<PAGE>
[LOGO] INVESTING
FOR THE
21st
CENTURY-COPYRIGHT MARK-
ANNUAL REPORT SEPTEMBER 30, 1999
[PICTURE OF HORSE]
EATON VANCE
INCOME FUND
OF BOSTON
GLOBAL MANAGEMENT-GLOBAL DISTRIBUTION
[PICTURE OF BOSTON]
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999>
LETTER TO SHAREHOLDERS
[PICTURE] Eaton Vance Income Fund of Boston Class A shares had a
total return of 11.97% for the year ended September 30,
1999.(1) That return was the result of an increase in
James B. Hawkes net asset value per share from $8.03 on September 30,
President 1998 to $8.16 on September 30, 1999, and the reinvestment
of $0.807 in dividends.
The Fund's Class I shares had a total return of -0.44%. That return was the
result of a decline in NAV from $10.00 at inception on July 1, 1999 to $9.71
on September 30, 1999, and the reinvestment of $0.247 in dividends.
Based on the Fund's most recent distributions and NAVs of $8.16 for Class A
and $9.71 for Class I, Class A and Class I had distribution rates of 10.02%
and 10.20%, respectively, on September 30, 1999.(2) The Class A and Class I
30-day SEC yields were 9.26% and 9.88%, respectively, at September 30,
1999.(3)
After last year's crisis, the high-yield market mounted a strong recovery
amid improving fundamentals...
Like most fixed-income markets, the high-yield bond market felt the impact of
last fall's Asian crisis, as weaker demand and a flight to quality drove many
investors to Treasury bonds. However, the high-yield segment demonstrated its
resilience later in the fiscal year, as the U.S. economy was strong. While
higher-quality bonds felt the pressure of rising rates, the high-yield sector
rallied strongly in response to better underlying fundamentals.
Income Fund of Boston again outperformed its peer group...
In a volatile year for high-yield bonds, Income Fund of Boston's Class A
shares far outperformed the average 4.84% return of its High Yield Fund peer
group, according to Lipper, Inc., a nationally recognized monitor of mutual
fund performance.(4) The Fund's long-term performance has been equally
impressive. For the five-year period ended September 30, 1999, the Fund's
Class A shares ranked 3rd of 101 funds in the High Yield Fund category.(4)
The coming year is likely to present exciting new opportunities for
high-yield investors...
The high-yield market has made remarkable strides in the past decade. As we
look ahead to the year 2000, high-yield bonds will continue to play a central
role in capital formation for growing companies, provide financial support
for entrepreneurs and spur economic growth. For high-yield investors, the
1990s have proven a volatile but rewarding period and we believe the stage is
set for many more opportunities. In the pages that follow, portfolio manager
Michael Weilheimer reviews the past year in the high-yield markets and offers
his outlook as we look ahead to the year 2000.
Sincerely,
James B. Hawkes
President
November 9, 1999
- -------------------------------------------------------------------------
Fund Information
as of September 30, 1999
<TABLE>
<CAPTION>
<S> <C> <C>
Performance(5) Class A Class I
- ---------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- ---------------------------------------------------------------------------------
One Year 11.97% N.A.
Five Years 10.91 N.A.
Ten Years 10.59 N.A.
Life of Fund+ 10.11 -0.44%++
SEC Average Annual Total Returns (including sales charge)
- ----------------------------------------------------------------------------------
One Year 6.66% N.A.
Five Years 9.85 N.A.
Ten Years 10.05 N.A.
Life of Fund+ 9.92 -0.44%++
+ Inception dates: Class A: 6/15/72; Class I: 7/1/99
++ Returns for Class I are cumulative total returns.
Ten Largest Holdings(6)
- ----------------------------------------------------------------------------------
Versatel Telecom B.V. 2.4%
Telewest Communications PLC 2.3
PSINet, Inc. 2.2
Nextel Communications, Inc. 2.0
Ono Finance PLC 1.5
Worldwide Fiber, Inc. 1.5
Allied Waste North America Corp. 1.4
Regal Cinemas, Inc. 1.3
Exodus Communications, Inc. 1.3
NTL, Inc. 1.2
</TABLE>
(1) This return does not include the Fund's maximum 4.75% 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 yield
is calculated by dividing the net investment income per share for the
30-day period by the offering price at the end of the period and
annualizing the result. (4) For the one-year, three-year, and ten-year
periods ended 9/30/99, Income Fund of Boston Class A shares ranked 18
(of 302 funds), 4 (of 165 funds), and 8 (of 54 funds), respectively.
Rankings are based on percent change in net asset value and do not take
sales charges into consideration. Rankings for other Classes will vary.
Past performance is no guarantee of future results. It is not possible
to invest directly in an Index or Lipper category. (5) Returns are
calculated by determining the percentage change in net asset value (NAV)
with all distributions reinvested. SEC returns reflect maximum sales
charge as noted. (6) Ten largest holdings account for 17.1% of the Fund's
net assets, determined by dividing the total market value of the
holdings by the total net assets 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.
2
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
MANAGEMENT DISCUSSION
[PICTURE] AN INTERVIEW WITH
MICHAEL W. WEILHEIMER,
PORTFOLIO MANAGER OF
Michael W. Weilheimer EATON VANCE INCOME FUND OF BOSTON.
Portfolio Manager
Q: MIKE, THE PAST FISCAL YEAR HAS BEEN
VERY EVENTFUL FOR THE FINANCIAL MARKETS.
HOW WOULD YOU DESCRIBE THE HIGH-YIELD
MARKETS DURING THAT PERIOD?
A: The high-yield market was very challenging. Last year's turmoil in Asia
resulted in a significant widening of quality spreads -- the difference in
yields between bonds of varying quality. During the early fall months,
spreads for high-yield bonds reached as high as 650 basis points (6.5%) over
Treasury yields. That's the widest they have been since 1991, which indicates
enormous value in the high-yield market.
The market subsequently rallied, although an infusion of new supply proved a
hurdle. While heavy new supply typically takes a while to digest, that's
especially true in a rising rate environment. Nonetheless, despite the
difficult environment, the high-yield market produced positive returns and
was among the best-performing fixed-income asset classes during the past
year.
Q: THE FUND REGISTERED EXCELLENT PERFORMANCE IN THIS DIFFICULT PERIOD. HOW
DID YOU MANAGE TO GENERATE THE ABOVE-AVERAGE RETURNS?
A: We detected some potential problems on the horizon in the summer of 1998.
At that time, we began to increase our cash positions, with an eye toward
future buying opportunities. That worked to our advantage at the market
bottom, when the Fund invested fairly aggressively. We were able to
identify seasoned companies with good fundamentals whose bonds were trading
at significantly undervalued levels.
Even as the market recovered somewhat in January, high-yield investors
generally focused on the more liquid, BB-rated names, providing yet
another opportunity for the Fund in the B-rated segment of the market.
That move benefited the Fund as interest rates moved higher during the
year, because B-rated bonds are somewhat less sensitive to rising interest
rates.
Q: WHERE HAVE YOU FOCUSED THE FUND'S INVESTMENTS?
A: Communications and cable companies remained the Fund's largest industry
weightings at September 30, 1999, each characterized by continued strong
growth and reliable cash flows. There has, however, been an adjustment
- --------------------------------------------------------------------------
<TABLE>
<CAPTION>
Ratings Distribution(1) Five Largest Sector Weightings(1)
- ------------------------------ --------------------------------------------
By total investments By total net assets
<S> <C> <C> <C>
[GRAPH] [GRAPH]
AAA 8.90% Broadcasting & Cable 13.4%
BB 3.90% Wireless Communication Services-Int'l 10.0%
B 62.70% Information Technology Services 6.6%
CCC 11.50% Wireless Communication Services 6.1%
Non-Rated 13.00% Wireless Communication Services-N.A. 6.0%
</TABLE>
(1) Because the Fund is actively managed, Ratings Distribution and Sector
Weightings are subject to change. Five largest sector holdings account for
42.1% of the Fund.
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.
3
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
MANAGEMENT DISCUSSION CONT'D
in our telecom and cable investments, as we've shifted our emphasis
from the U.S. to Europe.
The climate for telecom companies in Europe is less competitive and, in
our view, the potential for consolidation is greater. In recent years,
we've seen a wave of mergers in the U.S., with Bell operating companies
merging to integrate networks and achieve efficiency of scale. We believe
a similar trend will emerge in Europe, with smaller companies
participating in the consolidation as well.
Q: COULD YOU DISCUSS SOME OF THE TELECOM COMPANIES IN WHICH THE FUND HAS
INVESTMENTS?
A: Yes. The Fund has an investment in IXC Communications bonds. IXC
provides data and voice transmission services, and owns and operates a
coast-to-coast fiber optic network. Earlier this year, IXC agreed to be
purchased by Cincinnati Bell, an Ohio-based, local phone company. We
believe that the infusion of Cincinnati Bell's resources and new
management should have a favorable impact on the credit.
Allegiance Telecom is a Dallas-based competitive local exchange carrier
that provides data, voice and Internet communications services to
business, government and other institutional users in major metropolitan
areas. In 1999, the company's installations of new switches and lines have
run well ahead of schedule. In October, Allegiance established a switch in
Baltimore, its eighteenth major market, and plans to install a switch in
Detroit before year-end. The company is becoming an increasingly important
provider of telecom services for the institutional market.
Q: LET'S TURN TO YOUR EUROPEAN INVESTMENTS. WHAT ABOUT THE TELECOM SECTOR?
A: The Portfolio has a position in Esat Telecom Group PLC, a leading
telecom provider in Ireland. In addition to its leadership in fixed-line
services, Esat has a 50% ownership in Esat Digifone, a wireless service
provider. The company has enjoyed improved margins in the past year as it
nears completion of its own fiber optic network.
Esat is also a leading Internet Service Provider for corporate and
residential use. The company registered 68% growth in its corporate
customer base in the third quarter of 1999. In concert with IBM, Esat
recently launched Surf PC, a service that provides residential users with
IBM computers and Internet service.
Q: HAVE YOU FOUND OPPORTUNITIES AMONG EUROPEAN CABLE OPERATORS?
A: Yes. Telewest, a U.K.-based cable television operator was one of the
Portfolio's largest holdings at September 30, 1999. The company recently
announced the launch of a digital service that will allow customers to
watch digital television in all of its formats, while offering "a la
carte" service that permits customers to choose only those channels they
want. In addition, the company announced that software giant Microsoft
will purchase a stake in the company for $3 billion.
NTL, Inc. is the largest provider of cable television service in the U.K.
In March, the company began an interactive service that will enable users
to shop, send E-mail and conduct financial transactions through their
televisions. This service is gaining momentum in the U.K. and is expected
in coming years to spur growth in electronic commerce in the U.K. and
Europe. Reflecting the strong interest in the new technology, France
Telecom and Microsoft have each purchased a stake in NTL.
Q: WAS THERE ANY SECTOR IN WHICH YOU FOUND NEW OPPORTUNITIES?
A: Yes. The gaming and lodging industry has become increasingly attractive
in the past year. Gaming companies have generated very consistent revenue
growth in recent years; the industry itself has been rationalized by a
decline in new construction and licensing. As the existing
4
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
MANAGEMENT DISCUSSION CONT'D
properties have matured, companies have added amenities, such as golf
courses, hotels and entertainment features. That has encouraged visitors
to book longer visits, a trend that has improved the growth prospects of
these companies. We've avoided companies focusing on Las Vegas and
Atlantic City in favor of companies such as Hollywood Park, Inc. and
Hollywood Casino Corp. which have focused on newer gaming markets,
including the Gulf Coast, Chicago and Indiana.
Q: WERE THERE ANY AREAS THAT THE FUND AVOIDED?
A: Yes. There were some areas that we underweighted or avoided altogether,
and that helped the Fund's relative performance. For example, we
maintained a relatively small exposure to the manufacturing sector, where
there has been a near-recession atmosphere in some sectors because of weak
demand from Asia.
Another area we sidestepped was nursing homes. As with hospitals, nursing
home revenues have suffered from shifting Medicare reimbursement policies.
Until those issues are resolved, the industry faces an uncertain future.
Finally, we avoided the paging sector. Pagers are suffering from competing
technologies, especially cellular phones. As the cost of cellular phone
usage declines, it reduces demand for paging services. That trend has
exerted pricing pressures and resulted in lower revenues per unit.
Q: MIKE, LOOKING AHEAD, WHAT IS YOUR OUTLOOK FOR THE HIGH-YIELD MARKET IN
THE COMING YEAR?
A: I believe that the outlook has improved considerably in recent months.
The economy is sound and inflation remains in check. Many of the weak
Asian economies have begun to recover, which should improve foreign
demand. Meanwhile, the high-yield market remains a very important
financing tool for companies in the world's expanding communications
sector, an area that is likely to produce more excellent high-yield
opportunities. Moreover, with the widest spreads we've seen in many years,
there is excellent value in the high-yield market.
[GRAPH]
<TABLE>
<CAPTION>
<S> <C> <C>
Performance** Class A Class I
- ------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
- ------------------------------------------------------------------------------
One Year 11.97% N.A.
Five Years 10.91 N.A.
Ten Years 10.59 N.A.
Life of Fund+ 10.11 -0.44%++
SEC Average Annual Total Returns (including sales charge)
- -------------------------------------------------------------------------------
One Year 6.66% N.A.
Five Years 9.85 N.A.
Ten Years 10.05 N.A.
Life of Fund+ 9.92 -0.44%++
</TABLE>
+ Inception dates: Class A: 6/15/72; Class I: 7/1/99
++ Returns for Class I are cumulative total returns.
* Source: TowersData, Bethesda, MD.; CSFirst Boston, Inc.
The chart compares the Fund's Class A total return with that of the CS
First Boston High Yield Bond Index and the Lehman Brothers High Yield Bond
Index, broad-based, unmanaged market indexes of high-yield corporate
bonds. With this report, we are establishing the CS First Boston Index as
the Fund's primary benchmark in the belief that it more accurately
reflects the Fund's investment universe. In compliance with Securities and
Exchange Commission regulations, we are also including the Fund's previous
benchmark, the Lehman Brothers High Yield Bond Index, in this report. The
lines on the chart represent the total returns of $10,000 hypothetical
investments in the Fund and the Indexes. The Indexes' total returns do not
reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the
Indexes. It is not possible to invest directly in an Index. An investment
in the Fund's Class I shares on 7/1/99 at net asset value would have been
worth $9,956 on September 30, 1999.
** Returns are calculated by determining the percentage change in net
asset value (NAV) with all distributions reinvested. SEC returns for Class
A reflect maximum 4.75% sales charge.
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.
5
<PAGE>
Eaton Vance Income Fund of Boston, Class A vs.
Lehman Brothers High Yield Bond Index and
CS First Boston High Yield Bond Index
Date Fund/NAV Fund/MOP LBHYBI CSFBHYI
9/30/89 $10,000 $9,522 $10,000 $10,000
10/31/89 $9,833 $9,362 $9,763 $9,749
11/30/89 $9,752 $9,285 $9,743 $9,768
12/31/89 $9,760 $9,293 $9,759 $9,725
1/31/90 $9,528 $9,073 $9,549 $9,382
2/28/90 $9,114 $8,678 $9,353 $9,209
3/31/90 $9,042 $8,609 $9,598 $9,474
4/30/90 $9,085 $8,651 $9,581 $9,514
5/31/90 $9,285 $8,841 $9,766 $9,712
6/30/90 $9,486 $9,032 $10,003 $10,017
7/31/90 $9,703 $9,239 $10,272 $10,341
8/31/90 $9,264 $8,821 $9,687 $9,863
9/30/90 $8,694 $8,278 $8,980 $9,112
10/31/90 $8,425 $8,022 $8,509 $8,882
11/30/90 $8,280 $7,884 $8,774 $9,061
12/31/90 $8,247 $7,853 $8,823 $9,104
1/31/91 $8,227 $7,833 $9,066 $9,354
2/28/91 $8,755 $8,337 $10,058 $10,160
3/31/91 $9,228 $8,787 $10,650 $10,790
4/30/91 $9,951 $9,476 $11,087 $11,238
5/31/91 $10,004 $9,526 $11,107 $11,294
6/30/91 $10,294 $9,801 $11,435 $11,590
7/31/91 $10,719 $10,206 $11,801 $11,981
8/31/91 $10,889 $10,369 $12,073 $12,199
9/30/91 $11,174 $10,640 $12,240 $12,476
10/31/91 $11,570 $11,017 $12,649 $12,889
11/30/91 $11,710 $11,150 $12,715 $12,992
12/31/91 $11,780 $11,217 $12,898 $13,087
1/31/92 $12,274 $11,687 $13,352 $13,620
2/28/92 $12,565 $11,964 $13,682 $13,951
3/31/92 $12,862 $12,247 $13,852 $14,159
4/30/92 $13,031 $12,408 $13,904 $14,171
5/31/92 $13,175 $12,545 $14,100 $14,364
6/30/92 $13,380 $12,741 $14,233 $14,506
7/31/92 $13,592 $12,942 $14,448 $14,730
8/31/92 $13,772 $13,114 $14,637 $14,933
9/30/92 $13,884 $13,220 $14,786 $15,030
10/31/92 $13,735 $13,078 $14,578 $14,874
11/30/92 $13,799 $13,139 $14,762 $15,097
12/31/92 $13,933 $13,267 $14,930 $15,268
1/31/93 $14,257 $13,575 $15,364 $15,684
Page 1 of 3
<PAGE>
2/28/93 $14,554 $13,858 $15,635 $15,995
3/31/93 $14,762 $14,056 $15,836 $16,332
4/30/93 $14,897 $14,184 $15,974 $16,425
5/31/93 $15,126 $14,403 $16,164 $16,665
6/30/93 $15,439 $14,700 $16,504 $16,967
7/31/93 $15,595 $14,850 $16,664 $17,143
8/31/93 $15,644 $14,896 $16,804 $17,289
9/30/93 $15,632 $14,885 $16,847 $17,388
10/31/93 $15,979 $15,215 $17,188 $17,706
11/30/93 $16,193 $15,419 $17,270 $17,929
12/31/93 $16,437 $15,651 $17,484 $18,155
1/31/94 $16,818 $16,014 $17,864 $18,478
2/28/94 $16,946 $16,136 $17,817 $18,506
3/31/94 $16,449 $15,663 $17,144 $17,962
4/30/94 $16,256 $15,479 $17,027 $17,721
5/31/94 $16,343 $15,561 $17,036 $17,822
6/30/94 $16,419 $15,634 $17,089 $17,703
7/31/94 $16,360 $15,578 $17,234 $17,786
8/31/94 $16,300 $15,521 $17,356 $17,914
9/30/94 $16,296 $15,517 $17,357 $17,985
10/31/94 $16,318 $15,538 $17,398 $17,998
11/30/94 $16,124 $15,353 $17,179 $17,789
12/31/94 $16,226 $15,450 $17,305 $17,978
1/31/95 $16,372 $15,589 $17,540 $18,167
2/28/95 $16,761 $15,960 $18,141 $18,613
3/31/95 $16,845 $16,039 $18,336 $18,824
4/30/95 $17,315 $16,487 $18,803 $19,242
5/31/95 $17,755 $16,906 $19,330 $19,784
6/30/95 $17,773 $16,923 $19,459 $19,915
7/31/95 $18,086 $17,221 $19,699 $20,224
8/31/95 $18,020 $17,158 $19,760 $20,280
9/30/95 $18,129 $17,262 $20,003 $20,513
10/31/95 $18,222 $17,351 $20,069 $20,741
11/30/95 $18,403 $17,523 $20,304 $20,839
12/31/95 $18,707 $17,812 $20,623 $21,103
1/31/96 $19,055 $18,144 $20,986 $21,504
2/28/96 $19,372 $18,446 $21,003 $21,618
3/31/96 $19,248 $18,328 $20,989 $21,560
4/30/96 $19,383 $18,456 $21,035 $21,676
5/31/96 $19,597 $18,660 $21,161 $21,852
6/30/96 $19,612 $18,674 $21,336 $21,900
7/31/96 $19,753 $18,809 $21,436 $22,097
8/31/96 $20,071 $19,111 $21,667 $22,338
9/30/96 $20,561 $19,578 $22,189 $22,722
10/31/96 $20,630 $19,644 $22,360 $22,913
11/30/96 $20,975 $19,972 $22,801 $23,270
Page 2 of 3
<PAGE>
12/31/96 $21,277 $20,260 $22,964 $23,724
1/31/97 $21,530 $20,501 $23,188 $23,897
2/28/97 $21,925 $20,877 $23,572 $24,347
3/31/97 $21,471 $20,444 $23,221 $24,074
4/30/97 $21,718 $20,680 $23,466 $24,288
5/31/97 $22,321 $21,254 $23,968 $24,776
6/30/97 $22,789 $21,699 $24,300 $25,113
7/31/97 $23,455 $22,334 $24,967 $25,646
8/31/97 $23,607 $22,478 $24,911 $25,784
9/30/97 $24,195 $23,038 $25,405 $26,295
10/31/97 $24,182 $23,026 $25,427 $26,292
11/30/97 $24,359 $23,194 $25,670 $26,479
12/31/97 $24,740 $23,557 $25,895 $26,720
1/31/98 $25,381 $24,167 $26,361 $27,174
2/28/98 $25,693 $24,464 $26,516 $27,386
3/31/98 $26,142 $24,892 $26,765 $27,523
4/30/98 $26,270 $25,014 $26,870 $27,729
5/31/98 $26,294 $25,037 $26,964 $27,812
6/30/98 $26,341 $25,082 $27,061 $27,871
7/31/98 $26,514 $25,246 $27,215 $28,066
8/31/98 $24,474 $23,303 $25,713 $26,160
9/30/98 $24,431 $23,263 $25,829 $26,158
10/31/98 $23,787 $22,650 $25,300 $25,637
11/30/98 $25,432 $24,216 $26,350 $26,937
12/31/98 $25,458 $24,240 $26,379 $26,875
1/31/99 $26,107 $24,859 $26,771 $27,128
2/28/99 $26,395 $25,133 $26,613 $27,071
3/31/99 $26,992 $25,701 $26,866 $27,317
4/30/99 $27,777 $26,449 $27,387 $27,921
5/31/99 $27,450 $26,137 $27,016 $27,619
6/30/99 $27,469 $26,156 $26,959 $27,633
7/31/99 $27,664 $26,341 $27,067 $27,647
8/31/99 $27,431 $26,120 $26,768 $27,401
9/30/99 $27,355 $26,047 $26,575 $27,190
Page 3 of 3
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
PORTFOLIO OF INVESTMENTS
<TABLE>
<S> <C> <C> <C>
CORPORATE BONDS & NOTES -- 83.9%
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Aerospace and Defense -- 0.7%
- -----------------------------------------------------------------------------
Dunlop Stand Aero Holdings, Sr. Notes,
11.875%, 5/15/09(1) $ 1,100 $ 1,111,000
Transdigm, Inc., 10.375%, 12/1/08 1,300 1,254,500
- -----------------------------------------------------------------------------
$ 2,365,500
- -----------------------------------------------------------------------------
Apparel -- 1.0%
- -----------------------------------------------------------------------------
Hosiery Corp. of America, Inc., Sr. Sub.
Notes, 13.75%, 8/1/02 $ 1,700 $ 1,768,000
William Carter Co., Sr. Sub. Notes,
10.375%, 12/1/06 1,575 1,551,375
- -----------------------------------------------------------------------------
$ 3,319,375
- -----------------------------------------------------------------------------
Auto and Parts -- 1.8%
- -----------------------------------------------------------------------------
Dura Operating Corp., Sr. Sub. Notes,
9.00%, 5/1/09(1) EUR 2,000 $ 1,992,298
JL French Automotive Casting, Sr. Sub.
Notes, 11.50%, 6/1/09(1) $ 1,850 1,836,125
Talon Automotive Group, Sr. Sub. Notes,
9.625%, 5/1/08 2,550 2,173,875
- -----------------------------------------------------------------------------
$ 6,002,298
- -----------------------------------------------------------------------------
Broadcasting and Cable -- 11.2%
- -----------------------------------------------------------------------------
ACME Television Services, Inc., 10.875%
(0% until 2000), 9/30/04 $ 2,250 $ 1,946,251
Avalon Cable Holdings, LLC, Sr. Disc.
Notes, 11.875% (0% until 2003), 12/1/08 2,850 1,838,250
Avalon Cable of Michigan LLC, Sr. Sub
Notes, 9.375%, 12/1/08 400 402,000
Charter Communication Holdings LLC, Sr.
Notes, 8.625% (0% until 2009), 4/1/09(1) 800 760,000
Charter Communication, Sr. Disc. Notes,
9.92% (0% until 2004), 4/1/11(1) 4,200 2,520,000
Diamond Cable Communications Co., Sr.
Disc. Notes, 11.75% (0% until 2000),
12/15/05 1,000 897,500
Digital Television Services, Inc.,
Guaranteed Notes, 12.50%, 8/1/07 1,440 1,519,200
Golden Sky Systems, 12.375%, 8/1/06 1,310 1,401,700
Golden Sky Systems, Sr. Disc. Notes,
13.50% (0% until 2004), 3/1/07(1) 2,855 1,605,937
Muzak Holdings LLC, Sr. Disc. Notes,
13.00% (0% until 2004), 3/15/10(1) 2,812 1,602,840
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Broadcasting and Cable (continued)
- -----------------------------------------------------------------------------
Muzak Holdings LLC, Sr. Sub. Notes,
9.875%, 3/15/09(1) $ 2,100 $ 2,005,500
NTL, Inc., 9.75% (0% until 2004),
4/15/09 GBP 2,000 2,074,842
NTL, Inc., Sr. Notes, 12.375%
(0% until 2003), 10/1/08 3,000 2,047,500
Ono Finance PLC, 13.00%, 5/1/09(1) EUR 3,473 3,637,967
Ono Finance PLC, 13.00%, 5/1/09(1) EUR 1,200 1,316,834
RCN Corp., Sr. Disc. Notes, 9.80% (0%
until 2003), 2/15/08 750 451,875
RCN Corp., Sr. Disc. Notes, 11.125% (0%
until 2002), 10/15/07 1,250 812,500
Telemundo Holdings, Inc., Sr. Disc.
Notes, 11.50% (0% until 2003), 8/15/08 2,200 1,284,250
Telewest Communication PLC, 9.875% (0%
until 2004), 4/15/09(1) GBP 5,000 5,104,770
Telewest Communication PLC, Debs.,
9.625%, 10/1/06 75 75,937
Telewest PLC, Debs., 11.00%
(0% until 2000), 10/1/07 2,810 2,507,925
United International Holdings, Inc., Sr.
Disc. Notes, 10.75% (0% until 2003),
2/15/08 1,985 1,210,850
- -----------------------------------------------------------------------------
$ 37,024,428
- -----------------------------------------------------------------------------
Business Services - Miscellaneous -- 4.0%
- -----------------------------------------------------------------------------
Allied Waste, Sr. Sub Notes,
10.00%, 8/1/09(1) $ 5,150 $ 4,738,000
AP Holdings, Inc., Sr. Disc. Notes,
11.25% (0% until 2003), 3/15/08 2,450 1,243,375
Apcoa, Inc., Guaranteed Sr. Sub. Notes,
9.25%, 3/15/08 830 711,725
Cybernet Internet Service,
14.00%, 7/1/09(1) 800 804,000
Federal Data Corp., Sr. Sub. Notes,
10.125%, 8/1/05 1,185 977,625
Intertek Finance PLC, Sr. Sub. Notes,
10.25%, 11/1/06 1,400 1,295,000
Richmont Marketing Specialists,
10.125%, 12/15/07(1) 4,445 3,367,087
- -----------------------------------------------------------------------------
$ 13,136,812
- -----------------------------------------------------------------------------
Business Services - Rental & Leasing -- 2.9%
- -----------------------------------------------------------------------------
Anthony Crane Rental LP, Guaranteed Sr.
Notes, 10.375%, 8/1/08 $ 1,000 $ 900,000
NationsRent, Inc., Guaranteed Sr. Sub.
Notes, 10.375%, 12/15/08 1,800 1,786,500
Neff Corp., 10.25%, 6/1/08 1,950 1,940,250
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Business Services - Rental & Leasing (continued)
- -----------------------------------------------------------------------------
Neff Corp., Guaranteed Sr. Sub. Notes,
10.25%, 6/1/08 $ 850 $ 845,750
SBA Communications Corp., Sr. Disc.
Notes, 12.00% (0% to 2003), 3/1/08 900 486,000
Spectrasite Holdings, Inc., Sr. Disc.
Notes, 11.25% (0% until 2004),
4/15/09(1) 600 300,000
Spectrasite Holdings, Inc., Sr. Disc.
Notes, 12.00% (0% until 2003), 7/15/08 2,400 1,356,000
Unisite, Inc., Sub. Notes, 13.00%
(0% until 2000), 12/15/04(1) 1,500 1,881,600
- -----------------------------------------------------------------------------
$ 9,496,100
- -----------------------------------------------------------------------------
Cable - Telecommunications -- 1.0%
- -----------------------------------------------------------------------------
Insight Midwest, 9.75%, 10/1/09(1) $ 1,800 $ 1,822,500
United Pan-Europe, Sr. Disc. Notes,
12.50% (0% until 2004), 8/1/09(1) 2,600 1,475,500
- -----------------------------------------------------------------------------
$ 3,298,000
- -----------------------------------------------------------------------------
Chemicals -- 1.1%
- -----------------------------------------------------------------------------
Lyondell Chemical Co., 9.625%, 5/1/07 $ 1,000 $ 997,500
Lyondell Chemical Co., Sr. Sub. Notes,
10.875%, 5/1/09 2,650 2,676,500
- -----------------------------------------------------------------------------
$ 3,674,000
- -----------------------------------------------------------------------------
Consumer Products -- 1.9%
- -----------------------------------------------------------------------------
Amscan Holdings, Inc., Sr. Sub. Notes,
9.875%, 12/15/07 $ 1,120 $ 879,200
Glenoit Corp., Sr. Sub. Notes,
11.00%, 4/15/07 2,400 1,572,000
Head Holding GMBH, Sr. Notes,
10.75%, 7/15/06(1) EUR 2,500 2,650,182
Icon Health and Fitness, Inc.,
12.00%, 9/27/05(1) 355 195,360
Jafra Cosmetics International, Inc.,
Guaranteed Sr. Sub. Notes,
11.75%, 5/1/08 1,000 865,000
- -----------------------------------------------------------------------------
$ 6,161,742
- -----------------------------------------------------------------------------
Containers and Packaging -- 1.1%
- -----------------------------------------------------------------------------
Consolidated Container Co. LLC, Sr. Sub.
Notes, 10.125%, 7/15/09(1) $ 800 $ 808,000
Consumers International, Inc., Sr.
Notes, 10.25%, 4/1/05 985 940,675
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Containers and Packaging (continued)
- -----------------------------------------------------------------------------
Stone Container Corp., Sr. Notes,
12.58%, 8/1/16 $ 1,800 $ 1,984,500
- -----------------------------------------------------------------------------
$ 3,733,175
- -----------------------------------------------------------------------------
Drugs -- 0.7%
- -----------------------------------------------------------------------------
Biovail Corp., Sr. Notes,
10.875%, 11/15/05 $ 950 $ 985,625
King Pharmaceutical, Inc.,
10.75%, 2/15/09 1,250 1,293,750
- -----------------------------------------------------------------------------
$ 2,279,375
- -----------------------------------------------------------------------------
Electronic Equipment -- 2.5%
- -----------------------------------------------------------------------------
Amkor Technologies, Inc., Sr. Notes,
9.25%, 5/1/06(1) $ 100 $ 99,750
Amkor Technologies, Inc., Sr. Sub Notes,
10.50%, 5/1/09(1) 4,200 4,105,500
Jordan Telecom Products, Inc., Sr. Disc.
Notes, 11.75% (0% until 2000), 8/1/07 2,185 1,857,250
Viasystems, Inc., Sr. Sub. Notes,
9.75%, 6/1/07 900 778,500
Viasystems, Inc., Sr. Sub. Notes, Series
B, 9.75%, 6/1/07 895 774,175
Wavetek Corp., Sr. Sub. Notes,
10.125%, 6/15/07 840 709,800
- -----------------------------------------------------------------------------
$ 8,324,975
- -----------------------------------------------------------------------------
Entertainment -- 3.0%
- -----------------------------------------------------------------------------
Cinemark USA, Sr. Sub. Notes,
9.625%, 8/1/08(1) $ 2,500 $ 2,162,500
Marvel Enterprise, Inc.,
12.00%, 6/15/09 1,400 1,281,000
Premier Parks, Inc., Sr. Disc. Notes,
10.00% (0% until 2003), 4/1/08 1,400 896,000
Premier Parks, Inc., Sr. Notes,
9.75%, 6/15/07 1,250 1,218,750
Regal Cinemas, Inc., Sr. Sub. Notes,
8.875%, 12/15/10 2,860 1,901,900
Regal Cinemas, Inc., Sr. Sub. Notes,
9.50%, 6/1/08 3,590 2,459,150
- -----------------------------------------------------------------------------
$ 9,919,300
- -----------------------------------------------------------------------------
Financial Services -- 0.4%
- -----------------------------------------------------------------------------
Willis Corroon Corp., 9.00%, 2/1/09 $ 1,600 $ 1,448,000
- -----------------------------------------------------------------------------
$ 1,448,000
- -----------------------------------------------------------------------------
Foods -- 3.7%
- -----------------------------------------------------------------------------
B & G Foods, Inc., Sub. Notes,
9.625%, 8/1/07 $ 1,860 $ 1,683,300
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Foods (continued)
- -----------------------------------------------------------------------------
Cott Corp., Sr. Notes, 8.50%, 5/1/07 $ 500 $ 467,500
Del Monte Corp., Sr. Notes,
12.25%, 4/15/07 2,820 3,087,900
Del Monte Foods Co., Sr. Disc. Notes,
12.50% (0% until 2002), 12/15/07 875 665,000
Eagle Family Foods, Inc., Guaranteed Sr.
Notes, 8.75%, 1/15/08 700 535,500
International Home Foods, Inc., Sr. Sub.
Notes, 10.375%, 11/1/06 2,250 2,300,625
Luigino's, Inc., Sr. Sub. Notes,
10.00%, 2/1/06 825 775,500
Premier International Foods, Sr. Notes,
12.00%, 9/1/09(1) 2,750 2,763,750
- -----------------------------------------------------------------------------
$ 12,279,075
- -----------------------------------------------------------------------------
Health Services -- 0.9%
- -----------------------------------------------------------------------------
Alliance Imaging, Sr. Sub Notes,
9.625%, 12/15/05 $ 800 $ 813,000
Lifepoint Hospital Holdings, Sr. Sub.
Notes, 10.75%, 5/15/09(1) 2,330 2,318,350
- -----------------------------------------------------------------------------
$ 3,131,350
- -----------------------------------------------------------------------------
Information Technology Services -- 6.5%
- -----------------------------------------------------------------------------
Covad Communication Group, Sr. Disc.
Notes, 13.50% (0% until 2003), 3/15/08 $ 1,900 $ 988,000
Diva Systems Corp., Sr. Notes, 12.625%
(0% until 2003), 3/1/08 2,250 708,750
Dolphin Telecom, Sr. Disc. Notes, 14.00%
(0% until 2004), 5/15/09(1) 5,225 2,168,375
Exodus Communications, Inc., Sr. Notes,
11.25%, 7/1/08(1) 1,780 1,820,050
Exodus Communications, Inc., Sr. Notes,
11.25%, 7/1/08 2,530 2,586,925
IPC Information Systems, Sr. Disc.
Notes, 10.875% (0% until 2001), 5/1/08 1,750 1,323,437
PSINet, Inc., 11.00%, 8/1/09(1) EUR 1,000 1,033,438
PSINet, Inc., Sr. Notes,
11.00%, 8/1/09(1) 5,175 5,136,187
PSINet, Inc., Sr. Notes,
11.50%, 11/1/08 1,025 1,037,812
Verio, Inc., Sr. Notes, 11.25%, 12/1/08 3,600 3,699,000
Verio, Inc., Sr. Notes, 13.50%, 6/15/04 800 866,000
- -----------------------------------------------------------------------------
$ 21,367,974
- -----------------------------------------------------------------------------
Lodging and Gaming -- 5.3%
- -----------------------------------------------------------------------------
Coast Hotels & Casino, Inc.,
9.50%, 4/1/09 $ 925 $ 874,125
HMH Properties, 7.875%, 8/1/08(1) 2,412 2,164,770
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Lodging and Gaming (continued)
- -----------------------------------------------------------------------------
Hollywood Casino Corp., 11.25%, 5/1/07 $ 2,150 $ 2,171,500
Hollywood Casino Corp., First Mortgage
Bonds, 13.00%, 8/1/06(1) 2,850 2,949,750
Hollywood Park, Inc., Sr. Sub. Notes,
9.50%, 8/1/07 3,515 3,444,700
Majestic Star Casino LLC,
10.875%, 7/1/06(1) 1,750 1,723,750
Sun International Hotels, Sr. Sub.
Notes, 9.00%, 3/15/07 750 701,250
Waterford Gaming LLC, Sr. Notes,
9.50%, 3/15/10(1) 3,479 3,392,025
- -----------------------------------------------------------------------------
$ 17,421,870
- -----------------------------------------------------------------------------
Manufacturing -- 1.5%
- -----------------------------------------------------------------------------
Blount, Inc., 13.00%, 8/1/09(1) $ 1,000 $ 1,036,250
Cherokee International, Sr. Sub Notes,
10.50%, 5/1/09(1) 1,625 1,503,125
High Voltage Engineering, Sr. Notes,
10.50%, 8/15/04 600 549,000
Roller Bearing Holdings Co., Sr. Disc.
Notes, 13.00% (0% until 2002),
6/15/09(1) 3,467 1,785,505
- -----------------------------------------------------------------------------
$ 4,873,880
- -----------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 1.4%
- -----------------------------------------------------------------------------
Grant Geophysical, Inc., Sr. Notes,
9.75%, 2/15/08 $ 1,000 $ 575,000
Key Energy Services, 14.00%, 1/15/09 1,000 1,070,000
R&B Falcon Corp., 9.50%, 12/15/08 860 827,750
RBF Finance Co., 11.375%, 3/15/09 800 848,000
Universal Compression, Inc., Sr. Disc.
Notes, 9.875% (0% until 2003), 2/15/08 2,350 1,410,000
- -----------------------------------------------------------------------------
$ 4,730,750
- -----------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 2.3%
- -----------------------------------------------------------------------------
Chesapeake Energy Corp., 9.125%, 4/15/06 $ 1,100 $ 1,020,250
Chesapeake Energy Corp., Sr. Notes,
7.875%, 3/15/04 330 293,700
Chesapeake Energy Corp., Sr. Notes,
8.50%, 3/15/12 2,120 1,727,800
Comstock Resources, Inc., Sr. Notes,
11.25%, 5/1/07(1) 1,350 1,393,875
Energy Corp. of America, Sr. Sub. Notes,
9.50%, 5/15/07 390 351,488
Gothic Production Corp.,
11.125%, 5/1/05 1,200 1,038,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Oil and Gas - Exploration and Production (continued)
- -----------------------------------------------------------------------------
Gulf Canada Resources, Ltd., Sr. Notes,
8.375%, 11/15/05 $ 550 $ 540,947
Plains Resources, Inc., Sr. Sub. Notes,
10.25%, 3/15/06(1) 1,250 1,268,750
- -----------------------------------------------------------------------------
$ 7,634,810
- -----------------------------------------------------------------------------
Oil and Gas - Refining -- 0.2%
- -----------------------------------------------------------------------------
Western Natural Gas, Sr. Sub. Notes,
10.00%, 6/15/09(1) $ 750 $ 770,625
- -----------------------------------------------------------------------------
$ 770,625
- -----------------------------------------------------------------------------
Paper and Forest Products -- 1.4%
- -----------------------------------------------------------------------------
Asia Pulp and Paper, Debs,
12.00%, 12/29/49 $ 1,500 $ 870,000
Indah Kiat Finance Mauritius, Sr. Unsec.
Notes, 10.00%, 7/1/07 850 476,000
Kappa Beheer BV, 12.50%
(0% until 2004), 7/15/09(1) EUR 2,500 1,478,243
Pacifica Papers, Inc., 10.00%, 3/15/09 500 510,000
Pindo Deli Finance Mauritius, Ltd.,
Guaranteed Sr. Notes, 10.75%, 10/1/07 600 325,500
Repap New Brunswick, Inc., Sr. Notes,
9.00%, 6/1/04 600 579,000
Tjiwi Kimia Finance Mauritus, Ltd.,
Guaranteed Sr. Sub. Notes,
10.00%, 8/1/04 700 386,750
- -----------------------------------------------------------------------------
$ 4,625,493
- -----------------------------------------------------------------------------
Printing and Business Products -- 1.2%
- -----------------------------------------------------------------------------
MDC Communications Corp., Sr. Sub.
Notes, 10.50%, 12/1/06 $ 3,900 $ 3,861,000
- -----------------------------------------------------------------------------
$ 3,861,000
- -----------------------------------------------------------------------------
Publishing -- 0.5%
- -----------------------------------------------------------------------------
American Lawyer Media Corp., Sr. Disc.
Notes, 12.25% (0% to 2002), 12/15/08 $ 730 $ 465,375
Von Hoffman Press, Inc., Sr. Sub. Notes,
10.875%, 5/15/07(1) 1,275 1,255,875
- -----------------------------------------------------------------------------
$ 1,721,250
- -----------------------------------------------------------------------------
Restaurants -- 0.3%
- -----------------------------------------------------------------------------
Sbarro, Inc., Sr. Notes,
11.00%, 9/15/09(1) $ 1,000 $ 987,180
- -----------------------------------------------------------------------------
$ 987,180
- -----------------------------------------------------------------------------
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Retail - Food and Drug -- 2.1%
- -----------------------------------------------------------------------------
AFC Enterprises, Inc., Sr. Sub Notes,
10.25%, 5/15/07 $ 2,400 $ 2,355,000
Pantry, Inc., Sr. Sub. Notes,
10.25%, 10/15/07 3,020 3,027,550
Star Markets Co., Sr. Sub. Notes,
13.00%, 11/1/04 1,550 1,666,250
- -----------------------------------------------------------------------------
$ 7,048,800
- -----------------------------------------------------------------------------
Retail - General -- 1.7%
- -----------------------------------------------------------------------------
Advance Holding Corp., Sr. Debs.,
12.875% (0% until 2003), 4/15/09 $ 1,000 $ 550,000
Advance Stores Co., Inc., Sr. Sub.
Notes, 10.25%, 4/15/08 1,600 1,496,000
Ames Department Stores, Sr. Notes,
10.00%, 4/15/06 775 757,563
Kindercare Learning Ctrs., Inc., Sr.
Sub. Notes, 9.50%, 2/15/09 1,900 1,790,750
SpinCycle, Inc., Sr. Disc. Notes, 12.75%
(0% until 2001), 5/1/05 850 133,875
Tuesday Morning Corp., Sr. Sub. Notes,
11.00%, 12/15/07 1,015 1,040,375
- -----------------------------------------------------------------------------
$ 5,768,563
- -----------------------------------------------------------------------------
Semiconductors -- 1.9%
- -----------------------------------------------------------------------------
Chippac International Ltd., Inc.,
12.75%, 8/1/09(1) $ 2,115 $ 2,125,575
Intersil Corp., 13.25%, 8/15/09(1) 1,250 1,303,125
SCG Holding Corp., Sr. Sub. Notes,
12.00%, 8/1/09(1) 2,750 2,835,938
- -----------------------------------------------------------------------------
$ 6,264,638
- -----------------------------------------------------------------------------
Transportation -- 1.3%
- -----------------------------------------------------------------------------
Budget Group, Inc., Sr. Notes,
9.125%, 4/1/06 $ 1,940 $ 1,716,900
MTL, Inc., 10.498%, 6/15/06 400 354,000
Pacer International, Inc., Sr. Sub.
Notes, 11.75%, 6/1/07(1) 1,886 1,876,570
Worldwide Flight Service,
12.25%, 8/15/07(1) 250 248,750
- -----------------------------------------------------------------------------
$ 4,196,220
- -----------------------------------------------------------------------------
Wireless Communication Services -- 5.0%
- -----------------------------------------------------------------------------
Airgate PCS, Inc., 13.50%
(0% until 2004), 10/1/09 $ 2,000 $ 1,085,000
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Wireless Communication Services (continued)
- -----------------------------------------------------------------------------
Clearnet Communications, Sr. Disc.
Notes, 14.75% (0% until 2000), 12/15/05 $ 1,775 $ 1,668,500
Dobson Communications Corp., Sr. Notes,
11.75%, 4/15/07 500 530,000
Dobson/Sygnet Communications, Inc., Sr.
Notes, 12.25%, 12/15/08 1,175 1,233,750
Loral Space and Commerce, Sr. Notes,
9.50%, 1/15/06 720 617,400
Nextel Communications, Inc., Sr. Disc.
Notes, 9.75% (0% until 1999), 8/15/04 490 494,900
Nextel Communications, Inc., Sr. Disc.
Notes, 10.65% (0% until 2002), 9/15/07 2,790 2,068,088
Nextel Communications, Sr. Disc. Notes,
14.00% (0% until 2004), 2/1/09 1,250 737,500
Nextel International, Inc., Sr. Disc.
Notes, 12.125% (0% until 2003), 4/15/08 3,750 1,903,125
Tritel PCS, Inc., Sr. Disc. Notes,
12.75% (0% until 2004), 5/15/09(1) 1,130 644,100
Williams Communications Corp.,
10.875%, 10/1/09 3,900 3,870,711
Winstar Communications, Inc., Sr. Disc.
Notes, 14.00% (0% until 2000), 10/15/05 2,000 1,690,000
- -----------------------------------------------------------------------------
$ 16,543,074
- -----------------------------------------------------------------------------
Wireline Communication Services -
International -- 8.9%
- -----------------------------------------------------------------------------
Alestra SA, Sr. Notes,
12.125%, 5/15/06(1) $ 1,250 $ 1,203,125
Carrier1, Sr. Notes, 13.25%, 2/15/09 3,500 3,570,000
Completel Europe NV, Sr. Disc. Notes,
14.00% (0% until 2004), 2/15/09(1) 1,960 1,033,900
Energis PLC, 9.50%, 6/15/09(1) GBP 800 1,291,013
Esat Telecom Group PLC, Sr. Deferred
Coupon Notes, 12.50% (0% until 2002),
2/1/07 1,985 1,439,125
Esprit Telecom Group PLC, Sr. Notes,
11.50%, 12/15/07 3,150 3,244,500
Esprit Telecom Group PLC, Sr. Notes,
11.50%, 12/15/07 DEM 2,500 1,423,108
Facilicom International, Sr. Notes,
10.50%, 1/15/08 1,160 986,000
Jazztel PLC, with warrants,
14.00%, 4/1/09 EUR 2,000 2,493,142
Primus Telecom Group, Sr. Notes,
11.25%, 1/15/09 750 716,250
Primus Telecom Group, Sr. Notes,
11.75%, 8/1/04 1,150 1,127,000
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Wireline Communication Services -
International (continued)
- -----------------------------------------------------------------------------
RSL Communications PLC., Guaranteed Sr.
Notes, 10.50%, 11/15/08 $ 500 $ 457,500
RSL Communications, Ltd., Sr. Notes,
12.25%, 11/15/06 1,015 1,009,925
Tele1 Europe BV, Sr. Notes,
13.00%, 5/15/09(1) 600 591,000
Versatel Telecom B.V., Sr. Notes,
13.25%, 5/15/08 3,500 3,561,250
Versatel Telecom, Sr. Notes,
11.875%, 7/15/09 1,255 1,189,369
Versatel Telecom, Sr. Notes,
11.875%, 7/15/09 EUR 2,800 2,804,133
Viatel, Inc., Sr. Disc. Notes, 12.50%
(0% until 2003), 4/15/08 1,760 976,800
Viatel, Inc., Sr. Notes,
11.25%, 4/15/08 520 483,600
- -----------------------------------------------------------------------------
$ 29,600,740
- -----------------------------------------------------------------------------
Wireline Communication Services -
North America -- 4.5%
- -----------------------------------------------------------------------------
Allegiance Telecom, Inc., Sr. Notes,
12.875%, 5/15/08 $ 2,345 $ 2,556,050
Focal Communications Corp., Sr. Disc.
Notes, 12.125% (0% until 2003), 2/15/08 3,300 1,872,750
GST Telecommunications, Sr. Sub. Notes,
12.75%, 11/15/07 800 804,000
Hyperion Telecommunication, Inc., Sr.
Sub. Notes, 12.00%, 11/1/07 1,000 1,010,000
Level 3 Communications, Inc., Sr. Disc.
Notes, 10.50% (0% until 2003), 12/1/08 1,550 877,688
MGC Communications, Inc., Sr. Notes,
13.00%, 10/1/04 1,380 1,221,300
Nextlink Communications, Inc., Sr.
Notes, 12.50%, 4/15/06 1,680 1,785,000
Worldwide Fiber, Inc., Sr. Notes,
12.00%, 8/1/09(1) 3,250 3,201,250
Worldwide Fiber, Inc., Sr. Notes,
12.50%, 12/15/05 1,700 1,729,750
- -----------------------------------------------------------------------------
$ 15,057,788
- -----------------------------------------------------------------------------
Total Corporate Bonds & Notes
(identified cost $290,991,105) $278,068,160
- -----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<S> <C> <C> <C>
COMMON STOCKS, WARRANTS AND RIGHTS -- 0.8%
SECURITY SHARES VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Broadcasting and Cable -- 0.0%
- -----------------------------------------------------------------------------
Pegasus Communications Corp.,
Warrants(2),(3) 1,410 $ 74,011
UIH Australia/Pacific, Inc.,
Warrants(2),(3) 900 9
- -----------------------------------------------------------------------------
$ 74,020
- -----------------------------------------------------------------------------
Business Services - Rental & Leasing -- 0.0%
- -----------------------------------------------------------------------------
Unisite, Inc., Warrants(2),(3) 750 $ 0
- -----------------------------------------------------------------------------
$ 0
- -----------------------------------------------------------------------------
Chemicals -- 0.0%
- -----------------------------------------------------------------------------
Sterling Chemicals Holdings, Inc.,
Common(3) 2,400 $ 7,800
- -----------------------------------------------------------------------------
$ 7,800
- -----------------------------------------------------------------------------
Consumer Products -- 0.0%
- -----------------------------------------------------------------------------
HF Holdings, Inc., Warrants(2),(3) 3,400 $ 0
- -----------------------------------------------------------------------------
$ 0
- -----------------------------------------------------------------------------
Electronic Equipment -- 0.0%
- -----------------------------------------------------------------------------
Jordan Telecom Products, Inc.,
Common(2),(3) 700 $ 0
- -----------------------------------------------------------------------------
$ 0
- -----------------------------------------------------------------------------
Foods -- 0.0%
- -----------------------------------------------------------------------------
Specialty Foods Acquisition Corp.,
Common(2),(3) 12,000 $ 120
- -----------------------------------------------------------------------------
$ 120
- -----------------------------------------------------------------------------
Information Technology Services -- 0.1%
- -----------------------------------------------------------------------------
Cellnet Data Systems, Inc., Warrants,
Exp. 10/1/07(1),(3) 2,000 $ 20
Diva Systems Corp., Warrants(2),(3) 6,750 0
Verio, Inc., Common(3) 3,534 109,885
- -----------------------------------------------------------------------------
$ 109,905
- -----------------------------------------------------------------------------
Lodging and Gaming -- 0.0%
- -----------------------------------------------------------------------------
Peninsula Gaming LLC, Warrants(2),(3) 6,338 $ 38,027
- -----------------------------------------------------------------------------
$ 38,027
- -----------------------------------------------------------------------------
SECURITY SHARES VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Machinery -- 0.0%
- -----------------------------------------------------------------------------
MMH Holdings, Inc., Common(3) 5 $ 0
- -----------------------------------------------------------------------------
$ 0
- -----------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 0.3%
- -----------------------------------------------------------------------------
Key Energy Services, Inc.,
Warrants(2),(3) 1,000 $ 15,000
R&B Falcon Corp., Warrants(1),(3) 1,600 400,000
Weatherford International, Inc., Common 20,659 661,088
- -----------------------------------------------------------------------------
$ 1,076,088
- -----------------------------------------------------------------------------
Retail - General -- 0.0%
- -----------------------------------------------------------------------------
Spin Cycle, Inc., Warrants(2),(3) 850 $ 0
- -----------------------------------------------------------------------------
$ 0
- -----------------------------------------------------------------------------
Wireline Communication Services -
International -- 0.2%
- -----------------------------------------------------------------------------
Carrier1, Warrants(2),(3) 3,500 $ 35
Esat Holdings, Ltd., Common 4,138 74,018
Primus Telecom Group, Warrants,
Exp. 8/1/04(2),(3) 1,150 29,261
Tele1 Europe BV, Warrants(2),(3) 600 42,000
Versatel Telecom B.V., Warrants(2),(3) 3,500 399,541
- -----------------------------------------------------------------------------
$ 544,855
- -----------------------------------------------------------------------------
Wireline Communication Services -
North America -- 0.2%
- -----------------------------------------------------------------------------
Allegiance Telecom, Inc., Common 4,089 $ 215,184
AT & T Canada, Inc., Common 771 48,428
Hyperion Telecommunications, Inc.,
Class A, Common(3) 6,060 149,985
Intermedia Communications, Inc.,
Common(3) 5,454 118,804
MGC Communications, Inc. Warrants,
Exp. 10/1/04(1),(3) 1,420 142,797
OpTel, Inc., Common(2),(3) 1,460 197
- -----------------------------------------------------------------------------
$ 675,395
- -----------------------------------------------------------------------------
Total Common Stocks, Warrants and Rights
(identified cost $1,544,479) $ 2,526,210
- -----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
PORTFOLIO OF INVESTMENTS CONT'D
<TABLE>
<S> <C> <C> <C>
PREFERRED STOCKS -- 7.5%
SECURITY SHARES VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Apparel -- 0.0%
- -----------------------------------------------------------------------------
Cluett American Corp., 12.50% (PIK) 37 $ 736
- -----------------------------------------------------------------------------
$ 736
- -----------------------------------------------------------------------------
Broadcasting and Cable -- 2.2%
- -----------------------------------------------------------------------------
Adelphia Communications Corp., 13% (PIK) 12,000 $ 1,308,000
CSC Holdings, Inc., Series M, 11.125%
(PIK) 31,131 3,346,583
Pegasus Communications Corp., 12.75%
(PIK) 2,487 2,462,130
- -----------------------------------------------------------------------------
$ 7,116,713
- -----------------------------------------------------------------------------
Business Services - Rental & Leasing -- 0.8%
- -----------------------------------------------------------------------------
Crown Castle International Corp. 2,195 $ 2,216,950
Unisite, Inc., 8.5%(2) 1,080 581,386
- -----------------------------------------------------------------------------
$ 2,798,336
- -----------------------------------------------------------------------------
Containers and Packaging -- 0.4%
- -----------------------------------------------------------------------------
Packaging Corp. of America, 12.375%
(PIK)(1) 13,000 $ 1,417,000
- -----------------------------------------------------------------------------
$ 1,417,000
- -----------------------------------------------------------------------------
Electronic Equipment -- 0.3%
- -----------------------------------------------------------------------------
Jordan Telecom Products, Inc., 13.25%
(PIK) 906 $ 906,000
- -----------------------------------------------------------------------------
$ 906,000
- -----------------------------------------------------------------------------
Machinery -- 0.0%
- -----------------------------------------------------------------------------
MMH Holdings, Inc., 12% (PIK) 431 $ 64,650
- -----------------------------------------------------------------------------
$ 64,650
- -----------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 0.5%
- -----------------------------------------------------------------------------
R&B Falcon Corp. 1,661 $ 1,577,950
- -----------------------------------------------------------------------------
$ 1,577,950
- -----------------------------------------------------------------------------
Wireless Communication Services -- 1.1%
- -----------------------------------------------------------------------------
Dobson Communications Corp., 12.25%
(PIK) 1,135 $ 1,021,500
Nextel Communications, Inc., 11.125%
(PIK) 1,414 1,357,440
Rural Cellular Corp., 11.375% (PIK) 1,148 1,170,960
- -----------------------------------------------------------------------------
$ 3,549,900
- -----------------------------------------------------------------------------
SECURITY SHARES VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Wireline Communication Services -
International -- 0.9%
- -----------------------------------------------------------------------------
Global Crossing Holding, Ltd., 10.5% 2,800 $ 2,954,000
- -----------------------------------------------------------------------------
$ 2,954,000
- -----------------------------------------------------------------------------
Wireline Communication Services -
North America -- 1.3%
- -----------------------------------------------------------------------------
E.spire Communications, Inc., 12.75%
(PIK) 1,251 $ 387,810
Intermedia Communications, Inc., 7%
(PIK)(1) 45,000 956,250
IXC Communications, Inc., Series B,
12.5% (PIK) 2,620 2,764,100
Nextlink Communications, Inc., 14% (PIK) 5,960 295,020
- -----------------------------------------------------------------------------
$ 4,403,180
- -----------------------------------------------------------------------------
Total Preferred Stocks
(identified cost $26,497,037) $ 24,788,465
- -----------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 9.3%
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C> <C>
- -----------------------------------------------------------------------------
Associates Corp., 5.55%, 10/1/99 $12,867 $ 12,867,000
General Electric Capital Co., 5.55%,
10/1/99 13,000 13,000,000
Prudential Funding Corp., 5.29%, 10/7/99 5,000 4,995,592
- -----------------------------------------------------------------------------
Total Short-Term Investments
(at amortized cost, $30,862,592) $ 30,862,592
- -----------------------------------------------------------------------------
Total Investments -- 101.5%
(identified cost $349,895,213) $336,245,427
- -----------------------------------------------------------------------------
Other Assets, Less Liabilities -- (1.5)% $ (4,882,523)
- -----------------------------------------------------------------------------
Net Assets -- 100.0% $331,362,904
- -----------------------------------------------------------------------------
</TABLE>
(PIK) - Payment in kind.
EUR - Euro Dollar
GBP - British Pound
DEM - Deutche Mark
(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.
(2) Restricted security.
(3) Non-income producing security.
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1999
<S> <C>
Assets
- ------------------------------------------------------
Investments, at value (identified cost,
$349,895,213) $336,245,427
Cash 4,411
Receivable for investments sold 2,199,039
Receivable for Fund shares sold 1,665,971
Interest receivable 6,932,301
- ------------------------------------------------------
TOTAL ASSETS $347,047,149
- ------------------------------------------------------
Liabilities
- ------------------------------------------------------
Payable for investments purchased $ 13,103,094
Dividends payable 1,429,823
Payable for open forward foreign
currency contracts 507,149
Payable for Fund shares redeemed 404,918
Payable to affiliate for Trustees' fees 979
Payable to affiliate for service fees 13,991
Accrued expenses 224,291
- ------------------------------------------------------
TOTAL LIABILITIES $ 15,684,245
- ------------------------------------------------------
NET ASSETS $331,362,904
- ------------------------------------------------------
Sources of Net Assets
- ------------------------------------------------------
Paid-in capital $351,501,808
Accumulated net realized loss (computed
on the basis of identified cost) (6,941,249)
Accumulated undistributed net investment
income 960,248
Net unrealized depreciation (computed on
the basis of identified cost) (14,157,903)
- ------------------------------------------------------
TOTAL $331,362,904
- ------------------------------------------------------
Class A Shares
- ------------------------------------------------------
NET ASSETS $331,129,898
SHARES OUTSTANDING 40,581,913
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 8.16
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 95.25 of $8.16) $ 8.57
- ------------------------------------------------------
Class I Shares
- ------------------------------------------------------
NET ASSETS $ 233,006
SHARES OUTSTANDING 24,002
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 9.71
- ------------------------------------------------------
</TABLE>
On sales of $25,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED
SEPTEMBER 30, 1999
<S> <C>
Investment Income
- -----------------------------------------------------
Interest $27,251,412
Dividends 2,555,106
Other 531,899
- -----------------------------------------------------
TOTAL INVESTMENT INCOME $30,338,417
- -----------------------------------------------------
Expenses
- -----------------------------------------------------
Investment adviser fee $ 1,718,739
Trustees fees and expenses 25,082
Service fees
Class A 414,137
Transfer and dividend disbursing agent
fees 292,254
Registration fees 45,173
Legal and accounting services 37,558
Printing and postage 30,227
Custodian fee 195,891
Miscellaneous 25,140
- -----------------------------------------------------
TOTAL EXPENSES $ 2,784,201
- -----------------------------------------------------
NET INVESTMENT INCOME $27,554,216
- -----------------------------------------------------
Realized and Unrealized Gain (Loss)
- -----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ (193,314)
Foreign currency and forward foreign
currency exchange contract
transactions 605,898
- -----------------------------------------------------
NET REALIZED GAIN $ 412,584
- -----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 1,238,849
Foreign currency and forward foreign
currency exchange contracts (509,439)
- -----------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION
(DEPRECIATION) $ 729,410
- -----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 1,141,994
- -----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $28,696,210
- -----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
Increase (Decrease) in YEAR ENDED YEAR ENDED
NET ASSETS SEPTEMBER 30, 1999 SEPTEMBER 30, 1998
<S> <C> <C>
- --------------------------------------------------------------------------------
From operations --
Net investment income $ 27,554,216 $ 20,983,148
Net realized gain 412,584 7,819,473
Net change in unrealized appreciation
(depreciation) 729,410 (28,049,375)
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 28,696,210 $ 753,246
- --------------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (26,817,740) $ (20,370,292)
Class I (3,186) --
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (26,820,926) $ (20,370,292)
- --------------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $ 171,390,929 $ 98,227,680
Class I 243,469 --
Net asset value of shares issued to
shareholders in payment
ofdistributions declared
Class A 12,868,702 9,645,120
Class I 1,187 --
Cost of shares redeemed
Class A (79,969,507) (70,817,921)
Class I (6,997) --
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS $ 104,527,783 $ 37,054,879
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 106,403,067 $ 17,437,833
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of year $ 224,959,837 $ 207,522,004
- --------------------------------------------------------------------------------
AT END OF YEAR $ 331,362,904 $ 224,959,837
- --------------------------------------------------------------------------------
Accumulated undistributed
(distributions in excess of)
net investment income included
in net assets
- --------------------------------------------------------------------------------
AT END OF YEAR $ 960,248 $ (398,049)
- --------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
------------------------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
Net asset value -- Beginning
of year $8.030 $8.700 $8.120 $7.920 $ 7.900
- --------------------------------------------------------------------------------
Income (loss) from operations
- --------------------------------------------------------------------------------
Net investment income $0.830 $0.810 $0.790 $0.800 $ 0.820
Net realized and unrealized
gain (loss) 0.110 (0.700) 0.570 0.210 0.020
- --------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $0.940 $0.110 $1.360 $1.010 $ 0.840
- --------------------------------------------------------------------------------
Less distributions
- --------------------------------------------------------------------------------
From net investment income $(0.810 ) $(0.780 ) $(0.770 ) $(0.800 ) $ (0.820)
In excess of net investment
income -- -- (0.010) (0.010) --
- --------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.810 ) $(0.780 ) $(0.780 ) $(0.810 ) $ (0.820)
- --------------------------------------------------------------------------------
NET ASSET VALUE -- END OF
PERIOD $8.160 $8.030 $8.700 $8.120 $ 7.920
- --------------------------------------------------------------------------------
TOTAL RETURN(1) 11.97% 0.98% 17.68% 13.41% 11.25%
- --------------------------------------------------------------------------------
Ratios/Supplemental Data
- --------------------------------------------------------------------------------
Net assets, end of year (000's
omitted) $331,130 $224,960 $207,522 $143,844 $106,414
Ratios (As a percentage of
average daily net assets):
Expenses 1.01% 1.04% 1.05% 1.07% 1.09%
Net investment income 9.97% 9.22% 9.32% 9.96% 10.50%
Portfolio Turnover 132% 141% 105% 81% 84%
- --------------------------------------------------------------------------------
</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.
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS I
-------------------------
PERIOD ENDED
SEPTEMBER 30, 1999(1)
<S> <C>
- ---------------------------------------------------------
Net asset value -- Beginning
of year $ 10.000
- ---------------------------------------------------------
Income (loss) from operations
- ---------------------------------------------------------
Net investment income $ 0.250
Net realized and unrealized
loss (0.290)(2)
- ---------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ (0.040)
- ---------------------------------------------------------
Less distributions
- ---------------------------------------------------------
From net investment income $ (0.250)
- ---------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.250)
- ---------------------------------------------------------
NET ASSET VALUE -- END OF
PERIOD $ 9.710
- ---------------------------------------------------------
TOTAL RETURN(3) (0.44)%
- ---------------------------------------------------------
Ratios/Supplemental Data
- ---------------------------------------------------------
Net assets, end of year (000's
omitted) $ 233
Ratios (As a percentage of
average daily net assets):
Expenses 0.89%(4)
Net investment income 10.12%(4)
Portfolio Turnover 132%
- ---------------------------------------------------------
</TABLE>
(1) For the period from the commencement of offering of Class I shares, July 1,
1999, to September 30, 1999.
(2) The per share amount is not in accord with the net realized and unrealized
gain (loss) on investments for the period because of the timing of sales of
Fund Shares and the amount of the per share realized and unrealized gains
and losses at such time.
(3) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return is
not computed on an annualized basis.
(4) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
16
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
- -------------------------------------------
Eaton Vance Income Fund of Boston (the Trust), a Massachusetts business
trust, is registered under the Investment Company Act of 1940, as amended, as
a diversified, open-end, management investment company. The Fund offers two
classes of shares: Class A shares and, effective July 1, 1999, Class I
shares. Class A shares are generally sold subject to a sales charge imposed
at the time of purchase; Class I shares are sold at net asset value. Each
class represents a pro rata interest in the Fund, but votes separately on
class-specific matters and (as noted below) is subject to different expenses.
Realized and unrealized gains and losses are allocated daily to each class of
shares based on the relative net assets of each class to the total net assets
of the Fund. Net investment income, other than class specific expenses, is
allocated daily to each class of shares based upon the ratio of the value of
each class' paid shares to the total value of all paid shares. Each class of
shares differs in its distribution plan and certain other class specific
expenses. The 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, 1999, the Trust, for federal income
tax purposes, had a capital loss carryover of $4,490,056 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 ($2,042,401), 2003 ($1,177) and 2004 ($2,446,478). At
September 30, 1999 net capital losses of $2,038,773 attributable to security
transactions incurred after October 31, 1998, are treated as arising on the
first day of the Trust's next taxable year.
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 Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
to the Trust. Pursuant to the respective custodian agreements, IBT receives a
fee reduced by credits which are determined based on the average daily cash
balances the Trust maintains with IBT. All significant credit balances used
to reduce the Trust's custodian fees are reported as a reduction of expenses
on the Statement of Operations. For the year ended September 30, 1999, $3,926
credit balances were used to reduce the Trust's custodian fee.
F Other -- Investment transactions are accounted for on the date the
investments are purchased or sold. Gains and losses on securities sold are
determined on the basis of identified cost.
G 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 changes in foreign currency exchange
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 results from fluctuations in foreign currency exchange rates
is not separately disclosed.
17
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
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.
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 Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED SEPTEMBER 30,
------------------------
CLASS A 1999 1998
<S> <C> <C>
------------------------------------------------------------------
Sales 20,633,005 11,188,933
Issued to shareholders electing to
receive payment of distributions in
Trust shares 1,551,930 1,110,097
Redemptions (9,633,789) (8,116,055)
------------------------------------------------------------------
NET INCREASE 12,551,146 4,182,975
------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
PERIOD ENDED
CLASS I SEPTEMBER 30, 1999(1)
<S> <C>
---------------------------------------------------------------
Sales 24,598
Issued to shareholders electing to
receive
payment of distributions in Trust shares 122
Redemptions (718)
---------------------------------------------------------------
NET INCREASE 24,002
---------------------------------------------------------------
</TABLE>
(1) For the period from the commencement of offering of Class I
shares, July 1, 1999 to September 30, 1999.
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 daily 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. The Fund
was informed that Eaton Vance Distributors, Inc. (EVD), a subsidiary of EVM
and the Trust's principal underwriter, received approximately $200,000 of the
sales charge on sales of Class A shares during the year ended September 30,
1999. Certain officers and Trustees of the Trust are officers of the above
organizations.
5 Service Plan
- -------------------------------------------
The Trustees on behalf of Class A of the Trust have adopted a Service Plan
(the Plan). The Service Plan provides that the Class A shares may make
service fee payments to EVD, investment dealers or other persons in amounts
not exceeding 0.25% of the Class A share'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 EVD and investment
dealers 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
Class A 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 $414,137 for Class A shares under the
Plan to EVD and investment dealers during the year ended September 30, 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 Trust
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.
18
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
NOTES TO FINANCIAL STATEMENTS CONT'D
A summary of obligations under these financial instruments at September 30,
1999 is as follows:
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
<TABLE>
<CAPTION>
SALES
----------------------------------------------------------------------------------------
SETTLEMENT IN EXCHANGE FOR NET UNREALIZED
DATE DELIVER (IN U.S. DOLLARS) DEPRECIATION
<C> <S> <C> <C>
----------------------------------------------------------------------------------------
11/19/99 British Pound Sterling
5,086,447 8,150,522 (225,838)
11/19/99- European Currency Unit
11/22/99 14,687,548 15,432,367 (281,311)
----------------------------------------------------------------------------------------
$ 23,582,889 $ (507,149)
----------------------------------------------------------------------------------------
</TABLE>
7 Line of Credit
- -------------------------------------------
The Trust participates with other funds and portfolios managed by Boston
Management Research (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 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 year ended
September 30, 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 $422,164,718 and $344,587,848, respectively, for the
year ended September 30, 1999.
9 Federal Income Tax Basis of Investments
- -------------------------------------------
The cost and unrealized appreciation/depreciation in value of the investment
securities at September 30, 1999, as computed on a federal income tax basis,
were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $350,307,634
------------------------------------------------------
Gross unrealized appreciation $ 5,146,826
Gross unrealized depreciation (19,209,033)
------------------------------------------------------
NET UNREALIZED DEPRECIATION $(14,062,207)
------------------------------------------------------
</TABLE>
10 Restricted Securities
- -------------------------------------------
At September 30, 1999, the Trust owned the following securities (representing
0.36% of net assets) which were restricted as to public resale and not
registered under the Securities Act of 1933. 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 FAIR
DESCRIPTION ACQUISITION SHARES/FACE COST VALUE
<S> <C> <C> <C> <C>
--------------------------------------------------------------------------------------
COMMON STOCKS, WARRANTS AND RIGHTS
--------------------------------------------------------------------------------------
Carrier1, Warrants 9/09/99 3,500 $ 0 $ 35
Diva Systems Corp., Warrants 12/30/98- 6,750 22 0
9/24/99
HF Holdings, Inc., Warrants 9/27/99 3,400 182,579 0
Jordan Telecom Products, Inc., Common 1/30/98 700 0 0
Key Energy Services, Inc., Warrants 7/14/99 1,000 15,000 15,000
OpTel, Inc., Common 10/21/97- 1,460 10 197
10/22/97
Pegasus Communications Corp., Warrants 12/02/98 1,410 26,370 74,011
Peninsula Gaming LLC, Warrants 8/19/99 6,338 0 38,027
Primus Telecom Group, Warrants, Exp.
8/1/04 10/31/97 1,150 0 29,261
Specialty Foods Acquisition Corp.,
Common 8/10/93 12,000 8,722 120
SpinCycle, Inc., Warrants 4/24/98 850 0 0
Tele1 Europe BV, Warrants 9/23/99 600 0 42,000
UIH Australia/Pacific, Inc., Warrants 3/05/98 900 0 9
Unisite, Inc., Warrants 12/09/97 750 0 0
Versatel Telecom B.V., Warrants 8/11/98- 3,500 0 399,541
1/29/99
--------------------------------------------------------------------------------------
$232,703 $598,192
--------------------------------------------------------------------------------------
PREFERRED STOCKS
--------------------------------------------------------------------------------------
Unisite, Inc., 8.5% 12/19/97 1,080 499,949 581,386
--------------------------------------------------------------------------------------
$499,949 $581,386
--------------------------------------------------------------------------------------
</TABLE>
19
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 1999
INDEPENDENT ACCOUNTANTS' REPORT
TO THE TRUSTEES AND SHAREHOLDERS
OF EATON VANCE INCOME FUND OF BOSTON:
- ---------------------------------------------
In our opinion, the accompanying statement of assets and liabilities, including
the portfolio of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of the Eaton Vance Income Fund of
Boston (the "Fund") at September 30, 1999 and the results of its operations, the
changes in its net assets and the financial highlights for the periods
indicated, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
September 30, 1999 by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
PricewaterhouseCoopers LLP
Boston, Massachusetts
November 8, 1999
20
<PAGE>
EATON VANCE INCOME FUND OF BOSTON AS OF SEPTEMBER 30, 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
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
Norton H. Reamer
Chairman and Chief Executive Officer,
United Asset Management Corporation
21
<PAGE>
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<PAGE>
THIS PAGE INTENTIONALLY LEFT BLANK
<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) 482-8360
Custodian
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
Transfer Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
Independent Accountants
PricewaterhouseCoopers LLP
160 Federal Street
Boston, MA 02110
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.
- --------------------------------------------------------------------------------
4-2681-9/99 IBSRC-9/99
