<PAGE>
INVESTING
[Graphic:EV Logo] FOR THE [Graphic:Fax Machine]
21ST
CENTURY -REGISTERED TRADEMARK-
SEMIANNUAL REPORT MARCH 31, 1999
[Graphic:Statue] EATON VANCE
INCOME FUND
OF BOSTON
[Graphic:Boston]
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
INVESTMENT UPDATE
[Photo] INVESTMENT ENVIRONMENT
-----------------------------------------------------------
Michael W. - The high-yield market encountered some turbulence in the
Weilheimer fall of 1998, as weakness in the emerging markets drove
Portfolio investors toward the relative safety of U.S. Treasury
Manager bonds. In recent months, however, with a strong economy,
continued low inflation and a resilient stock market,
investors have returned to find excellent value within the
high-yield sector.
- - Amid the market volatility in October, quality spreads - the yield
differential between Treasury and representative high-yield bonds - rose to
more than 600 basis points (6.0%). The last occasion when spreads were that
wide was in 1991, when the economy was just emerging from a recession.
- - While the emerging markets and Japan faced an uncertain economic future, the
U.S. economy continued to surge. Despite lagging foreign demand, gross
domestic product rose a robust 4.5% in the first quarter of 1999, according to
preliminary figures.
THE FUND
- -------------------------------------------------------------------------------
Performance for the Past Six Months
- - The Fund's total return was 10.5% for the six months ended March 31, 1999.(1)
This return was the result of a rise in net asset value per share from $8.03
on September 30, 1998 to $8.45 on March 31, 1999, and the reinvestment of
$0.40 in dividends.
- - Based on the Fund's closing net asset value per share of $8.45 on March 31,
1999, the Fund had a distribution rate of 9.50%.(2) The Fund's SEC 30-day
yield at March 31, 1999 was 9.01%.(3)
- - The Fund's risk-adjusted performance through March 31, 1999 again earned it
a Five-Star Overall Morningstar Rating-TM- among 1,521 taxable bond funds.(4)
Morningstar is a nationally recognized monitor of mutual fund performance.
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------
FUND INFORMATION
AS OF MARCH 31, 1999
PERFORMANCE(5) TEN LARGEST EQUITY HOLDINGS(6)
- ------------------------------------------------------------------ ----------------------------------------------
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (AT NET ASSET VALUE) Nextel International, Inc. 2.9%
- ------------------------------------------------------------------ Viatel, Inc. 2.6
One year 3.3% Allegiance Telecom, Inc. 2.0
Five years 10.4 Muzak Holdings LLC 1.7
Ten years 10.9 Global Crossing Holdings PLC 1.6
Esprit Telecom Group PLC 1.5
Regal Cinemas, Inc. 1.5
SEC AVERAGE ANNUAL TOTAL RETURNS (INCLUDING 4.75% SALES CHARGE) Jazztel PLC 1.5
- ------------------------------------------------------------------ Hollywood Park, Inc. 1.5
One year -1.7% MDC Communications Corp. 1.5
Five years 9.3
Ten years 10.4
<CAPTION>
<S><C>
(1) This return does not include the Fund's 4.75% maximum sales charge.
(2) 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. (3) 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. (4) Morningstar proprietary ratings reflect historical risk-adjusted
performance through 3/31/99 and are subject to change every month. Past
performance is no guarantee of future results. Funds are assigned ratings
from 1 star (lowest) to 5 stars (highest). Ratings are calculated from the
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 (1,521
funds), for the 5-year period, 5 stars (1,048 funds); and for the 10-year
period, 5 stars (371 funds). Ratings may be lower for different periods.
(5) Returns are calculated by determining the percentage change in net asset
value with all distributions reinvested. SEC returns reflect sales charge
as noted. (6) Ten largest holdings account for 18.3% of the Fund's
investments, determined by dividing the total market value of the holdings
by the total investments of the Fund. 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.
</TABLE>
RECENT FUND SHIFTS
- - Broadcasting and cable bonds were among the Fund's largest sector weightings
at March 31. The dynamics of the cable business have shifted somewhat in
recent years. While subscriber growth has slowed for larger companies, their
broadband capabilities have allowed them to offer new services such as
Internet access.
- - International telecommunications companies have become an increasingly
important focus of the Fund. Telephone and Internet usage is much lower in
Europe than in the U.S. and the environment is less competitive, suggesting
the possibility of strong growth in the future for well-positioned European
companies.
- - The Fund remained light on cyclical issues. While the economy continued to
expand, the slowdown in Asian economies had a significant impact on
companies that export goods and raw materials abroad.
OTHER DEVELOPMENTS IN THE FUND
- - Allegiance Telecom was one of the Fund's largest holdings at March 31.
Allegiance has executed its business plan extremely well, and the equity
market has taken notice. It also has an excellent management team in place,
led by Royce Holland, a former top executive of MFS Communications, a
pioneer in the business.
- - Esprit Telecom is building a high capacity fiber network throughout western
Europe. In December, the company agreed to be purchased by Global
Tele-Systems. The merger will create a communications company with the
muscle to compete globally.
- - The Fund found good value among smaller cable companies. Avalon Cable is a
Michigan-based company that has steadily grown its business through
purchases of local cable systems. With sound fundamentals, good growth
prospects, and rising assets values, Avalon is well-positioned in the
midwest market.
- -------------------------------------------------------------------------------
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.
2
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED)
<TABLE>
<S> <C> <C>
CORPORATE BONDS & NOTES -- 86.1%
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Aerospace and Defense -- 0.5%
- -------------------------------------------------------------------------
Transdigm, Inc., Sr. Sub. Notes,
10.375%, 12/1/08(1) $ 1,300 $ 1,326,000
- -------------------------------------------------------------------------
$ 1,326,000
- -------------------------------------------------------------------------
Apparel -- 0.9%
- -------------------------------------------------------------------------
Hosiery Corp. of America, Inc., Sr. Sub.
Notes, 13.75%, 8/1/02 $ 800 $ 864,000
William Carter Co., Sr. Sub. Notes,
10.375%, 12/1/06 1,575 1,693,125
- -------------------------------------------------------------------------
$ 2,557,125
- -------------------------------------------------------------------------
Auto and Parts -- 1.3%
- -------------------------------------------------------------------------
American Axle and Manufacturing, Inc.,
Sr. Sub. Notes, 9.75%, 3/1/09(1) $ 1,200 $ 1,233,000
Talon Automotive Group, Sr. Sub. Notes,
9.625%, 5/1/08 2,550 2,307,750
- -------------------------------------------------------------------------
$ 3,540,750
- -------------------------------------------------------------------------
Broadcasting and Cable -- 9.2%
- -------------------------------------------------------------------------
Adelphia Communications Corp., Sr.
Notes, 9.875%, 3/1/07 $ 1,120 $ 1,232,000
Adelphia Communications Corp., Sr.
Notes, 10.50%, 7/15/04 660 726,000
Avalon Cable Holdings LLC, Sr. Disc.
Notes, 11.875%, (0% until 2003),
12/1/08(1) 2,850 1,838,250
Avalon Cable of Michigan LLC, Sr. Sub.
Notes, 9.375%, 12/1/08(1) 800 843,000
Century Communications, Sr. Notes,
8.75%, 10/1/07 400 417,000
Citadel Broadcasting Co., Guaranteed Sr.
Sub. Notes, 9.25%, 11/15/08 340 367,200
Digital Television Services, Inc.,
Guaranteed Notes, 12.50%, 8/1/07 1,440 1,591,200
EchoStar DBS Corp., Sr. Notes, 9.375%,
2/1/09(1) 1,600 1,656,000
Golden Sky Systems, Sr. Disc. Notes,
13.50%,
(0% until 2004), 3/1/07(1) 3,040 1,778,400
Golden Sky Systems, Sr. Sub. Notes,
144A, 12.375%, 8/1/06(1) 1,710 1,898,100
Intermedia Capital Partners, Sr. Sub.
Notes, 11.25%, 8/1/06 500 568,750
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Broadcasting and Cable (continued)
- -------------------------------------------------------------------------
Muzak Holdings LLC, Sr. Disc. Notes,
13.00%,
(0% until 2004), 3/15/10(1) $ 2,812 $ 1,525,510
Muzak Holdings LLC, Sr. Sub. Notes,
9.875%, 3/15/09(1) 3,100 3,208,500
NTL, Inc., Sr. Notes, 9.75%, (0% until
2003), 4/1/08 800 544,000
NTL, Inc., Sr. Notes, 12.375%, (0% until
2003), 10/1/08(1) 3,000 2,070,000
Pegasus Communications Corp., Sr. Notes,
9.75%, 12/1/06(1) 255 265,200
RCN Corp., Sr. Disc. Notes, 11.125%, (0%
until 2002), 10/15/07 950 641,250
RCN Corp., Sr. Disc. Notes, 9.80%, (0%
until 2003), 2/15/08 750 470,625
RCN Corp., Sr. Disc. Notes, 11.00%, (0%
until 2003), 7/1/08 850 533,375
Telemundo Holdings, Inc., Sr. Disc.
Notes, 11.50%, (0% until 2003), 8/15/08 2,450 1,408,750
Telewest PLC, Debs., 9.625%, 10/1/06 75 79,688
Telewest PLC, Debs., 11.00%, (0% until
2002), 10/1/07 620 545,600
United International Holdings, Inc., Sr.
Disc. Notes, 10.75%, (0% until 2003),
2/15/08 1,985 1,349,800
- -------------------------------------------------------------------------
$ 25,558,198
- -------------------------------------------------------------------------
Building Products -- 1.0%
- -------------------------------------------------------------------------
Panolam Industries International, Sr.
Sub. Notes, 11.50%, 2/15/09(1) $ 600 $ 618,000
Wesco International, Inc., Sr. Disc.
Notes, 11.125%, (0% until 2003), 6/1/08 3,150 2,173,500
- -------------------------------------------------------------------------
$ 2,791,500
- -------------------------------------------------------------------------
Business Services - Miscellaneous -- 2.9%
- -------------------------------------------------------------------------
AP Holdings, Inc., Sr. Disc. Notes,
11.25%, (0% until 2003), 3/15/08 $ 2,450 $ 1,408,750
Apcoa, Inc., Guaranteed Sr. Sub. Notes,
9.25%, 3/15/08 830 784,350
Federal Data Corp., Sr. Sub. Notes,
10.125%, 8/1/05 1,185 1,168,706
Intertek Finance PLC, Sr. Sub. Notes,
10.25%, 11/1/06 1,400 1,358,000
Richmont Marketing Special, Sr. Sub.
Notes, 10.125%, 12/15/07(1) 4,445 3,222,625
- -------------------------------------------------------------------------
$ 7,942,431
- -------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
Business Services-Rental & Leasing -- 3.1%
- -------------------------------------------------------------------------
Anthony Crane Rental LP, Guaranteed Sr.
Notes, 10.375%, 8/1/08 $ 1,000 $ 1,001,250
NationsRent, Inc., Guaranteed Sr. Sub.
Notes, 10.375%, 12/15/08 1,800 1,890,000
SBA Communications Corp., Sr. Disc.
Notes, 12.00%, (0% until 2003), 3/1/08 2,805 1,781,175
Spectrasite Holdings, Inc., Sr. Disc.
Notes, 12.00%, (0% until 2003),
7/15/08(1) 3,400 2,125,000
Unisite, Inc., Sub. Notes, 13.00%, (0%
until 2000), 12/15/04(1) 1,500 1,709,250
- -------------------------------------------------------------------------
$ 8,506,675
- -------------------------------------------------------------------------
Chemicals -- 0.8%
- -------------------------------------------------------------------------
NL Industries, Inc., Sr. Notes, 11.75%,
10/15/03 $ 1,260 $ 1,349,775
Sterling Chemicals Holdings, Inc., Sr.
Sub. Notes, 11.75%, 8/15/06 870 817,800
- -------------------------------------------------------------------------
$ 2,167,575
- -------------------------------------------------------------------------
Computer Equipment -- 0.7%
- -------------------------------------------------------------------------
Unisys Corp., Sr. Notes, 11.75%,
10/15/04 $ 400 $ 453,000
Unisys Corp., Sr. Notes, 12.00%, 4/15/03 1,400 1,543,500
- -------------------------------------------------------------------------
$ 1,996,500
- -------------------------------------------------------------------------
Consumer Products -- 2.4%
- -------------------------------------------------------------------------
Amscan Holdings, Inc., Sr. Sub. Notes,
9.875%, 12/15/07 $ 1,120 $ 957,600
Diamond Brands Operating Corp.,
Guaranteed Sr. Sub. Notes, 10.125%,
4/15/08 1,020 861,900
Diamond Brands, Inc., Sr. Debs.,
12.875%,
(0% until 2003), 4/15/09 700 165,375
Glenoit Corp., Sr. Sub. Notes, 11.00%,
4/15/07 2,400 2,124,000
Icon Health and Fitness, Inc., Sr. Sub.
Notes, 13.00%, 7/15/02 800 564,000
Jafra Cosmetics International, Inc.,
Guaranteed Sr. Sub. Notes, 11.75%,
5/1/08 1,000 897,500
United Industries Corp., Sr. Sub. Notes,
9.875%, 4/1/09(1) 1,112 1,143,970
- -------------------------------------------------------------------------
$ 6,714,345
- -------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Containers and Packaging -- 1.7%
- -------------------------------------------------------------------------
Consumers International, Inc., Sr.
Notes, 10.25%, 4/1/05 $ 985 $ 1,041,638
Consumers Packaging, Inc., Sr. Notes,
9.75%, 2/1/07(1) 675 696,938
Packaging Corp. of America, Sr. Sub.
Notes, 9.625%, 4/1/09(1) 1,100 1,127,500
Stone Container Corp., Sr. Notes,
12.58%, 8/1/16 1,800 1,923,750
- -------------------------------------------------------------------------
$ 4,789,826
- -------------------------------------------------------------------------
Drugs -- 0.5%
- -------------------------------------------------------------------------
King Pharmaceutical, Inc., Sr. Sub.
Notes, 10.75%, 2/15/09(1) $ 1,250 $ 1,281,250
- -------------------------------------------------------------------------
$ 1,281,250
- -------------------------------------------------------------------------
Electronic Equipment -- 1.6%
- -------------------------------------------------------------------------
Jordan Telecom Products, Inc., Sr. Disc.
Notes, 11.75%, (0% until 2000), 8/1/07 $ 2,000 $ 1,640,000
MCMS, Inc., Sr. Sub. Notes, 9.75%,
3/1/08 670 402,000
Viasystems, Inc., Sr. Sub. Notes, 9.75%,
6/1/07 895 854,725
Viasystems, Inc., Sr. Sub. Notes, 9.75%,
6/1/07 900 859,500
Wavetek Corp., Sr. Sub. Notes, 10.125%,
6/15/07 840 785,400
- -------------------------------------------------------------------------
$ 4,541,625
- -------------------------------------------------------------------------
Entertainment -- 4.6%
- -------------------------------------------------------------------------
Cinemark USA, Inc., Sr. Sub. Notes,
8.50%, 8/1/08 $ 1,660 $ 1,643,400
Loews Cineplex Entertainment Corp., Sr.
Sub. Notes, 8.875%, 8/1/08 1,700 1,702,125
Marvel Enterprises, Inc., Sr. Notes,
12.00%, 6/15/09(1) 1,400 1,428,000
Premier Parks, Inc., Sr. Disc. Notes,
10.00%,
(0% until 2003), 4/1/08 1,700 1,181,500
Premier Parks, Inc., Sr. Notes, 9.25%,
4/1/06 1,050 1,086,750
Regal Cinemas, Inc., Sr. Sub. Notes,
9.50%, 6/1/08 3,320 3,411,300
Regal Cinemas, Inc., Sr. Sub. Notes,
8.875%, 12/15/10 830 815,475
SFX Entertainment, Inc., Sr. Sub. Notes,
9.125%, 12/1/08(1) 1,400 1,438,500
- -------------------------------------------------------------------------
$ 12,707,050
- -------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
Financial Services -- 0.6%
- -------------------------------------------------------------------------
Willis Corroon Corp., Sr. Sub. Notes,
9.00%, 2/1/09(1) $ 1,600 $ 1,628,000
- -------------------------------------------------------------------------
$ 1,628,000
- -------------------------------------------------------------------------
Foods -- 3.3%
- -------------------------------------------------------------------------
B & G Foods, Inc., Sub. Notes, 9.625%,
8/1/07 $ 1,860 $ 1,813,500
Del Monte Corp., Sr. Notes, 12.25%,
4/15/07 2,820 3,183,075
Del Monte Foods Co., Sr. Disc. Notes,
12.50%,
(0% until 2002), 12/15/07 875 654,063
Eagle Family Foods, Inc., Guaranteed Sr.
Notes, 8.75%, 1/15/08 700 659,750
Grupo Azucarero Mexico, Sr. Notes,
11.50%, 1/15/05 1,200 429,000
International Home Foods, Inc., Sr. Sub.
Notes, 10.375%, 11/1/06 2,250 2,458,125
- -------------------------------------------------------------------------
$ 9,197,513
- -------------------------------------------------------------------------
Health Services -- 0.3%
- -------------------------------------------------------------------------
Alliance Imaging, Sr. Sub Notes, 9.625%,
12/15/05 $ 800 $ 796,000
- -------------------------------------------------------------------------
$ 796,000
- -------------------------------------------------------------------------
Information Technology Services -- 3.4%
- -------------------------------------------------------------------------
Diva Systems Corp., Sr. Notes, 12.625%,
(0% until 2003), 3/1/08 $ 1,500 $ 502,500
Exodus Communications, Inc., Sr. Notes,
11.25%, 7/1/08 1,610 1,768,988
PSINet, Inc., Sr. Notes, 11.50%, 11/1/08 2,400 2,718,000
Splitrock Services, Inc., Guaranteed Sr.
Notes, 11.75%, 7/15/08 1,000 960,000
Verio, Inc., Sr. Notes, 13.50%, 6/15/04 800 928,000
Verio, Inc., Sr. Notes, 11.25%,
12/1/08(1) 2,200 2,491,500
- -------------------------------------------------------------------------
$ 9,368,988
- -------------------------------------------------------------------------
Lodging and Gaming -- 6.2%
- -------------------------------------------------------------------------
Aztar Corp., Sr. Sub. Notes, 13.75%,
10/1/04 $ 2,500 $ 2,753,125
Coast Hotels and Casinos, Inc., Sr. Sub.
Notes, 9.50%, 4/1/09(1) 1,300 1,319,500
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Lodging and Gaming (continued)
- -------------------------------------------------------------------------
Hollywood Casino Corp., Sr. Sub. Notes,
12.75%, 11/1/03 $ 700 $ 768,250
Hollywood Park, Inc., Sr. Sub. Notes,
9.25%, 2/15/07(1) 600 619,500
Hollywood Park, Inc., Sr. Sub. Notes,
9.50%, 8/1/07 3,415 3,517,450
ITT Corp., Sr. Notes, 6.75%, 11/15/03 1,125 1,053,655
Lady Luck Gaming Corp., First Mortgage
Bonds, 11.875%, 3/1/01 1,500 1,518,750
Station Casinos, Inc., Sr. Sub. Notes,
9.75%, 4/15/07 1,400 1,480,500
Sun International Hotels, Sr. Sub.
Notes, 9.00%, 3/15/07 750 785,625
Waterford Gaming LLC, Sr. Notes, 9.50%,
3/15/10(1) 3,250 3,343,438
- -------------------------------------------------------------------------
$ 17,159,793
- -------------------------------------------------------------------------
Machinery -- 0.5%
- -------------------------------------------------------------------------
Applied Power, Inc., Sr. Sub. Notes,
8.75%, 4/1/09 $ 1,250 $ 1,250,000
- -------------------------------------------------------------------------
$ 1,250,000
- -------------------------------------------------------------------------
Manufacturing -- 1.1%
- -------------------------------------------------------------------------
IMO Industries, Sr. Sub. Notes, 11.75%,
5/1/06 $ 1,070 $ 1,086,050
Roller Bearing Holdings Co., Sr. Disc.
Notes, 13.00%, (0% until 2002),
6/15/09(1) 3,467 1,958,855
- -------------------------------------------------------------------------
$ 3,044,905
- -------------------------------------------------------------------------
Medical Products -- 0.5%
- -------------------------------------------------------------------------
Dade International, Inc., Sr. Sub.
Notes, 11.125%, 5/1/06 $ 1,200 $ 1,314,000
- -------------------------------------------------------------------------
$ 1,314,000
- -------------------------------------------------------------------------
Metals-Industrial -- 0.6%
- -------------------------------------------------------------------------
Bulong Operations Pty Ltd., Sr. Notes,
12.50%, 12/15/08(1) $ 1,000 $ 1,012,500
California Steel Industries, Inc., Sr.
Notes, 8.50%, 4/1/09(1) 500 506,250
- -------------------------------------------------------------------------
$ 1,518,750
- -------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
Oil and Gas-Equipment and Services -- 1.3%
- -------------------------------------------------------------------------
Dailey International, Inc., Sr. Notes,
9.50%, 2/15/08 $ 2,090 $ 836,000
Grant Geophysical, Inc., Sr. Notes,
9.75%, 2/15/08 1,000 450,000
RBF Finance Co., Guaranteed Sr. Notes,
11.375%, 3/15/09(1) 800 832,000
Universal Compression, Inc., Sr. Disc.
Notes, 9.875%, (0% until 2003), 2/15/08 2,350 1,445,250
- -------------------------------------------------------------------------
$ 3,563,250
- -------------------------------------------------------------------------
Oil and Gas-Exploration and Production -- 0.4%
- -------------------------------------------------------------------------
Energy Corp. of America, Sr. Sub. Notes,
9.50%, 5/15/07 $ 650 $ 605,313
Gulf Canada Resources, Ltd., Sr. Notes,
8.375%, 11/15/05 550 529,810
- -------------------------------------------------------------------------
$ 1,135,123
- -------------------------------------------------------------------------
Paper and Forest Products -- 1.3%
- -------------------------------------------------------------------------
Asia Pulp and Paper, Debs, 12.00%,
12/29/49 $ 1,500 $ 630,000
Indah Kiat Finance Mauritius, Sr. Unsec.
Notes, 10.00%, 7/1/07 850 408,000
Pindo Deli Finance Mauritius, Ltd.,
Guaranteed Sr. Notes, 10.75%, 10/1/07 600 331,500
Repap New Brunswick, Inc., Sr. Notes,
9.00%, 6/1/04 600 579,000
S.D. Warren Co., Sr. Sub. Notes, 12.00%,
12/15/04 1,200 1,300,500
Tjiwi Kimia Finance Mauritus, Ltd.,
Guaranteed Sr. Sub. Notes, 10.00%,
8/1/04 700 376,250
- -------------------------------------------------------------------------
$ 3,625,250
- -------------------------------------------------------------------------
Printing and Business Products -- 1.4%
- -------------------------------------------------------------------------
MDC Communications Corp., Sr. Sub.
Notes, 10.50%, 12/1/06 $ 3,900 $ 3,997,499
- -------------------------------------------------------------------------
$ 3,997,499
- -------------------------------------------------------------------------
Publishing -- 0.6%
- -------------------------------------------------------------------------
American Lawyer Media Corp., Sr. Disc.
Notes, 12.25%, (0% until 2002), 12/15/08 $ 730 $ 474,500
Von Hoffman Press, Inc., Sr. Sub. Notes,
10.875%, 5/15/07(1) 1,275 1,316,438
- -------------------------------------------------------------------------
$ 1,790,938
- -------------------------------------------------------------------------
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Restaurants -- 0.3%
- -------------------------------------------------------------------------
Dominos, Inc., Sr. Sub. Notes, 10.375%,
1/15/09(1) $ 700 $ 726,250
- -------------------------------------------------------------------------
$ 726,250
- -------------------------------------------------------------------------
Retail-Food and Drug -- 2.7%
- -------------------------------------------------------------------------
AFC Enterprises, Inc., Sr. Sub Notes,
10.25%, 5/15/07 $ 2,400 $ 2,556,000
Pantry, Inc., Sr. Sub. Notes, 10.25%,
10/15/07 3,020 3,186,100
Star Markets Co., Sr. Sub. Notes,
13.00%, 11/1/04 1,550 1,739,875
- -------------------------------------------------------------------------
$ 7,481,975
- -------------------------------------------------------------------------
Retail-General -- 2.5%
- -------------------------------------------------------------------------
Advance Holding Corp., Sr. Debs.,
12.875%,
(0% until 2003), 4/15/09 $ 1,000 $ 618,750
Advance Stores Co., Inc., Sr. Sub.
Notes, 10.25%, 4/15/08 1,600 1,632,000
Franks Nursery and Crafts, Sr. Sub.
Notes, 10.25%, 3/1/08 800 804,000
Kindercare Learning Ctrs., Inc., Sr.
Sub. Notes, 9.50%, 2/15/09 1,900 1,909,500
SpinCycle, Inc., Sr. Disc. Notes,
12.75%, (0% until 2001), 5/1/05 850 327,250
Tuesday Morning Corp., Sr. Sub. Notes,
11.00%, 12/15/07 1,470 1,506,750
- -------------------------------------------------------------------------
$ 6,798,250
- -------------------------------------------------------------------------
Transportation -- 0.1%
- -------------------------------------------------------------------------
MTL, Inc., Sr. Sub. Notes, Variable
Rate, 6/15/06(1) $ 400 $ 378,000
- -------------------------------------------------------------------------
$ 378,000
- -------------------------------------------------------------------------
Utilities -- 0.4%
- -------------------------------------------------------------------------
Calpine Corp., Sr. Notes, 7.75%, 4/15/09 $ 1,000 $ 997,500
- -------------------------------------------------------------------------
$ 997,500
- -------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
Wireless Communication Services -- 6.7%
- -------------------------------------------------------------------------
Dobson Communications Corp., Sr. Notes,
11.75%, 4/15/07 $ 500 $ 535,625
Dobson Communications Corp., Sr. Notes,
12.25%, 12/15/08(1) 1,750 1,881,250
Dolphin Telecom PLC, Sr. Disc. Notes,
11.50%,
(0% until 2003), 6/1/08 2,000 1,026,000
ICO Global Communications, Sr. Notes,
15.00%, 8/1/05 1,200 726,000
Loral Space and Communications Ltd., Sr.
Notes, 9.50%, 1/15/06(1) 1,620 1,534,950
Nextel Communications, Inc., Sr. Disc.
Notes, 9.75%, (0% until 1999), 8/15/04 2,990 3,094,650
Nextel Communications, Inc., Sr. Disc.
Notes, 9.75%, (0% until 2002), 10/31/07 1,600 1,136,000
Nextel International, Inc., Sr. Disc.
Notes, 12.125%, (0% until 2003), 4/15/08 3,750 1,762,500
Nextel Partners, Inc., Sr. Disc. Notes,
14.00%,
(0% until 2004), 2/1/09(1) 1,250 725,000
Triton PCS, Inc., Guaranteed Sr. Sub.
Notes, 11.00%, (0% until 2003), 5/1/08 1,000 595,000
Viatel, Inc., Sr. Notes, 11.50%,
3/15/09(1) 4,000 4,427,999
Winstar Communications, Inc., Sr. Disc.
Notes, 14.00%, (0% until 2000), 10/15/05 1,400 987,000
- -------------------------------------------------------------------------
$ 18,431,974
- -------------------------------------------------------------------------
Wireline Communication Services-International -- 11.3%
- -------------------------------------------------------------------------
Carrier1, Sr. Notes, 13.25%, 2/15/09 $ 3,000 $ 3,402,000
Completel Europe NV, Sr. Disc. Notes,
14.00%,
(0% until 2004), 2/15/09 1,960 1,038,800
Esat Telecom Group PLC, Sr. Deferred
Coupon Notes, 12.50%, (0% until 2002),
2/1/07 1,625 1,186,250
Esat Telecom Group PLC, Sr. Deferred
Coupon Notes, 12.50%, (0% until 2002),
2/1/07 900 657,000
Esat Telecom Group PLC, Sr. Notes,
11.875%, 12/1/08(1) 1,000 1,080,000
Esprit Telecom Group PLC, Sr. Notes,
11.50%, 12/15/07 3,150 3,386,250
Esprit Telecom Group PLC, Sr. Notes,
11.50%, 12/15/07 2,500 1,477,122
Facilicom International, Sr. Notes,
10.50%, 1/15/08 1,160 896,100
Global Crossing Holding, Ltd., Sr.
Notes, 9.625%, 5/15/08 725 807,469
Jazztel PLC, Sr. Notes, 14.00%, 4/1/09 4,000 4,319,999
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Wireline Communication Services-International (continued)
- -------------------------------------------------------------------------
Netia Holdings B.V., Sr. Disc. Notes,
11.25%,
(0% until 2001), 11/1/07 $ 300 $ 193,500
Primus Telecom Group, Sr. Notes, 11.75%,
8/1/04 1,150 1,204,625
Primus Telecom Group, Sr. Notes, 11.25%,
1/15/09(1) 1,950 2,013,375
RSL Communications PLC, Guaranteed Sr.
Notes, 12.00%, 11/1/08 600 663,000
RSL Communications PLC., Guaranteed Sr.
Notes, 10.50%, 11/15/08 1,750 1,863,750
RSL Communications, Ltd., Sr. Notes,
12.25%, 11/15/06 1,140 1,245,450
Versatel Telecom B.V., Sr. Notes,
13.25%, 5/15/08 1,960 2,018,800
Versatel Telecom B.V., Sr. Notes,
13.25%, 5/15/08 1,540 1,586,200
Viatel, Inc., Sr. Disc. Notes, 12.50%,
(0% until 2003), 4/15/08 2,185 1,349,238
Viatel, Inc., Sr. Notes, 11.25%, 4/15/08 940 961,150
- -------------------------------------------------------------------------
$ 31,350,078
- -------------------------------------------------------------------------
Wireline Communication Services-North America -- 9.4%
- -------------------------------------------------------------------------
Allegiance Telecom, Inc., Sr. Disc.
Notes, 11.75%, (0% until 2003), 2/15/08 $ 1,755 $ 1,114,425
Allegiance Telecom, Inc., Sr. Notes,
12.875%, 5/15/08 3,765 4,169,737
Focal Communications Corp., Sr. Disc.
Notes, 12.125%, (0% until 2003), 2/15/08 1,750 980,000
GST Telecommunications, Sr. Sub. Notes,
12.75%, 11/15/07 800 772,000
Hyperion Telecommunications, Inc., Sr.
Notes, 12.25%, 9/1/04 1,800 1,957,500
Hyperion Telecommunications, Inc., Sr.
Sub. Notes, 12.00%, 11/1/07(1) 1,000 1,040,000
Intermedia Communications, Inc., Sr.
Disc. Notes, 11.25%, (0% until 2002),
7/15/07 710 541,375
Intermedia Communications, Inc., Sr.
Notes, 8.60%, 6/1/08 1,310 1,310,000
ITC Deltacom Inc., Sr. Notes, 9.75%,
11/15/08 1,275 1,341,938
Level 3 Communications, Inc., Sr. Disc.
Notes, 13.50%, (0% until 2003),
12/1/08(1) 2,450 1,552,688
McLeodUSA, Inc., Sr. Notes, 8.125%,
2/15/09(1) 1,600 1,604,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
- -------------------------------------------------------------------------
<S> <C> <C>
Wireline Communication Services-North America (continued)
- -------------------------------------------------------------------------
Metromedia Fiber Network, Inc., Sr.
Notes, 10.00%, 11/15/08(1) $ 1,680 $ 1,797,600
MetroNet Communications Corp., Sr.
Notes, 12.00%, 8/15/07 1,250 1,468,750
MetroNet Communications Corp., Sr.
Notes, 10.625%, 11/1/08(1) 750 877,500
Nextlink Communications, Inc., Sr.
Notes, 12.50%, 4/15/06 1,680 1,850,100
Worldwide Fiber, Inc., Sr. Notes,
12.50%, 12/15/05(1) 3,465 3,655,574
- -------------------------------------------------------------------------
$ 26,033,187
- -------------------------------------------------------------------------
Total Corporate Bonds & Notes
(identified cost $239,616,844) $ 238,008,073
- -------------------------------------------------------------------------
PREFERRED STOCKS -- 9.0%
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Apparel -- 0.0%
- -------------------------------------------------------------------------
Cluett American Corp., 12.50% (PIK)(1) 37 $ 29,440
- -------------------------------------------------------------------------
$ 29,440
- -------------------------------------------------------------------------
Broadcasting and Cable -- 2.7%
- -------------------------------------------------------------------------
21st Century Telecom Group, 13.75% (PIK) 228 $ 91,200
Adelphia Communications Corp., 13% (PIK) 12,000 1,380,000
CSC Holdings, Inc., Series M, 11.125%
(PIK) 29,470 3,462,725
Pegasus Communications Corp., 12.75%
(PIK) 2,168 2,406,480
- -------------------------------------------------------------------------
$ 7,340,405
- -------------------------------------------------------------------------
Business Services - Rental & Leasing -- 1.0%
- -------------------------------------------------------------------------
Crown Castle International Corp., 12.75%
(PIK)(1) 2,063 $ 2,269,300
Unisite, Inc., 8.5% (2) 1,080 534,353
- -------------------------------------------------------------------------
$ 2,803,653
- -------------------------------------------------------------------------
Containers and Packaging -- 0.4%
- -------------------------------------------------------------------------
Packaging Corp. of America, 12.375%
(PIK)(1) 10,000 $ 1,045,000
- -------------------------------------------------------------------------
$ 1,045,000
- -------------------------------------------------------------------------
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Electronic Equipment -- 0.3%
- -------------------------------------------------------------------------
Jordan Telecom Products, Inc., 13.25%
(PIK) 850 $ 850,000
- -------------------------------------------------------------------------
$ 850,000
- -------------------------------------------------------------------------
Machinery -- 0.1%
- -------------------------------------------------------------------------
MMH Holdings, Inc., 12% (PIK) 407 $ 162,800
- -------------------------------------------------------------------------
$ 162,800
- -------------------------------------------------------------------------
Wireless Communication Services -- 1.2%
- -------------------------------------------------------------------------
Dobson Communications Corp., 12.25%
(PIK) 1,069 $ 1,015,550
Nextel Communications, Inc., 11.125%
(PIK) 1,339 1,359,085
Rural Cellular Corp., 11.375% (PIK) 1,087 1,065,260
- -------------------------------------------------------------------------
$ 3,439,895
- -------------------------------------------------------------------------
Wireline Communication Services-International -- 1.4%
- -------------------------------------------------------------------------
Global Crossing Holding, Ltd., 10.5% 3,300 $ 3,794,999
Viatel, Inc., 10% (PIK)(1) 1,637 163,700
- -------------------------------------------------------------------------
$ 3,958,699
- -------------------------------------------------------------------------
Wireline Communication Services-North America -- 1.9%
- -------------------------------------------------------------------------
E.spire Communications, Inc., 12.75%
(PIK) 1,176 $ 588,000
Intermedia Communications, Inc., 7%
(PIK)(1) 45,000 1,192,500
IXC Communications, Inc., Series B,
12.5% (PIK) 2,841 3,068,280
Nextlink Communications, Inc., 14% (PIK) 5,565 294,945
- -------------------------------------------------------------------------
$ 5,143,725
- -------------------------------------------------------------------------
Total Preferred Stocks
(identified cost $24,523,330) $ 24,773,617
- -------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<S> <C> <C>
COMMON STOCKS, WARRANTS AND
RIGHTS -- 0.6%
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Broadcasting and Cable -- 0.0%
- -------------------------------------------------------------------------
21st Century Telecom Group,
Warrants(1)(3) 200 $ --
Pegasus Communications Corp.,
Warrants(2)(3) 1,410 31,373
UIH Australia/Pacific, Inc.,
Warrants(2)(3) 900 9
- -------------------------------------------------------------------------
$ 31,382
- -------------------------------------------------------------------------
Business Services-Rental & Leasing -- 0.0%
- -------------------------------------------------------------------------
Unisite, Inc., Warrants(2)(3) 750 $ --
- -------------------------------------------------------------------------
$ --
- -------------------------------------------------------------------------
Chemicals -- 0.0%
- -------------------------------------------------------------------------
Sterling Chemicals Holdings, Inc.,
Common(2)(3) 2,400 $ 15,000
- -------------------------------------------------------------------------
$ 15,000
- -------------------------------------------------------------------------
Electronic Equipment -- 0.0%
- -------------------------------------------------------------------------
Jordan Telecom Products, Inc.,
Common(2)(3) 700 $ --
- -------------------------------------------------------------------------
$ --
- -------------------------------------------------------------------------
Foods -- 0.0%
- -------------------------------------------------------------------------
Specialty Foods Acquisition Corp.,
Common(2)(3) 12,000 $ 120
- -------------------------------------------------------------------------
$ 120
- -------------------------------------------------------------------------
Information Technology Services -- 0.2%
- -------------------------------------------------------------------------
Cellnet Data Systems, Inc., Warrants
Exp. 10/1/07(2)(3) 2,000 $ 20
Diva Systems Corp., Warrants(2)(3) 4,500 --
Splitrock Services, Inc., Warrants(2)(3) 1,000 70,000
Verio, Inc., Common(3) 11,267 518,986
- -------------------------------------------------------------------------
$ 589,006
- -------------------------------------------------------------------------
Machinery -- 0.0%
- -------------------------------------------------------------------------
MMH Holdings, Inc., Common(3) 5 $ --
- -------------------------------------------------------------------------
$ --
- -------------------------------------------------------------------------
<CAPTION>
SECURITY SHARES VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
Metals-Industrial -- 0.0%
- -------------------------------------------------------------------------
Gulf States Steel, Warrants(2)(3) 600 $ --
- -------------------------------------------------------------------------
$ --
- -------------------------------------------------------------------------
Retail-General -- 0.0%
- -------------------------------------------------------------------------
SpinCycle, Inc., Warrants(2)(3) 850 $ --
- -------------------------------------------------------------------------
$ --
- -------------------------------------------------------------------------
Wireless Communication Services -- 0.1%
- -------------------------------------------------------------------------
Microcell Telecommunications, Inc.,
Common(3) 31,309 $ 257,322
Nextel Communications, Inc., Class A,
Common(3) 2,788 102,283
Nextel Communications, Inc., Warrants
Exp. 4/25/99(2)(3) 1,800 1,080
- -------------------------------------------------------------------------
$ 360,685
- -------------------------------------------------------------------------
Wireline Communication Services-International -- 0.1%
- -------------------------------------------------------------------------
Esat Holdings, Ltd., Warrants(2)(3) 900 $ 77,976
Primus Telecom Group, Warrants, Exp.
8/1/04(2)(3) 1,150 9,738
Versatel Telecom B.V., Warrants(2)(3) 3,500 210,000
- -------------------------------------------------------------------------
$ 297,714
- -------------------------------------------------------------------------
Wireline Communication Services-North America -- 0.2%
- -------------------------------------------------------------------------
Allegiance Telecom, Inc., Warrants Exp.
2/15/08(2)(3) 6,230 $ 204,515
Hyperion Telecommunications, Inc., Class
A, Common(3) 6,060 73,288
Intermedia Communications, Inc.,
Common(3) 3,766 100,753
MetroNet Communications
Corp., Common(2)(3) 772 42,434
MGC Communications, Inc., Warrants Exp.
10/01/04(3) 1,420 68,746
OpTel, Inc., Common(2) 1,460 29,383
- -------------------------------------------------------------------------
$ 519,119
- -------------------------------------------------------------------------
Total Common Stocks, Warrants and Rights
(identified cost $601,431) $ 1,813,026
- -------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<S> <C> <C>
SHORT-TERM INVESTMENTS -- 5.2%
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
- -------------------------------------------------------------------------
General Electric Capital Co., 5.0%,
4/1/99 $ 6,399 $ 6,399,000
General Motors Acceptance Corp., 4.83%,
4/7/99 8,000 7,993,560
- -------------------------------------------------------------------------
Total Short-Term Investments
(at amortized cost $14,392,560) $ 14,392,560
- -------------------------------------------------------------------------
Total Investments -- 100.9%
(identified cost $279,134,165) $ 278,987,276
- -------------------------------------------------------------------------
Other Assets, Less Liabilities -- (0.9)% $ (2,393,605)
- -------------------------------------------------------------------------
Net Assets -- 100% $ 276,593,671
- -------------------------------------------------------------------------
</TABLE>
(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. It is the
Portfolio's intention to hold this security until maturity.
(2) Restricted security.
(3) Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF MARCH 31, 1999
<S> <C>
Assets
- -------------------------------------------------------
Investments, at value (identified cost,
$279,134,165) $ 278,987,276
Cash 1,113
Receivable for investments sold 2,981,873
Receivable for Fund shares sold 600,521
Interest receivable 5,456,809
Receivable for open forward foreign
currency contracts 455,845
- -------------------------------------------------------
TOTAL ASSETS $ 288,483,437
- -------------------------------------------------------
Liabilities
- -------------------------------------------------------
Dividends payable $ 1,159,519
Payable for investments purchased 9,943,209
Payable for Fund shares redeemed 632,959
Payable to affiliate for Trustees' fees 1,682
Other accrued expenses 152,397
- -------------------------------------------------------
TOTAL LIABILITIES $ 11,889,766
- -------------------------------------------------------
NET ASSETS FOR 32,728,350 SHARES OF
BENEFICIAL INTEREST OUTSTANDING $ 276,593,671
- -------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------
Paid-in capital $ 285,239,285
Accumulated net realized loss (computed
on the basis of identified cost) (9,103,381)
Accumulated undistributed net investment
income 154,480
Net unrealized appreciation (computed on
the basis of identified cost) 303,287
- -------------------------------------------------------
TOTAL $ 276,593,671
- -------------------------------------------------------
Net Asset Value and Redemption
Price Per Share
- -------------------------------------------------------
($276,593,671 DIVIDED BY 32,728,350
SHARES OF
BENEFICIAL INTEREST OUTSTANDING) $ 8.45
- -------------------------------------------------------
Computation of Offering Price
- -------------------------------------------------------
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 95.25 OF $8.45) $ 8.87
- -------------------------------------------------------
</TABLE>
On sales of $25,000 or more, the offering price is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
MARCH 31, 1999
<S> <C>
Investment Income
- ------------------------------------------------------
Interest $ 12,354,159
Dividends 1,173,278
Miscellaneous 371,892
- ------------------------------------------------------
TOTAL INVESTMENT INCOME $ 13,899,329
- ------------------------------------------------------
Expenses
- ------------------------------------------------------
Investment adviser fee $ 773,104
Trustees fees and expenses 13,868
Service fees 184,956
Transfer and dividend disbursing agent
fees 110,706
Custodian fee 89,020
Legal and accounting services 23,599
Registration fees 17,988
Printing and postage 11,052
Miscellaneous 12,378
- ------------------------------------------------------
TOTAL EXPENSES $ 1,236,671
- ------------------------------------------------------
NET INVESTMENT INCOME $ 12,662,658
- ------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ (2,431,609)
Foreign currency transactions 57,054
- ------------------------------------------------------
NET REALIZED LOSS $ (2,374,555)
- ------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 14,741,746
Foreign currency and forward foreign
currency exchange contracts 448,854
- ------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $ 15,190,600
- ------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 12,816,045
- ------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 25,478,703
- ------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
FINANCIAL STATEMENTS (UNAUDITED) CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
Increase (Decrease) MARCH 31, 1999 YEAR ENDED
in Net Assets (UNAUDITED) SEPTEMBER 30, 1998
<S> <C> <C>
- ---------------------------------------------------------------------------------
From operations --
Net investment income $ 12,662,658 $ 20,983,148
Net realized gain (loss) (2,374,555) 7,819,473
Net change in unrealized appreciation
(depreciation) 15,190,600 (28,049,375)
- ---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 25,478,703 $ 753,246
- ---------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income $ (12,110,129) $ (20,370,292)
- ---------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (12,110,129) $ (20,370,292)
- ---------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares $ 64,062,796 $ 98,227,680
Net asset value of shares issued to
shareholders in payment of
distributions declared 5,899,240 9,645,120
Cost of shares redeemed (31,696,776) (70,817,921)
- ---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS $ 38,265,260 $ 37,054,879
- ---------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 51,633,834 $ 17,437,833
- ---------------------------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------------------------
At beginning of period $ 224,959,837 $ 207,522,004
- ---------------------------------------------------------------------------------
AT END OF PERIOD $ 276,593,671 $ 224,959,837
- ---------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of)
net investment income
included in net assets
- ---------------------------------------------------------------------------------
AT END OF PERIOD $ 154,480 $ (398,049)
- ---------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED SEPTEMBER 30,
MARCH 31, 1999 --------------------------------------------------------------
(UNAUDITED) 1998 1997 1996 1995 1994
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of
period $ 8.03 $ 8.70 $ 8.12 $ 7.92 $ 7.90 $ 8.40
- ------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.42 $ 0.81 $ 0.79 $ 0.80 $ 0.82 $ 0.83
Net realized and unrealized gain
(loss) 0.40 (0.70) 0.57 0.21 0.02 (0.47)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 0.82 $ 0.11 $ 1.36 $ 1.01 $ 0.84 $ 0.36
- ------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------
From net investment income $ (0.40) $ (0.78) $ (0.77) $ (0.80) $ (0.82) $ (0.81)
In excess of net investment income -- -- (0.01) (0.01) -- (0.05)
- ------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.40) $ (0.78) $ (0.78) $ (0.81) $ (0.82) $ (0.86)
- ------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD $ 8.45 $ 8.03 $ 8.70 $ 8.12 $ 7.92 $ 7.90
- ------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN(1) 10.48% 0.98% 17.68% 13.41% 11.25% 4.25%
- ------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
- ------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's
omitted) $276,594 $224,960 $207,522 $143,844 $106,414 $103,482
Ratios (As a percentage of average
daily net assets):
Expenses 1.00%(2) 1.04% 1.05% 1.07% 1.09% 1.04%
Net investment income 10.26%(2) 9.22% 9.32% 9.96% 10.50% 9.75%
Portfolio Turnover 84% 141% 105% 81% 84% 70%
- ------------------------------------------------------------------------------------------------------------------------
</TABLE>
(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
reinvested at the net asset value on the reinvestment date. Total return is
not computed on an annualized basis.
(2) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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, 1998, the Trust, for federal income
tax purposes, had a capital loss carryover of $6,521,922 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, 2000 ($4,074,267), 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 Foreign Currency Translation -- Investment valuations, other assets, and
liabilities initially expressed in foreign currencies are converted each
business day into U.S. dollars based upon current exchange rates. Purchases
and sales of foreign investment securities and income and expenses are
converted into U.S. dollars based upon currency exchange rates prevailing on
the respective dates of such transactions. Recognized gains or losses on
investment transactions attributable to foreign currency rates are recorded
for financial statement purposes as net realized gains and losses on
investments. That portion of unrealized gains and losses on investments that
result from fluctuations in foreign currency exchange rates are not
separately disclosed.
G Interim Financial Information -- The interim financial statements relating to
March 31, 1999 and for the six month period then ended have not been audited
by independent certified public accountants, but in the opinion of the
Portfolio'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 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.
14
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
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:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31, 1999 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 1998
<S> <C> <C>
- -------------------------------------------------------------------------------
Sales 7,857,218 11,188,933
Issued to shareholders electing to
receive payment of distributions in
Trust shares 719,468 1,110,097
Redemptions (3,879,103) (8,116,055)
- -------------------------------------------------------------------------------
NET INCREASE 4,697,583 4,182,975
- -------------------------------------------------------------------------------
</TABLE>
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 $82,000 of the sales charge on sales of
Trust shares during the six months ended March 31, 1999. 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 $184,956 under the Plan to the Principal Underwriter
and Authorized Firms during the six months ended March 31, 1999.
6 Financial Instruments
- -------------------------------------------
The Trust regularly trades in financial instruments with off-balance sheet
risk in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include written
options, forward foreign currency exchange contracts and financial futures
contracts and may involve, to a varying degree, elements of risk in excess of
the amounts recognized for financial statement purposes. The notional or
contractual amounts of these instruments represent the investment the
Portfolio has in particular classes of financial instruments and does not
necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
A summary of obligations under these financial instruments at March 31, 1999
is as follows:
Forward Foreign Currency Exchange Contracts
- -------------------------------------------
<TABLE>
<CAPTION>
IN EXCHANGE FOR NET UNREALIZED
SETTLEMENT (IN U.S. APPRECIATION
DATE DELIVER/RECEIVE DOLLARS) (DEPRECIATION)
<S> <C> <C> <C>
- -------------------------------------------------------------------------
PURCHASES
- -------------------------------------------------------------------------
5/19/99 European Currency
Unit
2,099,722 $ 2,282,293 $ (8,259)
- -------------------------------------------------------------------------
$ 2,282,293 $ (8,259)
- -------------------------------------------------------------------------
SALES
- -------------------------------------------------------------------------
5/3/99 European Currency
Unit
2,168,000 $ 2,483,010 $ 137,169
5/19/99 European Currency
Unit
9,165,625 10,253,460 326,935
- -------------------------------------------------------------------------
$ 12,736,470 $ 464,104
- -------------------------------------------------------------------------
</TABLE>
7 Line of Credit
- -------------------------------------------
The Trust participates with other funds and portfolios managed by BMR and EVM
and its affiliates in a $130 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
15
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
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, 1999.
8 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 $223,196,746 and $193,412,523, respectively, for the
six months ended March 31, 1999.
9 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation/depreciation in value of the investments
owned at March 31, 1999, as computed on a federal income tax basis, were as
follows:
<TABLE>
<S> <C>
AGGREGATE COST $ 279,134,165
- -------------------------------------------------------
Gross unrealized appreciation $ 11,609,951
Gross unrealized depreciation (11,756,840)
- -------------------------------------------------------
NET UNREALIZED DEPRECIATION $ (146,889)
- -------------------------------------------------------
</TABLE>
10 Restricted Securities
- -------------------------------------------
At March 31, 1999, The Trust owned the following securities (representing
0.44% of net assets) which were restricted as to public resale and not
registered under the Securities Act of 1933 (excluding Rule 144A securities).
The Trust has various registration rights (exercisable under a variety of
circumstances) with respect to these securities. The fair value of these
securities is determined based on valuations provided by brokers when
available, or if not available, they are valued at fair value using methods
determined in good faith by or at the direction of the Trustees.
<TABLE>
<CAPTION>
DATE OF
DESCRIPTION ACQUISITION SHARES/FACE COST FAIR VALUE
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------
PREFERRED STOCKS
- --------------------------------------------------------------------------------------------
Unisite, Inc., 8.5% (PIK) 12/19/97 1,080 $ 499,949 $ 534,353
COMMON STOCKS, WARRANTS, AND RIGHTS
- --------------------------------------------------------------------------------------------
Allegiance Telecom, Inc., 5/28/98 -
Wts. Exp. 2/15/08 6/10/98 6,230 $ 0 $ 204,515
Cellnet Data Systems, Inc.,
Wts. Exp. 10/1/07 12/12/97 2,000 0 20
Diva Systems Corp., Wts. 12/30/98 4,500 0 0
Esat Holdings, Ltd., Wts. 1/24/97 -
5/28/97 900 0 77,976
Gulf States Steel, Wts. 8/23/95 600 0 0
Jordan Telecom Products,
Inc., Common 1/30/98 700 0 0
MetroNet Communications
Corp., Common 8/25/98 772 9 42,434
Nextel Communications, Inc.,
Wts. Exp. 4/25/99 10/04/94 1,800 0 1,080
OpTel, Inc., Common 10/21/97 -
10/22/97 1,460 10 29,383
Pegasus Communications
Corp., Wts. 12/02/98 1,410 26,370 31,373
Primus Telecom Group, Wts.
Exp. 8/1/04 10/31/97 1,150 0 9,738
Specialty Foods Acq. Corp.,
Common 8/10/93 12,000 8,722 120
SpinCycle, Inc., Wts. 4/24/98 850 0 0
Splitrock Services, Inc., Wts. 7/21/98 1,000 0 70,000
Sterling Chemicals Holdings.,
Inc., Common 6/23/98 2,400 24 15,000
UIH Australia/Pacific, Inc.,
Wts. 3/05/98 900 0 9
Unisite, Inc., Wts. 12/09/97 750 0 0
Versatel Telecom, B.V. Wts. 8/11/98 -
1/29/99 3,500 0 210,000
- --------------------------------------------------------------------------------------------
$ 535,084 $ 1,226,001
- --------------------------------------------------------------------------------------------
</TABLE>
16
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF MARCH 31, 1999
INVESTMENT MANAGEMENT
EATON VANCE INCOME FUND OF BOSTON
Officers
James B. Hawkes
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
Emeritus, Harvard University Graduate School of
Business Administration
Kenneth C. Knight
Consultant
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
John L. Thorndike
Former Director, Fiduciary Company Incorporated
17
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<PAGE>
Investment Adviser of Eaton Vance
Income Fund of Boston
Eaton Vance Management
The Eaton Vance Building
255 State Street
Boston, MA 02109
Principal Underwriter
Eaton Vance Distributors, Inc.
The Eaton Vance Building
255 State Street
Boston, MA 02109
(617)482-8260
Custodian
Investors Bank & Trust Company
200 Claredon Street
Boston, MA 02116
Transfer Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
Eaton Vance Income Fund of Boston
The Eaton Vance Building
255 State Street
Boston, MA 02109
- -------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus
which contains more complete information on the Fund, including
its sales charges and expenses. Please read the prospectus
carefully before you invest or send money.
- -------------------------------------------------------------------------------
