UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811- 02258
Boston Income Portfolio
(Exact Name of registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
(Name and Address of Agent for Services)
(617) 482-8260
(registrant’s Telephone Number)
October 31
Date of Fiscal Year End
April 30, 2006
Date of Reporting Period
Item 1. Reports to Stockholders
1
Boston Income Portfolio as of April 30, 2006
PORTFOLIO OF INVESTMENTS (Unaudited)
| Senior, Floating Rate Interests — 3.2%(1) | |
| Security | | Principal
Amount | | Value | |
| Broadcasting — 0.8% | |
Hit Entertainment, Inc., Term Loan,
9.97%, Maturing 2/15/13 | | $ | 13,910,000 | | | $ | 14,027,373 | | |
| | | $ | 14,027,373 | | |
| Building Materials — 0.6% | |
Masonite International, Term Loan,
10.88%, Maturing 10/6/06 | | $ | 10,700,000 | | | $ | 10,111,500 | | |
| | | $ | 10,111,500 | | |
| Gaming — 0.3% | |
BLB Worldwide Holdings, Term Loan,
7.83%, Maturing 6/30/12 | | $ | 5,300,000 | | | $ | 5,403,790 | | |
| | | $ | 5,403,790 | | |
| Paper — 1.5% | |
Georgia Pacific Corp., Term Loan,
7.939%, Maturing 6/12/06 | | $ | 26,000,000 | | | $ | 26,595,010 | | |
| | | $ | 26,595,010 | | |
Total Senior, Floating Rate Interests
(identified cost $56,034,925) | | | | | | $ | 56,137,673 | | |
| Corporate Bonds & Notes — 85.4% | |
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Aerospace — 0.3% | |
| Argo Tech Corp., Sr. Notes, 9.25%, 6/1/11 | | $ | 2,050 | | | $ | 2,170,437 | | |
Armor Holdings, Inc., Sr. Sub. Notes,
8.25%, 8/15/13 | | | 2,410 | | | | 2,584,725 | | |
DRS Technologies, Inc., Sr. Sub. Notes,
7.625%, 2/1/18 | | | 1,440 | | | | 1,485,000 | | |
| | | $ | 6,240,162 | | |
| Air Transportation — 1.0% | |
| American Airlines, 7.80%, 10/1/06 | | $ | 10,535 | | | $ | 10,566,839 | | |
| American Airlines, 7.858%, 10/1/11 | | | 1,535 | | | | 1,633,295 | | |
| Continental Airlines, 7.033%, 6/15/11 | | | 2,994 | | | | 2,875,597 | | |
| Delta Air Lines, 9.50%, 11/18/08(2)(3) | | | 1,860 | | | | 1,822,800 | | |
| | | $ | 16,898,531 | | |
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Automotive & Auto Parts — 4.8% | |
| Altra Industrial Motion, Inc., 9.00%, 12/1/11 | | $ | 3,770 | | | $ | 3,807,700 | | |
Commercial Vehicle Group, Inc., Sr. Notes,
8.00%, 7/1/13 | | | 1,800 | | | | 1,809,000 | | |
| Dura Operating Corp., Series D, 9.00%, 5/1/09 | | | 435 | | | | 241,425 | | |
| Ford Motor Credit Co., 6.50%, 1/25/07 | | | 3,570 | | | | 3,548,523 | | |
| Ford Motor Credit Co., 7.375%, 10/28/09 | | | 14,920 | | | | 13,795,972 | | |
| Ford Motor Credit Co., 7.875%, 6/15/10 | | | 7,085 | | | | 6,548,658 | | |
Ford Motor Credit Co., Variable Rate,
7.68%, 11/2/07 | | | 17,775 | | | | 17,452,864 | | |
General Motors Acceptance Corp.,
5.125%, 5/9/08 | | | 3,555 | | | | 3,357,836 | | |
General Motors Acceptance Corp.,
5.85%, 1/14/09 | | | 1,815 | | | | 1,707,541 | | |
General Motors Acceptance Corp.,
6.125%, 9/15/06 | | | 4,535 | | | | 4,499,695 | | |
General Motors Acceptance Corp.,
7.00%, 2/1/12 | | | 710 | | | | 667,431 | | |
General Motors Acceptance Corp.,
8.00%, 11/1/31 | | | 5,265 | | | | 5,005,420 | | |
Keystone Automotive Operations, Inc.,
Sr. Sub. Notes, 9.75%, 11/1/13 | | | 1,510 | | | | 1,374,100 | | |
| Metaldyne Corp., 10.00%, 11/1/13 | | | 1,577 | | | | 1,525,747 | | |
Tenneco Automotive, Inc., Series B,
10.25%, 7/15/13 | | | 5,570 | | | | 6,196,625 | | |
Tenneco Automotive, Inc., Sr. Sub. Notes,
8.625%, 11/15/14 | | | 4,385 | | | | 4,461,737 | | |
TRW Automotive, Inc., Sr. Sub. Notes,
11.00%, 2/15/13 | | | 2,125 | | | | 2,358,750 | | |
United Components, Inc., Sr. Sub. Notes,
9.375%, 6/15/13 | | | 1,895 | | | | 1,866,575 | | |
| Venture Holding Trust, Sr. Notes, 9.50%, 7/1/05(2) | | | 3,683 | | | | 13,811 | | |
| Visteon Corp., Sr. Notes, 8.25%, 8/1/10 | | | 3,220 | | | | 2,906,050 | | |
| | | $ | 83,145,460 | | |
| Broadcasting — 1.8% | |
Nexstar Finance Holdings, LLC, Inc., Sr. Disc. Notes,
11.375%, (0% until 2008), 4/1/13 | | $ | 6,110 | | | $ | 5,101,850 | | |
Rainbow National Services, LLC, Sr. Notes,
8.75%, 9/1/12(3) | | | 2,855 | | | | 3,061,987 | | |
Rainbow National Services, LLC, Sr. Sub. Debs.,
10.375%, 9/1/14(3) | | | 10,985 | | | | 12,385,587 | | |
| Sirius Satellite Radio, Sr. Notes, 9.625%, 8/1/13 | | | 7,185 | | | | 7,059,262 | | |
XM Satellite Radio, Inc., Sr. Notes,
9.75%, 5/1/14(3) | | | 3,620 | | | | 3,656,200 | | |
| | | $ | 31,264,886 | | |
See notes to financial statements
16
Boston Income Portfolio as of April 30, 2006
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Building Materials — 3.0% | |
Coleman Cable, Inc., Sr. Notes,
9.875%, 10/1/12 | | $ | 2,160 | | | $ | 1,971,000 | | |
Dayton Superior Corp., Sr. Notes,
10.75%, 9/15/08 | | | 1,005 | | | | 1,047,712 | | |
| General Cable Corp., Sr. Notes, 9.50%, 11/15/10 | | | 3,760 | | | | 4,079,600 | | |
Goodman Global Holdings, Inc.,
Sr. Notes, Variable Rate, 7.491%, 6/15/12 | | | 5,495 | | | | 5,618,637 | | |
| Interface, Inc., Sr. Sub. Notes, 9.50%, 2/1/14 | | | 965 | | | | 1,008,425 | | |
Interline Brands, Inc., Sr. Sub. Notes,
11.50%, 5/15/11 | | | 3,507 | | | | 3,910,305 | | |
| MAAX Corp., Sr. Sub. Notes, 9.75%, 6/15/12 | | | 3,200 | | | | 2,768,000 | | |
| Nortek, Inc., Sr. Sub Notes, 8.50%, 9/1/14 | | | 9,160 | | | | 9,434,800 | | |
NTK Holdings, Inc., Sr. Disc. Notes, 10.75%,
(0.00% until 2009) 3/1/14 | | | 4,145 | | | | 3,176,106 | | |
Panolam Industries International, Sr. Sub. Notes,
10.75%, 10/1/13(3) | | | 5,305 | | | | 5,225,425 | | |
RMCC Acquisition Co., Sr. Sub. Notes,
9.50%, 11/1/12(3) | | | 13,310 | | | | 13,975,500 | | |
| | | $ | 52,215,510 | | |
| Cable / Satellite TV — 3.3% | |
Adelphia Communications, Sr. Notes,
10.25%, 11/1/06(2) | | $ | 5,085 | | | $ | 2,402,662 | | |
Adelphia Communications, Sr. Notes, Series B,
9.25%, 10/1/32(2) | | | 8,160 | | | | 3,855,600 | | |
CCO Holdings, LLC / CCO Capital Corp., Sr. Notes,
8.75%, 11/15/13 | | | 19,005 | | | | 18,719,925 | | |
| CSC Holdings, Inc., Sr. Notes, 7.25%, 7/15/08 | | | 3,765 | | | | 3,826,181 | | |
| CSC Holdings, Inc., Sr. Notes, 7.875%, 12/15/07 | | | 15 | | | | 15,356 | | |
CSC Holdings, Inc., Sr. Notes, Series B,
7.625%, 4/1/11 | | | 1,845 | | | | 1,886,512 | | |
Insight Communications, Sr. Disc. Notes,
12.25%, 2/15/11 | | | 20,845 | | | | 22,278,094 | | |
| Kabel Deutschland GMBH, 10.625%, 7/1/14(3) | | | 4,005 | | | | 4,345,425 | | |
| | | $ | 57,329,755 | | |
| Capital Goods — 4.1% | |
Amsted Industries, Inc., Sr. Notes,
10.25%, 10/15/11(3) | | $ | 10,125 | | | $ | 11,086,875 | | |
Case New Holland, Inc., Sr. Notes,
7.125%, 3/1/14(3) | | | 10,835 | | | | 10,699,562 | | |
| Case New Holland, Inc., Sr. Notes, 9.25%, 8/1/11 | | | 12,145 | | | | 12,964,787 | | |
Chart Industries, Inc., Sr. Sub. Notes,
9.125%, 10/15/15(3) | | | 3,575 | | | | 3,700,125 | | |
| Dresser, Inc., 9.375%, 4/15/11 | | | 10,965 | | | | 11,458,425 | | |
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Capital Goods (continued) | |
| Koppers, Inc., 9.875%, 10/15/13 | | $ | 51 | | | $ | 56,100 | | |
| Manitowoc Co., Inc. (The), 10.50%, 8/1/12 | | | 767 | | | | 839,865 | | |
| Milacron Escrow Corp., 11.50%, 5/15/11 | | | 5,750 | | | | 5,505,625 | | |
Mueller Group, Inc., Sr. Sub. Notes,
10.00%, 5/1/12 | | | 3,515 | | | | 3,866,500 | | |
Mueller Holdings, Inc., Disc. Notes,
14.75%, (0.00% until 2009), 4/15/14 | | | 5,445 | | | | 4,519,350 | | |
| Rexnord Corp., 10.125%, 12/15/12 | | | 1,065 | | | | 1,174,162 | | |
Thermadyne Holdings Corp., Sr. Sub. Notes,
9.25%, 2/1/14 | | | 5,430 | | | | 4,995,600 | | |
| | | $ | 70,866,976 | | |
| Chemicals — 5.0% | |
BCP Crystal Holdings Corp., Sr. Sub. Notes,
9.625%, 6/15/14 | | $ | 4,924 | | | $ | 5,441,020 | | |
Crystal US Holdings / US Holdings 3, LLC,
Sr. Disc. Notes, Series B, 10.50%,
(0.00% until 2009) 10/1/14 | | | 6,077 | | | | 4,831,215 | | |
| Equistar Chemical, Sr. Notes, 10.625%, 5/1/11 | | | 12,550 | | | | 13,742,250 | | |
Hexion U.S. Finance/Nova Scotia Finance,
9.00%, 7/15/14 | | | 2,760 | | | | 2,863,500 | | |
Huntsman International LLC, Sr. Notes,
9.875%, 3/1/09 | | | 2,010 | | | | 2,110,500 | | |
| IMC Global, Inc., Sr. Notes, 10.875%, 8/1/13 | | | 7,065 | | | | 8,054,100 | | |
| Ineos Group Holdings PLC, 8.50%, 2/15/16(3) | | | 13,270 | | | | 12,672,850 | | |
| Lyondell Chemical Co., 11.125%, 7/15/12 | | | 1,655 | | | | 1,837,050 | | |
| Millennium America, Inc., 9.25%, 6/15/08 | | | 2,000 | | | | 2,100,000 | | |
| Nalco Co., Sr. Notes, 7.75%, 11/15/11 | | | 4,620 | | | | 4,666,200 | | |
Nova Chemicals Corp., Senior Notes, Variable Rate,
7.561%, 11/15/13 | | | 3,525 | | | | 3,542,625 | | |
| OM Group, Inc., 9.25%, 12/15/11 | | | 13,060 | | | | 13,549,750 | | |
| Polyone Corp., Sr. Notes, 8.875%, 5/1/12 | | | 1,095 | | | | 1,116,900 | | |
| Polyone Corp., Sr. Notes, 10.625%, 5/15/10 | | | 6,790 | | | | 7,367,150 | | |
| PQ Corp., 7.75%, 2/15/13(3) | | | 1,895 | | | | 1,809,725 | | |
Rockwood Specialties Group, Sr. Sub. Notes,
10.625%, 5/15/11 | | | 1,797 | | | | 1,958,730 | | |
| | | $ | 87,663,565 | | |
| Consumer Products — 1.0% | |
| Fedders North America, Inc., 9.875%, 3/1/14 | | $ | 3,895 | | | $ | 3,291,275 | | |
Jafra Cosmetics/Distribution, Sr. Sub. Notes,
10.75%, 5/15/11 | | | 1,385 | | | | 1,495,800 | | |
Nutro Products, Inc., Sr. Notes, Variable Rate,
9.23%, 10/15/13(3) | | | 1,455 | | | | 1,491,375 | | |
See notes to financial statements
17
Boston Income Portfolio as of April 30, 2006
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Consumer Products (continued) | |
Nutro Products, Inc., Sr. Sub. Notes,
10.75%, 4/15/14(3) | | $ | 2,185 | | | $ | 2,272,400 | | |
| Samsonite Corp., Sr. Sub. Notes, 8.875%, 6/1/11 | | | 3,625 | | | | 3,860,625 | | |
Steinway Musical Instruments, Sr. Notes,
7.00%, 3/1/14(3) | | | 2,905 | | | | 2,897,737 | | |
WH Holdings Ltd./WH Capital Corp., Sr. Notes,
9.50%, 4/1/11 | | | 1,689 | | | | 1,815,675 | | |
| | | $ | 17,124,887 | | |
| Containers — 1.0% | |
Intertape Polymer US, Inc., Sr. Sub. Notes,
8.50%, 8/1/14 | | $ | 5,095 | | | $ | 5,120,475 | | |
| Pliant Corp. (PIK), 11.625%, 6/15/09 | | | 3,583 | | | | 3,909,039 | | |
| Solo Cup Co., Sr. Sub. Notes, 8.50%, 2/15/14 | | | 8,125 | | | | 7,759,375 | | |
| | | $ | 16,788,889 | | |
| Diversified Financial Services — 0.8% | |
E*Trade Financial Corp., Sr. Notes,
8.00%, 6/15/11 | | $ | 1,215 | | | $ | 1,260,562 | | |
| Residential Capital Corp., 6.875%, 6/30/15 | | | 2,855 | | | | 2,899,167 | | |
Residential Capital Corp., Variable Rate,
6.898%, 4/17/09(3) | | | 9,095 | | | | 9,096,737 | | |
| | | $ | 13,256,466 | | |
| Diversified Media — 2.6% | |
Advanstar Communciations, Sr. Sub. Notes, Series B,
12.00%, 2/15/11 | | $ | 2,000 | | | $ | 2,125,000 | | |
| Advanstar Communications, Inc., 10.75%, 8/15/10 | | | 11,580 | | | | 12,622,200 | | |
| Affinion Group, Inc., 10.125%, 10/15/13(3) | | | 1,800 | | | | 1,867,500 | | |
Affinion Group, Inc., Sr. Sub. Notes,
11.50%, 10/15/15(3) | | | 2,520 | | | | 2,595,600 | | |
| CanWest Media, Inc., 8.00%, 9/15/12 | | | 19,247 | | | | 19,607,421 | | |
| LBI Media, Inc., 10.125%, 7/15/12 | | | 3,025 | | | | 3,267,000 | | |
LBI Media, Inc., Sr. Disc. Notes,
11.00%, (0.00% until 2008), 10/15/13 | | | 3,320 | | | | 2,510,750 | | |
| | | $ | 44,595,471 | | |
| Energy — 5.1% | |
Allis-Chalmers Energy, Inc., Sr. Notes,
9.00%, 1/15/14(3) | | $ | 4,870 | | | $ | 5,016,100 | | |
Aventine Renewable Energy, Variable Rate,
10.91%, 12/15/11(3) | | | 4,165 | | | | 4,394,075 | | |
| Clayton Williams Energy, Inc., 7.75%, 8/1/13 | | | 2,150 | | | | 2,037,125 | | |
| Copano Energy, LLC, Sr. Notes, 8.125%, 3/1/16(3) | | | 1,240 | | | | 1,280,300 | | |
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Energy (continued) | |
| El Paso Corp., 9.625%, 5/15/12(3) | | $ | 3,800 | | | $ | 4,218,000 | | |
| El Paso Production Holding Co., 7.75%, 6/1/13 | | | 830 | | | | 860,087 | | |
Encore Acquisition Co., Sr. Sub Notes,
7.25%, 12/1/17 | | | 3,570 | | | | 3,556,612 | | |
| Giant Industries, 8.00%, 5/15/14 | | | 3,750 | | | | 3,871,875 | | |
| Inergy L.P. / Finance, Sr. Notes, 6.875%, 12/15/14 | | | 6,735 | | | | 6,398,250 | | |
| Northwest Pipeline Corp., 8.125%, 3/1/10 | | | 2,490 | | | | 2,636,287 | | |
Ocean Rig Norway AS, Sr. Notes,
8.375%, 7/1/13(3) | | | 1,815 | | | | 1,923,900 | | |
| Parker Drilling Co., Sr. Notes, 9.625%, 10/1/13 | | | 1,435 | | | | 1,592,850 | | |
| Petrobras International Finance Co., 7.75%, 9/15/14 | | | 885 | | | | 958,455 | | |
Petrobras International Finance, Sr. Notes,
9.125%, 7/2/13 | | | 2,255 | | | | 2,621,437 | | |
| Premcor Refining Group, Sr. Notes, 9.50%, 2/1/13 | | | 4,775 | | | | 5,261,090 | | |
| Ram Energy, Inc., Sr. Notes, 11.50%, 2/15/08 | | | 3,459 | | | | 3,597,360 | | |
| Semgroup L.P., Sr. Notes, 8.75%, 11/15/15(3) | | | 4,670 | | | | 4,786,750 | | |
| Southern Natural Gas, 8.00%, 3/1/32 | | | 3,345 | | | | 3,592,891 | | |
| Southern Natural Gas, 8.875%, 3/15/10 | | | 1,180 | | | | 1,258,470 | | |
Transmontaigne, Inc., Sr. Sub. Notes,
9.125%, 6/1/10 | | | 11,475 | | | | 12,393,000 | | |
| United Refining Co., Sr. Notes, 10.50%, 8/15/12 | | | 8,140 | | | | 8,547,000 | | |
| VeraSun Energy Corp., 9.875%, 12/15/12(3) | | | 5,450 | | | | 5,831,500 | | |
| Williams Cos., Inc. (The), 8.75%, 3/15/32 | | | 1,840 | | | | 2,129,800 | | |
| | | $ | 88,763,214 | | |
| Entertainment / Film — 0.9% | |
AMC Entertainment, Inc., Sr. Sub. Notes,
9.875%, 2/1/12 | | $ | 8,275 | | | $ | 8,399,125 | | |
AMC Entertainment, Inc., Variable Rate,
8.999%, 8/15/10 | | | 1,065 | | | | 1,104,937 | | |
Marquee Holdings, Inc., Sr. Disc. Notes,
12.00%, (0.00% until 2009) 8/15/14 | | | 9,335 | | | | 6,791,212 | | |
| | | $ | 16,295,274 | | |
| Environmental — 1.2% | |
| Aleris International, Inc., 9.00%, 11/15/14 | | $ | 4,169 | | | $ | 4,377,450 | | |
| Aleris International, Inc., 10.375%, 10/15/10 | | | 4,300 | | | | 4,740,750 | | |
Browning-Ferris Industries, Inc., Sr. Notes,
6.375%, 1/15/08 | | | 4,915 | | | | 4,939,575 | | |
Waste Services, Inc., Sr. Sub Notes,
9.50%, 4/15/14 | | | 6,285 | | | | 6,536,400 | | |
| | | $ | 20,594,175 | | |
See notes to financial statements
18
Boston Income Portfolio as of April 30, 2006
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Food & Drug Retail — 1.3% | |
Jean Coutu Group (PJC), Inc., Sr. Sub. Notes,
8.50%, 8/1/14 | | $ | 1,450 | | | $ | 1,366,625 | | |
| Rite Aid Corp., 6.125%, 12/15/08(3) | | | 11,225 | | | | 11,028,562 | | |
| Rite Aid Corp., 7.125%, 1/15/07 | | | 6,400 | | | | 6,448,000 | | |
| Rite Aid Corp., 8.125%, 5/1/10 | | | 3,560 | | | | 3,657,900 | | |
| | | $ | 22,501,087 | | |
| Food / Beverage / Tobacco — 1.8% | |
ASG Consolidated, LLC / ASG Finance, Inc., Sr. Disc.
Notes, 11.50%, (0.00% until 2008) 11/1/11 | | $ | 9,285 | | | $ | 7,799,400 | | |
Pierre Foods, Inc., Sr. Sub. Notes,
9.875%, 7/15/12 | | | 5,085 | | | | 5,307,469 | | |
Pinnacle Foods Holdings Corp., Sr. Sub. Notes,
8.25%, 12/1/13 | | | 9,070 | | | | 9,138,025 | | |
UAP Holding Corp., Sr. Disc. Notes,
10.75%, (0% until 2008) 7/15/12 | | | 8,265 | | | | 7,490,156 | | |
United Agricultural Products, Sr. Notes,
8.25%, 12/15/11 | | | 2,049 | | | | 2,151,450 | | |
| | | $ | 31,886,500 | | |
| Gaming — 5.1% | |
| CCM Merger, Inc., 8.00%, 8/1/13(3) | | $ | 2,795 | | | $ | 2,725,125 | | |
Chukchansi EDA, Sr. Notes, Variable Rate,
8.06%, 11/15/12(3) | | | 5,045 | | | | 5,234,188 | | |
| Eldorado Casino Shreveport, 10.00%, 8/1/12 | | | 698 | | | | 561,704 | | |
Galaxy Entertainment Finance,
9.875%, 12/15/12(3) | | | 6,660 | | | | 6,926,400 | | |
Galaxy Entertainment Finance, Variable Rate,
9.655%, 12/15/10(3) | | | 4,100 | | | | 4,284,500 | | |
Greektown Holdings, LLC, Sr. Notes,
10.75%, 12/1/13(3) | | | 3,645 | | | | 3,845,475 | | |
Inn of the Mountain Gods, Sr. Notes,
12.00%, 11/15/10 | | | 7,210 | | | | 7,840,875 | | |
Kerzner International Ltd., Sr. Sub. Notes,
6.75%, 10/1/15 | | | 900 | | | | 938,250 | | |
Majestic HoldCo, LLC, (0.00% until 2008),
0.00%, 10/15/11(3) | | | 790 | | | | 576,700 | | |
| Majestic Star Casino, LLC, 9.50%, 10/15/10 | | | 2,485 | | | | 2,658,950 | | |
| Majestic Star Casino, LLC, 9.75%, 1/15/11(3) | | | 4,000 | | | | 4,120,000 | | |
Mohegan Tribal Gaming Authority, Sr. Sub. Notes,
8.00%, 4/1/12 | | | 2,275 | | | | 2,377,375 | | |
| OED Corp./Diamond Jo, LLC, 8.75%, 4/15/12 | | | 6,960 | | | | 6,994,800 | | |
| San Pasqual Casino, 8.00%, 9/15/13(3) | | | 5,620 | | | | 5,704,300 | | |
| Trump Entertainment Resorts, Inc., 8.50%, 6/1/15 | | | 16,680 | | | | 16,513,200 | | |
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Gaming (continued) | |
Tunica-Biloxi Gaming Authority, Sr. Notes,
9.00%, 11/15/15(3) | | $ | 4,310 | | | $ | 4,503,950 | | |
Waterford Gaming, LLC, Sr. Notes,
8.625%, 9/15/12(3) | | | 11,428 | | | | 12,056,540 | | |
| Wynn Las Vegas, LLC/Corp., 6.625%, 12/1/14 | | | 1,040 | | | | 1,016,600 | | |
| | | $ | 88,878,932 | | |
| Healthcare — 5.2% | |
| Accellent, Inc., 10.50%, 12/1/13 | | $ | 7,915 | | | $ | 8,548,200 | | |
AMR HoldCo, Inc./EmCare HoldCo, Inc.,
Sr. Sub. Notes, 10.00%, 2/15/15 | | | 6,620 | | | | 7,116,500 | | |
CDRV Investors, Inc., Sr. Disc. Notes, 9.625%,
(0.00% until 2010) 1/1/15 | | | 7,625 | | | | 5,432,813 | | |
Concentra Operating Corp., Sr. Notes,
9.50%, 8/15/10 | | | 1,595 | | | | 1,670,763 | | |
| Concerta Operating Corp., 9.125%, 6/1/12 | | | 1,090 | | | | 1,149,950 | | |
| Encore Medical IHC, Inc., 9.75%, 10/1/12 | | | 5,105 | | | | 5,219,863 | | |
Inverness Medical Innovations, Inc.,
Sr. Sub. Notes, 8.75%, 2/15/12 | | | 4,820 | | | | 4,771,800 | | |
Multiplan, Inc., Sr. Sub. Notes,
10.375%, 4/15/16(3) | | | 6,850 | | | | 6,995,563 | | |
| National Mentor, Inc., 9.625%, 12/1/12 | | | 3,920 | | | | 4,449,200 | | |
| Res-Care, Inc., Sr. Notes, 7.75%, 10/15/13 | | | 3,575 | | | | 3,610,750 | | |
Service Corp. International, Sr. Notes,
7.50%, 6/15/17(3) | | | 5,065 | | | | 4,989,025 | | |
Tenet Healthcare Corp., Sr. Notes,
6.50%, 6/1/12 | | | 5,030 | | | | 4,640,175 | | |
Tenet Healthcare Corp., Sr. Notes,
9.50%, 2/1/15(3) | | | 720 | | | | 736,200 | | |
Tenet Healthcare Corp., Sr. Notes,
9.875%, 7/1/14 | | | 3,720 | | | | 3,878,100 | | |
| US Oncology, Inc., 9.00%, 8/15/12 | | | 3,455 | | | | 3,679,575 | | |
| US Oncology, Inc., 10.75%, 8/15/14 | | | 6,925 | | | | 7,781,969 | | |
Vanguard Health Holding Co. II, LLC,
Sr. Sub. Notes, 9.00%, 10/1/14 | | | 5,100 | | | | 5,291,250 | | |
Ventas Realty L.P. / Capital Corp., Sr. Notes,
7.125%, 6/1/15 | | | 2,505 | | | | 2,548,838 | | |
VWR International, Inc., Sr. Sub. Notes,
8.00%, 4/15/14 | | | 8,670 | | | | 8,713,350 | | |
| | | $ | 91,223,884 | | |
| Homebuilders / Real Estate — 0.1% | |
| Stanley-Martin Co., 9.75%, 8/15/15(3) | | $ | 1,415 | | | $ | 1,301,800 | | |
| | | $ | 1,301,800 | | |
See notes to financial statements
19
Boston Income Portfolio as of April 30, 2006
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Hotels — 0.5% | |
Felcor Lodging L.P., Sr. Notes, Variable Rate,
8.83%, 6/1/11 | | $ | 2,170 | | | $ | 2,262,225 | | |
| Host Marriot L.P., Series O, 6.375%, 3/15/15 | | | 730 | | | | 709,925 | | |
| Meristar Hospitality Corp., 9.00%, 1/15/08 | | | 2,965 | | | | 3,146,606 | | |
| Meristar Hospitality Corp., 9.125%, 1/15/11 | | | 2,245 | | | | 2,592,975 | | |
| | | $ | 8,711,731 | | |
| Leisure — 3.3% | |
HRP Myrtle Beach Operations, LLC/
HRP Myrtle Beach Capital Corp., 14.50%, 4/1/14(3) | | $ | 3,730 | | | $ | 3,767,300 | | |
HRP Myrtle Beach Operations, LLC/
HRP Myrtle Beach Capital Corp., 12.50%, 4/1/13(3) | | | 3,635 | | | | 3,671,350 | | |
HRP Myrtle Beach Operations, LLC/
HRP Myrtle Beach Capital Corp., Variable Rate,
9.818%, 4/1/12(3) | | | 6,020 | | | | 6,080,200 | | |
Six Flags Theme Parks, Inc., Sr. Notes,
8.875%, 2/1/10 | | | 7,780 | | | | 7,838,350 | | |
Six Flags Theme Parks, Inc., Sr. Notes,
9.625%, 6/1/14 | | | 5,295 | | | | 5,387,663 | | |
Universal City Development Partners, Sr. Notes,
11.75%, 4/1/10 | | | 17,995 | | | | 19,906,969 | | |
Universal City Florida Holding,
Sr. Notes, Variable Rate, 9.43%, 5/1/10 | | | 10,950 | | | | 11,333,250 | | |
| | | $ | 57,985,082 | | |
| Metals / Mining — 0.5% | |
Alpha Natural Resources, Sr. Notes,
10.00%, 6/1/12 | | $ | 2,155 | | | $ | 2,370,500 | | |
| Novelis, Inc., Sr. Notes, 7.75%, 2/15/15(3) | | | 7,420 | | | | 7,234,500 | | |
| | | $ | 9,605,000 | | |
| Paper — 3.3% | |
| Abitibi-Consolidated, Inc., 6.95%, 4/1/08 | | $ | 3,165 | | | $ | 3,180,825 | | |
| Georgia-Pacific Corp., 9.50%, 12/1/11 | | | 5,520 | | | | 6,085,800 | | |
| JSG Funding PLC, Sr. Notes, 9.625%, 10/1/12 | | | 11,075 | | | | 11,739,500 | | |
| NewPage Corp., 10.00%, 5/1/12 | | | 11,565 | | | | 12,446,831 | | |
| NewPage Corp., Variable Rate, 10.93%, 5/1/12 | | | 3,310 | | | | 3,641,000 | | |
| Stone Container Corp., 7.375%, 7/15/14 | | | 4,830 | | | | 4,467,750 | | |
| Stone Container Corp., Sr. Notes, 9.25%, 2/1/08 | | | 15,079 | | | | 15,644,463 | | |
| | | $ | 57,206,169 | | |
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Publishing / Printing — 3.1% | |
American Media Operations, Inc., Series B,
10.25%, 5/1/09 | | $ | 10,326 | | | $ | 9,732,255 | | |
| CBD Media, Inc., Sr. Sub. Notes, 8.625%, 6/1/11 | | | 2,125 | | | | 2,167,500 | | |
Dex Media West, LLC, Sr. Sub. Notes,
9.875%, 8/15/13 | | | 7,072 | | | | 7,823,400 | | |
Houghton Mifflin Co., Sr. Sub. Notes,
9.875%, 2/1/13 | | | 11,340 | | | | 12,190,500 | | |
Medianews Group, Inc., Sr. Sub. Notes,
6.875%, 10/1/13 | | | 725 | | | | 667,000 | | |
R.H. Donnelley Corp., Sr. Disc. Notes,
6.875%, 1/15/13(3) | | | 3,805 | | | | 3,557,675 | | |
R.H. Donnelley Corp., Sr. Disc. Notes,
6.875%, 1/15/13(3) | | | 6,865 | | | | 6,418,775 | | |
R.H. Donnelley Corp., Sr. Notes,
8.875%, 1/15/16(3) | | | 10,635 | | | | 10,993,931 | | |
| | | $ | 53,551,036 | | |
| Railroad — 0.6% | |
| TFM SA de C.V., Sr. Notes, 9.375%, 5/1/12 | | $ | 7,455 | | | $ | 8,051,400 | | |
| TFM SA de C.V., Sr. Notes, 12.50%, 6/15/12 | | | 1,855 | | | | 2,063,688 | | |
| | | $ | 10,115,088 | | |
| Restaurants — 0.5% | |
| EPL Finance Corp., Sr. Notes, 11.75%, 11/15/13(3) | | $ | 4,665 | | | $ | 4,851,600 | | |
NPC International, Inc., Sr. Sub. Notes,
9.50%, 5/1/14(3) | | | 3,255 | | | | 3,303,825 | | |
| | | $ | 8,155,425 | | |
| Services — 3.4% | |
Avis Budget Car Rental, LLC, Sr. Notes, Variable Rate,
7.576%, 5/15/14(3) | | $ | 1,440 | | | $ | 1,488,600 | | |
| Hertz Corp., Sr. Notes, 8.875%, 1/1/14(3) | | | 12,465 | | | | 13,306,388 | | |
| Hertz Corp., Sr. Sub. Notes, 10.50%, 1/1/16(3) | | | 5,335 | | | | 5,928,519 | | |
Hydrochem Industrial Services, Inc., Sr. Sub Notes,
9.25%, 2/15/13(3) | | | 4,075 | | | | 4,064,813 | | |
Knowledge Learning Center, Sr. Sub. Notes,
7.75%, 2/1/15(3) | | | 3,695 | | | | 3,524,106 | | |
Muzak, LLC / Muzak Finance, Sr. Notes,
10.00%, 2/15/09 | | | 2,950 | | | | 2,596,000 | | |
Norcross Safety Products, LLC/Norcross Capital Corp.,
Sr. Sub. Notes, Series B, 9.875%, 8/15/11 | | | 6,635 | | | | 6,983,338 | | |
Safety Products Holdings, Inc., Sr. Notes (PIK),
11.75%, 1/1/12(3) | | | 10,294 | | | | 10,405,780 | | |
See notes to financial statements
20
Boston Income Portfolio as of April 30, 2006
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Services (continued) | |
| United Rentals North America, Inc., 6.50%, 2/15/12 | | $ | 520 | | | $ | 512,200 | | |
United Rentals North America, Inc.,
Sr. Sub. Notes, 7.00%, 2/15/14 | | | 11,140 | | | | 10,777,950 | | |
| | | $ | 59,587,694 | | |
| Steel — 0.7% | |
| Ispat Inland ULC, Sr. Notes, 9.75%, 4/1/14 | | $ | 3,829 | | | $ | 4,313,686 | | |
RathGibson, Inc., Sr. Notes,
11.25%, 2/15/14(3) | | | 7,875 | | | | 8,485,313 | | |
| | | $ | 12,798,999 | | |
| Super Retail — 2.9% | |
Affinity Group, Inc., Sr. Sub. Notes,
9.00%, 2/15/12 | | $ | 5,265 | | | $ | 5,317,650 | | |
Autonation, Inc., Variable Rate,
7.045%, 4/15/13(3) | | | 2,540 | | | | 2,597,150 | | |
| General Nutrition Centers, Inc., 8.625%, 1/15/11 | | | 1,770 | | | | 1,823,100 | | |
| GSC Holdings Corp., 8.00%, 10/1/12(3) | | | 19,130 | | | | 19,249,563 | | |
GSC Holdings Corp., Variable Rate,
8.865%, 10/1/11(3) | | | 8,785 | | | | 9,103,456 | | |
Neiman Marcus Group, Inc., Sr. Notes,
9.00%, 10/15/15(3) | | | 8,820 | | | | 9,415,350 | | |
Neiman Marcus Group, Inc., Sr. Sub. Notes,
10.375%, 10/15/15(3) | | | 3,575 | | | | 3,843,125 | | |
| | | $ | 51,349,394 | | |
| Technology — 3.3% | |
Activant Solutions, Inc., Sr. Sub. Notes,
9.50%, 5/1/16(3) | | $ | 1,810 | | | $ | 1,850,725 | | |
Advanced Micro Devices, Inc., Sr. Notes,
7.75%, 11/1/12 | | | 3,904 | | | | 4,099,200 | | |
Amkor Technologies, Inc., Sr. Notes,
7.125%, 3/15/11 | | | 125 | | | | 119,375 | | |
Amkor Technologies, Inc., Sr. Notes,
7.75%, 5/15/13 | | | 1,120 | | | | 1,073,800 | | |
CPI Holdco, Inc., Sr. Notes, Variable Rate,
10.561%, 2/1/15 | | | 2,250 | | | | 2,340,000 | | |
Solectron Global Financial Ltd., Sr. Sub. Notes,
8.00%, 3/15/16(3) | | | 1,070 | | | | 1,088,725 | | |
Sungard Data Systems, Inc., Sr. Notes,
9.125%, 8/15/13(3) | | | 7,465 | | | | 8,006,213 | | |
Sungard Data Systems, Inc., Sr. Notes, Variable Rate,
9.431%, 8/15/13(3) | | | 2,030 | | | | 2,161,950 | | |
Sungard Data Systems, Inc., Sr. Sub. Notes,
10.25%, 8/15/15(3) | | | 9,960 | | | | 10,756,800 | | |
| UGS Corp., 10.00%, 6/1/12 | | | 19,710 | | | | 21,631,725 | | |
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Technology (continued) | |
| Xerox Corp., 9.75%, 1/15/09 | | $ | 3,600 | | | $ | 3,933,000 | | |
| | | $ | 57,061,513 | | |
| Telecommunications — 7.5% | |
| AirGate PCS, Inc., 9.375%, 9/1/09 | | $ | 3,500 | | | $ | 3,679,375 | | |
| AirGate PCS, Inc., Variable Rate, 8.827%, 10/15/11 | | | 1,785 | | | | 1,854,169 | | |
Alamosa Delaware, Inc., Sr. Notes,
11.00%, 7/31/10 | | | 13,155 | | | | 14,618,494 | | |
Centennial Cellular Operating Co. /
Centennial Communication Corp., Sr. Notes,
10.125%, 6/15/13 | | | 5,490 | | | | 6,032,138 | | |
| Digicel Ltd., Sr. Notes, 9.25%, 9/1/12(3) | | | 3,900 | | | | 4,143,750 | | |
| Inmarsat Finance PLC, 7.625%, 6/30/12 | | | 4,495 | | | | 4,629,850 | | |
Intelsat Bermuda Ltd., Sr. Notes, Variable Rate,
9.614%, 1/15/12 | | | 10,805 | | | | 11,021,100 | | |
| Intelsat Ltd., Sr. Notes, 5.25%, 11/1/08 | | | 21,540 | | | | 20,839,950 | | |
IWO Holdings, Inc.,
10.75%, (0.00% until 2010) 1/15/15 | | | 3,590 | | | | 2,719,425 | | |
| IWO Holdings, Inc., 14.00%, 1/15/11(2) | | | 5,600 | | | | 0 | | |
| IWO Holdings, Inc., Variable Rate, 8.818%, 1/15/12 | | | 965 | | | | 1,010,838 | | |
| LCI International, Inc., Sr. Notes, 7.25%, 6/15/07 | | | 165 | | | | 166,650 | | |
New Skies Satellites NV, Sr. Notes, Variable Rate,
9.573%, 11/1/11 | | | 3,330 | | | | 3,446,550 | | |
New Skies Satellites NV, Sr. Sub. Notes,
9.125%, 11/1/12 | | | 8,460 | | | | 9,157,950 | | |
Qwest Communications International, Inc.,
7.25%, 2/15/11 | | | 2,180 | | | | 2,204,525 | | |
Qwest Communications International, Inc.,
7.50%, 2/15/14 | | | 15,785 | | | | 15,982,313 | | |
Qwest Communications International, Inc., Sr. Notes,
7.50%, 11/1/08 | | | 235 | | | | 235,588 | | |
| Qwest Corp., Sr. Notes, 7.625%, 6/15/15 | | | 3,500 | | | | 3,657,500 | | |
| Qwest Corp., Sr. Notes, 7.875%, 9/1/11 | | | 5,300 | | | | 5,584,875 | | |
Qwest Corp., Sr. Notes, Variable Rate,
8.16%, 6/15/13 | | | 1,080 | | | | 1,181,250 | | |
Rogers Wireless, Inc., Sr. Sub. Notes,
8.00%, 12/15/12 | | | 705 | | | | 743,775 | | |
Rogers Wireless, Inc., Variable Rate,
8.035%, 12/15/10 | | | 5,465 | | | | 5,656,275 | | |
Telemig Celular SA/Amazonia Celular SA,
8.75%, 1/20/09(3) | | | 2,600 | | | | 2,736,500 | | |
U.S. West Communications, Debs.,
7.20%, 11/10/26 | | | 670 | | | | 660,788 | | |
| UbiquiTel Operating Co., Sr. Notes, 9.875%, 3/1/11 | | | 8,225 | | | | 9,068,063 | | |
| | | $ | 131,031,691 | | |
See notes to financial statements
21
Boston Income Portfolio as of April 30, 2006
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Textiles / Apparel — 3.1% | |
| Levi Strauss & Co., Sr. Notes, 12.25%, 12/15/12 | | $ | 17,010 | | | $ | 19,306,350 | | |
Levi Strauss & Co., Sr. Notes, Variable Rate,
9.74%, 4/1/12 | | | 7,950 | | | | 8,317,688 | | |
| Oxford Industries, Inc., Sr. Notes, 8.875%, 6/1/11 | | | 9,180 | | | | 9,524,250 | | |
Perry Ellis International, Inc., Sr. Sub. Notes,
8.875%, 9/15/13 | | | 4,390 | | | | 4,433,900 | | |
| Phillips Van-Heusen, Sr. Notes, 7.25%, 2/15/11 | | | 1,740 | | | | 1,757,400 | | |
| Phillips Van-Heusen, Sr. Notes, 8.125%, 5/1/13 | | | 4,000 | | | | 4,230,000 | | |
| Quiksilver, Inc., 6.875%, 4/15/15 | | | 2,495 | | | | 2,420,150 | | |
| Russell Corp., 9.25%, 5/1/10 | | | 4,075 | | | | 4,278,750 | | |
| | | $ | 54,268,488 | | |
| Transportation Ex Air / Rail — 0.5% | |
H-Lines Finance Holding Corp., Sr. Disc. Notes,
11.00%, (0.00% until 2008) 4/1/13 | | $ | 2,583 | | | $ | 2,208,465 | | |
| Horizon Lines, LLC, 9.00%, 11/1/12 | | | 3,787 | | | | 3,962,149 | | |
Quality Distribution, LLC /
QD Capital Corp., Variable Rate, 9.568%, 1/15/12 | | | 3,045 | | | | 3,052,613 | | |
| | | $ | 9,223,227 | | |
| Utilities — 2.8% | |
| AES Corp., Sr. Notes, 8.75%, 5/15/13(3) | | $ | 3,555 | | | $ | 3,866,063 | | |
| AES Corp., Sr. Notes, 8.875%, 2/15/11 | | | 322 | | | | 347,760 | | |
| AES Corp., Sr. Notes, 9.00%, 5/15/15(3) | | | 1,890 | | | | 2,069,550 | | |
| AES Eastern Energy, Series 99-A, 9.00%, 1/2/17 | | | 2,881 | | | | 3,247,117 | | |
| Dynegy Holdings, Inc., 8.375%, 5/1/16(3) | | | 7,340 | | | | 7,340,000 | | |
| Dynegy Holdings, Inc., Debs., 7.625%, 10/15/26 | | | 7,090 | | | | 6,451,900 | | |
Mirant North America, LLC, Sr. Notes,
7.375%, 12/31/13(3) | | | 1,615 | | | | 1,629,131 | | |
| Mission Energy Holding Co., 13.50%, 7/15/08 | | | 5,230 | | | | 5,968,738 | | |
| NRG Energy, Inc., Sr. Notes, 7.375%, 2/1/16 | | | 1,360 | | | | 1,375,300 | | |
Orion Power Holdings, Inc., Sr. Notes,
12.00%, 5/1/10 | | | 14,185 | | | | 16,241,826 | | |
| | | $ | 48,537,385 | | |
Total Corporate Bonds & Notes
(identified cost $1,449,307,520) | | | | | | $ | 1,488,023,346 | | |
| Convertible Bonds — 1.5% | |
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Aerospace — 0.3% | |
| L-3 Communications Corp., 3.00%, 8/1/35(3) | | $ | 5,745 | | | $ | 5,745,000 | | |
| | | $ | 5,745,000 | | |
| Security | | Principal
Amount
(000's omitted) | | Value | |
| Broadcasting — 0.3% | |
| Sinclair Broadcast Group, Inc., 4.875%, 7/15/18 | | $ | 1,585 | | | $ | 1,392,819 | | |
| XM Satellite Radio Holdings, Inc., 1.75%, 12/1/09 | | | 1,750 | | | | 1,456,875 | | |
| XM Satellite Radio, Inc., 1.75%, 12/1/09(3) | | | 3,450 | | | | 2,872,125 | | |
| | | $ | 5,721,819 | | |
| Gaming — 0.2% | |
| Kerzner International Ltd., 2.375%, 4/15/24(3) | | $ | 2,080 | | | $ | 2,818,400 | | |
| | | $ | 2,818,400 | | |
| Technology — 0.7% | |
| Amkor Technologies, Inc., 5.75%, 6/1/06 | | $ | 2,290 | | | $ | 2,301,450 | | |
| Nortel Networks Ltd., 4.25%, 9/1/08 | | | 9,380 | | | | 8,934,450 | | |
| | | $ | 11,235,900 | | |
Total Convertible Bonds
(identified cost, $25,589,921) | | | | | | $ | 25,521,119 | | |
| Common Stocks — 1.2% | |
| Security | | Shares | | Value | |
| Gaming — 0.6% | |
| Shreveport Gaming Holdings, Inc.(4)(5) | | | 4,453 | | | $ | 79,486 | | |
| Trump Entertainment Resorts, Inc.(5) | | | 549,513 | | | | 10,451,737 | | |
| | | $ | 10,531,223 | | |
| Telecommunications — 0.1% | |
| Crown Castle International Corp.(5) | | | 62,704 | | | $ | 2,109,676 | | |
| | | $ | 2,109,676 | | |
| Transportation Ex Air / Rail — 0.0% | |
| Quality Distribution, Inc. | | | 1,084 | | | $ | 16,396 | | |
| | | $ | 16,396 | | |
| Utilities — 0.5% | |
| Mirant Corp.(5) | | | 342,879 | | | $ | 8,409,107 | | |
| | | $ | 8,409,107 | | |
Total Common Stocks
(identified cost $16,280,078) | | | | | | $ | 21,066,402 | | |
See notes to financial statements
22
Boston Income Portfolio as of April 30, 2006
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
| Convertible Preferred Stocks — 1.3% | |
| Security | | Shares | | Value | |
| Energy — 0.6% | |
| Chesapeake Energy Corp., 4.50% | | | 91,533 | | | $ | 8,695,635 | | |
| Chesapeake Energy Corp., 5.00%(3) | | | 21,939 | | | | 2,320,049 | | |
| | | $ | 11,015,684 | | |
| Telecommunications — 0.6% | |
| Crown Castle International Corp., (PIK), 6.25% | | | 174,523 | | | $ | 9,642,396 | | |
| | | $ | 9,642,396 | | |
| Utilities — 0.1% | |
| NRG Energy, Inc., 4.00%(3) | | | 1,255 | | | $ | 1,639,501 | | |
| | | $ | 1,639,501 | | |
Total Convertible Preferred Stocks
(identified cost $20,180,492) | | | | | | $ | 22,297,581 | | |
| Warrants — 0.2% | |
| Security | | Shares | | Value | |
| Cable / Satellite TV — 0.0% | |
| Ono Finance PLC, Exp. 3/16/11(3)(4)(5) | | | 2,520 | | | $ | 173,880 | | |
| Ono Finance PLC, Exp. 5/31/09(4)(5) | | | 3,440 | | | | 104,920 | | |
| Ono Finance PLC, Exp. 5/31/09(4)(5) | | | 1,200 | | | | 40,057 | | |
| | | $ | 318,857 | | |
| Consumer Products — 0.0% | |
| HF Holdings, Inc., Exp. 9/27/09(4)(5) | | | 3,400 | | | $ | 0 | | |
| | | $ | 0 | | |
| Gaming — 0.0% | |
Peninsula Gaming LLC, Convertible Preferred
Membership Interests(4)(5)(6) | | | 6,338 | | | $ | 38,027 | | |
| | | $ | 38,027 | | |
| Restaurants — 0.0% | |
| New World Coffee, Exp. 6/15/06(4)(5)(6) | | | 845 | | | $ | 8 | | |
| | | $ | 8 | | |
| Security | | Shares | | Value | |
| Technology — 0.0% | |
| Asat Finance, Exp. 11/1/06(3)(4)(5) | | | 3,900 | | | $ | 78 | | |
| | | $ | 78 | | |
| Telecommunications — 0.2% | |
| American Tower Corp., Exp. 8/1/08(3)(5) | | | 4,825 | | | $ | 2,318,827 | | |
| | | $ | 2,318,827 | | |
Total Warrants
(identified cost $505,960) | | | | | | $ | 2,675,797 | | |
| Miscellaneous — 0.0% | |
| Security | | Shares | | Value | |
| Gaming — 0.0% | |
| Trump Atlantic City(4)(5) | | | 8,960,000 | | | $ | 344,960 | | |
| | | $ | 344,960 | | |
| Utilities — 0.0% | |
| Mirant Corp., Escrow Certificate | | | 2,205,000 | | | $ | 88,200 | | |
| Mirant Corp., Escrow Certificate | | | 4,900,000 | | | | 196,000 | | |
| | | $ | 284,200 | | |
Total Miscellaneous
(identified cost $0) | | | | | | $ | 629,160 | | |
| Commercial Paper — 5.1% | |
| Security | | Principal
Amount
(000's omitted) | | Value | |
| HSBC Finance Corp., 4.75%, 5/3/06 | | $ | 10,000 | | | $ | 9,997,361 | | |
| Novartis Finance Corp., 4.83%, 5/1/06 | | | 79,290 | | | | 79,290,000 | | |
Total Commercial Paper
(at amortized cost, $89,287,361) | | | | | | $ | 89,287,361 | | |
See notes to financial statements
23
Boston Income Portfolio as of April 30, 2006
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
| Time Deposit — 0.1% | |
| Security | | Principal
Amount
(000's omitted) | | Value | |
Investors Bank and Trust Company Time Deposit,
4.86%, 5/1/06 | | $ | 2,000 | | | $ | 2,000,000 | | |
Total Time Deposit
(at amortized cost, $2,000,000) | | | | $ | 2,000,000 | | |
Total Investments — 98.0%
(identified cost $1,659,186,257) | | | | $ | 1,707,638,439 | | |
| Other Assets, Less Liabilities — 2.0% | | | | $ | 34,693,436 | | |
| Net Assets — 100.0% | | | | $ | 1,742,331,875 | | |
PIK - Payment In Kind.
(1) Senior floating-rate loans often require prepayments from excess cash flows or permit the borrower to repay at its election. The degree to which borrowers repay, whether as a contractual requirement or at their election, cannot be predicted with accuracy. As a result, the actual remaining maturity may be substantially less than the stated maturities shown. However, it is anticipated that the senior floating-rate interests will have an expected average life of approximately two to three years. The stated interest rate represents the weighted average interest rate of all contracts within the senior loan facility. Senior Loans typically have rates of interest which are redetermined either daily, monthly, quarterly or semi-annually by reference to a base lending rate, plus a premium. These base lending rates are primarily the London-Int erbank Offered Rate ("LIBOR"), and secondarily the prime rate offered by one or more major United States banks (the "Prime Rate") and the certificate of deposit ("CD") rate or other base lending rates used by commercial lenders.
(2) Defaulted security. Currently the issuer is in default with respect to interest payments.
(3) Security exempt from registration under Rule 144A of the Securities Act of 1933. These securities may be sold in transactions exempt from registration, normally to qualified institutional buyers. At April 30, 2006, the aggregate value of the securities is $411,970,949 or 23.6% of the Portfolio's net assets.
(4) Security valued at fair value using methods determined in good faith by or at the direction of the Trustees.
(5) Non-income producing security.
(6) Restricted security.
See notes to financial statements
24
Boston Income Portfolio as of April 30, 2006
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
As of April 30, 2006
| Assets | |
| Investments, at value (identified cost, $1,659,186,257) | | $ | 1,707,638,439 | | |
| Cash | | | 32,672 | | |
| Receivable for investments sold | | | 22,422,905 | | |
| Interest and dividends receivable | | | 36,026,997 | | |
| Total assets | | $ | 1,766,121,013 | | |
| Liabilities | |
| Payable for investments purchased | | $ | 22,815,884 | | |
| Payable to affiliate for Investment Advisory fees | | | 897,621 | | |
| Payable to affiliate for Trustees' fees | | | 2,539 | | |
| Accrued expenses | | | 73,094 | | |
| Total liabilities | | $ | 23,789,138 | | |
| Net Assets applicable to investors' interest in Portfolio | | $ | 1,742,331,875 | | |
| Sources of Net Assets | |
| Net proceeds from capital contributions and withdrawals | | $ | 1,693,879,693 | | |
| Net unrealized appreciation (computed on the basis of identified cost) | | | 48,452,182 | | |
| Total | | $ | 1,742,331,875 | | |
Statement of Operations
For the Six Months Ended
April 30, 2006
| Investment Income | |
| Interest | | $ | 71,066,377 | | |
| Dividends | | | 588,175 | | |
| Other Income | | | 1,671,984 | | |
| Total investment income | | $ | 73,326,536 | | |
| Expenses | |
| Investment adviser fee | | $ | 5,319,081 | | |
| Trustees' fees and expenses | | | 14,458 | | |
| Custodian fee | | | 200,922 | | |
| Legal and accounting services | | | 45,052 | | |
| Miscellaneous | | | 31,693 | | |
| Total expenses | | $ | 5,611,206 | | |
Deduct —
Reduction of investment adviser fee | | $ | 25,266 | | |
| Total expense reductions | | $ | 25,266 | | |
| Net expenses | | $ | 5,585,940 | | |
| Net investment income | | $ | 67,740,596 | | |
| Realized and Unrealized Gain (Loss) | |
Net realized gain (loss) —
Investment transactions (identified cost basis) | | $ | 18,299,664 | | |
| Swap contracts | | | 578,964 | | |
Foreign currency and forward foreign currency exchange
contract transactions | | | 28,506 | | |
| Net realized gain | | $ | 18,907,134 | | |
Change in unrealized appreciation (depreciation) —
Investments (identified cost basis) | | $ | 16,954,816 | | |
| Swap contracts | | | (381,347 | ) | |
| Foreign currency and forward foreign currency exchange contracts | | | (41,879 | ) | |
| Net change in unrealized appreciation (depreciation) | | $ | 16,531,590 | | |
| Net realized and unrealized gain | | $ | 35,438,724 | | |
| Net increase in net assets from operations | | $ | 103,179,320 | | |
See notes to financial statements
25
Boston Income Portfolio as of April 30, 2006
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
Increase (Decrease)
in Net Assets | | Six Months Ended
April 30, 2006
(Unaudited) | | Year Ended
October 31, 2005 | |
From operations —
Net investment income | | $ | 67,740,596 | | | $ | 134,085,114 | | |
Net realized gain from investments,
and foreign currency and forward
foreign currency exchange
contract transactions | | | 18,907,134 | | | | 22,707,377 | | |
Net change in unrealized appreciation
(depreciation) from investments,
swaps, and foreign currency and
foreign currency exchange contracts | | | 16,531,590 | | | | (61,844,432 | ) | |
| Net increase in net assets from operations | | $ | 103,179,320 | | | $ | 94,948,059 | | |
Capital transactions —
Contributions | | $ | 205,637,831 | | | $ | 504,652,003 | | |
| Withdrawals | | | (252,657,568 | ) | | | (632,859,203 | ) | |
Net decrease in net assets from
capital transactions | | $ | (47,019,737 | ) | | $ | (128,207,200 | ) | |
| Net increase (decrease) in net assets | | $ | 56,159,583 | | | $ | (33,259,141 | ) | |
| Net Assets | |
| At beginning of period | | $ | 1,686,172,292 | | | $ | 1,719,431,433 | | |
| At end of period | | $ | 1,742,331,875 | | | $ | 1,686,172,292 | | |
See notes to financial statements
26
Boston Income Portfolio as of April 30, 2006
FINANCIAL STATEMENTS CONT'D
Supplementary Data
| | | Six Months Ended
April 30, 2006 | | Year Ended
October 31, | | Period Ended
October 31, | | Year Ended September 30, | |
| | | (Unaudited) | | 2005 | | 2004(1) | | 2004 | | 2003 | | 2002(2) | | 2001(3) | |
| Ratios/Supplemental Data† | |
| Ratios (As a percentage of average daily net assets): | |
| Net expenses | | | 0.66 | %(4) | | | 0.65 | % | | | 0.66 | %(4) | | | 0.66 | % | | | 0.66 | % | | | 0.68 | % | | | 0.69 | %(4) | |
| Net expenses after custodian fee reduction | | | 0.66 | %(4) | | | 0.65 | % | | | 0.66 | %(4) | | | 0.66 | % | | | 0.66 | % | | | 0.68 | % | | | 0.69 | %(4) | |
| Net investment income | | | 8.02 | %(4) | | | 7.71 | % | | | 7.29 | %(4) | | | 8.29 | % | | | 9.51 | % | | | 9.91 | % | | | 10.38 | %(4) | |
| Portfolio Turnover | | | 35 | % | | | 71 | % | | | 5 | % | | | 79 | % | | | 116 | % | | | 91 | % | | | 16 | % | |
| Total Return(5) | | | 6.12 | % | | | 5.80 | % | | | 1.82 | % | | | 13.28 | % | | | 26.96 | % | | | 2.09 | % | | | — | | |
| Net assets, end of period (000's omitted) | | $ | 1,742,332 | | | $ | 1,686,172 | | | $ | 1,719,431 | | | $ | 1,669,254 | | | $ | 1,367,987 | | | $ | 796,712 | | | $ | 752,620 | | |
† The operating expenses of the Portfolio reflect reductions of the investment adviser fee. Had such actions not been taken, the ratios would have been the same.
(1) For the one month period ended October 31, 2004. The Portfolio changed its fiscal year end from September 30 to October 31.
(2) The Portfolio adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies and changed its methodology for accreting market discount for certain securities. It also began amortizing premiums on fixed-income securities using the interest method of amortization. Prior to October 1, 2001, the Portfolio did not amortize market premiums on fixed-income securities. The effect of these changes for the year ended September 30, 2002 was to decrease the ratio of net investment income to average net assets from 10.12% to 9.91%.
(3) For the period from the start of business, July 23, 2001, to September 30, 2001.
(4) Annualized.
(5) Total return is required to be disclosed for fiscal years beginning after December 15, 2000.
See notes to financial statements
27
Boston Income Portfolio as of April 30, 2006
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
Boston Income Portfolio (the Portfolio) is registered under the Investment Company Act of 1940, as amended, as an open-end investment company. The Portfolio, which was organized as a trust under the laws of the state of New York on March 13, 2001, has as its objective to provide as much current income as possible. The Declaration of Trust permits the Trustees to issue interests in the Portfolio. At April 30, 2006, the Eaton Vance Income Fund of Boston and Eaton Vance Diversified Income Fund held an approximate 95.2% and 4.8% interest in the Portfolio, respectively. The following is a summary of significant accounting policies consistently followed by the Portfolio in the preparation of its financial statements. The policies are in conformity with accounting principles generally accepted in the United States of America.
A Investment Valuation — 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 and senior floating-rate loan interests (other than short-term obligations), including listed investments and investments for which 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. If short-term debt securities are acquired with a remaining maturity of more than 60 days, they will be valued by a pricing service. Investme nts 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 recorded on the basis of interest accrued, adjusted for amortization of premium or accretion of discount. Fees associated with loan amendments are recognized immediately. Dividend income is recorded on the ex-dividend date for dividends received in cash and/or securities.
C Federal Taxes — The Portfolio has elected to be treated as a partnership for 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 on its share of taxable income. Since at least one of the Portfolio's investors is a regulated investment company that invests all or substantially all of its 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 a mong its investors, each investor's distributive share of the Portfolio's net investment income, net realized capital gains, and any other items of income, gain, loss, deduction or credit.
D 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.
E Forward Foreign Currency Exchange Contracts — The Portfolio may enter into forward foreign currency exchange contracts for the purchase or sale of a specific foreign currency at a fixed price on a future date. Risks may arise upon entering these contracts from the potential inability of counterparties to meet the terms of their contracts and from movements in the value of a foreign currency relative to the U.S. dollar. The Portfolio will enter into forward contracts for hedging purposes as well as non-hedging purposes. The forward foreign currency exchange contracts are adjusted by the daily exchange rate of the underlying currency and any gains or losses are recorded for financial statement purposes as unrealized until such time as the contracts have been closed.
F Credit Default Swaps — The Trust may enter into credit default swap contracts for risk management purposes, including diversification. When the Trust is a buyer of a credit default swap contract, the Trust is entitled to receive the par (or other agreed-upon) value of a referenced debt obligation from the counterparty to the contract in the event of a default by a third party, such as a U.S. or foreign corporate issuer, on the debt obligation. In return, the Trust would pay the counterparty a periodic stream of payments over the term of the contract provided that no event of default has occurred. If no default occurs, the Trust would have spent the stream of payments and received no benefit from the contract. When the Trust is the seller of a credit
28
Boston Income Portfolio as of April 30, 2006
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
default swap contract, it receives the stream of payments, but is obligated to pay upon default of the referenced debt obligations. As the seller, the Trust would effectively add leverage to its portfolio because, in addition to its total net assets, the Trust would be subject to investment exposure on the notional amount of the swap. The Trust will segregate assets in the form of cash and cash equivalents in an amount equal to the aggregate market value of the credit default swap of which it is the seller, marked to market on a daily basis. These transactions involve certain risks, including the risk that the seller may be unable to fulfill the transaction.
G 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 balance the Portfolio maintains with IBT. All credit balances used to reduce the Portfolio's custodian fees are reported as a reduction of expenses in the Statement of Operations.
H Use of Estimates — The preparation of the 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 income and expense during the reporting period. Actual results could differ from those estimates.
I Indemnifications — Under the Portfolio's organizational documents, its officers and Trustees may be indemnified against certain liabilities and expenses arising out of the performance of their duties to the Portfolio. Interestholders in the Portfolio are jointly and severally liable for the liabilities and obligations of the Portfolio in the event that the Portfolio fails to satisfy such liabilities and obligations; provided, however, that, to the extent assets are available in the Portfolio, the Portfolio may, under certain circumstances, indemnify interestholders from and against any claim or liability to which such holder may become subject by reason of being or having been an interestholder in t he Portfolio. Additionally, in the normal course of business, the Portfolio enters into agreements with service providers that may contain indemnification clauses. The Portfolio's maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Portfolio that have not yet occurred.
J Other — Investment transactions are accounted for on the date the securities are purchased or sold. Realized gains and losses on securities sold are determined on the basis of identified cost.
K Interim Financial Statements — The interim financial statements relating to April 30, 2006 and for the six months then ended have not been audited by an independent registered public accounting firm, 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. BMR receives a monthly advisory fee in the amount of 5/96th of 1% (equal to 0.625% annually) of average daily net assets of the Portfolio. For the six months ended April 30, 2006 the advisory fee amounted to $5,319,081. Effective March 27, 2006, BMR agreed to a fee reduction, pursuant to a Fee Reduction Agreement between BMR and the Portfolio. On assets of $2 billion or more, BMR has agreed to reduce its annual fee rate as follows: 0.575% (annualized) of average net assets of $2 billion but less than $5 billion and 0.555% (annualized) of average net assets of $5 billion or more. Prior to March 27, 2006, BMR had agreed to reduce its annual fee rate as follows: 0.60% of average net assets of $1.5 billion bu t less than $2 billion and 0.575% of average net assets of $2 billion or more. Pursuant to such contractual agreements, BMR reduced its fee in the amount of $25,266 for the six months ended April 30, 2006. BMR has also agreed to reduce the investment adviser fee by an amount equal to that portion of commissions paid to broker dealers in execution of portfolio transactions attributed to the Portfolio that is consideration for third-party research services. There was no advisory fee reduction for the six months ended April 30, 2006. 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 the investment adviser fee. Trustees of the Portfolio who are not affiliated with BMR may elect to defer receipt of all or a percentage of their annual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended April 30, 2006 no significant amounts have been deferr ed.
29
Boston Income Portfolio as of April 30, 2006
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
Certain officers and Trustees of the Portfolio are officers of the above organizations.
3 Investment Transactions
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 $550,152,331 and $563,535,144 respectively, for the six months ended April 30, 2006.
4 Federal Income Tax Basis of Unrealized Appreciation (Depreciation)
The cost and unrealized appreciation (depreciation) in value of the investments owned at April 30, 2006, as determined on a federal income tax basis, were as follows:
| Aggregate cost | | $ | 1,663,072,445 | | |
| Gross unrealized appreciation | | $ | 64,792,319 | | |
| Gross unrealized depreciation | | | (20,226,325 | ) | |
| Net unrealized appreciation | | $ | 44,565,994 | | |
5 Financial Instruments
The Portfolio may trade 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, financial futures and swap contracts and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the investment the Portfolio has in particular classes of financial instruments and do 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. The Portfolio did not have any open financial instruments at April 30, 2006.
6 Line of Credit
The Portfolio participates with other portfolios and funds managed by BMR and EVM and its affiliates in a $150 million unsecured line of credit agreement with a group of banks. Borrowings will be made by the Portfolio solely to facilitate the handling of unusual and/or unanticipated short-term cash requirements. Interest is charged to each participating portfolio or fund 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 portfolios and funds at the end of each quarter. The Portfolio did not have any significant borrowings or allocated fees during the six months ended April 30, 2006.
7 Restricted Securities
At April 30, 2006, the Portfolio owned the following securities (representing less than 0.01% 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 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.
| Description | | Date of
Acquisition | | Shares | | Cost | | Fair Value | |
| Common Stocks and Warrants | |
Peninsula Gaming LLC,
Convertible Preferred
Membership Interests | | 7/08/99 | | | 6,338 | | | $ | 0 | | | $ | 38,027 | | |
New World Coffee,
Exp. 6/15/06 | | 1/06/03 -
5/13/03 | | | 845 | | | | 0 | | | | 8 | | |
| | | $ | 0 | | | $ | 38,035 | | |
30
Eaton Vance Income Fund of Boston
BOARD OF TRUSTEES' ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT
Overview of the Contract Review Process
The Investment Company Act of 1940, as amended (the "1940 Act"), provides, in substance, that each investment advisory agreement between a fund and its investment adviser will continue in effect from year to year only if its continuance is approved at least annually by the fund's board of trustees, including by a vote of a majority of the trustees who are not "interested persons" of the fund ("Independent Trustees") cast in person at a meeting called for the purpose of considering such approval.
At a meeting of the Boards of Trustees (each a "Board") of the Eaton Vance group of mutual funds (the "Eaton Vance Funds") held on March 27, 2006, the Board, including a majority of the Independent Trustees, voted to approve continuation of existing advisory and sub-advisory agreements for the Eaton Vance Funds for an additional one-year period. In voting its approval, the Board relied upon the affirmative recommendation of the Special Committee of the Board, which is a committee comprised exclusively of Independent Trustees. Prior to making its recommendation, the Special Committee reviewed information furnished for a series of meetings of the Special Committee held in February and March 2006. Such information included, among other things, the following:
Information about Fees, Performance and Expenses
• An independent report comparing the advisory and related fees paid by each fund with fees paid by comparable funds;
• An independent report comparing each fund's total expense ratio and its components to comparable funds;
• An independent report comparing the investment performance of each fund to the investment performance of comparable funds over various time periods;
• Data regarding investment performance in comparison to relevant peer groups of funds and appropriate indices;
• Comparative information concerning fees charged by each adviser for managing other mutual funds and institutional accounts using investment strategies and techniques similar to those used in managing the fund;
• Profitability analyses for each adviser with respect to each fund managed by it;
Information about Portfolio Management
• Descriptions of the investment management services provided to each fund, including the investment strategies and processes employed;
• Information concerning the allocation of brokerage and the benefits received by each adviser as a result of brokerage allocation, including information concerning the acquisition of research through "soft dollar" benefits received in connection with the funds' brokerage, and the implementation of a soft dollar reimbursement program established with respect to the funds;
• Data relating to portfolio turnover rates of each fund;
• The procedures and processes used to determine the fair value of fund assets and actions taken to monitor and test the effectiveness of such procedures and processes;
Information about each Adviser
• Reports detailing the financial results and condition of each adviser;
• Descriptions of the qualifications, education and experience of the individual investment professionals whose responsibilities include portfolio management and investment research for the funds, and information relating to their compensation and responsibilities with respect to managing other mutual funds and investment accounts;
• Copies of the Codes of Ethics of each adviser and its affiliates, together with information relating to compliance with and the administration of such codes;
• Information concerning the resources devoted to compliance efforts undertaken by each adviser and its affiliates on behalf of the funds (including descriptions of various compliance programs) and their record of compliance with investment policies and restrictions, including policies with respect to market-timing, late trading and selective portfolio disclosure, and with policies on personal securities transactions;
• Descriptions of the business continuity and disaster recovery plans of each adviser and its affiliates;
Other Relevant Information
• Information concerning the nature, cost and character of the administrative and other non-investment management services provided by Eaton Vance Management and its affiliates;
• Information concerning management of the relationship with the custodian, subcustodians and fund accountants by each adviser or the funds' administrator; and
• The terms of each advisory agreement.
In addition to the information identified above, the Special Committee considered information provided from time to time by each adviser throughout the year at meetings of the Board and its committees. Over the course of the twelve month period ended March 31, 2006, the
31
Eaton Vance Income Fund of Boston
BOARD OF TRUSTEES' ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT CONT'D
Board met nine times and the Special Committee, the Audit Committee and the Governance Committee, each of which is a Committee comprised solely of Independent Trustees, met eight, twelve and five times, respectively. At such meetings, the Trustees received, among other things, presentations by the portfolio managers and other investment professionals of each adviser relating to the investment performance of each fund and the investment strategies used in pursuing the fund's investment objective.
For funds that invest through one or more underlying portfolios, the Board considered similar information about the portfolio(s) when considering the approval of advisory agreements. In addition, in cases where the fund's investment adviser has engaged a sub-adviser, the Board considered similar information about the sub-adviser when considering the approval of any sub-advisory agreement.
The Special Committee was assisted throughout the contract review process by Goodwin Procter LLP, legal counsel for the Independent Trustees. The members of the Special Committee relied upon the advice of such counsel and their own business judgment in determining the material factors to be considered in evaluating each advisory and sub-advisory agreement and the weight to be given to each such factor. The conclusions reached with respect to each advisory and sub-advisory agreement were based on a comprehensive evaluation of all the information provided and not any single factor. Moreover, each member of the Special Committee may have placed varying emphasis on particular factors in reaching conclusions with respect to each advisory and sub-advisory agreement.
Results of the Process
Based on its consideration of the foregoing, and such other information as it deemed relevant, including the factors and conclusions described below, the Special Committee concluded that the continuance of the investment advisory agreement of the Boston Income Portfolio, the portfolio in which the Eaton Vance Income Fund of Boston (the "Fund") invests (the "Portfolio"), with Boston Management and Research (the "Adviser"), including the fee structure, is in the interests of shareholders and, therefore, the Special Committee recommended to the Board approval of the agreement. The Board accepted the recommendation of the Special Committee as well as the factors considered and conclusions reached by the Special Committee with respect to the agreement. Accordingly, the Board, including a majority of the Independent Trustees, voted to approve continuation of the investment advisory agreement for the Portfolio.
Nature, Extent and Quality of Services
In considering whether to approve the investment advisory agreement of the Portfolio, the Board evaluated the nature, extent and quality of services provided to the Portfolio by the Adviser.
The Board considered the Adviser's management capabilities and investment process with respect to the types of investments held by the Portfolio, including the education, experience and number of its investment professionals and other personnel who provide portfolio management, investment research, and similar services to the Portfolio. In particular, the Board evaluated the abilities and experience of such investment personnel in analyzing special considerations relevant to investing in high-yield debt. The Board also took into account the resources dedicated to portfolio management and other services, including the compensation paid to recruit and retain investment personnel, and the time and attention devoted to each Portfolio in the complex by senior management.
The Board reviewed the compliance programs of the Adviser and and relevant affiliates thereof. Among other matters, the Board considered compliance and reporting matters relating to personal trading by investment personnel, selective disclosure of portfolio holdings, late trading, frequent trading, portfolio valuation, business continuity and the allocation of investment opportunities. The Board also evaluated the responses of the Adviser and its affiliates to requests from regulatory authorities such as the Securities and Exchange Commission and the National Association of Securities Dealers.
The Board considered shareholder and other administrative services provided or managed by Eaton Vance Management and its affiliates, including transfer agency and accounting services. The Board evaluated the benefits to shareholders of investing in a fund that is a part of a large family of funds, including the ability, in many cases, to exchange an investment among different funds without incurring additional sales charges.
After consideration of the foregoing factors, among others, the Board concluded that the nature, extent and quality of services provided by the Adviser, taken as a whole, are appropriate and consistent with the terms of the investment advisory agreement.
Fund Performance
The Board compared the Fund's investment performance to a relevant universe of similarly managed funds identified by an independent data provider and appropriate benchmark indices. The Board reviewed comparative performance data for the one-, three-, five- and ten-year periods ended September 30, 2005 for the Fund. The Board concluded that the performance of the Fund was satisfactory.
32
Eaton Vance Income Fund of Boston
BOARD OF TRUSTEES' ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT CONT'D
Management Fees and Expenses
The Board reviewed contractual investment advisory fee rates payable by the Portfolio and the Fund (referred to as "management fees"). As part of its review, the Board considered the management fees and the Fund's total expense ratio for the one-year period ended September 30, 2005, as compared to a group of similarly managed funds selected by an independent data provider.
After reviewing the foregoing information, and in light of the nature, extent and quality of the services provided by the Adviser, the Board concluded that the management fees charged for advisory and related services and the Fund's total expense ratio are reasonable.
Profitability
The Board reviewed the level of profits realized by the Adviser and relevant affiliates thereof in providing investment advisory and administrative services to the Fund, the Portfolio and to all Eaton Vance Funds as a group. The Board considered the level of profits realized without regard to revenue sharing or other payments by the Adviser and its affiliates to third parties in respect of distribution services. The Board also considered other direct or indirect benefits received by the Adviser and its affiliates in connection with its relationship with the Fund and the Portfolio.
The Board concluded that, in light of the foregoing factors and the nature, extent and quality of the services rendered, the profits realized by the Adviser and its affiliates are reasonable.
Economies of Scale
In reviewing management fees and profitability, the Board also considered the extent to which the Adviser and its affiliates, on the one hand, and the Fund, on the other hand, can expect to realize benefits from economies of scale as the assets of the Fund and Portfolio increase. The Board acknowledged the difficulty in accurately measuring the benefits resulting from the economies of scale with respect to the management of any specific fund or group of funds. The Board reviewed data summarizing the increases and decreases in the assets of the Fund and of all Eaton Vance Funds as a group over various time periods, and evaluated the extent to which the total expense ratio of the Fund and the profitability of the Adviser and its affiliates may have been affected by such increases or decreases. The Board noted that, at its request, the Adviser had agreed to add a breakpoint for the Boston Income Portfolio with respect to assets tha t exceed $5 billion. Based upon the foregoing, the Board concluded that the benefits from economies of scale are currently being shared equitably by the Adviser and its affiliates and the Fund. The Board also concluded that, assuming reasonably foreseeable increases in the assets of the Portfolio, the structure of the advisory fee, which includes breakpoints at several asset levels, can be expected to cause the Adviser and its affiliates and the Fund to continue to share such benefits equitably.
33
Eaton Vance Income Fund of Boston
INVESTMENT MANAGEMENT
Eaton Vance Income Fund of Boston
Officers
Michael W. Weilheimer
President
Thomas P. Huggins
Vice President
Cliff Quisenberry, Jr.
Vice President
Barbara E. Campbell
Treasurer
Alan R. Dynner
Secretary
Paul M. O'Neil
Chief Compliance Officer | | Trustees
Samuel L. Hayes, III
Chairman
Benjamin C. Esty
James B. Hawkes
William H. Park
Ronald A. Pearlman
Norton H. Reamer
Lynn A. Stout
Ralph F. Verni | |
|
Boston Income Portfolio
Officers
Michael W. Weilheimer
President and Co-Portfolio Manager
Thomas P. Huggins
Vice President and Co-Portfolio Manager
Dan A. Maalouly
Treasurer
Alan R. Dynner
Secretary
Paul M. O'Neil
Chief Compliance O fficer | | Trustees
Samuel L. Hayes, III
Chairman
Benjamin C. Esty
James B. Hawkes
William H. Park
Ronald A. Pearlman
Norton H. Reamer
Lynn A. Stout
Ralph F. Verni | |
|
34
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Investment Adviser of Boston Income Portfolio
Boston Management and Research
The Eaton Vance Building
255 State Street
Boston, MA 02109
Principal Underwriter
Eaton Vance Distributors, Inc.
The Eaton Vance Building
255 State Street
Boston, MA 02109
(617) 482-8260
Custodian
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
Transfer Agent
PFPC Inc.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
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. Before investing, investors should consider carefully the Fund's investment objective(s), risks, and charges and expenses. The Fund's current prospectus contains this and other information about the Fund and is available through your financial advisor. Please read the prospectus carefully before you invest or send money. For further information please call 1-800-225-6265.
443-6/06 IBSRC
Item 2. Code of Ethics
The registrant has adopted a code of ethics applicable to its Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer. The registrant undertakes to provide a copy of such code of ethics to any person upon request, without charge, by calling 1-800-262-1122.
Item 3. Audit Committee Financial Expert
The registrant’s Board has designated William H. Park, Samuel L. Hayes, III and Norton H. Reamer, each an independent trustee, as its audit committee financial experts. Mr. Park is a certified public accountant who is the Vice Chairman of Commercial Industrial Finance Corp (specialty finance company). Previously, he served as President and Chief Executive Officer of Prizm Capital Management, LLC (investment management firm) and as Executive Vice President and Chief Financial Officer of United Asset Management Corporation (“UAM”) (a holding company owning institutional investment management firms). Mr. Hayes is the Jacob H. Schiff Professor of Investment Banking Emeritus of the Harvard University Graduate School of Business Administration. Mr. Reamer is the President, Chief Executive Officer and a Director of Asset Management Finance Corp. (a specialty finance company serving the investment management industry) and is President of Unicorn Corporation (an investment and financial advisory services company). Formerly, Mr. Reamer was Chairman of Hellman, Jordan Management Co., Inc. (an investment management company) and Advisory Director of Berkshire Capital Corporation (an investment banking firm), Chairman of the Board of UAM and Chairman, President and Director of the UAM Funds (mutual funds).
Item 4. Principal Accountant Fees and Services
Not required in this filing
Item 5. Audit Committee of Listed registrants
Not required in this filing.
Item 6. Schedule of Investments
Please see schedule of investments contained in the Report to Stockholders included under Item 1 of this Form N-CSR.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies
Not required in this filing.
Item 8. Portfolio Managers of Closed-End Management Investment Companies
Not required in this filing.
Item 9. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not required in this filing.
Item 10. Submission of Matters to a Vote of Security Holders.
No Material Changes.
Item 11. Controls and Procedures
(a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.
(b) There have been no changes in the registrant’s internal controls over financial reporting during the second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.
Item 12. Exhibits
(a)(1) | | Registrant’s Code of Ethics — Not applicable (please see Item 2). | |
(a)(2)(i) | | Treasurer’s Section 302 certification. | |
(a)(2)(ii) | | President’s Section 302 certification. | |
(b) | | Combined Section 906 certification. | |
2
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Boston Income Portfolio
By: | /s/ MICHAEL W. WEILHEIMER | |
| Michael W. Weilheimer | |
| President | |
| | |
| June 16, 2006 | |
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
By: | /s/ DAN A. MAALOULY | |
| Dan A. Maalouly | |
| Treasurer | |
June 16, 2006
By: | /s/ MICHAEL W. WEILHEIMER | |
| Michael W. Weilheimer | |
| President | |
June 16, 2006
3
