<PAGE>
[LOGO OF EATON Investing [PHOTO OF STOCK CERTIFICATES
VANCE APPEARS AND PHONE APPEARS HERE]
HERE] for the
21st
Century(R)
Semiannual Report March 31, 1998
[PHOTO OF STATUE
APPEARS HERE]
EATON VANCE
INCOME FUND
OF BOSTON
Global Management-Global Distribution
[PHOTO OF CITY APPEARS HERE]
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
INVESTMENT UPDATE
Investment Environment
- --------------------------------------------------------------------------------
The High-Yield Market
[PHOTO OF MICHAEL W. WEILHEIMER APPEARS HERE]
Michael W. Weilheimer
Portfolio Manager
. Supported by a sound economy, continued low inflation, and a robust equity
market, the high-yield bond market posted strong results for the six
months ended March 31, 1998. As a measure of that strength, the Lehman
Brothers High Yield Bond Index -- an unmanaged index of high-yield
corporate issues -- had a total return of 5.4%./1/
. With inflation subdued, interest rates trended lower during the period.
Yields on ten-year Treasury bonds declined from 6.1% on September 30
to 5.6% on March 31.
. High-yield bond issuance reached record levels in 1997, as a strong stock
market encouraged initial public offerings, which continued to rise in the
first three months of 1998.
The Fund
- --------------------------------------------------------------------------------
Performance for the Past Six Months
. The Fund's total return was 8.1% for the six months ended March 31, 1998./2/
This return was the result of a rise in net asset value per share from $8.70
on September 30, 1997 to $9.00 on March 31, 1998, and the reinvestment of
$0.384 in dividends.
. Based on the Fund's closing net asset value per share of $9.00 on March 31,
1998, the Fund had a distribution rate of 8.6%./3/ The Fund's SEC 30-day yield
at March 31 was 8.0%./4/
. The Fund's risk-adjusted performance through March 31 again earned it a Five-
Star Overall rating among taxable bond funds covered by Morningstar, Inc./5/ -
a nationally recognized monitor of mutual fund performance.
Recent Portfolio Shifts
. The Portfolio increased its exposure to defensive issues. One such holding,
AFC Enterprises, is the parent company of the Church's Fried Chicken and
Popeye's restaurant chains. The company is among the few fast-food chains that
has enjoyed strong growth in same-store sales. AFC continues to deleverage its
balance sheet and appears close to an initial public offering of common
stocks.
. The Portfolio bought an issue of Coleman Company, a maker of outdoor
recreation equipment with over $1 billion in revenues. In the wake of the
company's agreement to a takeover by Sunbeam Corp., a leading maker of
consumer goods, the bonds performed extremely well.
Other Developments in the Portfolio
. Marcus Cable is the largest privately-owned cable company in the U.S. and has
enjoyed good subscriber growth in the southwest. The company was recently
purchased by Paul Allen, a co-founder of Microsoft. The purchase has caused
excitement within the industry because Allen has been exploring ways to
combine cable with the Internet.
. The growth of cable television has been no less impressive abroad, as
exemplified by United International Holdings, a major foreign cable player and
an excellent performer for the Portfolio. Because many of the company's cable
properties are in Europe, it has tended to be misunderstood by analysts, and,
in our estimation, undervalued.
. In an emerging growth area, Crown Castle, SBA Communications and Pinnacle
Corp. have bought or constructed hundreds of towers that are leased to phone
company-tenants such as Sprint or Nextel. The tower management industry is in
its infancy, but with the increase in wireless services like cellular and
paging devices, there is clear growth potential.
- --------------------------------------------------------------------------------
Mutual fund shares are not insured by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are subject
to investment risks, including possible loss of principal invested.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fund Information
as of March 31, 1998
Performance/6/ -
==============================================================================
Average Annual Total Returns (or net asset value)
- ------------------------------------------------------------------------------
One year 21.8%
Five years 12.1
Ten years 11.8
SEC Average Annual Total Returns (including 4.75% sales change)
- ------------------------------------------------------------------------------
One year 16.0%
Five years 11.0
Ten years 11.2
Ten Largest Holdings/7/
- ------------------------------------------------------------------------------
By total net assets
Nextlink Communications, Inc. 2.1%
CSC Holdings, Inc. 1.7
Allied Waste Industries, Inc. 1.6
Dobson Communications Corp. 1.6
IXC Communications, Inc. 1.5
Adelphia Communications Corp. 1.4
Extended Stay America 1.3
Unisys Corp. 1.3
Chancellor Radio Broadcasting, Inc. 1.2
Winstar Communications, Inc. 1.2
/1/ It is not possible to invest directly in an Index. /2/ This return does not
include the Fund's 4.75% maximum sales charge. /3/ The Fund's distribution rate
represents actual distributions paid to shareholders and is calculated daily by
dividing the last distribution per share (annualized) by the net asset value./4/
The Fund's SEC yields are calculated by dividing the net investment income per
share for the 30-day period by the offering price at the end of the period and
annualizing the result. /5/ Morningstar ratings reflect historical risk-adjusted
performance through 3/31/98 and are subject to change. Funds are assigned
ratings from 1 star (lowest) to 5 stars (highest). Ratings are calculated from
the Fund's 3-,5-, and 10-year returns (with fee adjustment) in excess of 90-day
Treasury bill returns. The top 10% of the funds in a category receive 5 stars.
For the 3-year period, the Fund was rated 5 stars (1403 funds), for the 5-year
period, 5 stars (831 funds); and for the 10-year period, 5 stars (329 funds)./6/
Returns are calculated by determining the percentage change in net asset value
with all distributions reinvested. SEC returns reflect sales charge as noted./7/
Ten largest holdings account for 14.9% of the portfolio's investments,
determined by dividing the total market value of the holdings by the total
investments of the portfolio. Holdings are subject to change.
Past performance is no guarantee of future results. Investment return and
principal value will fluctuate so that shares, when redeemed, may be worth more
or less than their original cost.
2
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited)
Corporate Bonds & Notes -- 89.4%
Principal
Amount
Security (000's omitted) Value
- --------------------------------------------------------------------------
Aerospace and Defense -- 0.5%
- --------------------------------------------------------------------------
Alliant Tech Systems Inc., Sr. Sub.
Notes, 11.75%, 3/1/03 $ 1,000 $ 1,100,000
- --------------------------------------------------------------------------
$ 1,100,000
- --------------------------------------------------------------------------
Apparel -- 1.3%
- --------------------------------------------------------------------------
Glenoit Corp., Sr. Sub. Notes, 11.00%,
4/15/07/(1)/ $ 1,200 $ 1,296,000
- --------------------------------------------------------------------------
William Carter Co., Sr. Sub. Note,
10.375%, 12/1/06 1,575 1,689,188
- --------------------------------------------------------------------------
$ 2,985,188
- --------------------------------------------------------------------------
Auto and Parts -- 1.5%
- --------------------------------------------------------------------------
Cambridge Industries, Inc., Sr.
Sub. Notes, 10.25%, 7/15/07 $ 630 $ 655,200
Key Plastics Inc., Sr. Notes,
14.00%, 11/15/99 1,500 1,665,000
Walbro Corp., Sr. Notes,
10.125%, 12/15/07 1,160 1,136,800
- --------------------------------------------------------------------------
$ 3,457,000
- --------------------------------------------------------------------------
Banks - Regional -- 1.1%
- --------------------------------------------------------------------------
First Nationwide Holdings, Inc.,
Sr. Sub. Note, 10.625%, 10/1/03 $ 1,800 $ 2,020,500
First Nationwide, Inc. Sr. Notes,
12.50%, 4/15/03 400 458,000
- --------------------------------------------------------------------------
$ 2,478,500
- --------------------------------------------------------------------------
Broadcasting and Cable -- 8.3%
- --------------------------------------------------------------------------
21st Century Telecom Group, Sr.
Disc. Notes, 12.25%, (0% until
2003), 2/15/08/(1)/ $ 2,000 $ 1,177,500
Adelphia Communications Corp., Sr.
Notes, 9.875%, 3/1/07 1,120 1,218,000
Adelphia Communications Corp., Sr.
Notes, 10.50%, 7/15/04 660 724,350
Century Communications, Sr. Notes,
8.75%, 10/1/07 600 624,000
CSC Holdings, Inc., Sr. Sub. Notes,
9.25%, 11/1/05 850 903,125
Diamond Cable Communications Co.,
Sr. Disc. Notes, 13.25%, (0% until
1999), 9/30/04 400 369,000
Diamond Cable Communications Co.,
Sr. Disc. Notes, 11.75%, (0% until
2000), 12/15/05 100 79,500
Digital Television Services, Inc.,
Guaranteed Notes, 12.50%, 8/1/07 1,440 1,659,600
Echostar DBS Corp., Sr. Sec. Notes,
12.50%, 7/1/02 1,300 1,469,000
Intermedia Capital Partners, Sr.
Sub. Note, 11.25%, 8/1/06 500 562,500
Marcus Cable Co., Sr. Debs.,
11.875%, 10/1/05 200 217,500
Marcus Cable Co., Sr. Disc. Notes,
14.25%, (0% until 2000), 12/15/05 2,500 2,268,750
NTL, Inc., 10.00%, 2/15/07 1,100 1,193,500
NTL, Inc., Sr. Notes, 9.75%, (0%
until 2003), 4/1/08/(1)/ 1,100 717,750
Star Choice Communications, Sr.
Sec. Notes, 13.00%, 12/15/05/(1)/ 600 627,000
Sullivan Broadcasting Co., Inc.,
Sr. Sub. Notes, 10.25%, 12/15/05 1,350 1,488,375
Telewest PLC, Debs., 11.00%, (0%
until 2002), 10/1/07 2,250 1,811,250
UIH Australia/Pacific, Inc., Sr.
Disc. Note, 14.00%, (0% until
2001), 5/15/06 400 276,000
UIH Australia/Pacific, Inc., Sr.
Disc. Notes, 14.00%, (0% until
2001), 5/15/06 500 345,000
United International Holdings,
Inc., Sr. Disc. Notes, 10.75%, (0%
until 2003), 2/15/08 2,700 1,687,500
- --------------------------------------------------------------------------
$ 19,419,200
- --------------------------------------------------------------------------
Building Materials -- 0.2%
- --------------------------------------------------------------------------
Tarkett International, AG., Sr.
Sub. Notes, 9.00%, 3/1/02 $ 400 $ 409,000
- --------------------------------------------------------------------------
$ 409,000
- --------------------------------------------------------------------------
Business Services -- 1.8%
- --------------------------------------------------------------------------
AP Holdings, Inc., Sr. Disc. Notes,
11.25%, (0% until 2003), 3/15/08/(1)/ $ 1,200 $ 723,000
Apcoa, Inc., Sr. Sub. Notes,
9.25%, 3/15/08/(1)/ 300 300,750
Federal Data Corp., Sr. Sub. Notes,
10.125%, 8/1/05 1,080 1,123,200
Intertek Finance PLC, Sr. Sub.
Note, 10.25%, 11/1/06 1,400 1,498,000
Sitel Corp., Sr. Sub. Notes,
9.25%, 3/15/06/(1)/ 600 615,000
- --------------------------------------------------------------------------
$ 4,259,950
- --------------------------------------------------------------------------
See notes to financial statements
3
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Principal
Amount
Security (000's omitted) Value
- --------------------------------------------------------------------------
Business Services - Miscellaneous -- 4.9%
- --------------------------------------------------------------------------
Allied Waste Industries, Inc., Sr.
Disc. Notes, 11.30%, (0% until
2002), 6/1/07 $ 1,950 $ 1,433,250
Allied Waste North America, Inc.,
Sr. Sub. Note, LOC, 10.25%, 12/1/06 2,050 2,275,500
Crown Castle International Corp.,
Sr. Disc. Notes, 10.625%, (0% until
2002), 11/15/07/(1)/ 950 641,250
Pinnacle Holdings, Inc., Sr. Disc.
Notes, 10.00%, (0% until 2003),
3/15/08/(1)/ 980 612,500
Richmont Marketing Special, Sr.
Sub. Notes, 10.125%, 12/15/07/(1)/ 1,875 1,950,000
SBA Communications Corp., Sr. Disc.
Notes, 12.00%, (0% until 2003),
3/1/08/(1)/ 3,400 2,010,250
Unicco Service/Finance, Inc., Sr.
Sub. Notes, 9.875%, 10/15/07 1,010 1,033,988
Unisite, Inc., Sub. Notes,
13.00%, 12/15/04/(1)/ 1,500 1,557,150
- --------------------------------------------------------------------------
$ 11,513,888
- --------------------------------------------------------------------------
Chemicals -- 1.1%
- --------------------------------------------------------------------------
Huntsman Corp., Sr. Sub. Note,
9.50%, 7/1/07/(1)/ $ 150 $ 155,625
NL Industries, Inc., Sr. Notes,
11.75%, 10/15/03 1,260 1,401,750
Sterling Chemical Holdings, Inc.,
0.00%, 8/15/08 1,600 952,000
- --------------------------------------------------------------------------
$ 2,509,375
- --------------------------------------------------------------------------
Communications Equipment -- 0.7%
- --------------------------------------------------------------------------
Jordan Telecom Products, Inc., Sr.
Disc. Notes, 11.75%, (0% until
2000), 8/1/07/(1)/ $ 2,000 $ 1,700,000
- --------------------------------------------------------------------------
$ 1,700,000
- --------------------------------------------------------------------------
Computer Equipment -- 1.7%
- --------------------------------------------------------------------------
Merisel, Inc., Sr. Notes,
12.50%, 12/31/04 $ 1,000 $ 1,115,000
Unisys Corp., Debs., 9.75%, 9/15/16 900 931,500
Unisys Corp., Sr. Notes, 11.75%,
10/15/04 400 463,000
Unisys Corp., Sr. Notes, 12.00%,
4/15/03 1,400 1,585,500
- --------------------------------------------------------------------------
$ 4,095,000
- --------------------------------------------------------------------------
Containers and Packaging -- 1.7%
- --------------------------------------------------------------------------
Applied Extrusion Inc., Sr. Notes,
11.50%, 4/1/02 $ 1,500 $ 1,605,000
Consumers International, Inc., Sr.
Sub. Note, 10.25%, 4/1/05/(1)/ 985 1,088,425
S.D. Warren Co., Sr. Sub. Notes,
12.00%, 12/15/04 1,200 1,341,000
- --------------------------------------------------------------------------
$ 4,034,425
- --------------------------------------------------------------------------
Electric Utilities -- 1.0%
- --------------------------------------------------------------------------
AES Corp., 8.375%, 8/15/07 $ 300 $ 308,250
AES Corp., Sr. Sub. Notes,
10.25%, 7/15/06 400 442,000
Cal Energy Company, Inc., Sr.
Notes, 9.50%, 9/15/06 1,500 1,611,045
- --------------------------------------------------------------------------
$ 2,361,295
- --------------------------------------------------------------------------
Electrical Equipment -- 0.4%
- --------------------------------------------------------------------------
Wavetek Corp., Sr. Sub. Notes,
10.125%, 6/15/07 $ 840 $ 879,900
- --------------------------------------------------------------------------
$ 879,900
- --------------------------------------------------------------------------
Electronics - Instruments -- 0.6%
- --------------------------------------------------------------------------
HCC Industries, Inc., Sr. Sub.
Notes, 10.75%, 5/15/07 $ 1,275 $ 1,332,375
- --------------------------------------------------------------------------
$ 1,332,375
- --------------------------------------------------------------------------
Entertainment -- 1.0%
- --------------------------------------------------------------------------
Australis Media Ltd., Sub. Disc.
Notes, 15.75%, (0% until 2000), 5/15/03 $ 1,122 $ 224,480
Fox Kids Worldwide, Inc., Sr. Disc.
Notes, 10.25%, (0% until 2002),
11/1/07/(1)/ 1,300 828,750
Premier Parks, Inc., Sr. Disc.
Notes, 10.00%, (0% until 2003), 4/1/08 800 510,000
Premier Parks, Inc., Sr. Notes,
9.25%, 4/1/06 410 419,225
SFX Entertainment, Inc., Sr. Sub.
Notes, 9.125%, 2/1/08/(1)/ 370 364,450
- --------------------------------------------------------------------------
$ 2,346,905
- --------------------------------------------------------------------------
See notes to financial statements
4
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Principal
Amount
Security (000's omitted) Value
- --------------------------------------------------------------------------
Foods -- 4.6%
- --------------------------------------------------------------------------
B & G Foods, Inc., Sub. Notes,
9.625%, 8/1/07/(1)/ $ 980 $ 1,004,500
Del Monte Corp., Sr. Note,
12.25%, 4/15/07 1,600 1,824,000
Del Monte Foods Co., Sr. Disc.
Notes, 12.50%, (0% until 1998),
12/15/07/(1)/ 1,750 1,148,438
Grupo Azucarero Mexico, Sr. Notes,
11.50%, 1/15/05/(1)/ 800 794,000
International Home Foods, Inc., Sr.
Sub. Note, 10.375%, 11/1/06 2,250 2,503,125
Keebler Corp., Sr. Sub. Notes,
10.75%, 7/1/06 1,430 1,623,050
Van De Kamps, Inc., Sr. Sub. Notes,
12.00%, 9/15/05 1,575 1,756,125
- --------------------------------------------------------------------------
$ 10,653,238
- --------------------------------------------------------------------------
Health Services -- 1.2%
- --------------------------------------------------------------------------
Dade International, Inc., Sr. Sub.
Notes, 11.125%, 5/1/06 $ 1,200 $ 1,341,000
Genesis Eldercare Acquisition
Corp., Sr. Sub. Note, 9.00%, 8/1/07/(1)/ 1,530 1,568,250
- --------------------------------------------------------------------------
$ 2,909,250
- --------------------------------------------------------------------------
Household Products -- 2.8%
- --------------------------------------------------------------------------
Amscan Holdings, Inc., Sr. Sub.Notes,
9.875%, 12/15/07/(1)/ $ 1,120 $ 1,173,200
Coleman Holdings, Inc., Sr. Disc.
Notes, 0.00%, 5/15/01 1,000 785,000
Icon Health and Fitness, Inc., Sr.
Sub. Note, 13.00%, 7/15/02 1,000 1,090,000
IHF Holdings, Inc., 15.00%, (0%
until 1999), 11/15/04 740 621,600
Ridell Sports, Inc., Sr. Note,
10.50%, 7/15/07 790 829,500
Selmer Co., Inc., Sr. Sub. Notes,
11.00%, 5/15/05 1,000 1,097,500
Werner Holdings Co., Inc., Sr. Sub.
Notes, 10.00%, 11/15/07 1,000 1,056,250
- --------------------------------------------------------------------------
$ 6,653,050
- --------------------------------------------------------------------------
Information Services -- 1.7%
- --------------------------------------------------------------------------
Cellnet Data Systems, Inc., Sr.
Disc. Notes, 14.00%, (0% until
2002), 10/1/07 $ 2,600 $ 1,534,000
Concentric Network Corp., Sr.
Notes, 12.75%, 12/15/07/(1)/ 800 948,000
Orbital Imaging Corp., Sr. Notes,
11.625%, 3/1/05/(1)/ 940 1,029,300
Verio, Inc., Sr. Notes, 10.375%,
4/1/05/(1)/ 540 561,600
- --------------------------------------------------------------------------
$ 4,072,900
- --------------------------------------------------------------------------
Lodging and Gaming -- 4.6%
- --------------------------------------------------------------------------
Aztar Corp., Sr. Sub. Notes,
13.75%, 10/1/04 $ 1,000 $ 1,152,500
Extended Stay America, Sr. Sub.
Notes, 9.15%, 3/15/08/(1)/ 3,050 3,088,124
Harvey Casinos Resorts, Sr. Sub.
Notes, 10.625%, 6/1/06 1,950 2,188,875
Horseshoe Gaming L.L.C., Sr. Sub.
Notes, 9.375%, 6/15/07 800 864,000
Showboat Marina Casino, 1st Mtg.
Notes, 13.50%, 3/15/03 1,500 1,770,000
Trump Atlantic City Associates,
Co., 1st Mtg. Notes, 11.25%,
5/1/06 1,600 1,644,000
- --------------------------------------------------------------------------
$ 10,707,499
- --------------------------------------------------------------------------
Machinery -- 0.3%
- --------------------------------------------------------------------------
Alvey Systems, Inc., Sr. Sub.
Notes, 11.375%, 1/31/03 $ 600 $ 645,000
- --------------------------------------------------------------------------
$ 645,000
- --------------------------------------------------------------------------
Manufacturing -- 7.1%
- --------------------------------------------------------------------------
Amtrol Acquisition, Inc., Sr. Sub.,
10.625%, 12/31/06 $ 900 $ 924,750
Clark-Schwebel Holdings, Inc.,
Debs., 12.50%, 7/15/07 736 791,100
Details, Inc., Sr. Sub. Notes,
10.00%, 11/15/05 1,450 1,518,875
FWT, Inc., Sr. Sub. Notes,
9.875%, 11/15/07/(1)/ 840 798,000
GSI Group, Inc., Sr. Sub. Notes,
10.25%, 11/1/07/(1)/ 920 970,600
IMO Industries, Sr. Sub. Notes,
11.75%, 5/1/06 2,070 2,339,100
MCMS, Inc., Sr. Sub. Notes,
9.75%, 3/1/08/(1)/ 1,850 1,868,500
See notes to financial statements
5
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Principal
Amount
Security (000's omitted) Value
- --------------------------------------------------------------------------
Manufacturing (continued)
- --------------------------------------------------------------------------
Motors and Gears, Inc., Sr. Notes,
10.75%, 11/15/06 $ 1,650 $ 1,782,000
RBX Corp., Sr. Notes, 12.00%,
1/15/03/(1)/ 550 572,000
Roller Bearing Co. America, Inc.,
Sr. Sub. Notes, 9.625%, 6/15/07 400 411,000
Roller Bearing Holdings Co.,
13.00%, (0% until 2002), 6/15/09/(1)/ 3,467 2,270,885
Viasystems, Inc., Sr. Sub. Notes,
9.75%, 6/1/07/(1)/ 1,250 1,306,250
Viasystems, Inc., Sr. Sub. Notes,
9.75%, 6/1/07/(1)/ 900 940,500
- --------------------------------------------------------------------------
$ 16,493,560
- --------------------------------------------------------------------------
Medical Products -- 1.3%
- --------------------------------------------------------------------------
Alliance Imaging, Sr. Sub. Notes,
9.625%, 12/15/05 $ 800 $ 836,000
Maxxim Medical, Inc., Sr. Sub.
Notes, 10.50%, 8/1/06 1,300 1,443,000
Physician Sales and Service, Sr.
Sub. Notes, 8.50%, 10/1/07 670 696,800
- --------------------------------------------------------------------------
$ 2,975,800
- --------------------------------------------------------------------------
Metals - Industrial -- 1.5%
- --------------------------------------------------------------------------
GS Technologies Corp., Sr. Notes,
12.25%, 10/1/05 $ 1,900 $ 2,156,500
Kaiser Aluminum and Chemical, Inc.,
Sr. Notes, 10.875%, 10/15/06 500 542,500
WHX Corp., 10.50%, 4/15/05/(1)/ 900 900,000
- --------------------------------------------------------------------------
$ 3,599,000
- --------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 2.7%
- --------------------------------------------------------------------------
Dailey International, Inc., Sr.
Notes, 9.50%, 2/15/08/(1)/ $ 2,280 $ 2,294,250
Grant Geophysical, Inc., Sr. Notes,
9.75%, 2/15/08/(1)/ 1,400 1,379,000
Hvide Marine, Inc., Sr. Notes,
8.375%, 2/15/08/(1)/ 1,200 1,170,000
Universal Compression, Inc., Sr.
Disc. Notes, 9.875%, (0% until
2003), 2/15/08/(1)/ 2,350 1,468,750
- --------------------------------------------------------------------------
$ 6,312,000
- --------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 2.9%
- --------------------------------------------------------------------------
Energy Corp. of America, Sr. Sub.
Notes, 9.50%, 5/15/07 $ 1,350 $ 1,350,000
Mariner Energy Corp., Sr. Sub.
Notes, 10.50%, 8/1/06 1,350 1,404,000
Michael Petroleum Corp., Sr. Notes,
11.50%, 4/1/05 645 638,550
Rutherford-Moran Oil Corp., Sr.
Sub. Notes, 10.75%, 10/1/04 1,695 1,813,650
Transamerican Energy, Sr. Notes,
11.50%, 6/15/02 800 792,000
United Refining Co., Sr. Notes,
10.75%, 6/15/07 800 844,000
- --------------------------------------------------------------------------
$ 6,842,200
- --------------------------------------------------------------------------
Paper and Forest Products -- 1.4%
- --------------------------------------------------------------------------
Asia Pulp and Paper, 12.00%, 12/29/49 $ 1,500 $ 1,230,000
Indah Kiat Finance Mauritius, Sr.
Unsec. Notes, 10.00%, 7/1/07 850 703,375
Pindo Deli Finance Mauritius, Ltd.,
Guaranteed Sr. Note, 10.75%, 10/1/07 600 501,000
Tjiwi Kimia Finance Mauritus, Ltd.,
Guaranteed Sr. Sub. Notes, 10.00%, 8/1/04 950 788,500
- --------------------------------------------------------------------------
$ 3,222,875
- --------------------------------------------------------------------------
Printing and Business Products -- 1.1%
- --------------------------------------------------------------------------
American Pad and Paper Co., Sr.
Sub. Notes, 13.00%, 11/15/05 $ 650 $ 689,000
MDC Communications Corp., Sr. Sub.
Notes, 10.50%, 12/1/06 1,650 1,790,250
- --------------------------------------------------------------------------
$ 2,479,250
- --------------------------------------------------------------------------
Publishing -- 1.6%
- --------------------------------------------------------------------------
American Lawyer Media Corp., Sr.
Disc. Notes, 12.25%, (0% until
2002) 12/15/08 $ 730 $ 463,550
American Lawyer Media Corp., Sr.
Notes, 9.75%, 12/15/07/(1)/ 500 525,000
Newsquest Capital Corp., Sr. Sub.
Notes, 11.00%, 5/1/06 1,256 1,409,860
Von Hoffman Press, Inc., Sr. Sub.
Note, 10.375%, 5/15/07/(1)/ 1,200 1,296,000
- --------------------------------------------------------------------------
$ 3,694,410
- --------------------------------------------------------------------------
See notes to financial statements
6
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Principal
Amount
Security (000's omitted) Value
- --------------------------------------------------------------------------
Retail - Food and Drug -- 2.4%
- --------------------------------------------------------------------------
AFC Enterprises, Inc., Sr. Sub.
Notes, 10.25%, 5/15/07 $ 2,400 $ 2,544,000
Pantry, Inc., Sr. Sub. Notes,
10.25%, 10/15/07 1,300 1,356,875
Star Markets Co., Sr. Sub. Notes,
13.00%, 11/1/04 1,550 1,767,000
- --------------------------------------------------------------------------
$ 5,667,875
- --------------------------------------------------------------------------
Retail - General -- 1.8%
- --------------------------------------------------------------------------
Big 5 Corp., Sr. Notes,
10.875%, 11/15/07 $ 1,080 $ 1,104,300
Franks Nursery and Crafts, Sr. Sub.
Notes, 10.25%, 3/1/08/(1)/ 800 796,000
Kindercare Learning Ctrs., Inc.,
Sr. Sub. Note, 9.50%, 2/15/09 1,500 1,539,375
Tuesday Morning Corp., Sr. Sub.
Notes, 11.00%, 12/15/07/(1)/ 750 778,125
- --------------------------------------------------------------------------
$ 4,217,800
- --------------------------------------------------------------------------
Transportation -- 0.4%
- --------------------------------------------------------------------------
International Logistics, Ltd., Sr.
Notes, 9.75%, 10/15/07 $ 920 $ 913,100
- --------------------------------------------------------------------------
$ 913,100
- --------------------------------------------------------------------------
Wireless Communication Services -- 10.5%
- --------------------------------------------------------------------------
America Mobile/AMSC Acquisition
Corp., Sr. Notes, 12.25%, 4/1/08 $ 1,350 $ 1,404,000
Dial Call Communications Inc., Sr.
Red. Notes, 12.25%, (0% until
1999), 4/15/04 2,680 2,666,600
Dobson Communications Corp., Sr.
Note, 11.75%, 4/15/07 2,435 2,678,500
Iridium L.L.C. Capital Corp., Sr.
Notes, 11.25%, 7/15/05 1,750 1,855,000
Microcell Telecommunication, Sr.
Disc. Notes, 14.00%, (0% until
2001), 6/1/06 1,110 824,175
Millicom International Cellular,
Inc., Sr. Disc. Notes, 13.50%, (0%
until 2001), 6/1/06 1,800 1,404,000
Nextel Communications, Inc., Sr.
Disc. Notes, 9.75%, (0% until
1999), 8/15/04 1,000 962,500
Nextel International, Inc., Sr.
Disc. Notes, 12.125%, (0% until
2003), 4/15/08/(1)/ 2,250 1,350,000
Omnipoint Corp., Sr. Note,
11.625%, 8/15/06 645 709,500
Orion Network Systems, Inc., Sr.
Disc. Notes, 12.50%, (0% until
2002), 1/15/07 400 314,000
Orion Network Systems, Inc., Sr.
Note, 11.25%, 1/15/07 1,400 1,624,000
Pricellular Wireless Communications
Corp., Sr. Notes, 10.75%, 11/1/04 800 900,000
Pricellular Wireless Communications
Corp., Sr. Sub. Disc. Nts., 12.25%,
(0% until 1998), 10/1/03 1,620 1,733,400
Satelites Mexicanos SA, Sr. Notes,
10.125%, 11/1/04 700 724,500
Telesystem International Wireless,
Sr. Disc. Notes, 13.25%, (0% until
2002), 6/30/07 950 662,625
Telesystem International Wireless,
Sr. Disc. Notes, 10.50%, (0% until
2002), 11/1/07 1,000 635,000
Teligent, Inc., Sr. Notes,
11.50%, 12/1/07 1,200 1,260,000
Winstar Communications, Inc., Sr.
Disc. Notes, 14.00%, (0% until
2000), 10/15/05 600 888,000
Winstar Communications, Inc., Sr.
Sub. Notes, 10.00%, 3/15/08/(1)/ 1,900 1,928,500
- --------------------------------------------------------------------------
$ 24,524,300
- --------------------------------------------------------------------------
Wireline Communication Services -- 11.7%
- --------------------------------------------------------------------------
Allegiance Telecom, Inc., Sr. Disc.
Notes, 11.75%, (0% until 2003),
2/15/08/(1)/ $ 2,500 $ 1,450,000
Econophone, Inc., Sr. Disc. Notes,
11.00%, (0% until 2003), 2/15/08/(1)/ 1,000 572,500
Esat Telecom Group PLC, Sr.
Deferred Coupon Note, 12.50%, (0%
until 2002), 2/1/07 1,625 1,210,625
Esat Telecom Group PLC, Sr.
Deferred Coupon Notes, 12.50%, (0%
until 2002), 2/1/07 900 670,500
Esprit Telecom Group PLC, Sr.
Notes, 11.50%, 12/15/07 750 821,250
Facilicom International, Sr. Notes,
10.50%, 1/15/08/(1)/ 1,760 1,839,200
Focal Communications Corporate
Purpose, Sr. Disc. Notes, 12.125%,
(0% until 2003), 2/15/08/(1)/ 3,400 1,997,500
GST Equipment Funding, Sr. Notes,
13.25%, 5/1/07 1,225 1,451,625
GST Telecommunications, Sr. Sub.
Notes, 12.75%, 11/15/07 400 484,000
GST USA, Inc., Sr. Disc. Notes,
13.875%, (0% until 2000), 12/15/05 820 680,600
Icg Holdings, Inc., Sr. Disc. Note,
10.00%, 3/15/07 1,775 1,313,500
See notes to financial statements
7
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Principal
Amount
Security (000's omitted) Value
- --------------------------------------------------------------------------
Wireline Communication Services (continued)
- --------------------------------------------------------------------------
Icg Services, Inc., Sr. Disc.
Notes, 10.00%, (0% until 2002),
2/15/08/(1)/ $ 1,730 $ 1,124,500
IDT Corp., Sr. Notes, 8.75%,
2/15/06/(1)/ 360 358,200
Intermedia Communications, Inc.,
Sr. Notes, 8.50%, 1/15/08 1,200 1,248,000
Metronet Communications, Sr. Disc.
Notes, 10.75%, (0% until 2002),
11/1/07 1,200 798,000
Metronet Communications, Sr. Notes,
12.00%, 8/15/07 450 519,750
MGC Communications, Inc., Sr.
Notes, 13.00%, 10/1/04 1,420 1,521,175
Netia Holdings B.V., Sr. Notes,
10.25%, 11/1/07/(1)/ 600 616,500
Netia Holdings B.V., Sr. Notes,
11.25%, (0% until 2001), 11/1/07/(1)/ 300 204,750
Nextlink Communications, Inc., Sr.
Discount Notes, 9.45%, (0% until
2003), 4/15/08 2,000 1,262,500
Nextlink Communications, Inc., Sr.
Notes, 12.50%, 4/15/06 1,680 1,932,000
Nextlink Communications, Inc., Sr.
Notes, 9.00%, 3/15/08/(1)/ 1,400 1,435,000
Primus Telecom Group, Sr. Notes,
11.75%, 8/1/04 1,150 1,285,125
Qwest Communications International,
Sr. Disc. Notes, 9.47%, (0% until
2002), 10/15/07 875 643,125
RSL Commerce, Ltd., Sr. Notes,
12.25%, 11/15/06 1,625 1,852,500
- --------------------------------------------------------------------------
$ 27,292,425
- --------------------------------------------------------------------------
Total Corporate Bonds & Notes
(identified cost $198,354,320) $208,757,533
- --------------------------------------------------------------------------
Preferred Stocks - 8.9%
Security Shares Value
- --------------------------------------------------------------------------
Broadcasting and Cable -- 3.6%
- --------------------------------------------------------------------------
21st Century Telecom Group, 13.75%
/(PIK) (1)/ 2,000 $ 224,000
Adelphia Communications Corp.,
13%/(PIK)(1)/ 12,000 1,431,000
Chancellor Radio Broadcasting, Inc., 12%
/(PIK) (1)/ 22,299 2,709,328
CSC Holdings, Inc., Series M, 11.125%
/(PIK) (1)/ 26,410 3,096,571
Echostar Communications, 12.125%
/(PIK) (1)/ 824 918,738
- --------------------------------------------------------------------------
$ 8,379,637
- --------------------------------------------------------------------------
Business Services - Miscellaneous -- 0.2%
- --------------------------------------------------------------------------
Unisite, Inc., 8.50% /(PIK)/ 1,080 $ 512,763
- --------------------------------------------------------------------------
$ 512,763
- --------------------------------------------------------------------------
Communications Equipment -- 0.4%
- --------------------------------------------------------------------------
Jordan Telecom Products, Inc.,
13.25% /(PIK) (1)/ 700 $ 931,000
- --------------------------------------------------------------------------
$ 931,000
- --------------------------------------------------------------------------
Machinery -- 0.3%
- --------------------------------------------------------------------------
MMH Holdings, Inc., 12% /(PIK) (1)/ 784 $ 823,200
- --------------------------------------------------------------------------
$ 823,200
- --------------------------------------------------------------------------
Manufacturing -- 0.0%
- --------------------------------------------------------------------------
MCMS, Inc., 12.50% /(PIK) (1)/ 100 $ 101,000
- --------------------------------------------------------------------------
$ 101,000
- --------------------------------------------------------------------------
Wireless Communication Services -- 1.0%
- --------------------------------------------------------------------------
Dobson Communications, 12.25% /(PIK)(1)/ 950 $ 1,047,375
Nextel Communications, Inc., 11.125%
/(PIK) (1)/ 1,200 1,275,000
- --------------------------------------------------------------------------
$ 2,322,375
- --------------------------------------------------------------------------
See notes to financial statements
8
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security Shares Value
- --------------------------------------------------------------------------
Wireline Communication Services -- 3.4%
- --------------------------------------------------------------------------
America Communications Services,
12.75% /(PIK) (1)/ 1,038 $ 1,256,283
Global Telesystem Holdings, 14%
/(PIK) (1)/ 1,100 1,259,500
Intermedia Communications, Inc., 7%
/(PIK) (1)/ 45,000 1,575,000
IXC Communications, Inc., 12.5%
/(PIK) (1)/ 2,867 3,497,587
Nextlink Communications, 14%
/(PIK)(1)/ 4,853 305,716
- --------------------------------------------------------------------------
$ 7,894,086
- --------------------------------------------------------------------------
Total Preferred Stocks
(identified cost $18,255,997) $ 20,964,061
- --------------------------------------------------------------------------
Common Stocks, Warrants and Rights -- 0.4%
Security Shares Value
- --------------------------------------------------------------------------
Broadcasting and Cable -- 0.0%
- --------------------------------------------------------------------------
American Telecasting, Inc.,
Warrants*+ 1,400 $ 14
Australis Media Ltd., Warrants*+ 900 --
CS Wireless Systems, Inc. /(1)/* 198 --
UIH Australia/Pacific, Inc., Warrants*+ 900 9
United International Holdings,
Inc., Warrants Exp. 11/15/99*+ 1,960 32,634
- --------------------------------------------------------------------------
$ 32,657
- --------------------------------------------------------------------------
Business Services - Miscellaneous -- 0.0%
- --------------------------------------------------------------------------
Unisite, Inc., Warrants*+ 750 $ --
- --------------------------------------------------------------------------
$ --
- --------------------------------------------------------------------------
Chemicals -- 0.1%
- --------------------------------------------------------------------------
Crompton & Knowles Corp., Common 7,116 $ 205,916
Sterling Chemicals Holdings, Warrants*+ 800 18,400
- --------------------------------------------------------------------------
$ 224,316
- --------------------------------------------------------------------------
Communications Equipment -- 0.0%
- --------------------------------------------------------------------------
In Flight Phone Corp., Warrants
Exp. 8/31/02*+ 400 $ --
Jordan Telecommunications, Common
/(1)/ 700 --
- --------------------------------------------------------------------------
$ --
- --------------------------------------------------------------------------
Foods -- 0.0%
- --------------------------------------------------------------------------
Servam Corp., $2.00 Warrant Exp.
4/1/01*+ 7,864 $ --
Servam Corp., $4.50 Warrant Exp.
4/1/01*+ 1,768 --
Servam Corp., Common*+ 884 --
Specialty Foods Acquisition Corp.,
Common*+ 12,000 3,000
- --------------------------------------------------------------------------
$ 3,000
- --------------------------------------------------------------------------
Information Services -- 0.0%
- --------------------------------------------------------------------------
Cellnet Data Systems, Inc.,
Warrants Exp. 10/1/07*+ 2,000 $ 20
- --------------------------------------------------------------------------
$ 20
- --------------------------------------------------------------------------
Machinery -- 0.0%
- --------------------------------------------------------------------------
Thermadyne Holdings Corp., Common*+ 777 $ 26,321
- --------------------------------------------------------------------------
$ 26,321
- --------------------------------------------------------------------------
Metals - Industrial -- 0.0%
- --------------------------------------------------------------------------
Gulf States Steel, Warrants*+ 600 $ 30
- --------------------------------------------------------------------------
$ 30
- --------------------------------------------------------------------------
Wireless Communication Services -- 0.2%
- --------------------------------------------------------------------------
Microcell Telecommunication, Warrants*+ 14,600 $ 281,050
Nextel Communications, Inc.,
Class A /(1)/* 2,788 94,095
Nextel Communications, Warrants
Exp. 4/25/99*+ 1,800 6,300
Orion Network, Warrants Exp.
1/15/07*+ 1,400 21,000
Orion Network, Warrants Exp.
1/15/07*+ 400 5,000
- --------------------------------------------------------------------------
$ 407,445
- --------------------------------------------------------------------------
Wireline Communication Services -- 0.1%
- --------------------------------------------------------------------------
Esat Holdings, Ltd., Warrants*+ 900 $ 31,500
Hyperion Communications, Inc.,
Expires 4/15/01*+ 1,000 70,000
Intermedia Communications, Inc.,
Common /(1)/* 318 25,321
Metronet Communications, Warrants
Exp. 8/15/07*+ 450 19,800
MGC Communications, Inc., Warrants
Exp. 10/01/04* 1,420 --
See notes to financial statements
9
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security Shares Value
- --------------------------------------------------------------------------
Wireline Communication Services (continued)
- --------------------------------------------------------------------------
Optel, Inc., Common/(1)/* 1,460 $ 1
Primus Telecommunications Warrants,
Exp. 8/1/04*+ 1,150 40,250
- --------------------------------------------------------------------------
$ 186,872
- --------------------------------------------------------------------------
Total Common Stocks, Warrants and Rights
(identified cost $378,179) $ 880,661
- --------------------------------------------------------------------------
Total Investments -- 98.7%
(identified cost $216,988,496) $230,602,255
- --------------------------------------------------------------------------
Other Assets, Less Liabilities -- 1.3% $ 3,028,496
- --------------------------------------------------------------------------
Net Assets -- 100% $233,630,751
- --------------------------------------------------------------------------
/(PIK)/ Payment in kind.
/(1)/ Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
* Non-income producing security.
+ Restricted security (see Note 8).
See notes to financial statements
10
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
As of March 31, 1998
Assets
- --------------------------------------------------------------------------------
Investments, at value (Note 1A)
(identified cost, $216,988,496) $ 230,602,255
Cash 841
Receivable for investments sold 5,736,998
Receivable for Trust shares sold 896,872
Interest receivable 4,671,441
- --------------------------------------------------------------------------------
Total assets $ 241,908,407
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for investments purchased $ 5,372,577
Payable for Trust shares redeemed 565,053
Dividends payable 925,733
Demand note payable (Note 6) 1,230,000
Payable to affiliate for Trustees' fees (Note 4) 1,545
Accrued expenses 182,748
- --------------------------------------------------------------------------------
Total liabilities $ 8,277,656
- --------------------------------------------------------------------------------
Net Assets for 25,951,539 shares of beneficial interest
outstanding $ 233,630,751
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Paid-in capital $ 228,510,535
Accumulated net realized loss on investments (computed on the
basis of identified cost) (7,680,463)
Accumulated distributions in excess of net investment income (813,080)
Net unrealized appreciation of investments (computed on the
basis of identified cost) 13,613,759
- --------------------------------------------------------------------------------
Total $ 233,630,751
- --------------------------------------------------------------------------------
Net Asset Value and Redemption
Price Per Share
- --------------------------------------------------------------------------------
($233,630,751 / 25,951,539 shares of
beneficial interest outstanding) $ 9.00
- --------------------------------------------------------------------------------
Computation of Offering Price
- --------------------------------------------------------------------------------
Offering price per share (100 / 95.25 of $9.00) $ 9.45
- --------------------------------------------------------------------------------
On sales of $25,000 or more, the offering price is reduced.
Statement of Operations
For the Six Months Ended
March 31, 1998
Investment Income (Note 1B)
- --------------------------------------------------------------------------------
Dividends $ 346,949
Interest income 10,276,483
Miscellaneous income 150,277
- --------------------------------------------------------------------------------
Total investment income $ 10,773,709
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Investment adviser fee (Note 4) $ 676,090
Compensation of Trustees not members of the
Investment Adviser's organization (Note 4) 12,768
Service fees (Note 5) 162,931
Transfer and dividend disbursing agent fees 89,835
Custodian fee 60,301
Registration fees 29,906
Legal and accounting services 29,841
Printing and postage 22,801
Miscellaneous 57,667
- --------------------------------------------------------------------------------
Total expenses $ 1,142,140
- --------------------------------------------------------------------------------
Net investment income $ 9,631,569
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 6,867,632
- --------------------------------------------------------------------------------
Net realized gain on investment transactions $ 6,867,632
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 451,697
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $ 451,697
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments $ 7,319,329
- --------------------------------------------------------------------------------
Net increase in net assets from operations $ 16,950,898
- --------------------------------------------------------------------------------
See notes to financial statements
11
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
Six Months Ended
Increase (Decrease) March 31, 1998 Year Ended
in Net Assets (Unaudited) September 30, 1997
- -------------------------------------------------------------------------------
From operations --
Net investment income $ 9,631,569 $ 16,070,390
Net realized gain on
investment transactions 6,867,632 1,829,861
Net change in unrealized
appreciation (depreciation)
of investments 451,697 10,934,314
- -------------------------------------------------------------------------------
Net increase in net assets
from operations $ 16,950,898 $ 28,834,565
- -------------------------------------------------------------------------------
Distributions to shareholders (Note 2) --
From net investment income $ (9,433,542) $ (16,070,390)
In excess of net investment
income -- (106,072)
- -------------------------------------------------------------------------------
Total distributions to shareholders $ (9,433,542) $ (16,176,462)
- -------------------------------------------------------------------------------
Transactions in shares of beneficial
interest (Note 3) --
Proceeds from sale of shares $ 50,970,869 $ 80,417,886
Net asset value of shares issued
to shareholders in payment of
distributions declared 4,408,744 7,492,221
Cost of shares redeemed (36,788,222) (36,889,924)
- -------------------------------------------------------------------------------
Net increase in net assets from
Trust share transactions $ 18,591,391 $ 51,020,183
- -------------------------------------------------------------------------------
Net increase in net assets $ 26,108,747 $ 63,678,286
- -------------------------------------------------------------------------------
Net Assets
- -------------------------------------------------------------------------------
At beginning of period $ 207,522,004 $ 143,843,718
- -------------------------------------------------------------------------------
At end of period $ 233,630,751 $ 207,522,004
- -------------------------------------------------------------------------------
Accumulated
distributions in excess of
net investment income
included in net assets
- -------------------------------------------------------------------------------
At end of period $ (813,080) $ (1,011,107)
- -------------------------------------------------------------------------------
See notes to financial statements
12
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Six Months Ended Year Ended September 30,
March 31, 1998 ---------------------------------------------------------
(Unaudited) 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value -- beginning of period $ 8.70 $ 8.12 $ 7.92 $ 7.90 $ 8.40 $ 8.33
- ------------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.39 $ 0.79 $ 0.80 $ 0.82 $ 0.83 $ 0.92
Net realized and unrealized gain (loss) on investments 0.29 0.57 0.21 0.02 (0.47) 0.07
- ------------------------------------------------------------------------------------------------------------------------------------
Total income from operations $ 0.68 $ 1.36 $ 1.01 $ 0.84 $ 0.36 $ 0.99
- ------------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.38) $ (0.77) $ (0.80) $ (0.82) $ (0.81) $ (0.92)
In excess of net investment income -- (0.01) (0.01) -- (0.05) --
- ------------------------------------------------------------------------------------------------------------------------------------
Total distributions $ (0.38) $ (0.78) $ (0.81) $ (0.82) $ (0.86) $ (0.92)
- ------------------------------------------------------------------------------------------------------------------------------------
Net asset value-- end of period $ 9.00 $ 8.70 $ 8.12 $ 7.92 $ 7.90 $ 8.40
- ------------------------------------------------------------------------------------------------------------------------------------
Total Return (1) 8.05 % 17.68% 13.41% 11.25% 4.25% 12.59%
- ------------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 233,631 $ 207,522 $ 143,844 $ 106,414 $ 103,482 $ 95,123
Ratio of expenses to average daily net assets 1.06%+ 1.05% 1.07% 1.09% 1.04% 1.03%
Ratio of net investment income to average daily net assets 8.93%+ 9.32% 9.96% 10.50% 9.75% 11.01%
Portfolio Turnover 75% 105% 81% 84% 70% 102%
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
(1) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the reinvestment date. Total return is
not computed on an annualized basis.
See notes to financial statements
13
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
1 Significant Accounting Policies
------------------------------------------------------------------------------
Eaton Vance Income Fund of Boston (the Trust), a Massachusetts business trust,
is registered under the Investment Company Act of 1940, as amended, as a
diversified, open-end, management investment company. The following is a
summary of significant accounting policies consistently followed by the Trust
in the preparation of its financial statements. The policies are in conformity
with generally accepted accounting principles.
A Investment Valuations -- Investments listed on securities exchanges or
NASDAQ are valued at closing sale prices. Listed or unlisted investments for
which closing sale prices are not available are valued at the mean between the
latest bid and asked prices. Fixed income investments (other than short-term
obligations), including listed investments and investments for which price
quotations are available, will normally be valued on the basis of market
valuations furnished by a pricing service. Short-term obligations, maturing in
sixty days or less, are valued at amortized cost, which approximates value.
Investments for which there is no quotation or valuation are valued at fair
value using methods determined in good faith by or at the direction of the
Trustees.
B Income -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount when required for federal
income tax purposes. Dividend income is recorded on the ex-dividend date.
C Federal Taxes -- The Trust's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders all of its taxable income, including any net
realized gain on investments. Accordingly, no provision for federal income or
excise tax is necessary. At September 30, 1997, the Trust, for federal income
tax purposes, had a capital loss carryover of $14,514,179 which will reduce
the Trust's taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Internal Revenue Code, and
thus will reduce the amount of the distributions to shareholders which would
otherwise be necessary to relieve the Trust of any liability for federal
income or excise tax. Such capital loss carryover will expire on September 30,
1999 ($6,918,026), 2000 ($5,148,498), 2003 ($1,177) and 2004 ($2,446,478).
D Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those estimates.
E Other -- Investment transactions are accounted for on the date the
investments are purchased or sold. Gains and losses on securities sold are
determined on the basis of identified cost.
F Expense Reduction -- Investors Bank and Trust Company (IBT) serves as
custodian to the Trust. Pursuant to the Custodian Agreement, IBT receives a
fee reduced by credits which are determined based on the average daily cash
balance the Trust maintains with IBT. All significant credit balances used to
reduce the Trust's custodian fees are reflected as a reduction of operating
expenses in the Statement of Operations.
G Interim Financial Information -- The interim financial statements relating
to March 31, 1998 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the Trust's
management reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
2 Distributions to Shareholders
------------------------------------------------------------------------------
The net investment income of the Trust is determined daily, and substantially
all of the net investment income so determined is declared daily as a dividend
to shareholders of record at the time of declaration. Distributions are paid
monthly. Distributions of realized capital gains, if any, are made at least
annually. Shareholders may reinvest capital gain distributions in additional
shares of the Trust at the net asset value as of the ex-dividend date.
Distributions are paid in the form of additional shares of the Trust or, at
the election of the shareholder, in cash. The Trust distinguishes between
distributions on a tax basis and a financial reporting basis. Generally
accepted accounting principles require that only distributions in excess of
tax basis earnings and profits be reported in the financial statements as a
return of capital. Differences in the recognition or classification of income
between the
14
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
financial statements and tax earnings and profits which result in temporary
over-distributions for financial statement purposes are classified as
distributions in excess of net investment income or accumulated net realized
gains. Permanent differences between book and tax accounting relating to
distributions are reclassified to paid-in capital.
3 Shares of Beneficial Interest
------------------------------------------------------------------------------
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Trust shares were as follows:
Six Months Ended
March 31, 1998 Year Ended
(Unaudited) September 30, 1997
------------------------------------------------------------------------------
Sales 5,809,480 9,696,558
Issued to shareholders electing to
receive payment of distributions
in Trust shares 501,816 901,943
Redemptions (4,207,549) (4,456,378)
------------------------------------------------------------------------------
Net increase 2,103,747 6,142,123
------------------------------------------------------------------------------
4 Investment Adviser Fee and Other Transactions with Affiliates
------------------------------------------------------------------------------
The investment adviser fee, computed at a monthly rate of 5/96 of 1% (0.625%
annually) of the Trust's average monthly net assets, was earned by Eaton Vance
Management (EVM) as compensation for management and investment advisory
services rendered to the Trust. Except as to Trustees of the Trust who are not
members of EVM's organization, officers and Trustees receive remuneration for
their services to the Trust out of such investment adviser fee. Eaton Vance
Distributors, Inc. (EVD), a subsidiary of EVM and the Trust's principal
underwriter, received approximately $53,860 of the sales charge on sales of
Trust shares during the six months ended March 31, 1998. Certain of the
officers and Trustees of the Trust are officers and directors/trustees of the
above organizations.
5 Service Plan
------------------------------------------------------------------------------
The Trustees on behalf of the Trust have adopted a Service Plan (the Plan)
designed to meet the requirements of the revised sales charge rule of The
National Association of Securities Dealers Inc. The Service Plan provides that
the Trust may make service fee payments to the Principal Underwriter,
Authorized Firms or other persons in amounts not exceeding 0.25% of the
Trust's average daily net assets for any fiscal year. The Trustees have
initially implemented the Plan by authorizing the Trust to make quarterly
service fee payments to the Principal Underwriter and Authorized Firms in
amounts not expected to exceed 0.25% of that portion of the Trust's average
daily net assets for any fiscal year which is attributable to shares of the
Trust sold on or after May 22, 1989 by such persons and remaining outstanding
for at least twelve months. Such payments are made for personal services
and/or the maintenance of shareholder accounts. Pursuant to the Plan, the
Trust paid or accrued $162,931 under the Plan to the Principal Underwriter and
Authorized Firms during the six months ended March 31, 1998.
6 Line of Credit
------------------------------------------------------------------------------
The Trust participates with other funds and portfolios managed by BMR and EVM
and its affiliates in a $100 million unsecured line of credit agreement with a
group of banks. The Trust may temporarily borrow from the line of credit to
satisfy redemption requests or settle investment transactions. Interest is
charged to each fund or portfolio based on its borrowings at an amount above
either the Eurodollar rate or federal funds rate. In addition, a fee computed
at an annual rate of 0.10% on the daily unused portion of the line of credit
is allocated among the participating funds and portfolios at the end of each
quarter. The Trust did not have any significant borrowings or allocated fees
during the six months ended March 31, 1998. At March 31, 1998, the Trust had a
loan outstanding pursuant to this line of credit of $1,230,000.
7 Purchases and Sales of Investments
------------------------------------------------------------------------------
The Trust invests primarily in debt securities. The ability of the issuers of
the debt securities held by the Trust to meet their obligations may be
affected by economic developments in a specific industry. Purchases and sales
of investments, other than U.S. Government securities and short-term
obligations, aggregated $178,800,904 and $158,356,626, respectively, for the
six months ended March 31, 1998.
15
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
8 Federal Income Tax Basis of Investments
------------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in value of the investments
owned at March 31, 1998, as computed on a federal income tax basis, were as
follows:
Aggregate cost $216,988,496
-----------------------------------------------------------------------------
Gross unrealized appreciation $ 15,186,762
Gross unrealized depreciation 1,573,003
-----------------------------------------------------------------------------
Net unrealized appreciation $ 13,613,759
-----------------------------------------------------------------------------
9 Restricted Securities
------------------------------------------------------------------------------
At March 31, 1998, The Trust owned the following securities (representing
0.24% of net assets) which were restricted as to public resale and not
registered under the Securities Act of 1933 (excluding Rule 144A securities).
The Trust has various registration rights (exercisable under a variety of
circumstances) with respect to these securities. The fair value of these
securities is determined based on valuations provided by brokers when
available, or if not available, they are valued at fair value using methods
determined in good faith by or at the direction of the Trustees.
Date of
Description Acquisition Shares/Face Cost Fair Value
------------------------------------------------------------------------------
Common Stocks, Warrants, and Rights
------------------------------------------------------------------------------
American Telecasting, Inc.,
Wts. 1/16/96 1,400 $ 38,500 $ 14
Australis Media Ltd., Wts. 5/26/95 900 0 0
Cellnet Data Systems, Inc.,
Wts., Exp. 10/1/07 12/12/97 2,000 0 20
Esat Holdings, Ltd., Wts. 1/24/97 900 495,788 31,500
5/28/97-
Gulf States Steel, Wts. 8/23/95 600 0 30
Hyperion Communications, 7/30/97-
Inc., Exp. 4/15/01 8/04/97 1,000 22,500 70,000
In Flight Phone Corp., Wts.,
Exp. 8/31/02 11/28/95 400 0 0
Metronet Communications,
Wts., Exp. 8/15/07 1/05/98 450 0 19,800
Microcell Telecommunication,
Wts. 10/29/96 14,600 0 281,050
Nextel Communications, Wts.,
Exp. 4/25/99 10/04/94 1,800 0 6,300
Orion Network, Wts., Exp.
1/15/07 9/25/97 1,400 0 21,000
Orion Network, Wts., Exp.
1/15/07 9/25/97 400 0 5,000
Primus Telecommunications,
Wts., Exp. 8/1/04 10/31/97 1,150 0 40,250
Servam Corp., $2.00 Wts.,
Exp. 4/1/01 12/15/87 7,864 0 0
Servam Corp., $4.50 Wts.,
Exp. 4/1/01 12/15/87 1,768 0 0
Servam Corp., Common 12/15/87 884 0 0
Specialty Foods Acq. Corp.,
Common 8/10/93 12,000 8,722 3,000
Sterling Chemicals Holdings,
Wts. 10/11/96 800 0 18,400
Thermadyne Holdings Corp.,
Common 5/17/94 777 18,900 26,321
UIH Australia/Pacific, Inc.,
Wts. 3/05/98 900 0 9
Unisite, Inc., Wts. 12/19/97 750 0 0
United InternationalHoldings,
Inc., Wts., Exp. 11/15/99 11/16/94 1,960 55,546 32,634
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$ 639,956 $ 555,328
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16
<PAGE>
Eaton Vance Income Fund of Boston as of March 31, 1998
INVESTMENT MANAGEMENT
Eaton Vance Income Fund of Boston
Officers
M. Dozier Gardner
President and Trustee
Michael W. Weilheimer
Vice President and Portfolio Manager
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Robert Gluck
Management Consultant
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking, Harvard University Graduate School of Business Administration
Kenneth C. Knight
Consultant
Norton H. Reamer
President and Director, United Asset Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
17
<PAGE>
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<PAGE>
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<PAGE>
Investment Adviser of Eaton Vance
Income Fund of Boston
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617)482-8260
Custodian
Investors Bank & Trust Company
200 Clarendon Street, 16th Floor
Boston, MA 02116
Transfer Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
Legal Counsel
Gordon Altman Butowsky Weitzen
Shalov & Wein
114 West 47th Street
New York, NY 10036
Eaton Vance Income Fund of Boston
24 Federal Street
Boston, MA 02110
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This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including it sales charges and
expenses. Please read the prospectus carefully before you invest or send money.
- --------------------------------------------------------------------------------
T-18SRC-5/98
