<PAGE>
EATON VANCE MUNICIPALS TRUST
For the Marathon & Classic High Income Fund Semi-Annual Report
[LOGO]
September 30, 1997
Investment Adviser of
High Income Portfolio
Boston Management and Research
24 Federal Street
Boston, MA 02110
Administrator of
EV Classic & Marathon
High Income Fund
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
Custodian
Investors Bank & Trust Company
200 Clarendon Street, 16th Floor
Boston, MA 02116
Transfer and Dividend Disbursing Agent
First Data Investor Services Group
Attn: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
<PAGE>
High Income Portfolio as of September 30, 1997
- -------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS (Unaudited)
- -------------------------------------------------------------------------------
(Expressed in United States Dollars)
<TABLE>
<CAPTION>
Corporate Bonds & Notes -- 92.5%
Principal
Amount
Security (000 omitted) Value
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Advertising -- 0.7%
- -----------------------------------------------------------------------------------------------
Outdoor Systems, Inc., Sr. Sub Notes, 8.875%, 6/15/07 $ 5,600 $ 5,712,000
- -----------------------------------------------------------------------------------------------
$ 5,712,000
- -----------------------------------------------------------------------------------------------
Apparel -- 2.4%
- -----------------------------------------------------------------------------------------------
Dan River Inc., Sr. Sub. Notes, 10.125%, 12/15/03 $ 5,800 $ 6,220,500
Glenoit Corp., Sr. Sub. Notes, 11.00%, 4/15/07(1) 4,800 5,148,000
Polysindo International Finance, Inc., Guaranteed Notes,
9.375%, 7/30/07 1,200 1,179,000
William Carter Co., Sr. Sub. Notes, 10.375%, 12/1/06 6,275 6,557,375
- -----------------------------------------------------------------------------------------------
$ 19,104,875
- -----------------------------------------------------------------------------------------------
Auto and Parts -- 1.2%
- -----------------------------------------------------------------------------------------------
Key Plastics, Inc., Sr. Notes, 14.00%, 11/15/99 $ 5,500 $ 6,105,000
Terex Corp., Sr. Sub. Notes, 13.25%, 5/15/02 3,333 3,816,285
- -----------------------------------------------------------------------------------------------
$ 9,921,285
- -----------------------------------------------------------------------------------------------
Banks-Regional -- 1.2%
- -----------------------------------------------------------------------------------------------
First Nationwide Holdings, Inc., Sr. Sub Notes, 10.625%, 10/1/03 $ 7,200 $ 7,920,000
First Nationwide, Inc., Sr. Notes, 12.50%, 4/15/03 1,600 1,800,000
- -----------------------------------------------------------------------------------------------
$ 9,720,000
- -----------------------------------------------------------------------------------------------
Banks and Money Services -- 0.7%
- -----------------------------------------------------------------------------------------------
Intertek Finance PLC, Sr. Sub. Notes, 10.25%, 11/1/06 $ 5,600 $ 5,880,000
- -----------------------------------------------------------------------------------------------
$ 5,880,000
- -----------------------------------------------------------------------------------------------
Broadcasting and Cable -- 8.0%
- -----------------------------------------------------------------------------------------------
Adelphia Communications Corp., Sr. Notes, 10.50%, 7/15/04(1) $ 2,640 $ 2,798,400
Adelphia Communications Corp., Sr. Notes, 9.875%, 3/1/07 4,480 4,625,600
Austrailis Holdings, Sr. Sec. Disc. Notes, 15.00% (0% until
2000), 11/1/02 2,000 1,600,000
Cablevision Systems Corp., Sr. Sub. Notes, 9.25%, 11/1/05 3,400 3,553,000
Diamond Cable Communications Co., Sr. Disc. Notes, 13.25% (0%
until 1999),9/30/04 1,600 1,400,000
Diamond Cable Communications Co., Sr. Disc. Notes, 11.75% (0%
until 2000),12/15/05 1,400 1,048,250
Digital Television Services, Inc., Sr. Sub. Notes,
12.50%, 8/1/07(1) 5,760 6,033,600
International Cabletel, Inc., Sr. Disc. Notes, 11.50%
(0% until 2001), 2/1/06 1,400 1,046,500
Marcus Cable Operating Co., Sr. Debs., 11.875%, 10/1/05 2,800 3,062,500
Marcus Cable Operating Co., Sr. Disc. Notes, 13.50%
(0% until 1999),8/1/04 800 721,000
Marcus Cable Operating Co., Sr. Disc. Notes, 14.25%
(0% until 2000),12/15/05 8,500 7,055,000
NTL, Inc., Sr. Notes, 10.00%, 2/15/07 4,400 4,598,000
Sullivan Broadcasting Co., Inc., Sr. Sub. Notes, 10.25%, 12/15/05 4,800 5,034,000
UIH Australia/Pacific, Inc., Sr. Disc. Notes,
14.00% (0% until 2007), 5/15/06(1) 1,600 1,148,000
UIH Australia/Pacific, Inc., Sr. Disc. Notes,
14.00% (0% until 2001), 5/15/06 2,000 1,435,000
United International-Series B, Sr. Sec. Disc. Notes,
0.00%, 11/15/99 800 654,000
United International Holdings Inc., Sr. Sec. Disc. Notes,
0.00%, 11/15/99 14,953 12,224,240
Videotron Holdings PLC, Inc., Sr. Disc. Notes, 11.00%
(0% until 1999), 8/15/05 3,200 2,760,000
Young Broadcasting Corp., Sr. Sub. Notes, 10.125%, 2/15/05 4,000 4,200,000
- -----------------------------------------------------------------------------------------------
$ 64,997,090
- -----------------------------------------------------------------------------------------------
Building Materials -- 1.6%
- -----------------------------------------------------------------------------------------------
Commemorative Brands, Inc., Sr. Sub. Notes, 11.00%, 1/15/07 $ 2,000 $ 2,077,500
Nortek, Inc., Sr. Notes, 9.125%, 9/1/07(1) 3,550 3,585,500
Overhead Door Corp., Sr. Notes, 12.25%, 2/1/00 3,450 3,583,688
Tarkett International, AG., Sr. Sub. Notes, 9.00%, 3/1/02 3,600 3,645,000
- -----------------------------------------------------------------------------------------------
$ 12,891,688
- -----------------------------------------------------------------------------------------------
Business Services -- 0.8%
- -----------------------------------------------------------------------------------------------
Kindercare Learning Ctrs., Inc., Sr. Sub. Notes, 9.50%, 2/15/09 $ 6,500 $ 6,353,750
- -----------------------------------------------------------------------------------------------
$ 6,353,750
- -----------------------------------------------------------------------------------------------
Business Services - Miscellaneous -- 1.7%
- -----------------------------------------------------------------------------------------------
Allied Waste Industries, Inc., Sr. Disc. Notes, 11.30% (0%
until 2002), 6/1/07(1) $ 6,550 $ 4,437,625
Allied Waste North America, Inc., Sr. Sub Notes, LOC,
10.25%, 12/1/06 8,200 8,979,000
- -----------------------------------------------------------------------------------------------
$ 13,416,625
- -----------------------------------------------------------------------------------------------
Chemicals -- 4.1%
- -----------------------------------------------------------------------------------------------
Huntsman Corp., Sr. Sub. Notes, 9.50%, 7/1/07(1) $ 6,950 $ 7,297,500
Key Plastics, Inc., Sr. Sub. Notes, 10.25%, 3/15/07 800 840,000
NL Industries, Inc., Sr. Notes, 11.75%, 10/15/03 5,040 5,531,400
Plastic Containers, Inc., Sr. Notes, 10.00%, 12/15/06 2,400 2,556,000
Plastic Specialties and Tech., Inc., Sr. Sec. Notes,
11.25%, 12/1/03 7,950 8,625,750
Sovereign Specialties, Sr. Sub. Notes, 9.50%, 8/1/07(1) 3,120 3,182,400
Sterling Chemical Holdings, Inc., Sr. Disc. Notes, 0.00%, 8/15/08 2,400 1,692,000
UCC Investors, Inc., Sr. Sub. Notes, 11.00%, 5/1/03 3,700 3,977,500
- -----------------------------------------------------------------------------------------------
$ 33,702,550
- -----------------------------------------------------------------------------------------------
Coal -- 0.2%
- -----------------------------------------------------------------------------------------------
Anker Coal Group, Inc., Sr. Sub Notes, 9.75%, 10/1/07 $ 1,440 $ 1,461,600
- -----------------------------------------------------------------------------------------------
$ 1,461,600
- -----------------------------------------------------------------------------------------------
Communications Equipment -- 3.6%
- -----------------------------------------------------------------------------------------------
Echostar Communications, Sr. Sub. Notes, 12.875%
(0% until 1999), 6/1/04 $ 2,200 $ 1,991,000
Hyperion Telecommunications, Inc., Sr. Disc. Notes,
13.00% (0% until 2001), 4/15/03 5,000 3,506,250
Hyperion Telecommunications, Inc., Sr. Sec. Notes,
12.25%, 9/1/04(1) 5,800 6,351,000
MGC Communications, Inc., Sr. Sec. Notes and Warrants,
13.00%, 10/1/04 5,200 5,408,000
Omnipoint Corp., Sr. Notes, 11.625%, 8/15/06 2,440 2,513,200
Pricellular Wireless Communications Corp., Sr. Notes,
10.75%, 11/1/04 2,400 2,592,000
Pricellular Wireless Communications Corp., Sr. Sub. Disc.
Notes, 12.25% (0% until 1998), 10/1/03 6,980 6,910,200
- -----------------------------------------------------------------------------------------------
$ 29,271,650
- -----------------------------------------------------------------------------------------------
Communications Services -- 12.5%
- -----------------------------------------------------------------------------------------------
Australis Media Ltd., Sub. Disc. Notes, 14.00%
(0% until 2000), 5/15/03 $ 4,453 $ 3,696,142
Brooks Fiber Properties, Inc., Sr. Disc. Notes, 11.875%
(0% until 2001), 11/1/06 2,400 1,848,000
Brooks Fiber Properties, Inc., Sr. Sub. Notes, 10.00%, 6/1/07 800 906,000
Brooks Fiber Properties. Inc., Sr. Disc. Notes, 10.875%
(0% until 2001), 3/1/06 5,500 4,400,000
Call-net Enterprises, Inc., Sr. Disc. Notes,
9.27% (0% until 2002), 8/15/07 2,000 1,330,000
Cellnet Data Systems, Inc., Sr. Disc. Notes, 0.00%,
10/1/07 800 4,080,000
Dial Call Communications Inc., Sr. Red. Notes, 12.25%
(0% until 1999), 4/15/04 10,720 10,023,200
Diamond Cable Communications, PLC, Sr. Disc. Notes, 10.75% (0%
until 2002), 2/15/07 6,000 3,907,500
Dobson Communications Corp., Sr. Notes, 11.75%, 4/15/07 2,000 1,987,500
Echostar DBS Corp., Sr. Sec. Notes, 12.50%, 7/1/02(1) 3,600 3,964,500
Echostar Satellite Broadcasting Corp., Sr. Disc. Notes, 13.125%
(0% until 2000), 3/15/04 7,525 6,292,781
Esat Holdings, Ltd., Sr. Deferred Coupon Notes, 12.50% (0%
until 2002), 2/1/07(1) 3,600 2,340,000
Esat Telecom Group PLC, Sr. Deferred Coupon Notes, 12.50% (0%
until 2002), 2/1/07 7,400 4,810,000
Intermedia Communications, Inc., Sr. Disc. Notes, 11.25% (0%
until 2002), 7/15/07(1) 11,040 7,645,200
Metronet Commerce Sr. Notes, 12.00%, 8/15/07(1) 1,800 1,998,000
Microcell Telecommunication, Sr. Disc. Notes, 14.00%
(0% until 2001), 6/1/06 9,800 6,713,000
Millicom International Cellular, Sr. Disc Notes, 13.50% (0%
until 2001), 6/1/06 7,200 5,580,000
Nextel Communications, Inc., Sr. Disc. Notes, 10.65%, 9/15/07(1) 1,390 856,588
Nextlink Communications, Inc., Sr. Notes, 9.625%, 10/1/07 6,320 6,557,000
Nextlink Communications, Inc., Sr. Notes, 12.50%, 4/15/06 6,720 7,728,000
Primus Telecom Group, Sr. Notes, 11.75%, 8/1/04 7,200 7,704,000
Telesystem International Wireless, Inc., Sr. Disc. Notes,
13.25% (0% until 2002), 6/30/07(1) 3,800 2,384,500
Telewest PLC, Debs., 11.00% (0% until
2002), 10/1/07 7,000 5,250,000
- -----------------------------------------------------------------------------------------------
$102,001,911
- -----------------------------------------------------------------------------------------------
Computer Software -- 1.1%
- -----------------------------------------------------------------------------------------------
Unisys Corp., Sr. Notes, 11.75%, 10/15/04 $ 2,600 $ 2,938,000
Unisys Corp., Sr. Notes, 12.00%, 4/15/03 5,600 6,286,000
- -----------------------------------------------------------------------------------------------
$ 9,224,000
- -----------------------------------------------------------------------------------------------
Containers and Packaging -- 3.2%
- -----------------------------------------------------------------------------------------------
American Pad and Paper Co., Sr. Sub. Notes, 13.00%, 11/15/05 $ 3,250 $ 3,835,000
Asia Pulp and Paper, Guaranteed Notes, 12.00%, 12/29/49 6,000 6,127,500
Container Corp., Sr. Notes, 10.75%, 5/1/02 3,250 3,591,250
Gaylord Container Corp., Sr. Sub. Disc. Debs., 12.75%
(0% until 1996), 5/15/05 5,700 6,234,375
S.D. Warren Co., Sr. Sub. Notes, 12.00%, 12/15/04 3,800 4,294,000
US Can Corp., Sr. Sub. Notes, 10.125%, 10/15/06 1,600 1,698,000
- -----------------------------------------------------------------------------------------------
$ 25,780,125
- -----------------------------------------------------------------------------------------------
Electric Utilities -- 0.2%
- -----------------------------------------------------------------------------------------------
AES Corp., Sr. Sub. Notes, 8.375%, 8/15/07 $ 1,200 $ 1,206,000
- -----------------------------------------------------------------------------------------------
$ 1,206,000
- -----------------------------------------------------------------------------------------------
Electrical Equipment -- 0.4%
- -----------------------------------------------------------------------------------------------
Wavetek Corp., Sr. Sub. Notes, 10.125%, 6/15/07(1) $ 3,360 $ 3,477,600
- -----------------------------------------------------------------------------------------------
$ 3,477,600
- -----------------------------------------------------------------------------------------------
Electronics - Instruments -- 2.0%
- -----------------------------------------------------------------------------------------------
Blue Bell Funding Inc., Sec. Ext. Notes, 11.85%, 5/1/99 $ 4,304 $ 4,454,640
GS Technologies Corp., Sr. Notes, 12.25%, 10/1/05 7,100 7,916,500
HCC Industries, Inc., Sr. Sub. Notes, 10.75%, 5/15/07(1) 3,975 4,213,500
- -----------------------------------------------------------------------------------------------
$ 16,584,640
- -----------------------------------------------------------------------------------------------
Entertainment -- 1.1%
- -----------------------------------------------------------------------------------------------
All American Communications, Inc., Sr. Sub. Notes,
10.875%, 10/15/01 $ 4,400 $ 4,763,000
Cinemark USA, Sr. Sub. Notes, 9.625%, 8/1/08 4,000 4,115,000
- -----------------------------------------------------------------------------------------------
$ 8,878,000
- -----------------------------------------------------------------------------------------------
Foods -- 5.8%
- -----------------------------------------------------------------------------------------------
Aurora Foods, Inc., Sr. Sub Notes, 9.875%, 2/15/07(1) $ 5,600 $ 5,824,000
B and G Foods, Inc., Sr. Sub. Notes, 9.625%, 8/1/07(1) 3,925 3,939,719
Del Monte Corp., Sr. Sub. Notes, 12.25%, 4/15/07 4,400 4,807,000
Inflo Holdings Corp., Promissory Notes, 0.00%
(0% until 1999), 1/27/07+ 4,400 3,960,000
International Home Foods, Inc., Sr. Sub. Notes, 10.375%, 11/1/06 9,000 9,922,500
Keebler Corp., Sr. Sub. Notes, 10.75%, 7/1/06 5,720 6,435,000
PM Holdings Corp., Sr. Sub. Notes, 11.50%
(0% until 2000), 9/1/05 2,837 2,234,138
Van De Kamps, Inc., Sr. Sub. Notes, 12.00%, 9/15/05 6,100 6,725,250
Windy Hill Pet Food Products, Inc., Sr. Sub Notes,
9.75%, 5/15/07(1) 3,050 3,172,000
- -----------------------------------------------------------------------------------------------
$ 47,019,607
- -----------------------------------------------------------------------------------------------
Health Services -- 1.8%
- -----------------------------------------------------------------------------------------------
Dade International, Inc., Sr. Sub. Notes, 11.125%, 5/1/06 $ 4,800 $ 5,406,000
Genesis Eldercare Acquisition Corp., Sr. Sub. Notes,
9.00%, 8/1/07(1) 6,120 6,089,400
Vencor, Inc., Sr. Sub. Notes, 8.625%, 7/15/07 2,800 2,842,000
- -----------------------------------------------------------------------------------------------
$ 14,337,400
- -----------------------------------------------------------------------------------------------
Household Products -- 1.7%
- -----------------------------------------------------------------------------------------------
Communications Instruments, Inc., Sr. Sub Notes,
10.00%, 9/15/04(1) $ 1,760 $ 1,801,800
Hedstrom Holdings, Inc., Sr. Disc. Notes, 12.00%
(0% until 2002), 6/1/09(1) 1,400 896,000
Icon Fitness Corp., Sr. Disc. Notes,
14.00% (0% until 2001), 11/15/06 1,600 944,000
Icon Health and Fitness, Inc., Sr. Sub. Notes, 13.00%, 7/15/02 4,000 4,540,000
Pillowtex Corp., Sr. Sub. Notes, 10.00%, 11/15/06 2,400 2,532,000
Ridell Sports, Inc., Sr. Notes, 10.50%, 7/15/07 3,160 3,314,050
- -----------------------------------------------------------------------------------------------
$ 14,027,850
- -----------------------------------------------------------------------------------------------
Information Services -- 3.6%
- -----------------------------------------------------------------------------------------------
Federal Data Corp., Sr. Sub. Notes, 10.125%, 8/1/05(1) $ 4,320 $ 4,428,000
Icg Holdings, Inc., Sr. Disc. Notes, 12.50%
(0% until 2001), 5/1/06 1,240 930,000
Icg Holdings, Inc., Sr. Disc. Notes, 11.625%
(0% until 2002), 3/15/07 7,075 4,811,000
Intermedia Capital Partners, Sr. Sub. Notes, 11.25%, 8/1/06 2,050 2,249,875
ITC Deltacom, Inc., Sr. Notes, 11.00%, 6/1/07(1) 4,000 4,390,000
ITT Publimedia, Sr. Notes, 9.375%, 9/15/07(1) 1,440 1,508,400
Mcleod Usa, Inc., Sr. Notes, 9.25%, 7/15/07(1) 3,680 3,910,000
Orion Network Systems, Inc., Sr. Disc. Notes, 12.50%
(0% until 2002), 1/15/07 1,600 1,072,000
Orion Network Systems, Inc., Sr. Notes, 11.25%, 1/15/07 5,600 6,132,000
- -----------------------------------------------------------------------------------------------
$ 29,431,275
- -----------------------------------------------------------------------------------------------
Investment Services -- 1.6%
- -----------------------------------------------------------------------------------------------
DVI, Inc., Sr. Notes, 9.875%, 2/1/04 $ 4,400 $ 4,554,000
IHF Holdings, Inc., Sr. Disc. Notes, 15.00%
(0% until 1999), 11/15/04 2,960 2,575,200
ISP Holdings, Inc., Sr. Notes, 9.75%, 2/15/02 5,750 6,210,000
- -----------------------------------------------------------------------------------------------
$ 13,339,200
- -----------------------------------------------------------------------------------------------
Lodging and Gaming -- 4.0%
- -----------------------------------------------------------------------------------------------
Aztar Corp., Sr. Sub. Notes, 13.75%, 10/1/04 $ 5,000 $ 5,731,250
Capstar Hotel, Co., Sr. Sub. Notes, 8.75%, 8/15/07(1) 2,025 2,047,781
Harvey Casinos Resorts, Sr. Sub. Notes, 10.625%, 6/1/06 6,000 6,570,000
Horseshoe Gaming L.l.C., Sr. Sub. Notes, 9.375%, 6/15/07(1) 3,200 3,304,000
Showboat Marina Casino, 1st Mtg. Notes, 13.50%, 3/15/03 6,000 6,900,000
Trump Atlantic City Associates, Co., 1st Mtg. Notes, 11.25%, 5/1/06 4,700 4,559,000
Trump Holdings & Funding Inc., Sr. Notes, 15.50%, 6/15/05 3,000 3,502,500
- -----------------------------------------------------------------------------------------------
$ 32,614,531
- -----------------------------------------------------------------------------------------------
Machinery -- 2.2%
- -----------------------------------------------------------------------------------------------
Alvey Systems, Inc., Sr. Sub. Notes, 11.375%, 1/31/03 $ 2,400 $ 2,520,000
Amtrol Acquisition, Inc., Sr. Sub. Notes, 10.625%, 12/31/06 3,600 3,726,000
Cambridge Industries, Inc., Sr. Sub. Notes, 10.25%, 7/15/07(1) 2,520 2,633,400
IMO Industries, Sr. Sub. Notes, 11.75%, 5/1/06 8,680 9,265,900
- -----------------------------------------------------------------------------------------------
$ 18,145,300
- -----------------------------------------------------------------------------------------------
Manufacturing -- 4.2%
- -----------------------------------------------------------------------------------------------
Consumers International, Inc., Sr. Sub. Notes, 10.25%, 4/1/05(1) $ 3,935 $ 4,289,150
Energy Corp., Sr. Sub. Notes, 9.50%, 5/15/07 5,400 5,427,000
Motors and Gears, Inc., Sr. Notes, 10.75%, 11/15/06 4,000 4,280,000
Roller Bearing Co. America, Inc., Sr. Sub. Notes, 9.625%, 6/15/07(1) 1,600 1,640,000
Roller Bearing Holdings Co., Sr. Disc. Debs., 13.00%
(0% until 2002), 6/15/09(1) 3,000 1,785,000
Telex Communication Group, Inc., Sr. Sub. Notes, 10.50%, 5/1/07(1) 4,475 4,592,469
Tjiwi Kimia Finance Mauritius, Ltd., Guaranteed Sr. Sub. Notes,
10.00%, 8/1/04(1) 3,800 3,728,750
United Refining Co., Gty. Notes, 10.75%, 6/15/07(1) 3,200 3,200,000
Viasystems, Inc., Sr. Sub. Notes, 9.75%, 6/1/07(1) 5,000 5,200,000
- -----------------------------------------------------------------------------------------------
$ 34,142,369
- -----------------------------------------------------------------------------------------------
Medical Products -- 0.7%
- -----------------------------------------------------------------------------------------------
Maxxim Medical, Inc., Sr. Sub. Notes, 10.50%, 8/1/06 $ 5,200 $ 5,668,000
- -----------------------------------------------------------------------------------------------
$ 5,668,000
- -----------------------------------------------------------------------------------------------
Metals - Industrial -- 3.1%
- -----------------------------------------------------------------------------------------------
Applied Extrusion Inc., Sr. Notes, 11.50%, 4/1/02 $ 6,000 $ 6,360,000
Howmet Corp., Sr. Sub. Notes, 10.00%, 12/1/03 2,850 3,106,500
Kaiser Aluminum and Chemical Corp., Sr. Notes, 10.875%, 10/15/06 2,500 2,706,250
Kaiser Aluminum and Chemical Corp., Sr. Sub. Notes, 12.75%, 2/1/03 6,600 7,128,000
Newflo Corp., Sub. Notes, 13.25%, 11/15/02 5,500 5,831,100
- -----------------------------------------------------------------------------------------------
$ 25,131,850
- -----------------------------------------------------------------------------------------------
Miscellaneous -- 2.4%
- -----------------------------------------------------------------------------------------------
Alliant Tech Systems Inc., Sr. Sub. Notes, 11.75%, 3/1/03 $ 4,000 $ 4,430,000
Clark-Schwebel, Sr. Notes, 10.50%, 4/15/06 5,200 5,694,000
Day International Group, Inc., Sr. Sub. Notes, 11.125%, 6/1/05 3,300 3,564,000
Selmer Co., Inc., Sr. Sub. Notes, 11.00%, 5/15/05 5,300 5,777,000
- -----------------------------------------------------------------------------------------------
$ 19,465,000
- -----------------------------------------------------------------------------------------------
Oil and Gas - Equipment and Services -- 5.1%
- -----------------------------------------------------------------------------------------------
AES Corp., Sr. Sub. Notes, 10.25%, 7/15/06 $ 1,600 $ 1,748,000
Belden and Blake Corp., Sr. Sub. Notes, 9.875%, 6/15/07(1) 5,200 5,226,000
Cal Energy Company, Inc., Sr. Notes, 9.50%, 9/15/06 5,500 5,935,160
Dawson Product Services, Inc., Sr. Notes, 9.375%, 2/1/07 2,800 2,919,000
DI Industries, Inc., Sr. Sub. Notes, 8.875%, 7/1/07 4,800 4,944,000
Mariner Energy Corp., Sr. Sub. Notes, 10.50%, 8/1/06 10,000 10,200,000
Midland Funding II, Sec. Lease Oblig., 11.75%, 7/23/05 2,200 2,611,180
Rutherford-Moran Oil Corp., Sr. Sub. Notes, 10.75%, 10/1/04 4,630 4,803,625
Veritas DGC, Inc., Sr. Notes, 9.75%, 10/15/03 3,200 3,400,000
- -----------------------------------------------------------------------------------------------
$ 41,786,965
- -----------------------------------------------------------------------------------------------
Oil and Gas - Exploration and Production -- 0.4%
- -----------------------------------------------------------------------------------------------
Dailey Petroleum Service Corp., Sr. Disc. Notes, 9.75%, 8/15/07(1) $ 3,025 $ 3,146,000
- -----------------------------------------------------------------------------------------------
$ 3,146,000
- -----------------------------------------------------------------------------------------------
Paper and Forest Products -- 0.7%
- -----------------------------------------------------------------------------------------------
Pindo Deli Finance Mauritius, Ltd., Guaranteed Sr. Notes,
10.75%, 10/1/07(1) $ 4,000 $ 4,085,000
Stone Container Corp., Sr. Sub. Notes, 12.25%, 4/1/02 1,400 1,452,500
- -----------------------------------------------------------------------------------------------
$ 5,537,500
- -----------------------------------------------------------------------------------------------
Printing and Business Products -- 0.4%
- -----------------------------------------------------------------------------------------------
MDC Communications Corp., Sr. Sub. Notes, 10.50%, 12/1/06 $ 3,200 $ 3,436,000
- -----------------------------------------------------------------------------------------------
$ 3,436,000
- -----------------------------------------------------------------------------------------------
Publishing -- 1.8%
- -----------------------------------------------------------------------------------------------
Newsquest Capital Corp., Sr. Sub. Notes, 11.00%, 5/1/06 $ 1,000 $ 1,115,000
Newsquest Capital Corp., Sr. Sub. Notes, 11.00%, 5/1/06 7,400 8,251,000
Von Hoffman Press, Inc., Sr. Sub Notes, 10.375%, 5/15/07(1) 4,800 5,088,000
- -----------------------------------------------------------------------------------------------
$ 14,454,000
- -----------------------------------------------------------------------------------------------
Retail - Food and Drug -- 3.6%
- -----------------------------------------------------------------------------------------------
AFC Enterprises, Inc. Sr Notes, 10.25%, 5/15/07 $ 9,600 $ 10,080,000
Duane Reade, G.P., Sr. Notes, 12.00%, 9/15/02 6,200 6,510,000
Jitney-Jungle Stores America, Inc., Sr. Sub. Notes,
10.375%, 9/15/07(1) 3,040 3,131,200
Randalls Food Products Markets, Inc., Sr. Sub. Notes, 9.375%,
7/1/07(1) 2,120 2,141,200
Star Markets Co., Sr. Sub. Notes, 13.00%, 11/1/04 6,200 7,068,000
- -----------------------------------------------------------------------------------------------
$ 28,930,400
- -----------------------------------------------------------------------------------------------
Retail - General -- 0.3%
- -----------------------------------------------------------------------------------------------
Knoll, Inc., Sr. Sub. Notes, 10.875%, 3/15/06 $ 2,335 $ 2,591,850
- -----------------------------------------------------------------------------------------------
$ 2,591,850
- -----------------------------------------------------------------------------------------------
Retail - Specialty and Apparel -- 0.6%
- -----------------------------------------------------------------------------------------------
Specialty Retailers, Inc., Gty. Notes, 9.00%, 7/15/07 $ 800 $ 813,000
Stage Stores, Inc., Notes, 8.50%, 7/15/05 4,000 4,095,000
- -----------------------------------------------------------------------------------------------
$ 4,908,000
- -----------------------------------------------------------------------------------------------
Telephone Utilities -- 0.7%
- -----------------------------------------------------------------------------------------------
Jordan Telecom Products, Inc., Sr. Disc. Notes, 11.75% (0%
until 2001), 8/1/07(1) $ 7,700 $ 6,006,000
- -----------------------------------------------------------------------------------------------
$ 6,006,000
- -----------------------------------------------------------------------------------------------
Textiles -- 0.5%
- -----------------------------------------------------------------------------------------------
Clark-Schwebel Holdings, Inc., Sr. Sub. Notes,
12.50%, 7/15/07(1) $ 3,726 $ 4,023,555
- -----------------------------------------------------------------------------------------------
$ 4,023,555
- -----------------------------------------------------------------------------------------------
Transportation -- 0.6%
- -----------------------------------------------------------------------------------------------
Hermes Europe Railtel, Sr. Sub. Notes, 11.50%, 8/15/07(1) $ 4,735 $ 5,161,150
- -----------------------------------------------------------------------------------------------
$ 5,161,150
- -----------------------------------------------------------------------------------------------
Total Corporate Bonds & Notes (identified cost $708,176,781) $752,889,191
- -----------------------------------------------------------------------------------------------
Common Stocks, Warrants and
Rights -- 0.6%
Shares
- -----------------------------------------------------------------------------------------------
Broadcasting and Cable -- 0.0%
- -----------------------------------------------------------------------------------------------
American Telecasting, Inc. Warrants+* 2,600 $ 26
Australis Holdings, Ltd., Warrants+* 2,000 --
Australis Media Ltd., Warrants+* 3,600 --
United International Holdings, Inc.,
Warrants Exp. 11/15/99+* 7,840 56,840
- -----------------------------------------------------------------------------------------------
$ 56,866
- -----------------------------------------------------------------------------------------------
Chemicals -- 0.1%
- -----------------------------------------------------------------------------------------------
Crompton & Knowles Corp., Common 9,489 $ 252,047
Sterling Chemicals Holdings, Warrants+* 3,200 112,000
- -----------------------------------------------------------------------------------------------
$ 364,047
- -----------------------------------------------------------------------------------------------
Communications Equipment -- 0.0%
- -----------------------------------------------------------------------------------------------
In Flight Phone Corp., Warrants Exp. 8/31/02+* 1,600 $ --
- -----------------------------------------------------------------------------------------------
$ --
- -----------------------------------------------------------------------------------------------
Communications Services -- 0.3%
- -----------------------------------------------------------------------------------------------
CS Wireless Systems, Inc., Common+* 902 $ --
Esat Holdings, Ltd., Warrants To Buy
.0447477 Shrs of Common+* 3,600 90,000
Hyperion Communications, Inc., Warrants,
Expires 4/15/01* 4,000 90,000
Microcell Telecommunication, Warrants+* 58,400 1,387,000
Microcell Telecommunication, Contingent Warrants+* 58,400 584
Nextel Communications Warrants Exp. 4/25/99+* 7,200 82,800
Nextel Communications, Inc., Common+ 11,154 322,072
- -----------------------------------------------------------------------------------------------
$ 1,972,456
- -----------------------------------------------------------------------------------------------
Containers and Packaging -- 0.0%
- -----------------------------------------------------------------------------------------------
SD Warren Company, Warrants Exp. 12/15/06+* 48,000 $ 252,000
- -----------------------------------------------------------------------------------------------
$ 252,000
- -----------------------------------------------------------------------------------------------
Foods -- 0.0%
- -----------------------------------------------------------------------------------------------
Servam Corp., $2.00 Warrant Exp. 4/1/01+* 12,276 $ --
Servam Corp., $4.50 Warrant Exp. 4/1/01+* 2,760 --
Servam Corp., Common+* 1,380 --
Specialty Foods Acquisition Corp., Common+* 48,000 12,000
- -----------------------------------------------------------------------------------------------
$ 12,000
- -----------------------------------------------------------------------------------------------
Industrial Development Revenue/Pollution
Control Revenue -- 0.0%
- -----------------------------------------------------------------------------------------------
Thermadyne Holdings Corp., Common+* 40,000 $ 400
- -----------------------------------------------------------------------------------------------
$ 400
- -----------------------------------------------------------------------------------------------
Information Services -- 0.0%
- -----------------------------------------------------------------------------------------------
Orion Network Warrants Expire 1/15/07* 7,200 $ --
- -----------------------------------------------------------------------------------------------
$ --
- -----------------------------------------------------------------------------------------------
Machinery -- 0.2%
- -----------------------------------------------------------------------------------------------
Terex Corp., Common* 77,120 $ 1,600,240
Terex Corp., Warrants Exp. 5/15/02+* 20,000 260,000
- -----------------------------------------------------------------------------------------------
$ 1,860,240
- -----------------------------------------------------------------------------------------------
Metals - Industrial -- 0.0%
- -----------------------------------------------------------------------------------------------
Gulf States Steel, Warrants+* 2,400 $ 120
- -----------------------------------------------------------------------------------------------
$ 120
- -----------------------------------------------------------------------------------------------
Total Common Stocks, Warrants and Rights
(identified cost $1,315,377) $ 4,518,129
- -----------------------------------------------------------------------------------------------
Preferred Stocks -- 5.3%
Broadcasting and Cable -- 3.6%
- -----------------------------------------------------------------------------------------------
Adelphia Communications, Corp.(1) 40,000 $ 4,440,000
Cablevision Systems Corp., 11.125% (PIK)(1) 104,608 11,768,343
Chancellor Radio Broadcasting, Inc.(1) 89,194 10,268,459
Echostar Communications(1) 3,200 3,356,000
- -----------------------------------------------------------------------------------------------
$ 29,832,802
- -----------------------------------------------------------------------------------------------
Communications Services -- 1.1%
- -----------------------------------------------------------------------------------------------
IXC Communications, Inc.(1) 7,600 $ 8,816,000
Nextlink Communications 14% (PIK)(1) 897 58,754
- -----------------------------------------------------------------------------------------------
$ 8,874,754
- -----------------------------------------------------------------------------------------------
Containers and Packaging -- 0.3%
- -----------------------------------------------------------------------------------------------
S.D. Warren Co. w / Warrants, 14%, 12/15/06 48,000 $ 2,160,000
- -----------------------------------------------------------------------------------------------
$ 2,160,000
- -----------------------------------------------------------------------------------------------
Telephone Utilities -- 0.3%
- -----------------------------------------------------------------------------------------------
Jordan Telecom Products, Inc.(1) 2,500 $ 2,687,500
- -----------------------------------------------------------------------------------------------
$ 2,687,500
- -----------------------------------------------------------------------------------------------
Total Preferred Stocks
(identified cost $38,326,233) $ 43,555,056
- -----------------------------------------------------------------------------------------------
Short-Term Investment -- 1.6%
Principal
Amount
(000 omitted)
- -----------------------------------------------------------------------------------------------
Associates Corporation of America, 6.36%, 10/1/97 $ 12,574 $ 12,574,000
- -----------------------------------------------------------------------------------------------
Total Short-Term Investment
(at amortized cost $12,574,000) $ 12,574,000
- -----------------------------------------------------------------------------------------------
Total Investments -- 100.0%
(identified cost $760,392,391) $813,536,376
- -----------------------------------------------------------------------------------------------
(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. At September 30, 1997, the value of these securities amounted to
$210,621,388 or 25.5% of net assets.
+ Restricted security (see Note 6).
* Non-income producing security.
(PIK) Payment in-kind.
</TABLE>
See notes to financial statements
<PAGE>
High Income Portfolio as of September 30, 1997
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
Statement of Assets and Liabilities
As of September 30, 1997
(Expressed in United States Dollars)
Assets
- --------------------------------------------------------------------------------
Investments, at value (Note 1A)
(identified cost, $760,392,391) $813,536,376
Cash 3,151
Receivable for investments sold 14,054,834
Interest receivable 17,183,311
Prepaid expenses 10,866
Deferred organization expenses (Note 1D) 7,508
- --------------------------------------------------------------------------------
Total assets $844,796,046
- --------------------------------------------------------------------------------
Liabilities
- --------------------------------------------------------------------------------
Payable for investments purchased $ 19,742,797
Payable to affiliate for Trustees' fees (Note 2) 5,229
Accrued expenses 35,517
- --------------------------------------------------------------------------------
Total liabilities $ 19,783,543
- --------------------------------------------------------------------------------
Net Assets applicable to investors' interest in Portfolio $825,012,503
- --------------------------------------------------------------------------------
Sources of Net Assets
- --------------------------------------------------------------------------------
Net proceeds from capital contributions and withdrawals $771,868,518
Net unrealized appreciation of investments
(computed on the basis of identified cost) 53,143,985
- --------------------------------------------------------------------------------
Total $825,012,503
- --------------------------------------------------------------------------------
<PAGE>
Statement of Operations
For the Six Months Ended
September 30, 1997
(Expressed in United States Dollars)
Investment Income (Note 1B)
- --------------------------------------------------------------------------------
Interest income $37,842,819
Dividend income 251,621
Miscellaneous income 303,500
- --------------------------------------------------------------------------------
Total investment income $38,397,940
- --------------------------------------------------------------------------------
Expenses
- --------------------------------------------------------------------------------
Investment adviser fee (Note 2) $ 2,220,108
Compensation of Trustees not members of the Investment Adviser's
organization (Note 2) 104
Custodian fee 130,471
Legal and accounting services 48,668
Amortization of organization expenses (Note 1D) 2,265
Miscellaneous 5,311
- --------------------------------------------------------------------------------
Total expenses $ 2,406,927
- --------------------------------------------------------------------------------
Net investment income $35,991,013
- --------------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- --------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified cost basis) $12,116,158
- --------------------------------------------------------------------------------
Net realized gain on investments $12,116,158
- --------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $42,365,746
- --------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation)
of investments $42,365,746
- --------------------------------------------------------------------------------
Net realized and unrealized gain on investments $54,481,904
- --------------------------------------------------------------------------------
Net increase in net assets from operations $90,472,917
- --------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
High Income Portfolio as of September 30, 1997
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS CONT'D
- --------------------------------------------------------------------------------
Statements of Changes in Net Assets
(Expressed in United States Dollars)
Six Months Ended
Increase (Decrease) September 30, 1997 Year Ended
in Net Assets (Unaudited) March 31, 1997
- --------------------------------------------------------------------------------
From operations --
Net investment income $ 35,991,013 $ 60,083,973
Net realized gain (loss) on investments 12,116,158 (4,056,681)
Net change in unrealized appreciation
(depreciation) of investments 42,365,746 13,401,858
- --------------------------------------------------------------------------------
Net increase in net assets from operations $ 90,472,917 $ 69,429,150
- --------------------------------------------------------------------------------
Capital transactions --
Contributions $ 134,568,596 $ 280,137,284
Withdrawals (106,740,472) (154,202,111)
- --------------------------------------------------------------------------------
Net increase in net assets from capital
transactions $ 27,828,124 $ 125,935,173
- --------------------------------------------------------------------------------
Net increase in net assets $ 118,301,041 $ 195,364,323
- --------------------------------------------------------------------------------
Net Assets
- --------------------------------------------------------------------------------
At beginning of period $ 706,711,462 $ 511,347,139
- --------------------------------------------------------------------------------
At end of period $ 825,012,503 $ 706,711,462
- --------------------------------------------------------------------------------
See notes to financial statements
<PAGE>
High Income Portfolio as of September 30, 1997
- --------------------------------------------------------------------------------
FINANCIAL STATEMENTS CONT'D
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Supplementary Data
(Expressed in United States Dollars)
Six Months Ended Year Ended March 31,
September 30, 1997 -----------------------------------------------------
(Unaudited) 1997 1996 1995*
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Ratios (as a percentage of average daily net assets)
- ---------------------------------------------------------------------------------------------------------------------------
Expenses 0.63%+ 0.67% 0.71% 0.70%+
Net investment income 9.44%+ 10.02% 10.41% 10.63%+
Portfolio Turnover 61% 78% 88% 53%
- ---------------------------------------------------------------------------------------------------------------------------
Average Commission Rate (per share)(1) $0.060 -- -- --
- ---------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000s omitted) $825,013 $706,711 $511,347 $442,552
- ---------------------------------------------------------------------------------------------------------------------------
+ Annualized.
* For the period from the start of business, June 1, 1994, to March 31, 1995.
(1) Average commission rate paid is computed by dividing the total dollar amount of commissions paid during the fiscal
year by the total number of shares purchased and sold during the fiscal year for which commissions were charged.
</TABLE>
See notes to financial statements
<PAGE>
High Income Portfolio as of September 30, 1997
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS (Unaudited)
- --------------------------------------------------------------------------------
(Expressed in United States Dollars)
1 Significant Accounting Policies
- -------------------------------------------------------------------------------
High Income Portfolio (the Portfolio) is registered under the Investment
Company Act of 1940 as a diversified open-end management investment company
which was organized as a trust under the laws of the State of New York on
May 1, 1992. The Declaration of Trust permits the Trustees to issue
interests in the Portfolio. The following is a summary of significant
accounting policies of the Portfolio. The policies are in conformity with
accounting principles generally accepted in the United States of America.
A Investment Valuations -- Investments listed on securities exchanges or in
the NASDAQ National Market 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. Financial futures contracts listed on commodity exchanges are
valued at closing settlement prices. Short-term obligations, maturing in
sixty days or less, are valued at amortized cost, which approximates value.
Investments for which there are no quotations or valuations 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 for
dividends received in cash and/or securities.
C Income Taxes -- The Portfolio has elected to be treated as a partnership
for United States Federal tax purposes. No provision is made by the
Portfolio for federal or state taxes on any taxable income of the Portfolio
because each investor in the Portfolio is ultimately responsible for the
payment of any taxes. Since some of the Portfolio's investors are regulated
investment companies that invest all or substantially all of their assets in
the Portfolio, the Portfolio normally must satisfy the applicable source of
income and diversification requirements (under the Internal Revenue Code) in
order for its investors to satisfy them. The Portfolio will allocate at
least annually among its investors each investor's distributive share of the
Portfolio's net taxable investment income, net realized capital gains, and
any other items of income, gain, loss, deduction or credit.
D Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
E Financial Futures Contracts -- Upon the entering of a financial futures
contract, the Portfolio is required to deposit ("initial margin") either in
cash or securities an amount equal to a certain percentage of the purchase
price indicated in the financial futures contract. Subsequent payments are
made or received by the Portfolio ("margin maintenance") each day, dependent
on the daily fluctuations in the value of the underlying security, and are
recorded for book purposes as unrealized gains or losses by the Portfolio.
The Portfolio's investment in financial futures contracts is designed only
to hedge against anticipated future changes in interest rates. Should
interest rates move unexpectedly, the Portfolio may not achieve the
anticipated benefits of the financial futures contracts and may realize a
loss.
F Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of
America 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.
G Other -- Investment transactions are accounted for on a trade date basis.
H Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT
receives a fee reduced by credits which are determined based on the average
daily cash balances the Portfolio maintains with IBT. All significant credit
balances used to reduce the Portfolio's custodian fees are reflected as a
reduction of expenses on the Statement of Operations.
I Interim Financial Information -- The interim financial statements relating
to September 30, 1997 and the six months 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 Investment Adviser Fee and Other Transactions with Affiliates
- --------------------------------------------------------------------------------
The investment adviser fee is earned by Boston Management and Research
(BMR), a wholly-owned subsidiary of Eaton Vance Management (EVM), as
compensation for management and investment advisory services rendered to the
Portfolio. The fee is based upon a percentage of average daily net assets
plus a percentage of gross income (i.e., income other than gains from the
sale of securities). For the six months ended September 30, 1997, the fee
was equivalent to 0.58%, annualized, of the Portfolio's average daily net
assets and amounted to $2,220,108. Except as to Trustees of the Portfolio
who are not members of EVM's or BMR's organization, officers and Trustees
receive remuneration for their services to the Portfolio out of such
investment adviser fee. Certain of the officers and Trustees of the
Portfolio are officers and directors/trustees of the above organizations.
Trustees of the Portfolio that are not affiliated with the Investment
Adviser may elect to defer receipt of all or a portion of their annual fees
in accordance with the terms of the Trustees Deferred Compensation Plan. For
the six months ended September 30, 1997, no significant amounts have been
deferred.
3 Investments
- --------------------------------------------------------------------------------
The Portfolio invests primarily in debt securities. The ability of the issuers
of the debt securities held by the Portfolio 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 $515,140,152 and $447,503,735, respectively, for the
six months ended September 30, 1997.
4 Line of Credit
- --------------------------------------------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR
and EVM and its affiliates in a $120 million unsecured line of credit
agreement with a group of banks. The Portfolio may temporarily borrow from
the line of credit to satisfy redemption requests or settle investment
transactions. Interest is charged to each portfolio or fund based on its
borrowings at an amount above the banks' adjusted certificate of deposit
rate, Eurodollar rate or federal funds rate. In addition, a fee computed at
an annual rate of 0.15% on the daily unused portion of the line of credit is
allocated among the participating portfolios and funds at the end of each
quarter. The Portfolio did not have any significant borrowings or allocated
fees during the period.
5 Federal Income Tax Basis of Investments
- --------------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in value of the
investments owned at September 30, 1997, as computed on a federal income tax
basis, were as follows:
Aggregate cost $760,392,391
------------------------------------------------------------------
Gross unrealized appreciation $ 53,864,321
Gross unrealized depreciation (720,336)
------------------------------------------------------------------
Net unrealized appreciation $ 53,143,985
------------------------------------------------------------------
6 Restricted Securities
- --------------------------------------------------------------------------------
At September 30, 1997, the Portfolio owned the following securities
(constituting 0.79% of net assets) which were restricted as to public resale
and not registered under the Securities Act of 1933 (excluding Rule 144A
Securities). The Portfolio has various registration rights (exercisable
under a variety of circumstances) with respect to certain of 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>
Corporate Note
- -----------------------------------------------------------------------------------------------------------
Inflo Holdings Corp.,
Promissory Notes, 10%
(0% until 1999), 1/27/07 9/13/96 4,400,000 $2,884,000 $3,960,000
Common Stocks, Warrants, and Rights
- -----------------------------------------------------------------------------------------------------------
American Telecasting, Inc. Warrants 01/16/96 2,600 $ 71,500 $ 26
Australis Holdings, Ltd., Warrants 04/02/97 2,000 -- --
Australis Media Ltd., Warrants 05/26/95 3,600 -- --
CS Wireless Systems, Inc., Common 01/14/97 902 -- --
Esat Holdings, Ltd., Warrants 06/19/97 3,600 -- 90,000
Gulf States Steel, Warrants 08/22/95 2,400 -- 120
In Flight Phone Corp., Warrants Exp. 8/31/02 11/28/95 1,600 -- --
Microcell Telecommunication, Warrants 10/30/96 58,400 -- 1,387,000
Microcell Telecommunication, Contingent
Warrants 10/30/96 58,400 -- 584
Nextel Communications, Inc., Common 09/05/97 11,154 180,000 322,072
Nextel Communications Warrants Exp. 4/25/99 10/04/96 7,200 -- 82,800
SD Warren Company Warrants Exp. 12/15/06 05/15/95 48,000 -- 252,000
Servam Corp., $2.00 Warrant Exp. 4/1/01 12/15/87 12,276 -- --
Servam Corp., $4.50 Warrant Exp. 4/1/01 12/15/87 2,760 -- --
Servam Corp., Common 12/15/87 1,380 -- --
Sterling Chemicals Holdings, Warrants 10/07/96 3,200 -- 112,000
Specialty Foods Acquisition Corp., Common 08/10/93 48,000 34,886 12,000
Terex Corp., Warrants Exp. 5/15/02 11/07/96 20,000 -- 260,000
Thermadyne Holdings Corp., Common 04/03/89 40,000 28,800 400
United International Holdings, Inc.,
Warrants Exp. 11/15/99 11/16/94 7,840 222,186 56,840
- -----------------------------------------------------------------------------------------------------------
$3,421,372 $6,535,842
- -----------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
INVESTMENT MANAGEMENT
- --------------------------------------------------------------------------------
<TABLE>
High Income Portfolio
<S> <C>
Officers Independent Trustees
M. DOZIER GARDNER DONALD R. DWIGHT
President and Trustee President, Dwight Partners, Inc.
Chairman, Newspapers of New England, Inc.
JAMES B. HAWKES
Vice President and Trustee SAMUEL L. HAYES, III
Jacob H. Schiff Professor of Investment
Banking, Harvard University Graduate School of
HOOKER TALCOTT, JR. Business Administration
Vice President and
Co-Portfolio Manager
NORTON H. REAMER
President and Director, United Asset
MICHAEL W. WEILHEIMER Management Corporation
Vice President and
Co-Portfolio Manager
JOHN L. THORNDIKE
Formerly Director, Fiduciary Company Incorporated
WILLIAM CHISHOLM
Vice President
JACK L. TREYNOR
Investment Adviser and Consultant
RAYMOND O'NEIL
Vice President
MICHEL NORMANDEAU
Vice President
JAMES L. O'CONNOR
Treasurer
ALAN R. DYNNER
Secretary
</TABLE>
