited with the amount of any CDSC paid on
such redeemed shares.
REPORTS TO SHAREHOLDERS
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements
included in annual reports are audited by the Fund's independent accountants.
Shortly after the end of each calendar year, shareholders will be furnished
with information necessary for preparing federal and state tax returns.
Consistent with applicable law, duplicate mailings of shareholder reports and
certain other Fund information to shareholders residing at the same address
may be eliminated.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE TRANSFER AGENT
WILL SET UP A LIFETIME INVESTING ACCOUNT FOR THE INVESTOR ON THE FUND'S
RECORDS. This account is a complete record of all transactions between the
investor and the Fund which at all times shows the balance of shares owned.
The Fund will not issue share certificates except upon request.
At least quarterly, shareholders will receive a statement showing complete
details of any transaction and the current share balance in the account. THE
LIFETIME INVESTING ACCOUNT PERMITS A SHAREHOLDER TO MAKE ADDITIONAL
INVESTMENTS IN SHARES BY SENDING A CHECK FOR $50 OR MORE to the Transfer
Agent.
Any questions concerning a shareholder's account or services available may
also be directed by telephone to EATON VANCE SHAREHOLDER SERVICES at
800-225-6265, extension 2, or in writing to the Transfer Agent, First Data
Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123 (please
provide the name of the shareholder, the Fund and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME INVESTING
ACCOUNTS and may be changed as often as desired by written notice to the
Fund's dividend disbursing agent, First Data Investor Services Group, P.O. Box
5123, Westborough, MA 01581-5123. The currently effective option will appear
on each account statement.
SHARE OPTION -- Dividends and capital gains will be reinvested in additional
shares.
INCOME OPTION -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
CASH OPTION -- Dividends and capital gains will be paid in cash.
The SHARE OPTION will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under federal income tax laws.
If shareholder communications are returned by the United States Postal Service
or other delivery service as not deliverable, the distribution option on the
account will be automatically changed to the SHARE OPTION until such time as
the shareholder selects a different option. No interest will accrue on amounts
represented by uncashed distribution or redemption checks.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional
shares of another Eaton Vance fund. Before selecting this option, a
shareholder should obtain a prospectus of the other Eaton Vance fund and
consider its objectives and policies carefully.
"STREET NAME" ACCOUNTS. If shares of the Fund are held in a "street name"
account with an Authorized Firm, all recordkeeping, transaction processing and
payments of distributions relating to the beneficial owner's account will be
performed by the Authorized Firm, and not by the Fund and its Transfer Agent.
Since the Fund will have no record of the beneficial owner's transactions, a
beneficial owner should contact the Authorized Firm to purchase, redeem or
exchange shares, to make changes in or give instructions concerning the
account, or to obtain information about the account. The transfer of shares in
a "street name" account to an account with another dealer or to an account
directly with the Fund involves special procedures and will require the
beneficial owner to obtain historical purchase information about the shares in
the account from the Authorized Firm. Before establishing a "street name"
account with an investment firm, or transferring the account to another
investment firm, an investor wishing to reinvest distributions should
determine whether the firm which will hold the shares allows reinvestment of
distributions in "street name" accounts.
THE EATON VANCE EXCHANGE PRIVILEGE
Shares of the Fund currently may be exchanged for Class A shares of any of the
funds in the Eaton Vance Group of Funds, Eaton Vance Cash Management Fund or
Eaton Vance Tax Free Reserves on the basis of the net asset value per share of
each fund at the time of the exchange (plus, in the case of an exchange made
within six months of the date of purchase of shares subject to an initial
sales charge, an amount equal to the difference, if any, between the sales
charge previously paid on the shares being exchanged and the sales charge
payable on the shares being acquired). Exchange offers are available only in
states where shares of the fund being acquired may be legally sold.
Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Fund does not permit the
exchange privilege to be used for "Market Timing" and may terminate the
exchange privilege for any shareholder account engaged in Market Timing
activity. Any shareholder account for which more that two round-trip exchanges
are made within any twelve month period will be deemed to be engaged in Market
Timing. Furthermore, a group of unrelated accounts for which exchanges are
entered contemporaneously by a financial intermediary will be considered to be
engaged in Market Timing.
Shares of the Fund which are subject to a CDSC may be exchanged into any of
the above funds without incurring the CDSC. The shares acquired in an exchange
may be subject to a CDSC upon redemption. For purposes of computing the CDSC
payable upon redemption of shares acquired in an exchange, the holding period
of the original shares is added to the holding period of the shares acquired
in the exchange.
The Transfer Agent makes exchanges at the next determined net asset value
after receiving an exchange request in good order (see "How to Redeem Fund
Shares"). Consult the Transfer Agent for additional information concerning the
exchange privilege. Applications and prospectuses of the other funds are
available from Authorized Firms or the Principal Underwriter. The prospectus
for each fund describes its investment objectives and policies, and
shareholders should obtain a prospectus and consider these objectives and
policies carefully before requesting an exchange.
Class A shares of certain other funds for which Eaton Vance acts as investment
adviser or administrator may be exchanged for Fund shares on the basis of the
net asset value per share of each fund at the time of the exchange (plus, in
the case of an exchange made within six months of the date of purchase of
shares subject to an initial sales charge, an amount equal to the difference,
if any, between the sales charge previously paid on the shares being exchanged
and the sales charge payable on the Fund shares being acquired). Any such
exchange is subject to any restrictions or qualifications set forth in the
current prospectus of any such fund.
Telephone exchanges are accepted by the Transfer Agent provided the investor
has not disclaimed in writing the use of the privilege. To effect such
exchanges, call the Transfer Agent at 800-262-1122, Monday through Friday,
9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone
exchange must be registered in the same name(s) and with the same address as
the shares being exchanged. Neither the Fund, the Principal Underwriter nor
the Transfer Agent will be responsible for the authenticity of exchange
instructions received by telephone, provided that reasonable procedures to
confirm that instructions communicated are genuine have been followed.
Telephone instructions will be tape recorded. In times of drastic economic or
market changes, a telephone exchange may be difficult to implement. An
exchange may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter.
The cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION. Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of Eaton
Vance Income Fund of Boston may be mailed directly to the Transfer Agent,
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
at any time -- whether or not dividends are reinvested. The name of the
shareholder, the Fund and the account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION. Cash investments
of $50 or more may be made automatically each month or quarter from the
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
STATEMENT OF INTENTION. Purchases of $25,000 or more made over a 13-month
period are eligible for reduced sales charges. See "How to Buy Fund Shares --
Statement of Intention and Escrow Agreement."
RIGHT OF ACCUMULATION. Purchases may qualify for reduced sales charges when
the current market value of holdings (shares at current offering price), plus
new purchases, reaches $25,000 or more. Shares of the Eaton Vance funds listed
under "The Eaton Vance Exchange Privilege" may be combined under the Statement
of Intention and Right of Accumulation.
WITHDRAWAL PLAN. A shareholder may draw on shareholdings systematically with
monthly or quarterly checks in an amount specified by the shareholder. A
minimum deposit of $5,000 in shares is required. The maintenance of a
withdrawal plan concurrently with purchases of additional shares would be
disadvantageous because of the sales charge included in such purchases.
REINVESTMENT PRIVILEGE. A shareholder who has redeemed shares may reinvest at
net asset value any portion or all of the redemption proceeds (plus that
amount necessary to acquire a fractional share to round off the purchase to
the nearest full share) in shares of the Fund, or, provided that the shares
redeemed have been held for at least 60 days, in shares of any of the other
funds offered by the Principal Underwriter subject to an initial sales charge,
provided that the reinvestment is effected within 60 days after such
redemption, and the privilege has not been used more than once in the prior 12
months. Shares are sold to a reinvesting shareholder at the next determined
net asset value following timely receipt of a written purchase order by the
Principal Underwriter or by the fund the shares of which are being purchased
(or by such fund's transfer agent). The privilege is also available to
shareholders of the funds listed under the "The Eaton Vance Exchange
Privilege" who wish to reinvest such redemption proceeds in shares of the
Fund. If a shareholder reinvests redemption proceeds within the 60-day period,
the shareholder's account will be credited with the amount of any CDSC paid on
such redeemed shares. To the extent that any shares of the Fund are sold at a
loss and the proceeds are reinvested in shares of the Fund (or other shares of
the Fund are acquired) within the period beginning 30 days before and ending
30 days after the date of the redemption, some or all of the loss generally
will not be allowed as a tax deduction. Shareholders should consult their tax
advisers concerning the tax consequences of reinvestments.
TAX-SHELTERED RETIREMENT PLANS. Shares of the Fund are available for purchase
in connection with certain tax-sheltered retirement plans. Detailed
information concerning these plans, including certain exceptions to minimum
investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The infomation
sets forth the service fee charged for retirement plans and describes the
federal income tax consequences of establishing a plan. Participant accounting
services (including trust fund reconciliation services) will be offered only
through third party recordkeepers and not by the Principal Underwriter. Under
all plans, dividends and distributions will be automatically reinvested in
additional shares.
DISTRIBUTIONS AND TAXES
SUBSTANTIALLY ALL OF THE INVESTMENT INCOME EARNED BY THE FUND, LESS ITS
EXPENSES, WILL BE DECLARED DAILY AS A DISTRIBUTION TO SHAREHOLDERS OF RECORD
AT THE TIME OF DECLARATION. Such distributions whether taken in cash or
reinvested in additional shares, will ordinarily be paid on the last day of
each month or the next business day thereafter. Capital gains, if any,
realized on sales of investments and on options and futures transactions will
be offset by any capital loss carryovers and will be distributed at least once
a year, usually in December. Daily distribution crediting will commence on the
business day after collected funds for the purchase of Fund shares are
available at the Fund's Transfer Agent.
TAXES. For federal income tax purposes, a shareholder's proportionate share of
distributions from the Fund's net investment income and net short-term capital
gains and certain foreign exchange gains are taxable as ordinary income,
whether received in cash or reinvested in additional shares. A small portion
of distributions from net investment income may be eligible for the dividends
received deduction for corporations. A shareholder's proportionate share of
distributions from the Fund's net long-term capital gain is taxable as long-
term capital gains whether received in cash or reinvested in additional
shares, regardless of the length of time Fund shares have been owned by the
shareholder. If shares are purchased shortly before the record date of a
distribution, the shareholder will pay the full price for the shares and then
receive some portion of the price back as a taxable distribution.
Sales charges paid upon a purchase of Fund shares cannot be taken into account
for purposes of determining gain or loss on a redemption or exchange of the
shares before the 91st day after their purchase to the extent a sales charge
is reduced or eliminated in a subsequent acquisition of shares of the Fund or
of another fund pursuant to the Fund's reinvestment or exchange privilege. Any
disregarded amounts will result in an adjustment to the shareholder's tax
basis in some or all of any other shares acquired.
Shareholders will receive annually one or more Forms 1099 to assist in
reporting on their federal and state income tax returns the prior calendar
year's distributions, proceeds from the redemption or exchange of Fund shares,
and federal income tax (if any) withheld by the Fund's Transfer Agent.
As a regulated investment company under the Code, the Fund does not pay
federal income or excise taxes to the extent that it distributes to
shareholders substantially all of its ordinary income and capital gain net
income in accordance with the timing requirements imposed by the Code.
Shareholders should consult their tax advisers concerning the applicability of
state, local or other taxes to an investment in the Fund.
PERFORMANCE INFORMATION
FROM TIME TO TIME, YIELD AND/OR AVERAGE ANNUAL TOTAL RETURN MAY BE ADVERTISED.
The Fund's current yield is calculated by dividing the net investment income
per share earned during a recent 30-day period by the maximum offering price
per share of the Fund on the last day of the period and annualizing the
resulting figure. The Fund's average annual total return is determined by
multiplying a hypothetical initial purchase order of $1,000 by the average
annual compounded rate of return (including capital appreciation/depreciation,
and dividends and distributions paid and reinvested) for the stated period and
annualizing the result. The average annual total return calculation assumes
that the maximum sales charge is deducted from the initial $1,000 purchase
order and that all dividends and distributions are reinvested at net asset
value on the reinvestment dates during the period. The Fund may also publish
annual and cumulative total return figures from time to time.
The Fund may also furnish total return calculations based on investments at
various sales charge levels or at net asset value. Any performance data which
is based on the Fund's net asset value per share would be lower if a sales
charge were taken into account. The Fund's performance may be compared in
publications to the performance of various indices and investments for which
reliable data is available, and to averages, performance rankings, or other
information prepared by recognized mutual fund statistical services.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's current yield or total return
for any prior period should not be considered a representation of what an
investment may earn or what the Fund's yield or total return may be in any
future period.
<PAGE>
The following chart reflects the annual investment returns of the Fund for
one-year periods ending September 30 and does not take into account any sales
charge which investors may bear:
5 YEAR AVERAGE ANNUAL TOTAL RETURN -- 11.75%
10 YEAR AVERAGE ANNUAL TOTAL RETURN -- 11.25%
1988 .................. 9.35%
1989 .................. 9.76%
1990 .................. (13.06%)
1991 .................. 28.53%
1992 .................. 24.25%
1993 .................. 12.59%
1994 .................. 4.25%
1995 .................. 11.25%
1996 .................. 13.41%
1997 .................. 17.68%
<PAGE>
APPENDIX A
DESCRIPTION OF MOODY'S INVESTORS SERVICE, INC.'S CORPORATE BOND RATINGS:
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They
carry the smallest degree of investment risk and are generally referred to as
"gilt-edged". Interest payments are protected by a large or by an
exceptionally stable margin and principal is secure. While the various
protective elements are likely to change, such changes as can be visualized
are most unlikely to impair the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all
standards. Together with the Aaa group they comprise what are generally known
as high grade bonds. They are rated lower than the best bonds because margins
of protection may not be as large as in Aaa securities or fluctuation of
protective elements may be of greater amplitude or there may be other elements
present which make the long-term risk appear somewhat larger than in Aaa
securities.
A: Bonds which are rated A possess many favorable investment attributes and
are to be considered as upper medium grade obligations. Factors giving
security to principal and interest are considered adequate, but elements may
be present which suggest a susceptibility to impairment sometime in the
future.
SECURITIES IN WHICH THE FUND MAY INVEST WILL INCLUDE THOSE IN THE FOLLOWING
CATEGORIES:
Baa: Bonds which are rated Baa are considered as medium-grade obligations,
(i.e., they are neither highly protected nor poorly secured). Interest
payments and principal security appear adequate for the present but certain
protective elements may be lacking or may be characteristically unreliable
over any great length of time. Such bonds lack outstanding investment
characteristics and in fact have speculative characteristics as well.
Ba: Bonds which are rated Ba are judged to have speculative elements; their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal
or interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
NOTE: Moody's applies numerical modifiers, 1, 2 and 3 in each generic rating
classification from Aa to B. The modifier 1 indicates that the company ranks
in the higher end of its generic rating category; the modifier 2 indicates a
mid-range ranking; and the modifier 3 indicates that the company ranks in the
lower end of its generic rating category.
DESCRIPTION OF STANDARD & POOR'S RATINGS GROUP CORPORATE DEBT RATINGS:
INVESTMENT GRADE
AAA: Debt rated AAA has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated AA has a very strong capacity to pay interest and repay
principal and differs from the higher rated issues only in small degree.
A: Debt rated A has a strong capacity to pay interest and repay principal
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher rated categories.
SECURITIES IN WHICH THE FUND MAY INVEST WILL INCLUDE THOSE IN THE FOLLOWING
CATEGORIES:
BBB: Debt rated BBB is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher rated categories.
SPECULATIVE GRADE
Debt rated BB, B, CCC, CC, and C is regarded, on balance, as predominantly
speculative with respect to capacity to pay interest and repay principal in
accordance with the terms of the obligation. BB indicates the lowest degree of
speculation and C the highest degree of speculation. While such debt will
likely have some quality and protective characteristics, these are outweighed
by large uncertainties or major risk exposures to adverse conditions.
BB: Debt rated BB has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The BB
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied BBB- rating.
B: Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness
to pay interest and repay principal. The B rating category is also used for
debt subordinated to senior debt that is assigned an actual or implied BB or
BB- rating.
CCC: Debt rated CCC has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to
meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The CCC rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied B or B- rating.
CC: The rating CC is typically applied to debt subordinated to senior debt
that is assigned an actual or implied CCC debt rating.
C: The rating C is typically applied to debt subordinated to senior debt which
is assigned an actual or implied CCC- debt rating. The C rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
C1: The Rating C1 is reserved for income bonds on which no interest is being
paid.
D: Debt rated D is in payment default. The D rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless Standard & Poor's believes
that such payments will be made during such grace period. The D rating also
will be used upon the filing of a bankruptcy petition if debt service payments
are jeopardized.
PLUS (+) OR MINUS (-): The ratings from AA to CCC may be modified by the
addition of a plus or minus sign to show relative standing within the major
rating categories.
NR: Indicate that no public rating has been requested, that there is
insufficient information on which to base a rating, or that Standard & Poor's
does not rate a particular type of obligation as a matter of policy.
* * * * * * * *
NOTES: Debt which is unrated exposes the investor to risks with respect to
capacity to pay interest or repay principal which are similar to the risks of
lower-rated speculative obligations. The Fund is dependent on the Investment
Adviser's judgment, analysis and experience in the evaluation of such debt.
Investors should note that the assignment of a rating to a bond by a rating
service may not reflect the effect of recent developments on the issuer's
ability to make interest and principal payments.
<PAGE>
APPENDIX B
EATON VANCE INCOME FUND OF BOSTON
ASSET COMPOSITION INFORMATION
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1997
Percent of
Net Assets
- ------------------------------------------------------------------------------
Common Stocks & Warrants 0.2%
Short-Term Obligations 2.7%
Debt Securities -- Moody's Rating
Ba 8.9%
B1 12.4%
B2 25.2%
B3 39.6%
Caa 6.1%
Unrated 4.9%
-----
Total 100.0%
The chart above indicates the weighted average composition of the Fund's
portfolio for the fiscal year ended September 30, 1997, with the debt
securities rated by Moody's separated into the indicated categories. The
weighted average indicated above was calculated on a dollar weighted basis and
was computed as at the end of each month during the fiscal year. The chart
does not necessarily indicate what the composition of the Fund's portfolio
will be in the current and subsequent fiscal years.
For a description of Moody's ratings of fixed-income securities, see Appendix
A to this Prospectus.
<PAGE>
Investing
for the
[LOGO]
EATON VANCE 21st
==============
Mutual Funds Century
- --------------------------------------------------------------------------------
Eaton Vance
Income Fund of Boston
PROSPECTUS
FEBRUARY 1, 1998
Investment Adviser
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
Custodian
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
Transfer Agent
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
Independent Accountants
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein, 114 West 47th Street,
New York, NY 10036
IBP
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
February 1, 1998
EATON VANCE INCOME FUND OF BOSTON
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
- --------------------------------------------------------------------------------
TABLE OF CONTENTS ......................................................... Page
Additional Information about Investment Policies .......................... 2
Investment Restrictions ................................................... 6
Trustees and Officers ..................................................... 7
Control Persons and Principal Holders of Securities ....................... 9
Investment Adviser ........................................................ 9
Custodian ................................................................. 11
Services for Accumulation ................................................. 11
Service for Withdrawal .................................................... 12
Portfolio Security Transactions ........................................... 12
Determination of Net Asset Value .......................................... 13
Investment Performance .................................................... 14
Taxes ..................................................................... 15
Principal Underwriter ..................................................... 17
Service Plan .............................................................. 17
Other Information ......................................................... 18
Independent Accountants ................................................... 19
Financial Statements ...................................................... 19
- --------------------------------------------------------------------------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE CURRENT PROSPECTUS OF EATON VANCE INCOME FUND OF BOSTON
(THE "FUND") DATED FEBRUARY 1, 1998, AS SUPPLEMENTED FROM TIME TO TIME, WHICH
IS INCORPORATED HEREIN BY REFERENCE. THIS STATEMENT OF ADDITIONAL INFORMATION
SHOULD BE READ IN CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH MAY BE
OBTAINED WITHOUT CHARGE BY CONTACTING EATON VANCE DISTRIBUTORS, INC. (THE
"PRINCIPAL UNDERWRITER") (SEE BACK COVER FOR ADDRESS AND PHONE NUMBER).
<PAGE>
This Statement of Additional Information ("SAI") provides information
about Eaton Vance Income Fund of Boston (the "Fund"). Capitalized terms used
in this SAI and not otherwise defined herein have the meanings given them in
the Prospectus.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
The Fund seeks to achieve its primary investment objective, as much
current income as possible, by investing primarily in high-yielding, high
risk, fixed-income securities. A substantial portion of the Fund's portfolio
will generally consist of fixed-income securities and dividend paying stocks.
However, the Fund may also, from time to time, invest in non-income producing
bonds and obligations and in non-dividend paying stocks and rights and
warrants when it believes there is a substantial opportunity for capital
appreciation. Any realized gains from such capital appreciation provide an
opportunity for increasing the Fund's investment in income producing
securities. Bonds and preferred stocks will tend to be acquired for current
income and reasonable stability of capital; convertible securities and common
stocks will normally be acquired for their growth potential as well as their
yield. The percentages of assets invested in fixed-income securities and the
type of such securities held by the Fund will vary and may include a broad
range of quality in rated and unrated debt securities, as described in the
Prospectus. The Fund does not invest in companies for the primary purpose of
acquiring control or management thereof.
The Fund does not seek to realize short-term gains. However, it may
dispose of fixed-income securities on a short term (less than six months)
basis in order to take advantage of differentials in bond prices and yields or
of fluctuations in interest rates consistent with its investment objective.
Other securities may also be disposed of earlier than originally anticipated
because of changes in business trends or developments, or other circumstances
believed to render them vulnerable to price decline or otherwise undesirable
for continued holding.
See the information contained under the caption "Investment Policies and
Risks" in the current Prospectus for a further description of the Fund's
objective and investment policies.
OTHER FIXED-INCOME SECURITIES
Included in the fixed-income securities in which the Fund may invest are
preferred, preference and convertible stocks, equipment lease certificates,
equipment trust certificates and conditional sales contracts. Preference
stocks are stocks that have many characteristics of preferred stocks, but are
typically junior to an existing class of preferred stocks. Equipment lease
certificates are debt obligations secured by leases on equipment (such as
railroad cars, airplanes or office equipment), with the issuer of the
certificate being the owner and lessor of the equipment. Equipment trust
certificates are debt obligations secured by an interest in property (such as
railroad cars or airplanes), the title of which is held by a trustee while the
property is being used by the borrower. Conditional sales contracts are
agreements under which the seller of property continues to hold title to the
property until the purchase price is fully paid or other conditions are met by
the buyer.
The Fund may purchase fixed-rate bonds which have a demand feature
allowing the holder to redeem the bonds at specified times. These bonds are
more defensive than conventional long-term bonds (protecting to some degree
against a rise in interest rates) while providing greater opportunity than
comparable intermediate term bonds, since the Fund may retain the bond if
interest rates decline. By acquiring these kinds of bonds the Fund obtains the
contractual right to require the issuer of the bonds to purchase the security
at an agreed upon price, which right is contained in the obligation itself
rather than in a separate agreement or instrument. Since this right is
assignable only with the bond, the Fund will not assign any separate value to
such right. The Fund may also purchase floating or variable rate obligations,
which it would anticipate using as short-term investments pending longer term
investment of its funds.
LOAN INTERESTS
A loan in which the Fund may acquire a loan interest (a "Loan Interest")
is typically originated, negotiated and structured by a U.S. or foreign
commercial bank, insurance company, finance company or other financial
institution (the "Agent") for a lending syndicate of financial institutions.
The Agent typically administers and enforces the loan on behalf of the other
lenders in the syndicate. In addition, an institution, typically but not
always the Agent (the "Collateral Bank"), holds collateral (if any) on behalf
of the lenders. These Loan Interests may take the form of participation
interests in, assignments of or novations of a loan during its secondary
distribution, or direct interests during a primary distribution. Such Loan
Interests may be acquired from U.S. or foreign banks, insurance companies,
finance companies or other financial institutions who have made loans or are
members of a lending syndicate or from other holders of Loan Interests.
The Fund may also acquire Loan Interests under which the Fund derives its
rights directly from the borrower. Such Loan Interests are separately
enforceable by the Fund against the borrower and all payments of interest and
principal are typically made directly to the Fund from the borrower. In the
event that the Fund and other lenders become entitled to take possession of
shared collateral, it is anticipated that such collateral would be held in the
custody of a Collateral Bank for their mutual benefit. The Fund may not act as
an Agent, a Collateral Bank, a guarantor or sole negotiator or structurer with
respect to a loan.
The Investment Adviser will analyze and evaluate the financial condition
of the borrower in connection with the acquisition of any Loan Interest. The
Investment Adviser also analyzes and evaluates the financial condition of the
Agent and, in the case of Loan Interests in which the Fund does not have
privity with the borrower, those institutions from or through whom the Fund
derives its rights in a loan (the "Intermediate Participants"). From time to
time the Investment Adviser and its affiliates may borrow money from various
banks in connection with their business activities. Such banks may also sell
interests in loans to or acquire such interests from the Fund or may be
Intermediate Participants with respect to loans in which the Fund owns
interests. Such banks may also act as Agents for loans in which the Fund owns
interests.
In a typical loan the Agent administers the terms of the loan agreement.
In such cases, the Agent is normally responsible for the collection of
principal and interest payments from the borrower and the apportionment of
these payments to the credit of all institutions which are parties to the loan
agreement. The Fund will generally rely upon the Agent or an Intermediate
Participant to receive and forward to the Fund its portion of the principal
and interest payments on the loan. Furthermore, unless under the terms of a
participation agreement the Fund has direct recourse against the borrower, the
Fund will rely on the Agent and the other members of the lending syndicate to
use appropriate credit remedies against the borrower. The Agent is typically
responsible for monitoring compliance with covenants contained in the loan
agreement based upon reports prepared by the borrower. The seller of the Loan
Interest usually does, but is often not obligated to, notify holders of Loan
Interests of any failures of compliance. The Agent may monitor the value of
the collateral and, if the value of the collateral declines, may accelerate
the loan, may give the borrower an opportunity to provide additional
collateral or may seek other protection for the benefit of the participants in
the loan. The Agent is compensated by the borrower for providing these
services under a loan agreement, and such compensation may include special
fees paid upon structuring and funding the loan and other fees paid on a
continuing basis. With respect to Loan Interests for which the Agent does not
perform such administrative and enforcement functions, the Fund will perform
such tasks on its own behalf, although a Collateral Bank will typically hold
any collateral on behalf of the Fund and the other lenders pursuant to the
applicable loan agreement.
A financial institution's appointment as Agent may usually be terminated
in the event that it fails to observe the requisite standard of care or
becomes insolvent, enters Federal Deposit Insurance Corporation ("FDIC")
receivership, or, if not FDIC insured, enters into bankruptcy proceedings. A
successor Agent would generally be appointed to replace the terminated Agent,
and assets held by the Agent under the loan agreement should remain available
to holders of Loan Interests. However, if assets held by the Agent for the
benefit of the Fund were determined to be subject to the claims of the Agent's
general creditors, the Fund might incur certain costs and delays in realizing
payment on a loan interest, or suffer a loss of principal and/or interest. In
situations involving Intermediate Participants similar risks may arise.
Purchasers of Loan Interests depend primarily upon the creditworthiness of
the borrower for payment of principal and interest. If the Fund does not
receive scheduled interest or principal payments on such indebtedness, the
Fund's share price and yield could be adversely affected. Loans that are fully
secured offer the Fund more protections than an unsecured loan in the event of
non-payment of scheduled interest or principal. However, there is no assurance
that the liquidation of collateral from a secured loan would satisfy the
borrower's obligation, or that the collateral can be liquidated. Indebtedness
of borrowers whose creditworthiness is poor involves substantially greater
risks, and may be highly speculative. Borrowers that are in bankruptcy or
restructuring may never pay off their indebtedness, or may pay only a small
fraction of the amount owed. Direct indebtedness of developing countries will
also involve a risk that the governmental entities responsible for the
repayment of the debt may be unable, or unwilling, to pay interest and repay
principal when due.
The Fund limits the amount of total assets that it will invest in any one
issuer or in issuers within the same industry. See Investment Restrictions (1)
and (5) below. For purposes of these restrictions, the Fund generally will
treat the borrower as the "issuer" of a Loan Interest held by the Fund. In the
case of loan participations where the Agent or Intermediate Participant serves
as financial intermediary between the Fund and the borrower, the Fund, in
appropriate circumstances, will treat both the Agent or Intermediate
Participant and the borrower as "issuers" for the purposes of determining
whether the Fund has invested more than 5% of its total assets in a single
issuer. Treating a financial intermediary as an issuer of indebtedness may
restrict the Fund's ability to invest in indebtedness related to a single
intermediary, or a group of intermediaries engaged in the same industry, even
if the underlying borrowers represent many different companies and industries.
FOREIGN INVESTMENTS
Investing in foreign issuers involves certain special considerations,
including those set forth below, which are not typically associated with
investing in U.S. issuers. Since investments in foreign issuers may involve
currencies of foreign countries, and since the Fund may temporarily hold funds
in bank deposits in foreign currencies during completion of investment
programs, the Fund may be affected favorably or unfavorably by changes in
currency rates and in exchange control regulations and may incur costs in
connection with conversions between various currencies.
Since foreign companies are not generally subject to uniform accounting,
auditing and financial reporting standards, practices and requirements
comparable to those applicable to U.S. companies, there may be less publicly
available information about a foreign company than about a domestic company.
Foreign stock markets, while growing in volume of trading activity, have
substantially less volume than the Exchange, and securities of some foreign
companies are less liquid and more volatile than securities of comparable U.S.
companies. Similarly, volume and liquidity in most foreign bond markets is
less than in the United States and, at times, volatility of price can be
greater than in the United States. Fixed commissions on foreign stock
exchanges are generally higher than negotiated commissions on U.S. exchanges,
although the Fund endeavors to achieve the most favorable net results on its
portfolio transactions. There is generally less government supervision and
regulation of stock exchanges, brokers and listed companies than in the United
States. Mail service between the United States and foreign countries may be
slower or less reliable than within the United States, thus increasing the
risk of delayed settlements of portfolio transactions or loss of certificates
for portfolio securities. In addition, with respect to certain foreign
countries, there is the possibility of expropriation or confiscatory taxation,
political or social instability, or diplomatic developments which could affect
the Fund's investments in those countries. Moreover, individual foreign
economies may differ favorably or unfavorably from the U.S. economy in such
respects as growth of gross national product, rate of inflation, capital
reinvestment, resource self-sufficiency and balance of payments position.
The Fund may enter into forward foreign currency exchange contracts. A
forward foreign currency exchange contract involves an obligation to purchase
or sell a specific currency at a future date, which may be any fixed number of
days from the date of the contract agreed upon by the parties, at a price set
at the time of the contract. These contracts are traded in the interbank
market conducted directly between currency traders (usually large commercial
banks) and their customers. A forward contract generally has no deposit
requirement, and no commissions are charged at any stage for trades.
At the maturity of a forward contract the Fund may either accept or make
delivery of the currency specified in the contract or, at or prior to
maturity, enter into a closing transaction involving the purchase or sale of
an offsetting contract. Closing transactions with respect to forward contracts
are usually effected with the currency trader who is a party to the original
forward contract.
FORWARD FOREIGN CURRENCY EXCHANGE TRANSACTIONS
The Fund does not intend to enter into forward foreign currency exchange
contracts to protect the value of its portfolio securities on a regular
continuous basis, and will not do so if, as a result, the Fund will have more
than 15% of the value of its total assets committed to the consummation of
such contracts. The Fund also will not enter into such forward contracts or
maintain a net exposure to such contracts where the consummation of the
contracts would obligate the Fund to deliver an amount of foreign currency in
excess of the value of the securities held by the Fund or other assets
denominated in that currency. Under normal circumstances, consideration of the
prospect for currency parities will be incorporated into the long-term
investment decisions made with regard to overall diversification strategies.
However, the Fund believes that it is important to have the flexibility to
enter into such forward contracts when it determines that the best interests
of the Fund will be served. The Fund generally will not enter into a forward
contract with a term of greater than one year.
OPTIONS ON SECURITIES
An options position may be closed out only on an options exchange which
provides a secondary market for an option of the same series. Although the
Fund will generally purchase or write only those options for which there
appears to be an active secondary market, there is no assurance that a liquid
secondary market on an exchange will exist for any particular option, or at
any particular time. For some options no secondary market on an exchange may
exist. In such event, it might not be possible to effect closing transactions
in particular options, with the result that the Fund would have to exercise
its options in order to realize any profit and would incur transaction costs
upon the sale of underlying securities pursuant to the exercise of put
options. If the Fund as a covered call option writer is unable to effect a
closing purchase transaction in a secondary market, it will not be able to
sell the underlying security until the option expires or it delivers the
underlying security upon exercise.
Reasons for the absence of a liquid secondary market on an exchange
include the following: (i) there may be insufficient trading interest in
certain options; (ii) restrictions may be imposed by an exchange on opening
transactions or closing transactions or both; (iii) trading halts, suspensions
or other restrictions may be imposed with respect to particular classes or
series of options or underlying securities; (iv) unusual or unforeseen
circumstances may interrupt normal operations on an exchange; (v) the
facilities of an exchange or the Options Clearing Corporation may not at all
times be adequate to handle current trading volume; or (vi) one or more
exchanges could, for economic or other reasons, decide or be compelled at some
future date to discontinue the trading of options (or a particular class or
series of options), in which event the secondary market on that exchange (or
in that class or series of options) would cease to exist, although outstanding
options on that exchange that had been issued by the Options Clearing
Corporation as a result of trades on that exchange would continue to be
exercisable in accordance with their terms.
There is no assurance that higher than anticipated trading activity or
other unforeseen events might not, at times, render certain of the facilities
of the Options Clearing Corporation inadequate, and thereby result in the
institution by an exchange of special procedures which may interfere with the
timely execution of customers' orders.
FUTURES CONTRACTS
All futures contracts entered into by the Fund are traded on exchanges or
boards of trade that are licensed and regulated by the Commodity Futures
Trading Commission ("CFTC"). The Fund may purchase and write call and put
options on futures contracts which are traded on a United States exchange or
board of trade.
The Fund will engage in futures and related options transactions for bona
fide hedging or non-hedging purposes as defined in or permitted by CFTC
regulations. The Fund will determine that the price fluctuations in the
futures contracts and options on futures used for hedging purposes are
substantially related to price fluctuations in securities held by the Fund or
which it expects to purchase. Except as stated below, the Fund's futures
transactions will be entered into for traditional hedging purposes -- i.e.,
futures contracts will be sold to protect against a decline in the price of
securities that the Fund owns, or futures contracts will be purchased to
protect the Fund against an increase in the price of securities it intends to
purchase. The Fund will engage in transactions in futures contracts and
related options only to the extent such transactions are consistent with the
requirements of the Code for maintaining the qualification of the Fund as a
regulated investment company for federal income tax purposes (see "Taxes").
To the extent that the Fund enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the CFTC, in each case that are not for bona fide hedging
purposes (as defined by the CFTC), the aggregate initial margin and premiums
required to establish these positions (excluding the amount by which options
are "in-the-money") may not exceed 5% of the liquidation value of the Fund's
portfolio, after taking into account unrealized profits and unrealized losses
on any contracts the Fund has entered into. The Fund did not engage in such
transactions during the fiscal year ended September 30, 1997, and there is no
assurance that it will engage in such transactions in the future.
ASSET COVERAGE REQUIREMENTS
Transactions involving when-issued securities, forward contracts, futures
contracts and options (other than options that the Fund has purchased) expose
the Fund to an obligation to another party. The Fund will not enter into any
such transactions unless it owns either (1) an offsetting ("covered") position
in securities or other options, futures contracts or forward contracts, or (2)
cash or liquid securities (such as readily marketable obligations and money
market instruments) with a value sufficient at all times to cover its
potential obligations not covered as provided in (1) above. The Fund will
comply with the Commission guidelines regarding cover for these instruments
and, if the guidelines so require, set aside cash, or liquid securities in a
segregated account with its custodian in the prescribed amount. The securities
in the segregated account will be marked to market daily. Assets used as cover
or held in a segregated account maintained by the Fund's custodian cannot be
sold while the position requiring coverage or segregation is outstanding
unless they are replaced with other appropriate assets. As a result, the
commitment of a large portion of the Fund's assets to segregated accounts or
to cover could impede portfolio management or the Fund's ability to meet
redemption requests or other current obligations.
LENDING PORTFOLIO SECURITIES
The Fund may seek to increase its income by lending portfolio securities
to broker-dealers or other institutional borrowers. During the existence of a
loan, the Fund will continue to receive the equivalent of the interest paid by
the issuer on the securities loaned and will also receive a fee or all of a
portion of the interest on investment of the collateral, if any. However, the
Fund may pay lending fees to such borrowers. As with other extensions of
credit there are risks of delay in recovery or even loss of rights in the
securities loaned if the borrower of the securities fails financially.
However, the loans would be made only to organizations deemed by the Fund's
management to be of good standing and when, in the judgment of the Fund's
management, the consideration which can be earned from securities loans of
this type, net of administrative expenses and any finders fees, justifies the
attendant risk. The financial condition of the borrower will be monitored by
the Investment Adviser on an ongoing basis. The value of the securilties
loaned will not exceed 30% of the Fund's total assets.
Under present regulatory policies of the Commission, such loans are
required to be secured continuously by collateral in cash, cash equivalents or
U.S. Government securities held by the Fund's custodian and maintained on a
current basis at an amount at least equal to the market value of the
securities loaned, which will be marked to market daily. Cash equivalents
include certificates of deposit, commercial paper and other short-term money
market instruments. The Fund would have the right to call a loan and obtain
the securities loaned at any time on up to five business days' notice. The
Fund would not have the right to vote any securities having voting rights
during the existence of a loan, but would call the loan in anticipation of an
important vote to be taken among holders of the securities or the giving or
withholding of their consent on a material matter affecting the investment.
INVESTMENT IN WARRANTS
The Fund may invest in warrants which have no voting rights, pay no
dividends and have no rights with respect to the assets of the corporation
issuing them. Warrants basically are options to purchase equity securities at
a specific price valid for a specific period of time. They do not represent
ownership of the securities, but only the right to buy them. Warrants differ
from calls in that warrants are issued by the same issuer as the security
which may be purchased on their exercise, whereas calls may be written or
issued by anyone. The prices of warrants do not necessarily move parallel to
the prices of the underlying securities.
RESTRICTED SECURITIES
The Fund may invest in securities the disposition of which would be
subject to legal restrictions. It may be difficult to sell such securities at
a price representing their fair value until such time as such securities may
be sold publicly. Where registration is required, a considerable period may
elapse between a decision to sell the securities and the time when the Fund
would be permitted to sell. Thus, the Fund may not be able to obtain as
favorable a price as that prevailing at the time of the decision to sell. The
Fund may also acquire securities through private placements under which it may
agree to contractual restrictions on the resale of such securities. Such
restrictions might prevent their sale at a time when such sale would otherwise
be desirable.
PORTFOLIO TURNOVER
The Fund cannot accurately predict its portfolio turnover rate, but it is
anticipated that the annual turnover rate will generally not exceed 100%
(excluding turnover of securities having a maturity of one year or less). A
100% annual turnover rate could occur, for example, if all the securities in
the portfolio were replaced once in a period of one year. A high turnover rate
could occur, for example, if all the securities in the portfolio were replaced
more than once in a period of one year. A high turnover rate (100% or more)
necessarily involves greater expenses to the Fund. The Fund engages in
portfolio trading (including short-term trading) if it believes that a
transaction including all costs will help in achieving its investment
objective either directly by increasing income or indirectly by enhancing the
Fund's net asset value.
INVESTMENT RESTRICTIONS
The following investment restrictions are designated as fundamental
policies and as such cannot be changed without the approval of the holders of
a majority of the Fund's outstanding voting securities, which as used in this
SAI means the lesser of (a) 67% of the shares of the Fund present or
represented by proxy at a meeting if the holders of more than 50% of the
shares are present or represented at the meeting or (b) more than 50% of the
shares of the Fund.
As a matter of fundamental policy, the Fund may not:
(1) With respect to 75% of the total assets of the Fund, purchase any
security if such purchase, at the time thereof, would cause more than 5% of
the value of the total assets of the Fund (taken at market value) to be
invested in the securities of a single issuer, or cause more than 10% of the
total outstanding voting securities of such issuer to be held by the Fund,
except obligations issued or guaranteed by the U.S. Government, its agencies
or instrumentalities and except securities of other investment companies;
(2) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940 (the "1940 Act"). (The use of options and
futures transactions and short sales may be deemed senior securities);
(3) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities). The deposit or payment by the Fund of initial, maintenance or
variation margin in connection with all types of options and futures contract
transactions is not considered the purchase of a security on margin;
(4) Underwrite or participate in the marketing of securities of others,
except insofar as it may technically be deemed to be an underwriter in selling
a portfolio security under circumstances which may require the registration of
the same under the Securities Act of 1933 (restricted securities);
(5) Purchase any security if such purchase, at the time thereof, would
cause more than 25% of the Fund's total assets to be invested in any single
industry, provided that the electric, gas and telephone utility industries
shall be treated as separate industries for purposes of this restriction and
further provided that there is no limitation with respect to obligations
issued or guaranteed by the U.S. Government or any of its agencies or
instrumentalities;
(6) Purchase or sell real estate, although it may purchase and sell
securities which are secured by real estate and securities of companies which
invest or deal in real estate;
(7) Purchase or sell physical commodities or contracts for the purchase or
sale of physical commodities; or
(8) Make loans to any person except by (i) the acquisition of debt
securities and making portfolio investments, (ii) entering into repurchase
agreements or (iii) lending portfolio securities.
The Fund has adopted the following nonfundamental investment policies
which may be changed by the Trustees without the approval of the Fund's
shareholders. As a matter of nonfundamental policy, the Fund may not (a)
invest more than 15% of net assets in investments which are not readily
marketable, including restricted securities and repurchase agreements maturing
in more than seven days. Restricted securities for the purposes of this
limitation do not include securities eligible for resale pursuant to Rule 144A
under the Securities Act of 1933 and commercial paper issued pursuant to
Section 4(2) of said Act that the Board of Trustees, or its delegate,
determines to be liquid; (b) make short sales of securities or maintain a
short position, unless at all times when a short position is open it owns an
equal amount of such securities or securities convertible into or exchangeable
for, without payment of any further consideration, securities of the same
issuer as, and equal in amount to, the securities sold short, and unless not
more than 25% of its net assets (taken at current value) is held as collateral
for such sales at any one time; or (c) purchase or retain in its portfolio any
securities issued by an issuer, any of whose officers, directors, trustees or
security holders is an officer or Trustee of the Fund or is a member, officer,
director or trustee of an investment adviser of the Fund, if after the
purchase of the securities of such issuer by the Fund one or more of such
persons owns beneficially more than 1/2 of 1% of the shares or securities or
both (all taken at market value) of such issuer and such persons owning more
than 1/2 of 1% of such shares or securities together own beneficially more
than 5% of such shares or securities or both (all taken at market value).
TRUSTEES AND OFFICERS
The Fund's Trustees and officers are listed below. Except as indicated,
each individual has held the office shown or other offices in the same company
for the last five years. Unless otherwise noted, the business address of each
Trustee and officer is 24 Federal Street, Boston, Massachusetts 02110, which
is also the address of Eaton Vance; Eaton Vance's wholly-owned subsidiary,
Boston Management and Research ("BMR"); Eaton Vance's parent, Eaton Vance
Corp. ("EVC"); and of Eaton Vance's and BMR's trustee Eaton Vance, Inc.
("EV"). Eaton Vance and EV are both wholly-owned subsidiaries of EVC. Those
Trustees who are "interested persons" of the Fund, as defined in the 1940 Act
by virtue of their affiliation with any one or more of Eaton Vance, BMR, EVC
or EV, are indicated by an asterisk (*).
KENNETH C. KNIGHT (71), Chairman of the Board of Trustees
Consultant; prior to 1989, Division Manager, The Whale Oil Corp. of New
England (fuel oils and home heating).
Address: 588 Andover Street, Lowell, Massachusetts 01852
M. DOZIER GARDNER (64), President and Trustee*
Vice President of Eaton Vance, BMR, EVC and EV, and Director of EVC and EV.
Trustee or officer of various investment companies managed by Eaton Vance or
BMR.
DONALD R. DWIGHT (66), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company) founded in 1988. Trustee of various investment companies managed by
Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
ROBERT GLUCK (70), Trustee
Management Consultant
Address: 6742 Via Regina, Boca Raton, Florida 33433
SAMUEL L. HAYES III (62), Trustee
Jacob H. Schiff Professor of Investment Banking, Harvard University Graduate
School of Business Administration, Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (62), Trustee
President and Director, United Asset Management Corporation (a holding company
owning institutional investment management firms); Chairman, President and
Director, UAM Funds (mutual funds). Trustee of various investment companies
managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (71), Trustee
Formerly Director of Fiduciary Company Incorporated; Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
MICHAEL W. WEILHEIMER (37), Vice President
Vice President of Eaton Vance, BMR, and EV since February 20, 1996. Officer of
various other investment companies managed by Eaton Vance or BMR.
JAMES L. O'CONNOR (52), Treasurer
Vice President of Eaton Vance, BMR and EV. Officer of various other investment
companies managed by Eaton Vance or BMR.
ALAN R. DYNNER (57), Secretary
Vice President and Chief Legal Officer of BMR, Eaton Vance, EVC and EV since
November 1, 1996. Previously, Mr. Dynner was a Partner of the law firm of
Kirkpartrick & Lockhart LLP, New York and Washington, D.C., and was
Executive Vice President of Neuberger & Berman Management, Inc., a mutual
fund management company. Officer of various investment companies managed by
Eaton Vance or BMR. Mr. Dynner was elected Secretary on June 23, 1997.
JANET E. SANDERS (62), Assistant Treasurer and Assistant Secretary
Vice President of Eaton Vance, BMR and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
A. JOHN MURPHY (35), Assistant Secretary
Assistant Vice President of Eaton Vance, BMR and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993). Officer of various investment companies managed
by Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the
Fund on April 18, 1995.
ERIC G. WOODBURY (40), Assistant Secretary
Vice President of Eaton Vance, BMR and EV since February 1993; formerly,
associate attorney at Dechert, Price & Rhoads. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Woodbury was elected Assistant
Secretary of the Fund on August 7, 1995.
Messrs. Gluck, Knight and Thorndike are members of the Special Committee
of the Board of Trustees of the Fund. The Special Committee's functions
include a continuous review of the Fund's contractual relationship with the
Investment Adviser, making recommendations to the Trustees regarding the
compensation of those Trustees who are not members of the Investment Adviser's
organization, and making recommendations to the Trustees regarding candidates
to fill vacancies, as and when they occur, in the ranks of those Trustees who
are not "interested persons" of the Fund or the Investment Adviser.
Mr. Dwight is a member of the Audit Committee of the Board of Trustees of
the Fund. The Audit Committee's functions include making recommendations to
the Trustees regarding the selection of the independent accountants, and
reviewing matters relative to trading and brokerage policies and practices,
accounting and auditing practices and procedures, accounting records, internal
accounting controls, and the functions performed by the custodian, transfer
agent and dividend disbursing agent of the Fund.
The fees and expenses of those Trustees of the Fund who are not members of
the Eaton Vance organization (the noninterested Trustees) are paid by the
Fund. (The Trustees of the Fund who are members of the Eaton Vance
organization receive no compensation from the Fund.) During the fiscal year
ended September 30, 1997, the noninterested Trustees of the Fund earned the
following compensation in their capacities as Trustees from the Fund and the
funds in the Eaton Vance fund complex(1):
AGGREGATE TOTAL COMPENSATION
COMPENSATION FROM FUND AND
NAME FROM FUND FUND COMPLEX
- --- ------------ ------------------
Donald R. Dwight ........................... $ 1,140 $145,000(2)
Robert Gluck ............................... 9,600 9,600
Samuel L. Hayes, III ....................... 1,477 153,750(3)
Kenneth C. Knight .......................... 10,000 10,000
Norton H. Reamer ........................... 1,315 145,000
John L. Thorndike .......................... 1,408 146,250(4)
- ----------
(1) As of February 1, 1998, the Eaton Vance fund complex consists of 154
registered investment companies or series thereof. Messrs. Gluck, Knight
and Preston serve only on the Board of Trustees of the Fund.
(2) Includes $45,000 of deferred compensation.
(3) Includes $38,438 of deferred compensation.
(4) Includes $109,022 of deferred compensation.
Trustees of the Eaton Vance fund complex (except Messrs. Gluck, Knight and
Preston) who are not affiliated with the Investment Adviser may elect to defer
receipt of all or a percentage of their annual fees in accordance with the
terms of a Trustees Deferred Compensation Plan (the "Trustees" Plan"). Under
the Trustees' Plan, an eligible Trustee may elect to have his deferred fees
invested by an Eaton Vance fund in the shares of one or more funds in the
Eaton Vance Family of Funds, and the amount paid to the Trustees under the
Trustees' Plan will be determined based upon the performance of such
investments. Deferral of Trustees' fees in accordance with the Trustees' Plan
will have a negligible effect on the Fund's assets, liabilities, and net
income per share, and will not obligate the Fund to retain the services of any
Trustee or obligate the Fund to pay any particular level of compensation to
the Trustee. The Fund is not a participant in the Plan. The Fund does not have
a retirement plan for its Trustees.
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As of December 31, 1997, the Trustees and officers of the Fund, as a
group, owned in the aggregate less than 1% of the outstanding shares of the
Fund. As of that same date, Merrill Lynch, Pierce, Fenner & Smith, Inc.,
Jacksonville, FL, was the record owner of approximately 11.3% of the
outstanding shares, which it held on behalf of its customers who are the
beneficial owners of such shares, and as to which it had voting power under
certain limited circumstances. To the knowledge of the Fund, no other person
owned of record or beneficially 5% or more of the Fund's outstanding shares as
of such date.
INVESTMENT ADVISER
The Fund engages Eaton Vance as its investment adviser pursuant to an
Investment Advisory Agreement (the "Agreement") originally made on May 22,
1989 and re-executed on November 1, 1990. Eaton Vance and its affiliates
maintains a large staff of experienced fixed-income and equity investment
professionals to service the needs of their clients. The fixed-income division
focuses on all kinds of taxable investment-grade and high-yield securities,
tax-exempt investment-grade and high-yield securities, and U.S. Government
securities. The equity division covers stocks ranging from blue chip to
emerging growth companies.
Under the Investment Advisory Agreement, Eaton Vance receives a monthly
advisory fee of 5/96 of 1% (equivalent to 5/8 of 1% annually) of average
monthly net assets of the Fund. For the fiscal years ended September 30, 1997,
1996, and 1995, the Fund paid Eaton Vance advisory fees of $1,076,121,
$762,899, and $628,411, respectively.
The Fund has agreed to pay all expenses not expressly stated to be payable
by Eaton Vance under the Investment Advisory Agreement, which expenses payable
by the Fund include, without implied limitation, expenses of maintaining the
Fund and continuing its existence, registration of the Fund under the 1940
Act, commissions, fees and other expenses connected with the purchase or sale
of securities, auditing, accounting and legal expenses, taxes and interest,
governmental fees, expenses of issue, sale, repurchase and redemptions of
shares, expenses of registering and qualifying the Fund and its shares under
federal and state securities laws and of preparing and printing prospectuses
for such purposes and for distributing the same to shareholders and investors,
expenses of reports and notices to shareholders and of meetings of
shareholders and proxy solicitations therefor, expenses of reports to
governmental officers and commissions, insurance expenses, association
membership dues, fees, expenses and disbursements of custodians and
subcustodians for all services to the Fund (including without limitation
safekeeping of funds and securities, keeping of books and accounts and
determination of net asset values), fees, expenses and disbursements of
transfer agents, dividend disbursing agents and registrars for all services to
the Fund, expenses for servicing shareholder accounts, any direct charges to
shareholders approved by the Trustees of the Fund, compensation and expenses
of Trustees of the Fund who are not members of the Eaton Vance organization,
and such non-recurring items as may arise, including expenses incurred in
connection with litigation, proceedings and claims and any legal obligation of
the Fund to indemnify its Trustees and officers with respect thereto to the
extent not covered by insurance.
The Fund is responsible for all expenses for servicing shareholder
accounts, and Eaton Vance performs on behalf of the Fund various functions
which relate to the administration and servicing of existing shareholder
accounts without being reimbursed by the Fund for its costs in connection
therewith. It is possible that Eaton Vance may, in the future, request that
the Trustees of the Fund take action to have the Fund reimburse Eaton Vance
for its costs in performing these services. These services include functions
which are primarily administrative and clerical in nature, and include such
matters as handling communications from shareholders with respect to their
accounts and the processing of liquidation and exchange requests received from
dealers or shareholders with respect to such accounts. If any such request for
reimbursement is made, the Trustees of the Fund intend to review the specific
nature and costs of these services prior to approving any such reimbursement.
The Investment Advisory Agreement with Eaton Vance continues in effect
from year to year so long as such continuance is approved at least annually
(i) by the vote of a majority of the Trustees who are not interested persons
of the Fund or of Eaton Vance cast in person at a meeting specifically called
for the purpose of voting on such approval and (ii) by the Board of Trustees
of the Fund or by vote of a majority of the outstanding voting securities of
the Fund. The Agreement may be terminated at any time without penalty on sixty
days written notice by the Board of Trustees of either party or by vote of the
majority of the outstanding voting securities of the Fund, and the Agreement
will terminate automatically in the event of its assignment. The Agreement
provides that Eaton Vance may render services to others. The Agreement also
provides that, in the absence of willful misfeasance, bad faith, gross
negligence or reckless disregard of obligations or duties under the agreement
on the part of Eaton Vance, Eaton Vance shall not be liable to the Fund or to
any shareholder for any act or omission in the course of or connected with
rendering services or for any losses sustained in the purpose, holding or sale
of any security.
Eaton Vance and EV are both wholly-owned subsidiaries of EVC. BMR is a
wholly-owned subsidiary of Eaton Vance. Eaton Vance and BMR are both
Massachusetts business trusts, and EV is the trustee of Eaton Vance and BMR.
The Directors of EV are M. Dozier Gardner, James B. Hawkes and Benjamin A.
Rowland, Jr. The Directors of EVC consist of the same persons and John G. L.
Cabot, John M. Nelson and Ralph Z. Sorenson. Mr. Hawkes is chairman, president
and chief executive officer and Mr. Gardner is vice chairman of EVC, Eaton
Vance, BMR and EV. All of the issued and outstanding shares of Eaton Vance and
of EV are owned by EVC. All of the issued and outstanding shares of BMR are
owned by Eaton Vance. All shares of the outstanding Voting Common Stock of EVC
are deposited in a Voting Trust the Voting Trustees of which are Messrs.
Gardner, Hawkes and Rowland and Alan R. Dynner, Thomas E. Faust, Jr., William
M. Steul and Wharton P. Whitaker. The Voting Trustees have unrestricted voting
rights for the election of Directors of EVC. All of the outstanding voting
trust receipts issued under said Voting Trust are owned by certain of the
officers of Eaton Vance and BMR who are also officers or officers and
Directors of EVC and EV. As of January 31, 1998, Messrs. Gardner and Hawkes
each owned 24% of such voting trust receipts and Messrs. Rowland and Faust
owned 15% and 13%, respectively, and Messrs. Dynner, Steul and Whitaker each
owned 8%. Messrs. Gardner and Dynner, who are officers or Trustees of the Fund
are members of the EVC, Eaton Vance, BMR and EV organizations. Messrs. Murphy,
O'Connor, Weilheimer and Woodbury, and Ms. Sanders, are officers of the Fund,
and are also members of the Eaton Vance, BMR and EV organizations.
Eaton Vance owns all the stock of Northeast Properties, Inc., which is
engaged in real estate investment. EVC owns all of the stock of Fulcrum
Management, Inc. and MinVen, Inc., which are engaged in precious metal mining
venture investment and management. EVC also owns approximately 21% of the
Class A shares of Lloyd George Management (B. V. I.) Limited, a registered
investment adviser. EVC, Eaton Vance, BMR and EV may also enter into other
businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the Fund's custodian, IBT. It
is Eaton Vance's opinion that the terms and conditions of such transactions
were not and will not be influenced by existing or potential custodial or
other relationships between the Fund and such banks.
CUSTODIAN
IBT acts as custodian for the Fund. IBT has the custody of all cash and
securities of the Fund, maintains the Fund's general ledger and computes the
daily per share net asset value. In such capacity it attends to details in
connection with the sale, exchange, substitution, transfer or other dealings
with the Fund's investments, receives and disburses all funds, and performs
various other ministerial duties upon receipt of proper instructions from the
Fund. IBT charges fees which are competitive within the industry. A portion of
the fee relates to custody, bookkeeping and valuation services and is based
upon a percentage of Fund net assets and a portion of the fee relates to
activity charges, primarily the number of portfolio transactions. These fees
are then reduced by a credit for cash balances of the particular investment
company at the custodian equal to 75% of the 91-day U.S. Treasury Bill auction
rate applied to the particular investment company's average daily collected
balances for the week.
IBT also provides services in connection with the preparation of
shareholder reports and electronic filing of such reports with the Commission,
for which it receives a separate fee.
SERVICES FOR ACCUMULATION
The following services are voluntary, involve no extra charge, other than
the sales charge included in the offering price, and may be changed or
discontinued without penalty at any time.
Intended Quantity Investment--Statement of Intention. If it is anticipated
that $25,000 or more of Fund shares and shares of the other continuously
offered open-end funds listed under "The Eaton Vance Exchange Privilege" in
the Prospectus will be purchased within a 13-month period, a Statement of
Intention should be signed so that shares may be obtained at the same reduced
sales charge as though the total quantity were invested in one lump sum.
Shares held under Right of Accumulation (see below) as of the date of the
Statement will be included toward the completion of the Statement. The
Statement authorizes the Transfer Agent to hold in escrow sufficient shares
(5% of the dollar amount specified in the Statement) which can be redeemed to
make up any difference in sales charge on the amount intended to be invested
and the amount actually invested. Execution of a Statement does not obligate
the shareholder to purchase or the Fund to sell the full amount indicated in
the Statement, and should the amount actually purchased during the 13-month
period be more or less than that indicated on the Statement, price adjustments
will be made. For sales charges and other information on quantity purchases,
see "How to Buy Shares" in the Prospectus. Any investor considering signing a
Statement of Intention should read it carefully.
Right of Accumulation--Cumulative Quantity Discount. The applicable sales
charge level for the purchase of Fund shares is calculated by taking the
dollar amount of the current purchase and adding it to the value (calculated
at the maximum current offering price) of the shares the shareholder owns in
his or her account(s) in the Fund and in the other continuously offered open-
end funds listed under "The Eaton Vance Exchange Privilege" in the current
Prospectus at the time of purchase. The sales charge on the shares being
purchased will then be at the rate applicable to the aggregate. For sales
charges on quantity purchases, see "How to Buy Shares" in the Prospectus.
Shares purchased (i) by an individual, his or her spouse and their children
under the age of twenty-one, and (ii) by a trustee, guardian or other
fiduciary of a single trust estate or a single fiduciary account, will be
combined for the purpose of determining whether a purchase will qualify for
the Right of Accumulation and if qualifying, the applicable sales charge
level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide the Principal Underwriter
(in the case of a purchase made through an Authorized Firm) or the Transfer
Agent (in the case of an investment made by mail) with sufficient information
to permit verification that the purchase order qualifies for the accumulation
privilege. Confirmation of the order is subject to such verification. The
Right of Accumulation privilege may be amended or terminated at any time as to
purchases occurring thereafter.
SERVICE FOR WITHDRAWAL
The Transfer Agent will send to the shareholder regular monthly or
quarterly payments of any permitted amount designated by the shareholder (see
"Eaton Vance Shareholder Services -- Withdrawal Plan" in the Prospectus) based
upon the value of the shares held. The checks will be drawn from share
redemptions and hence, are a return of principal. Income dividends and capital
gain distributions in connection with withdrawal accounts will be credited at
net asset value as of the record date for each distribution. Continued
withdrawals in excess of current income will eventually use up principal,
particularly in a period of declining market prices. A shareholder may not
have a withdrawal plan in effect at the same time he or she has authorized
Bank Automated Investing or is otherwise making regular purchases of Fund
shares. The shareholder, the Transfer Agent or the Principal Underwriter will
be able to terminate the withdrawal plan at any time without penalty.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of Fund portfolio security transactions,
including the selection of the market and the broker-dealer firm, are made by
Eaton Vance. Eaton Vance is also responsible for the execution of transactions
for all other accounts managed by it.
Eaton Vance places the portfolio security transactions of the Fund and of
all other accounts managed by it for execution with many broker-dealer firms.
Eaton Vance uses its best efforts to obtain execution of portfolio
transactions at prices which are advantageous to the Fund and (when a
disclosed commission is being charged) at reasonably competitive commission
rates. In seeking such execution, Eaton Vance will use its best judgment in
evaluating the terms of a transaction, and will give consideration to various
relevant factors including without limitation the size and type of the
transaction, the general execution and operational capabilities of the broker-
dealer, the nature and character of the market for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, reliability, experience and financial condition
of the broker-dealer, the value and quality of the services rendered by the
broker-dealer in other transactions, and the reasonableness of the commission,
if any. Transactions on United States stock exchanges and other agency
transactions involve the payment by the Fund of negotiated brokerage
commissions. Such commissions vary among different broker-dealer firms, and a
particular broker-dealer may charge different commissions according to such
factors as the difficulty and size of the transaction and the volume of
business done with the broker-dealer. Transactions in foreign securities
usually involve the payment of fixed brokerage commissions, which are
generally higher than those in the United States. There is generally no stated
commission in the case of securities traded in the over-the-counter markets,
but the price paid or received by the Fund usually includes an undisclosed
dealer markup or markdown. In an underwritten offering, the price paid by the
Fund often includes a disclosed fixed commission or discount retained by the
underwriter or dealer. Although commissions paid on portfolio security
transactions will, in the judgment of Eaton Vance, be reasonable in relation
to the value of the services provided, commissions exceeding those which
another firm might charge may be paid to broker-dealers who were selected to
execute transactions on behalf of the Fund and Eaton Vance's other clients for
providing brokerage and research services to Eaton Vance.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio transaction on behalf of the Fund
may receive a commission which is in excess of the amount of commission
another broker or dealer would have charged for effecting that transaction if
Eaton Vance determines in good faith that such compensation was reasonable in
relation to the value of the brokerage and research services provided. This
determination may be made on the basis of either that particular transaction
or on the basis of overall responsibilities which Eaton Vance and its
affiliates have for accounts over which they exercise investment discretion.
In making any such determination, Eaton Vance will not attempt to place a
specific dollar value on the brokerage and research services provided or to
determine what portion of the commission should be related to such services.
Brokerage and research services may include advice as to the value of
securities, the advisability of investing in, purchasing, or selling
securities, and the availability of securities or purchasers or sellers of
securities; furnishing analyses and reports concerning issuers, industries,
securities, economic factors and trends, portfolio strategy and the
performance of accounts; effecting securities transactions and performing
functions incidental thereto (such as clearance and settlement); and the
"Research Services" referred to in the next paragraph.
It is a common practice in the investment advisory industry for the
advisers of investment companies, institutions and other investors to receive
research, statistical and quotation services, data, information and other
services, products and materials which assist such advisers in the performance
of their investment responsibilities ("Research Services") from broker-
dealer firms which execute portfolio transactions for the clients of such
advisers and from third parties with which such broker-dealers have
arrangements. Consistent with this practice, Eaton Vance receives Research
Services from many broker-dealer firms with which Eaton Vance places the
Fund's portfolio transactions and from third parties with which these broker-
dealers have arrangements. These Research Services, include such matters as
general economic and market reviews, industry and company reviews, evaluations
of securities and portfolio strategies and transactions, recommendations as to
the purchase and sale of securities and other portfolio transactions,
financial, industry and trade publications, news and information services,
pricing and quotation equipment and services, and research oriented computer
hardware, software, data bases and services. Any particular Research Service
obtained through a broker-dealer may be used by Eaton Vance in connection with
client accounts other than those accounts which pay commissions to such
broker-dealer. Any such Research Service may be broadly useful and of value to
Eaton Vance in rendering investment advisory services to all or a significant
portion of its clients, or may be relevant and useful for the management of
only one client's account or of a few clients' accounts, or may be useful for
the management of merely a segment of certain clients' accounts, regardless of
whether any such account or accounts paid commissions to the broker-dealer
through which such Research Service was obtained. The advisory fee paid by the
Fund is not reduced because Eaton Vance receives such Research Services. Eaton
Vance evaluates the nature and quality of the various Research Services
obtained through broker-dealer firms and attempts to allocate sufficient
commissions to such firms to ensure the continued receipt of Research Services
which Eaton Vance believes are useful or of value to it in rendering
investment advisory services to its clients.
Subject to the requirement that Eaton Vance shall use its best efforts to
seek to execute Fund portfolio security transactions at advantageous prices
and at reasonably competitive commission rates or spreads, Eaton Vance is
authorized to consider as a factor in the selection of any broker-dealer firm
with whom Fund portfolio orders may be placed the fact that such firm has sold
or is selling shares of the Fund or of other investment companies sponsored by
Eaton Vance. This policy is not inconsistent with a rule of the National
Association of Securities Dealers, Inc. ("NASD"), which rule provides that no
firm which is a member of the NASD shall favor or disfavor the distribution of
shares of any particular investment company or group of investment companies
on the basis of brokerage commissions received or expected by such firm from
any source.
Securities considered as investments for the Fund may also be appropriate
for other investment accounts managed by Eaton Vance or its affiliates. Eaton
Vance will attempt to allocate equitably portfolio security transactions among
the Fund and the portfolios of its other investment accounts whenever
decisions are made to purchase or sell securities by the Fund and one or more
of such other accounts simultaneously. In making such allocations, the main
factors to be considered are the respective investment objectives of the Fund
and such other accounts, the relative size of portfolio holdings of the same
or comparable securities, the availability of cash for investment by the Fund
and such accounts, the size of investment commitments generally held by the
Fund and such accounts and the opinions of the persons responsible for
recommending investments to the Fund and such accounts. However, there may be
instances when the Fund will not participate in a securities transaction that
is allocated among other accounts. While this procedure could have a
detrimental effect on the price or amount of the securities available to the
Fund from time to time, it is the opinion of the Trustees that the benefits
available from the Eaton Vance organization outweigh any disadvantage that may
arise from exposure to simultaneous transactions.
For the fiscal years ended September 30, 1997 and 1996, the Fund paid no
brokerage commissions. During the fiscal year ended September 30, 1995, the
Fund paid brokerage commissions of $625 on portfolio transactions.
DETERMINATION OF NET ASSET VALUE
For a description of how the Fund values its shares, see "Valuing Shares"
in the Prospectus. The Fund will be closed for business and will not price its
shares on the following business holidays: New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor
Day, Thanksgiving Day and Christmas Day.
Debt securities will normally be valued on the basis of market valuations
furnished by an independent pricing service, which uses information such as
transactions in bonds, quotations by bond dealers, market transactions in
comparable securities, relationships between securities and yield to maturity.
Debt securities for which such market valuations are unavailable or deemed not
to represent market value by the Investment Adviser will be valued at fair
value pursuant to procedures established by the Trustees. Equity securities
listed on securities exchanges or in the NASDAQ National Market are valued at
closing sale prices. Listed equity securities for which closing sale prices
are not available and unlisted securities are valued at the mean between the
latest bid and asked prices provided by dealers. Warrants will be valued at
cost or market, unless the Investment Adviser believes fair value should be
used. Short-term obligations maturing in 60 days or less are valued by
amortized cost. Other assets will be valued at fair value pursuant to
procedures established by the Trustees.
INVESTMENT PERFORMANCE
Average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compound rate of return
(including capital appreciation/depreciation, distributions paid and
reinvested) for the stated period and annualizing the result. The calculation
assumes (i) the maximum sales charge is deducted from the initial $1,000
purchase order and (ii) that all dividends and distributions are reinvested at
net asset value on the reinvestment dates during the period. The table below
indicates the cumulative and average annual total return on a hypothetical
investment of $1,000 in the Fund covering the one-, five- and ten-year periods
ended September 30, 1997.
VALUE OF A $1,000 INVESTMENT
<TABLE>
<CAPTION>
TOTAL RETURN TOTAL RETURN
VALUE OF EXCLUDING SALES CHARGE INCLUDING SALES CHARGE
INVESTMENT INVESTMENT AMOUNT OF INVESTMENT -------------------------- --------------------------
PERIOD DATE INVESTMENT* ON 9/30/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
--------- ---------- ----------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended
9/30/97 9/30/87 $952.69 $2,766.61 190.41% 11.25% 176.66% 10.71%
5 Years Ended
9/30/97 9/30/92 $952.00 $1,658.95 74.26% 11.75% 65.90% 10.65%
1 Year Ended
9/30/97 9/30/96 $953.05 $1,121.50 17.68% 17.68% 12.15% 12.15%
</TABLE>
- ------------
*Initial investment less the current maximum sales charge of 4.75%.
Past performance is not indicative of future results. Investment return
and principal value will fluctuate and shares, when redeemed, may be worth
more or less than their original cost.
Yield is computed pursuant to a standardized formula by dividing its net
investment income per share earned during a recent thirty-day period by the
maximum offering price (including the maximum sales charge) per share on the
last day of the period and annualizing the resulting figure. Net investment
income per share is equal to the Fund's dividends and interest earned during
the period, reduced by accrued expenses for the period with the resulting
number being divided by the average daily number of Fund shares outstanding
and entitled to receive dividends during the period. Yield calculations assume
a maximum sales charge equal to 4.75% of the public offering price. Actual
yield may be affected by variations in sales charges on investments. For the
thirty-day period ended September 30, 1997 the yield of the Fund was 8.10%.
The Fund's total return may be compared to relevant indices, such as the
Consumer Price Index, and various domestic securities indices, which may be
used in advertisements and in information furnished to present or prospective
shareholders. The performance of the Fund and/or the high yield bond market
may also be compared to the performance of comparable securities (such as
Treasury bonds) or comparable mutual funds or mutual fund averages prepared by
independent sources (such as Lipper Analytical Services, Inc., CDA/
Wiesenberger and Morningstar, Inc.). Evaluations of the Fund's performance,
comparative performance information, charts and/or other illustrations
prepared by independent sources may also be used in advertisements and in
information furnished to present or prospective shareholders.
Information showing the effects of compounding interest (based on
different investment amounts and hypothetical rates of return) may be included
in advertisements and other material furnished to present and prospective
shareholders. Compounding is the process of earning interest on principal plus
interest that was earned earlier. Information, charts and illustrations
relating to inflation and the effects of inflation on the dollar may be
included in advertisements and other material furnished to present and
prospective shareholders.
Information, charts and illustrations showing comparative historical
information of high-yielding bonds as represented by The First Boston High
Yield Index over 10-year U.S. Treasury bonds may be used in advertisements and
other material furnished to present or prospective shareholders. The First
Boston High Yield Index is an unmanaged index of 713 high-yielding securities.
The principal and interest of U.S. Treasury bonds are guaranteed by the United
States Goverment, while high yield bonds are of lower quality than investment-
grade bonds and U.S. Government securities. Rates are given for illustrative
purposes only and are not meant to imply or predict actual results of an
investment in the Fund.
Information used in advertisements and materials furnished to present and
prospective investors may include statements or illustrations relating to the
appropriateness of certain types of securities and/or mutual funds to meet
specific financial goals. Such information may address:
- cost associated with aging parents;
- funding a college education (including its actual and estimated cost);
- health care expenses (including actual and projected expenses);
- long-term disabilities (including the availability of, and coverage
provided by, disability insurance; and
- retirement (including the availability of social security benefits, the
tax treatment of such benefits and statistics and other information
relating to maintaining a particular standard of living and outliving
existing assets).
Such information may also address different methods for saving money and
the results of such methods, as well as the benefits of investing in bond
funds.
Information in advertisements and materials furnished to present and
prospective investors may include profiles of different types of investors
(i.e., investors with different goals and assets) and different investment
strategies for meeting specific goals. Such information may provide
hypothetical illustrations which include: results of various investment
strategies; performance of an investment in the Fund over various time
periods; and results of diversifying assets among several investments with
varying performance. Information in advertisements and materials furnished to
present and prospective investors may also include quotations (including
editorial comments) and statistics concerning investing in securities, as well
as investing in particular types of securities and the performance of such
securities.
The Fund (or Principal Underwriter) may provide information about Eaton
Vance, its affiliates and other investment advisers to the funds in the Eaton
Vance Family of Funds in sales material or advertisements provided to
investors or prospective investors. Such material or advertisements may also
provide information on the use of investment professionals by such investors.
TAXES
The Fund has elected to be treated, has qualified, and intends to continue
to qualify each year as a regulated investment company ("RIC") under the Code.
Accordingly, the Fund intends to satisfy certain requirements relating to
sources of its income and diversification of its assets and to distribute all
of its ordinary income and net income in accordance with the timing
requirements imposed by the Code, so as to maintain its RIC status and to
avoid paying any federal income or excise tax. The Fund so qualified for its
fiscal year ended September 30, 1997.
In order to avoid incurring a federal excise tax obligation, the Code
requires that the Fund distribute (or be deemed to have distributed) by
December 31 of each calendar year at least 98% of its ordinary income (not
including tax-exempt income) for such year, at least 98% of the capital gain
net income (which is the excess of its realized capital gains over its
realized capital losses) generally computed on the basis of the one-year
period ending on October 31 of such year, after reduction by (i) any available
capital loss carryforwards, and (ii) 100% of any income from the prior year
(as previously computed) that was not paid out during such year and on which
the Fund paid no federal income tax. Under current law, provided the Fund
qualifies as a RIC for federal income tax purposes, the Fund is not liable for
any income, corporate excise or franchise tax in the Commonwealth of
Massachusetts.
The Fund's transactions in options, futures contracts and forward
contracts will be subject to special tax rules that may affect the amount,
timing and character of distributions to shareholders. For example, certain
positions held by the Fund on the last business day of each taxable year will
be marked to market (i.e., treated as if closed out on such day), and any
resulting gain or loss will, except for certain currency-related positions,
generally be treated as 60% long-term and 40% short-term capital gain or loss.
Certain positions held by the Fund that substantially diminish the Fund's risk
of loss with respect to other positions in its portfolio may constitute
"straddles," which are subject to tax rules that may cause deferral of Fund
losses, adjustments in the holding periods of Fund securities and conversion
of short-term into long-term capital losses. The Fund may have to limit its
activities in options, futures contracts and forward contracts in order to
maintain its qualification as a RIC.
The Fund's investment in zero coupon and deferred interest securities,
payment in kind securities and any other securities with original issue
discount (or market discount, if an election is made to include earned market
discount in current income) will cause it to realize income prior to the
receipt of cash payments with respect to these securities. In order to
distribute this income and avoid a tax on the Fund, the Fund may be required
to liquidate portfolio securities that it might otherwise have continued to
hold.
Investments in lower-rated or unrated securities may present special tax
issues for the Fund to the extent actual or anticipated defaults may be more
likely with respect to such securities. Tax rules are not entirely clear about
issues such as when the Fund may cease to accrue interest, original issue
discount, or market discount; when and to what extent deductions may be taken
for bad debts or worthless securities; how payments received on obligations in
default should be allocated between principal and income; and whether
exchanges of debt obligations in a workout context are taxable.
Distributions by the Fund of net investment income, the excess of net
short-term capital gains over net long-term capital losses and certain foreign
exchange gains are taxable to shareholders as ordinary income, whether
received in cash or reinvested in additional shares. Distributions of the
excess of net long-term capital gains over net short-term capital losses
(including any capital losses carried forward from prior years) are taxable to
shareholders as long-term capital gains whether received in cash or in
additional shares and regardless of the length of time their shares of the
Fund have been held. Certain distributions declared in October, November or
December and paid the following January will be taxed to shareholders as if
received on December 31 of the year in which they are declared.
The portion of distributions made by the Fund which are derived from
dividends received by the Fund from domestic corporations may qualify for the
dividends-received deduction for corporations. The dividends-received
deduction for corporate shareholders is reduced to the extent the shares with
respect to which the dividends are received are treated as debt-financed under
the Federal income tax law and is eliminated if the shares are deemed to have
been held for less than a minimum period, generally 46 days. Receipt of
certain distributions qualifying for the deduction may result in reduction of
the tax basis of the corporate shareholder's shares.
Any loss realized upon the redemption or exchange of shares of the Fund
with a tax holding period of 6 months or less will be treated as a long-term
capital loss to the extent of any distribution of net long-term capital gains
with respect to such shares. All or a portion of any loss realized upon a
taxable disposition of Fund shares may be disallowed under "wash sale" rules
if other shares of the Fund are purchased (whether through the reinvestment of
distributions or otherwise) within 30 days before or after such disposition.
The Fund may be subject to foreign withholding or other foreign taxes with
respect to income (possibly including, in some cases, capital gains) on
certain foreign securities. As it is not expected that more than 50% of the
value of the total assets of the Fund at the close of any taxable year will
consist of securities issued by foreign corporations, the Fund will not be
eligible to pass through to shareholders any foreign tax credits or deductions
for foreign taxes paid by the Fund. These taxes may be reduced or eliminated
under the terms of an applicable U.S. income tax treaty. Certain foreign
exchange gains and losses realized by the Fund will be treated as ordinary
income and losses. Certain uses of foreign currency or currency derivatives
and investment by the Fund in the stock of certain "passive foreign investment
companies" may be limited or a tax-deduction may be made, if available, in
order to avoid imposition of a tax on the Fund.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number
("TIN") and certain certifications required by the Internal Revenue Service
(the "IRS"), as well as shareholders with respect to whom the Fund has
received certain information from the IRS or a broker, may be subject to
"backup" withholding of federal income tax arising from the Fund's dividends
and other distributions as well as the proceeds of redemption transactions
(including repurchases and exchanges), at a rate of 31%. An individual's TIN
is generally his or her social security number.
The foregoing discussion does not address the special tax rules applicable
to certain classes of investors, such as retirement plans, tax-exempt
entities, insurance companies and financial institutions. Shareholders should
consult their own tax advisers with respect to the special tax rules that may
apply in their particular situations, as well as the state, local and, where
applicable, or foreign tax consequences of investing in the Fund.
PRINCIPAL UNDERWRITER
Shares of the Fund may be continuously purchased at the public offering
price through certain Authorized Firms which have agreements with the
Principal Underwriter.
The public offering price is the net asset value next computed after
receipt of the order, plus, where applicable, a variable percentage (sales
charge) depending upon the amount of purchase as indicated by the sales charge
table set forth in the Prospectus. Such table is applicable to purchases of
the Fund alone or in combination with purchases of the other funds offered by
the Principal Underwriter, made at a single time by (i) an individual, or an
individual, his or her spouse and their children under the age of twenty-one,
purchasing shares for his or their own account; and (ii) a trustee or other
fiduciary purchasing shares for a single trust estate or a single fiduciary
account.
The table is also presently applicable to (1) purchases of Fund shares,
alone or in combination with purchases of any of the other funds offered by
the Principal Underwriter through one dealer aggregating $25,000 or more made
by any of the persons enumerated above within a thirteen-month period starting
with the first purchase pursuant to a written Statement of Intention, in the
form provided by the Principal Underwriter, which includes provisions for a
price adjustment depending upon the amount actually purchased within such
period (a purchase not made pursuant to such Statement may be included
thereunder if the Statement is filed within 90 days of such purchase); or (2)
purchases of the Fund pursuant to the Right of Accumulation and declared as
such at the time of purchase.
Subject to the applicable provisions of the 1940 Act, the Fund may issue
shares at net asset value in the event that an investment company (whether a
regulated or private investment company or a personal holding company) is
merged or consolidated with or acquired by the Fund. Normally no sales charges
will be paid in connection with an exchange of Fund shares for the assets of
such investment company. Shares may be sold at net asset value to any officer,
director, trustee, general partner or employee of the Fund, or any investment
company for which Eaton Vance or BMR acts as investment adviser, any
investment advisory, agency, custodial or trust account managed or
administered by Eaton Vance or by any parent, subsidiary or other affiliate of
Eaton Vance, or any officer, director or employee of any parent, subsidiary or
other affiliate of Eaton Vance. The terms "officer," "director," "trustee,"
"general partner" or "employee" as used in this paragraph include any such
person's spouse and minor children, and also retired officers, directors,
trustees, general partners and employees and their spouses and minor children.
Shares of the Fund may also be sold at net asset value to registered
representatives and employees of Authorized Firms and to the spouses and
children under the age of 21 and beneficial accounts of such persons.
The Fund reserves the right to suspend or limit the offering of shares of
the Fund to the public at any time.
The Principal Underwriter acts as principal in selling shares of the Fund
under the Distribution Agreement with the Fund. The expenses of printing
copies of prospectuses used to offer shares to Authorized Firms or investors
and other selling literature and of advertising are borne by the Principal
Underwriter. The fees and expenses of qualifying and registering and
maintaining qualifications and registrations of the Fund and its shares under
federal and state securities laws are borne by the Fund. The distribution
agreement is renewable annually by the Fund's Board of Trustees (including a
majority of its Trustees who are not interested persons of the Principal
Underwriter or the Fund), may be terminated on six months' notice by either
party, and is automatically terminated upon assignment. The Principal
Underwriter distributes Fund shares on a "best efforts" basis under which it
is required to take and pay for only such shares as may be sold. The Principal
Underwriter allows Authorized Firms discounts from the applicable public
offering price which are alike for all Authorized Firms. The Principal
Underwriter may allow, upon notice to all Authorized Firms with whom it has
agreements, discounts up to the full sales charge during the periods specified
in the notice. See "How to Buy Fund Shares" in the Fund's current Prospectus
for the discount allowed to Authorized Firms on the sale of Fund shares.
During periods when the discount includes the full sales charge, such
Authorized Firms may be deemed to be underwriters as that term is defined in
the Securities Act of 1933. The total sales charges paid in connection with
the sale of shares of the Fund during the fiscal years ended September 30,
1997 and 1996 were $1,781,179 and $1,154,976, respectively, of which all was
received by Authorized Firms. The total sales charges paid in connection with
the sale of shares of the Fund during the fiscal year ended September 30, 1995
was $390,210 of which $16,634 was received by the Principal Underwriter and
$373,576 was received by Authorized Firms.
SERVICE PLAN
The Fund has adopted a Service Plan (the "Plan") designed to meet the
service fee requirements of the revised sales charge rule of the National
Association of Securities Dealers, Inc. (Management believes service fee
payments are not distribution expenses governed by Rule 12b-1 under the 1940
Act, but has chosen to have the Plan approved as if that Rule were
applicable.) The following supplements the discussion of the Plan contained in
the Prospectus.
The Plan remains in effect from year to year, provided such continuance is
approved by a vote of both of a majority of (i) those Trustees who are not
interested persons of the Fund and who have no direct or indirect financial
interest in the operation of the Plan or any agreements related to it (the
"Noninterested Trustees") and (ii) all of the Trustees then in office, cast in
person at a meeting (or meetings) called for the purpose of voting on this
Plan. The Plan may be terminated any time by vote of the Noninterested
Trustees or by a vote of a majority of the outstanding voting securities of
the Fund. The Plan has been approved by the Board of Trustees of the Fund,
including the Noninterested Trustees. The Plan amends and replaces the Fund's
original distribution plan (which originally became effective on May 22, 1989
and which was approved by the Fund's shareholders).
The Plan requires quarterly Trustee review of a written report of the
amount expended under the Plan and the purposes for which such expenditures
were made. The Plan may not be amended to increase materially the payments
described herein without approval of the affected shareholders of the Fund and
the Trustees. So long as the Plan is in effect, the selection and nomination
of Trustees who are not interested persons of the Fund shall be committed to
the discretion of such Trustees. The Trustees have determined that in their
judgment there is a reasonable likelihood that the Plan will benefit the Fund
and its shareholders.
During the fiscal year ended September 30, 1997, the Fund made service fee
payments under the Plan aggregating $191,582, of which $150,278 was paid to
Authorized Firms and the balance of which was retained by the Principal
Underwriter.
OTHER INFORMATION
The Fund is a Massachusetts business trust established under a Declaration
of Trust dated March 27, 1989, as amended and restated December 14, 1995.
Eaton Vance, pursuant to its agreement with the Fund, controls the use of the
Fund's name and may use the words "Eaton Vance" in other connections and for
other purposes. EVC may require the Fund to cease using such words in its name
if EVC or Eaton Vance or any other subsidiary or affiliate of EVC ceases to
act as investment manager of the Fund.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time
as less than a majority of the Trustees holding office have been elected by
shareholders. In such an event, the Trustees then in office will call a
shareholders' meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Fund's By-laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Fund's Declaration of Trust may be amended by the Trustees when authorized
by vote of a majority of the outstanding voting securities of the Fund, the
financial interests of which are affected by the amendment. The Trustees may
also amend the Declaration of Trust without the vote or consent of
shareholders to change the name of the Fund (or any series) or to make such
other changes (such as reclassifying series or classes of shares or
restructuring the Fund) as do not have a materially adverse effect on the
financial interests of shareholders or if they deem it necessary to conform it
to applicable federal or state laws or regulations. The Trustees are also
authorized to issue shares in one or more series or classes thereof.
Currently, the Trustees have only authorized issuance of shares of the Fund.
The Trustees intend to submit to shareholders any proposal involving the
merger of the Fund with an operating investment company unaffiliated with
Eaton Vance. The Fund (or any series or class) may be terminated by: (1) the
affirmative vote of the holders of not less than two-thirds of the shares
outstanding and entitled to vote at any meeting of shareholders of the Fund
(or the appropriate series or class thereof) or by an instrument or
instruments in writing without a meeting, consented to by the holders of two-
thirds of the shares of the Fund (or series or class thereof), provided,
however, that if such termination is recommended by the Trustees, the vote of
a majority of the outstanding voting securities of the Fund (or series or
class thereof) entitled to vote thereon shall be sufficient authorization; or
(2) by means of an instrument in writing signed by a majority of the Trustees,
be followed by a written notice to shareholders stating that a majority of the
Trustees has determined that the continuation of the Fund (or series or class
thereof) is not in the best interests of the Fund, (or such series or class)
or of its respective shareholders.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law; but nothing in the
Declaration of Trust protects a Trustee against any liability to which he
would otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office.
Under Massachusetts law, if certain conditions prevail, shareholders of a
Massachusetts business trust (such as the Trust) could be deemed to have
personal liability for the obligations of the Trust. Numerous investment
companies registered under the 1940 Act have been formed as Massachusetts
business trusts, and management is not aware of an instance where such
liability has been imposed. The Fund's Declaration of Trust contains an
express disclaimer of liability on the part of the Fund shareholders and the
Trust's By-laws provide that the Trust shall assume the defense on behalf of
any Fund shareholders. The Declaration of Trust also contains provisions
limiting the liability of a series or class to that series or class. Moreover,
the Trust's By-laws also provide for indemnification out of the property of
the Fund of any shareholder held personally liable solely by reason of being
or having been a shareholder for all loss or expense arising from such
liability. The assets of the Fund are readily marketable and will ordinarily
substantially exceed its liabilities. In light of the nature of the Fund's
business and the nature of its assets, management believes that the
possibility of the Fund's liability exceeding its assets, and therefore the
shareholder's risk of personal liability, is extremely remote.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange, is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the Commission, or during any
emergency as determined by the Commission which makes it impracticable for the
Fund to dispose of its securities or value its assets, or during any other
period permitted by order of the Commission for the protection of investors.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts
are the independent accountants for the Fund, providing audit services, tax
return preparation, and assistance and consultation with respect to the
preparation of filings with the Commission.
FINANCIAL STATEMENTS
The audited financial statements and report of independent accountants for
the Fund, appear in the Fund's most recent annual report to shareholders and
are incorporated by reference into this SAI. A copy of the Fund's most recent
Annual Report accompanies this SAI.
Registrant incorporates by reference the audited financial information for
the Fund for the fiscal year ended September 30, 1997, as previously filed
electronically with the Commission (Accession No. 0000950156-97-000982).
<PAGE>
Investing
for the
[LOGO]
EATON VANCE 21st
==============
Mutual Funds Century
- --------------------------------------------------------------------------------
Eaton Vance
Income Fund of Boston
STATEMENT OF ADDITIONAL INFORMATION
FEBRUARY 1, 1998
- --------------------------------------------------------------------------------
Investment Adviser
Eaton Vance Management, 24 Federal Street, Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc., 24 Federal Street, Boston, MA 02110
(800) 225-6265
Custodian
Investors Bank & Trust Company, 200 Clarendon Street, Boston, MA 02116
Transfer Agent
First Data Investor Services Group, P.O. Box 5123, Westborough, MA 01581-5123
(800) 262-1122
Independent Accountants
Coopers & Lybrand L.L.P., One Post Office Square, Boston, MA 02109
Legal Counsel
Gordon Altman Butowsky Weitzen Shalov & Wein, 114 West 47th Street,
New York, NY 10036
IBSAI
<PAGE>
PART C
OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS
(a) FINANCIAL STATEMENTS
INCLUDED IN PART A:
Financial Highlights for the ten years ended September 30,
1997
INCLUDED IN PART B:
INCORPORATED BY REFERENCE TO THE ANNUAL REPORT FOR THE FUND
DATED SEPTEMBER 30, 1997, FILED ELECTRONICALLY PURSUANT TO
SECTION 30(b)(2) OF THE INVESTMENT COMPANY ACT OF 1940
(ACCESSION NO. 0000950156-97-000982).
Portfolio of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Independent Accountants
(b) EXHIBITS:
(1) Amended and Restated Declaration of Trust dated December 14,
1995 filed as Exhibit No. (1) to Post-Effective Amendment No.
42 and incorporated herein by reference.
(2)(a) By-Laws filed as Exhibit (2)(a) to Post-Effective Amendment
No. 41 and incorporated herein by reference.
(b) Amendment to By-Laws dated December 13, 1993 filed as
Exhibit(2)(b) to Post- Effective Amendment No. 41 and
incorporated herein by reference.
(3) Not applicable
(4) Not applicable
(5) Investment Advisory Agreement with Eaton Vance Management
dated November 1, 1990 filed as Exhibit (5) to Post-Effective
Amendment No. 41 and incorporated herein by reference.
(6)(a) Distribution Agreement between Eaton Vance Distributors, Inc.
dated November 1, 1996 filed as Exhibit No. (6)(a) to
Post-Effective Amendment No. 42 and incorporated herein by
reference.
(b) Selling Group Agreement between Eaton Vance Distributors,
Inc. and Authorized Dealers filed as Exhibit (6)(b) to
Post-Effective Amendment No. 59 to the Registration Statement
of Eaton Vance Growth Trust (File Nos. 2-22019, and 811-1241)
and incorporated herein by reference.
(7) Not applicable
(8)(a) Custodian Agreement with Investors Bank & Trust Company dated
December 17, 1990 filed as Exhibit (8)(a) to Post-Effective
Amendment No. 41 and incorporated herein by reference.
(b) Amendment to Custodian Agreement with Investors Bank & Trust
Company dated November 20, 1995 filed as Exhibit (8)(b) to
Post-Effective Amendment No. 41 and incorporated herein by
reference.
(9)(a) Transfer Agency Agreement dated June 7, 1989 filed as Exhibit
(9)(b) to Post-Effective Amendment No. 65 to the
Registration Statement of Eaton Vance Growth Trust (File Nos.
2-22019, 811-1241) and incorporated herein by reference.
(b) Amendment to Transfer Agency Agreement dated February 1, 1993
filed as Exhibit (9)(c) to Post-Effective Amendment No. 65 to
the Registration Statement of Eaton Vance Growth Trust (File
Nos. 2-22019, 811-1241) and incorporated herein by reference.
(10) Not applicable
(11) Consent of Independent Accountants filed herewith.
(12) Not applicable
(13) Not applicable
(14)(a) Vance, Sanders Profit Sharing Retirement Plan for Self
Employed Persons with Adoption Agreement and instructions
filed as Exhibit No. 8(b)(1) to P.E.A. No. 28 to Registration
Statement on Form S-5, File No. 2-22019 and incorporated
herein by reference.
(b) Eaton & Howard, Vance Sanders Defined Contribution Prototype
Plan and Trust with Adoption Agreements (a) Basic
Profit-Sharing Retirement Plan (b) Basic Money Purchase
Pension Plan (c) Thrift Plan Qualifying as Profit Sharing
Plan (d) Thrift Plan Qualifying as Money Purchase Pension
Plan (e) Integrated Profit Sharing Retirement Plan (f)
Integrated Money Purchase Pension Plan filed as Exhibit No.
14 (2) to P.E.A. No. 29 to Registration Statement on Form
N-1, File No. 2-22019 and incorporated herein by reference.
(c) Individual Retirement Account (Form 5305-A) and Initial
Investment Instruction Form filed as Exhibit No. 18 to P.E.A.
No. 24 to Registration Statement on Form S-5, File No.
2-22019 and incorporated herein by reference.
(d) Vance, Sanders Variable Pension Prototype Plan and Trust with
Adoption Agreement filed as Exhibit No. 14(4) to P.E.A. No.
29 to Registration Statement on Form N-1, File No. 2-22019
and incorporated herein by reference.
(15)(a) Service Plan pursuant to Rule 12b-1 under the Investment
Company Act of 1940 dated August 9, 1993 filed as Exhibit
(15) to Post-Effective Amendment No. 41 and incorporated
herein by reference.
(b) Amendment to Service Plan dated November 1, 1996 filed as
Exhibit No. (15)(b) to Post-Effective Amendment No. 42 and
incorporated herein by reference.
(16) Schedule for Computation of Performance Quotations filed
herewith.
(17) Power of Attorney dated November 17, 1997 filed herewith.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable
ITEM 26. NUMBERS OF HOLDERS OF SECURITIES
NUMBER OF RECORD HOLDERS
TITLE OF CLASS AS OF DECEMBER 31, 1997
-------------- -----------------------
Shares of beneficial interest 8,514
without par value
ITEM 27. INDEMNIFICATION
Article IV of the Fund's Amended and Restated Declaration of Trust, dated
December 14, 1995, permits Trustee and officer indemnification by By-law,
contract and vote. Article XI of the By-laws contains indemnification
provisions. Registrant's Trustees and officers are insured under a standard
mutual fund errors and omissions insurance policy covering incurred by reason
of negligent errors and omissions committed in their capacities as such.
The distribution agreement of the Fund also provides for reciprocal
indemnity of the principal underwriter, on the one hand, and the Trustees and
officers, on the other.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER
Reference is made to the information set forth under the captions
"Management of the Fund" in the Prospectus and "Investment Adviser" in the
Statement of Additional Information, which information is incorporated herein
by reference.
ITEM 29. PRINCIPAL UNDERWRITERS
(a) Registrant's principal underwriter, Eaton Vance Distributors, Inc., a
wholly-owned subsidiary of Eaton Vance Management, is the principal
underwriter for each of the investment companies named below:
Eaton Vance Growth Trust Eaton Vance Mutual Funds Trust
Eaton Vance Income Fund of Boston Eaton Vance Prime Rate Reserves
Eaton Vance Investment Trust Eaton Vance Special Investment Trust
Eaton Vance Municipals Trust EV Classic Senior Floating-Rate Fund
Eaton Vance Municipals Trust II
(b)
<TABLE>
<CAPTION>
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICES
BUSINESS ADDRESS* WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
------------------ -------------------------- ---------------------
<S> <C> <C>
James B. Hawkes Vice President and Director None
William M. Steul Vice President and Director None
Wharton P. Whitaker President and Director None
Albert F. Barbaro Vice President None
Chris Berg Vice President None
Kate B. Bradshaw Vice President None
David B. Carle Vice President None
Daniel C. Cataldo Vice President None
Raymond Cox Vice President None
Mark P. Doman Vice President None
Alan R. Dynner Vice President Secretary
Richard Finelli Vice President None
Kelly Flynn Vice President None
James Foley Vice President None
Michael A. Foster Vice President None
William M. Gillen Senior Vice President None
Hugh S. Gilmartin Vice President None
Perry D. Hooker Vice President None
Brian Jacobs Senior Vice President None
Thomas P. Luka Vice President None
John Macejka Vice President None
Timothy D. McCarthy Vice President None
Joseph T. McMenamin Vice President None
Morgan C. Mohrman Senior Vice President None
James A. Naughton Vice President None
Mark D. Nelson Vice President None
Linda D. Newkirk Vice President None
James L. O'Connor Vice President Treasurer
Thomas Otis Secretary and Clerk None
George D. Owen, II Vice President None
Enrique M. Pineda Vice President None
F. Anthony Robinson Vice President None
Jay S. Rosoff Vice President None
Benjamin A. Rowland, Jr. Vice President, Treasurer and Director None
Stephen M. Rudman Vice President None
John P. Rynne Vice President None
Kevin Schrader Vice President None
George V.F. Schwab, Jr. Vice President None
Teresa A. Sheehan Vice President None
David C. Sturgis Vice President None
Cornelius J. Sullivan Senior Vice President None
David M. Thill Vice President None
John M. Trotsky Vice President None
Chris Volf Vice President None
Sue Wilder Vice President None
</TABLE>
- ----------
*Address is 24 Federal Street, Boston, MA 02110
(c) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 200 Clarendon Street,
16th Floor Mail Code ADM 27, Boston, MA 02116 and its transfer agent, First
Data Investor Services Group, 4400 Computer Drive, Westborough, MA 01581-5120,
with exception of certain corporate documents and portfolio trading documents
which are in the possession and custody of the Registrant's investment
adviser, Eaton Vance Management, 24 Federal Street, Boston, MA 02110.
Registrant is informed that all applicable accounts, books and documents
required to be maintained by registered investment advisers are in the custody
and possession of Registrant's investment adviser, Eaton Vance Management.
ITEM 31. MANAGEMENT SERVICES
Not applicable
ITEM 32. UNDERTAKINGS
The Registrant undertakes to furnish to each person to whom a prospectus
is delivered a copy of the latest annual report to shareholders, upon request
and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Amendment to the Registration
Statement pursuant to Rule 485(b) under the Securities Act of 1933 and has
duly caused this Amendment to its Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in the City of Boston,
and Commonwealth of Massachusetts, on the 26th day of January, 1998.
EATON VANCE INCOME FUND OF BOSTON
By /s/ M. DOZIER GARDNER
--------------------------------------
M. DOZIER GARDNER, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President, Principal
Executive Officer and
/s/ M. DOZIER GARDNER Trustee January 26, 1998
- --------------------------------------
M. DOZIER GARDNER
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer January 26, 1998
- --------------------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT* Trustee January 26, 1998
- --------------------------------------
DONALD R. DWIGHT
ROBERT GLUCK* Trustee January 26, 1998
- --------------------------------------
ROBERT GLUCK
SAMUEL L. HAYES, III* Trustee January 26, 1998
- --------------------------------------
SAMUEL L. HAYES, III
KENNETH C. KNIGHT* Trustee January 26, 1998
- --------------------------------------
KENNETH C. KNIGHT
NORTON H. REAMER* Trustee January 26, 1998
- --------------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee January 26, 1998
- --------------------------------------
JOHN L. THORNDIKE
*By: /s/ ALAN R. DYNNER
- --------------------------------------
ALAN R. DYNNER
As attorney-in-fact
</TABLE>
<PAGE>
EXHIBIT INDEX
The following exhibits are filed as part of this amendment to the
Registration Statement pursuant to General Instructions E of Form N-1A.
PAGE IN
SEQUENTIAL
NUMBERING
EXHIBIT NO. DESCRIPTION SYSTEM
- ----------- ----------- ----------
(11) Consent of Independent Accountants
(16) Schedule for Computation of Performance Quotations
(17) Power of Attorney dated November 17, 1997
<PAGE>
EXHIBIT 99.11
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 43 to the
Registration Statement on Form N-1A (1933 Act File Number 2-42722) of Eaton
Vance Income Fund of Boston (the "Fund") of our report dated October 31, 1997
on our audit of the financial statements and financial highlights of the Fund
which report is included in the Annual Report to Shareholders for the year
ended September 30, 1997, which is incorporated by reference in the Statement
of Additional Information which is part of such Registration Statement.
We also consent to the reference to our Firm under the heading "The Fund's
Financial Highlights" in the Prospectus and, under the caption "Independent
Accountants" in the Statement of Additional Information of the Registration
Statement.
/s/ COOPERS & LYBRAND L.L.P.
------------------------------------
COOPERS & LYBRAND L.L.P.
January 26, 1998
Boston, Massachusetts
<PAGE>
<TABLE>
EXHIBIT 99.16
INVESTMENT PERFORMANCE -- EATON VANCE INCOME FUND OF BOSTON
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the 1, 5, and 10 year periods ended September 30, 1997.
<CAPTION>
VALUE OF A $1,000 INVESTMENT
VALUE OF VALUE OF TOTAL RETURN TOTAL RETURN
INVESTMENT INVESTMENT INITIAL INVESTMENT EXCLUDING SALES CHARGE INCLUDING SALES CHARGE
PERIOD DATE INVESTMENT* ON 09/30/97 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
<S> <C> <C> <C> <C> <C> <C> <C>
10 YEARS ENDED
09/30/97 09/30/87 $952.69 $2,766.61 190.41% 11.25% 176.66% 10.71%
5 YEARS ENDED
09/30/97 09/30/92 $952.00 $1,658.95 74.26% 11.75% 65.90% 10.65%
1 YEAR ENDED
09/30/97 09/30/96 $953.05 $1,121.50 17.68% 17.68% 12.15% 12.15%
Average annual total return is calculated using the following formula:
n
P(1+T) = ERV
where P = an initial investment of $1,000 **
T = average annual total return
n = number of years
ERV = ending redeemable value of $1,000 initial investment at the end of the period
Cumulative total return is calculated using the following formula:
T = ( ERV / P ) - 1
where T = cumulative total return including the maximum sales charge
ERV = ending redeemable value of $1,000 initial investment at the end of the period
P = an initial investment of $1,000 ***
* Initial investment less the current maximum sales charge of 4.75%.
** The average annual total return including the sales charge is calculated based on an initial investment of $1,000 less the
maximum initial sales charge of 4.75%.
*** The cumulative total return including the sales charge is calculated based on an initial investment of $1,000 less
maximum initial sales charge of 4.75%.
</TABLE>
<PAGE>
Exhibit 16
EV INCOME FUND OF BOSTON
CALCULATION OF YIELD
For the 30 days ended 9/30/97:
Interest Income Earned: $1,582,944
Plus Dividend Income Earned: $0
----------
Equal Gross Income: $1,582,944
Minus Expenses: $170,011
----------
Equal Net Investment Income: $1,412,933
Divided by Average daily number of shares outstanding that
were entitled to receive dividends: 23,302,277
----------
Equal Net Investment Income Earned Per Share: $0.0606
Net Asset Value Price Per Share 9/30/97: $9.1300
30 Day Yield*: 8.10%
* Yield is calculated on a bond equivalent rate as follows:
6
2[(($0.0606/$9.13)+1)-1]
<PAGE>
EXHIBIT 99.17
POWER OF ATTORNEY
We, the undersigned officers and Trustees of Eaton Vance Income Fund of
Boston, a Massachusetts business trust, do hereby severally constitute and
appoint Alan R. Dynner, James B. Hawkes and Eric G. Woodbury, or any of them, to
be true, sufficient and lawful attorneys, or attorney for each of us, to sign
for each of us, in the name of each of us in the capacities indicated below, any
and all amendments (including post-effective amendments) to the Registration
Statement on Form N-1A filed by Eaton Vance Income Fund of Boston with the
Securities and Exchange Commission in respect of shares of beneficial interest
and other documents and papers relating thereto.
IN WITNESS WHEREOF we have hereunto set our hands on the dates set
opposite our respective signatures.
Signature Title Date
--------- ----- ----
President, Principal
/s/ M. Dozier Gardner Executive Officer and November 17, 1997
- --------------------------- Trustee
M. Dozier Gardner
Treasurer and Principal
/s/ James L. O'Connor Financial and Accounting November 17, 1997
- --------------------------- Officer
James L. O'Connor
/s/ Donald R. Dwight Trustee November 17, 1997
- ---------------------------
Donald R. Dwight
/s/ Robert Gluck Trustee November 17, 1997
- ---------------------------
Robert Gluck
/s/ Samuel L. Hayes, III Trustee November 17, 1997
- ---------------------------
Samuel L. Hayes, III
/s/ Kenneth C. Knight Trustee November 17, 1997
- ---------------------------
Kenneth C. Knight
/s/ Norton H. Reamer Trustee November 17, 1997
- ---------------------------
Norton H. Reamer
/s/ John L. Thorndike Trustee November 17, 1997
- ---------------------------
John L. Thorndike
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 0
<NAME> EATON VANCE INCOME FUND OF BOSTON
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> SEP-30-1997
<INVESTMENTS-AT-COST> 189337
<INVESTMENTS-AT-VALUE> 202499
<RECEIVABLES> 10779
<ASSETS-OTHER> 1
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 213279
<PAYABLE-FOR-SECURITIES> 4536
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1221
<TOTAL-LIABILITIES> 5757
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 209919
<SHARES-COMMON-STOCK> 23848
<SHARES-COMMON-PRIOR> 17706
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 1011
<ACCUMULATED-NET-GAINS> (14548)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 13162
<NET-ASSETS> 207522
<DIVIDEND-INCOME> 56
<INTEREST-INCOME> 17477
<OTHER-INCOME> 342
<EXPENSES-NET> 1805
<NET-INVESTMENT-INCOME> 16070
<REALIZED-GAINS-CURRENT> 1830
<APPREC-INCREASE-CURRENT> 10934
<NET-CHANGE-FROM-OPS> 28835
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 16070
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 106
<NUMBER-OF-SHARES-SOLD> 9697
<NUMBER-OF-SHARES-REDEEMED> 4456
<SHARES-REINVESTED> 902
<NET-CHANGE-IN-ASSETS> 63678
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> (16378)
<OVERDISTRIB-NII-PRIOR> 905
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1076
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1805
<AVERAGE-NET-ASSETS> 172378
<PER-SHARE-NAV-BEGIN> 8.12
<PER-SHARE-NII> 0.79
<PER-SHARE-GAIN-APPREC> 0.57
<PER-SHARE-DIVIDEND> 0.77
<PER-SHARE-DISTRIBUTIONS> 0.01
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.70
<EXPENSE-RATIO> 1.05
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
