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- 08464 | |||||||
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High Income Portfolio | ||||||||
(Exact name of registrant as specified in charter) | ||||||||
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The Eaton Vance Building, 255 State Street, Boston, Massachusetts |
| 02109 | ||||||
(Address of principal executive offices) |
| (Zip code) | ||||||
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Alan R. Dynner | ||||||||
(Name and address of agent for service) | ||||||||
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Registrant’s telephone number, including area code: | (617) 482-8260 |
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Date of fiscal year end: | October 31 |
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Date of reporting period: | April 30, 2005 |
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Item 1. Reports to Stockholders
High Income Portfolio as of April 30, 2005
PORTFOLIO OF INVESTMENTS (Unaudited)
Senior, Floating Rate Loans(1) - 0.5% | |||||||||||
Security | Principal Amount | Value | |||||||||
Beverage, Food and Tobacco - 0.4% | |||||||||||
New World Pasta, Term Loan B, 14.00%, Maturing 1/28/06 | $ | 4,277,546 | $ | 4,245,464 | |||||||
$ | 4,245,464 | ||||||||||
Utilities - 0.1% | |||||||||||
Mirant Corp., Revolving Term Loan, 364 day credit agreement with trade date 7/17/2001(2) | $ | 2,100,000 | $ | 1,515,150 | |||||||
$ | 1,515,150 | ||||||||||
Total Senior, Floating Rate Loans (identified cost $5,927,845) | $ | 5,760,614 | |||||||||
Corporate Bonds & Notes - 92.7% | |||||||||||
Security | Principal Amount (000's omitted) | Value | |||||||||
Aerospace and Defense - 0.2% | |||||||||||
Argo Tech Corp., Sr. Notes, 9.25%, 6/1/11 | $ | 1,575 | $ | 1,693,125 | |||||||
BE Aerospace, Sr. Sub. Notes, Series B, 8.00%, 3/1/08 | 795 | 795,000 | |||||||||
Standard Aero Holdings, Inc., Sr. Sub. Notes, 8.25%, 9/1/14(3) | 395 | 406,850 | |||||||||
$ | 2,894,975 | ||||||||||
Airlines - 1.7% | |||||||||||
American Airlines, 7.80%, 10/1/06 | $ | 7,968 | $ | 7,175,500 | |||||||
American Airlines, 7.858%, 10/1/11 | 260 | 268,767 | |||||||||
American Airlines, 8.608%, 4/1/11 | 570 | 514,280 | |||||||||
AMR Corp., 9.00%, 8/1/12 | 7,880 | 5,910,000 | |||||||||
Continental Airlines, 7.033%, 6/15/11 | 4,042 | 3,323,082 | |||||||||
Delta Air Lines, 7.779%, 11/18/05 | 217 | 161,919 | |||||||||
Delta Air Lines, 8.30%, 12/15/29 | 1,005 | 266,325 | |||||||||
Delta Air Lines, 9.50%, 11/18/08(3) | 2,358 | 1,921,770 | |||||||||
Northwest Airlines, Inc., 8.875%, 6/1/06 | 540 | 415,800 | |||||||||
$ | 19,957,443 |
Security | Principal Amount (000's omitted) | Value | |||||||||
Apparel - 1.3% | |||||||||||
GFSI, Inc., Sr. Sub. Notes, Series B, 9.625%, 3/1/07 | $ | 1,305 | $ | 1,194,075 | |||||||
Perry Ellis International, Inc., Sr. Sub. Notes, 8.875%, 9/15/13 | 1,965 | 2,004,300 | |||||||||
Phillips Van-Heusen, Sr. Notes, 7.25%, 2/15/11 | 1,350 | 1,356,750 | |||||||||
Phillips Van-Heusen, Sr. Notes, 8.125%, 5/1/13 | 3,615 | 3,741,525 | |||||||||
William Carter, Series B, 10.875%, 8/15/11 | 5,778 | 6,384,690 | |||||||||
$ | 14,681,340 | ||||||||||
Auto and Parts - 1.8% | |||||||||||
Delphi Corp., 6.55%, 6/15/06 | $ | 4,570 | $ | 4,295,800 | |||||||
Keystone Automotive Operations, Inc., Sr. Sub. Notes, 9.75%, 11/1/13 | 1,195 | 1,200,975 | |||||||||
Metaldyne Corp., Sr. Notes, 10.00%, 11/1/13(3) | 3,115 | 2,663,325 | |||||||||
Rexnord Corp., 10.125%, 12/15/12 | 1,195 | 1,284,625 | |||||||||
Tenneco Automotive, Inc., Series B, 10.25%, 7/15/13 | 3,955 | 4,340,612 | |||||||||
Tenneco Automotive, Inc., Sr. Sub. Notes, 8.625%, 11/15/14(3) | 2,965 | 2,720,387 | |||||||||
TRW Automotive, Inc., Sr. Sub. Notes, 11.00%, 2/15/13 | 2,142 | 2,313,360 | |||||||||
United Components, Inc., Sr. Sub. Notes, 9.375%, 6/15/13 | 1,670 | 1,544,750 | |||||||||
$ | 20,363,834 | ||||||||||
Broadcast Media - 2.7% | |||||||||||
CanWest Media, Inc., Sr. Sub. Notes, 8.00%, 9/15/12(3) | $ | 19,508 | $ | 20,044,314 | |||||||
Rainbow National Services, LLC, Sr. Notes, 8.75%, 9/1/12(3) | 2,200 | 2,365,000 | |||||||||
Rainbow National Services, LLC, Sr. Sub. Debs., 10.375%, 9/1/14(3) | 7,875 | 8,938,125 | |||||||||
$ | 31,347,439 | ||||||||||
Broadcasting and Cable - 7.2% | |||||||||||
Adelphia Communications, Sr. Notes, 10.25%, 11/1/06(2) | $ | 9,200 | $ | 7,912,000 | |||||||
Adelphia Communications, Sr. Notes, Series B, 9.25%, 10/1/32(2) | 7,585 | 6,523,100 | |||||||||
Century Communications, Sr. Notes, 8.75%, 10/1/07(2) | 1,040 | 998,400 | |||||||||
Century Communications, Sr. Notes, 8.875%, 1/15/07(2) | 2,915 | 2,827,550 | |||||||||
Century Communications, Sr. Notes, 9.50%, 3/1/05(2) | 5 | 4,745,000 |
See notes to financial statements
13
High Income Portfolio as of April 30, 2005
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security | Principal Amount (000's omitted) | Value | |||||||||
Broadcasting and Cable (continued) | |||||||||||
Charter Communication Holdings, Sr. Disc. Notes, 12.125%, (0% until 2007), 1/15/12 | $ | 520 | $ | 300,300 | |||||||
Charter Communication Holdings, Sr. Notes, 10.00%, 5/15/11 | 885 | 623,925 | |||||||||
Charter Communications Holdings II, LLC, Sr. Notes, 10.25%, 9/15/10 | 780 | 782,925 | |||||||||
Charter Communications Holdings, LLC, Sr. Disc. Notes, 11.75%, 1/15/10 | 1,315 | 1,045,425 | |||||||||
CSC Holdings, Inc., Sr. Notes, 7.875%, 12/15/07 | 15 | 15,412 | |||||||||
CSC Holdings, Inc., Sr. Sub. Notes, 10.50%, 5/15/16 | 540 | 592,650 | |||||||||
Fisher Communications, Inc., Sr. Notes, 8.625%, 9/15/14 | 480 | 511,200 | |||||||||
Insight Communications, Sr. Disc. Notes, 12.25%, (0% until 2006), 2/15/11 | 16,345 | 16,181,550 | |||||||||
Intelsat Ltd., Sr. Notes, 5.25%, 11/1/08 | 1,255 | 1,145,187 | |||||||||
Kabel Deutschland GMBH, 10.625%, 7/1/14(3) | 7,785 | 8,252,100 | |||||||||
LBI Media, Inc., Sr. Disc. Notes, 11.00%, (0.00% until 2008), 10/15/13 | 2,760 | 2,025,150 | |||||||||
Muzak LLC/Muzak Finance, Sr. Notes, 10.00%, 2/15/09 | 2,640 | 2,230,800 | |||||||||
Nexstar Finance Holdings LLC, Inc., Sr. Disc. Notes, 11.375%, (0% until 2008), 4/1/13 | 6,345 | 4,885,650 | |||||||||
Nextmedia Operating, Inc., 10.75%, 7/1/11 | 3,260 | 3,524,875 | |||||||||
Ono Finance PLC, Sr. Notes, 14.00%, 7/15/10 | EUR | 1,840 | 2,577,253 | ||||||||
Ono Finance PLC, Sr. Notes, 14.00%, 2/15/11 | 5,017 | 5,700,566 | |||||||||
Ono Finance PLC, Sr. Notes, 14.00%, 2/15/11(4) | EUR | 1,935 | 2,773,794 | ||||||||
Paxson Communications Corp., 10.75%, 7/15/08 | 1,560 | 1,548,300 | |||||||||
Paxson Communications Corp., 12.25%, (0% until 2006), 1/15/09 | 1,980 | 1,851,300 | |||||||||
Rogers Cable, Inc., 6.75%, 3/15/15 | 1,935 | 1,867,275 | |||||||||
XM Satellite Radio, Inc., 1.75%, 12/1/09(3) | 2,450 | 2,082,500 | |||||||||
$ | 83,524,187 | ||||||||||
Building and Construction-Miscellaneous - 1.3% | |||||||||||
Dayton Superior Corp., Sr. Notes, 10.75%, 9/15/08 | $ | 1,440 | $ | 1,418,400 | |||||||
Goodman Global Holdings, Sr. Notes, Variable Rate, 5.76%, 6/15/12(3) | 1,850 | 1,776,000 | |||||||||
Interline Brands, Inc., Sr. Sub. Notes, 11.50%, 5/15/11 | 2,828 | 3,209,780 | |||||||||
National Waterworks, Inc., Series B, 10.50%, 12/1/12 | 2,925 | 3,312,562 | |||||||||
Nortek, Inc., Sr. Sub Notes, 8.50%, 9/1/14 | 2,585 | 2,300,650 | |||||||||
Ply Gem Industries, Inc., Sr. Sub. Notes, 9.00%, 2/15/12 | 3,430 | 2,984,100 | |||||||||
$ | 15,001,492 |
Security | Principal Amount (000's omitted) | Value | |||||||||
Building Materials - 0.4% | |||||||||||
Coleman Cable, Inc., Sr. Notes, 9.875%, 10/1/12(3) | $ | 1,325 | $ | 1,238,875 | |||||||
Koppers, Inc., 9.875%, 10/15/13 | 60 | 64,500 | |||||||||
Owens Corning, 7.70%, 5/1/08(2) | 1,095 | 844,519 | |||||||||
RMCC Acquisition Co., Sr. Sub. Notes, 9.50%, 11/1/12(3) | 3,120 | 3,010,800 | |||||||||
$ | 5,158,694 | ||||||||||
Business Services - 2.4% | |||||||||||
Advanstar Communications, Inc., 10.75%, 8/15/10 | $ | 6,120 | $ | 6,732,000 | |||||||
Affinity Group, Inc., Sr. Sub. Notes, 9.00%, 2/15/12 | 3,815 | 3,853,150 | |||||||||
Carriage Services, Inc., 7.875%, 1/15/15(3) | 1,010 | 1,020,100 | |||||||||
CB Richard Ellis Services, Inc., Sr. Notes, 9.75%, 5/15/10 | 510 | 571,200 | |||||||||
Knowledge Learning Center, Sr. Sub. Notes, 7.75%, 2/1/15(3) | 2,545 | 2,430,475 | |||||||||
Norcross Safety Products LLC/Norcross Capital Corp., Sr. Sub. Notes, Series B, 9.875%, 8/15/11 | 5,065 | 5,368,900 | |||||||||
NSP Holdings LLC/NSP Holdings Capital Corp., Sr. Notes, (PIK), 11.75%, 1/1/12(3) | 2,105 | 2,147,100 | |||||||||
United Rentals North America, Inc., 6.50%, 2/15/12 | 930 | 890,475 | |||||||||
United Rentals North America, Inc., Sr. Sub. Notes, 7.00%, 2/15/14 | 2,705 | 2,448,025 | |||||||||
Vertis, Inc., Sub. Notes, 13.50%, 12/7/09(3) | 1,365 | 894,075 | |||||||||
Williams Scotsman, Inc., Sr. Notes, 10.00%, 8/15/08 | 1,595 | 1,698,675 | |||||||||
$ | 28,054,175 | ||||||||||
Cargo Transport - 0.2% | |||||||||||
H-Lines Finance Holding, Sr. Disc. Notes, 11.00%, (0.00% until 2008), 4/1/13(3) | $ | 2,745 | $ | 2,134,237 | |||||||
$ | 2,134,237 | ||||||||||
Chemicals - 6.5% | |||||||||||
Avecia Group PLC, 11.00%, 7/1/09 | $ | 391 | $ | 408,595 | |||||||
BCP Crystal Holdings Corp., Sr. Sub Notes, 9.625%, 6/15/14 | 3,783 | 4,189,672 | |||||||||
Borden U.S. Finance/Nova Scotia Finance, Sr. Notes, 9.00%, 7/15/14(3) | 2,130 | 2,140,650 | |||||||||
Crystal US Holdings/US Holdings 3, LLC, Sr. Disc. Notes, 10.50%, (0.00% until 2009), 10/1/14(3) | 3,465 | 2,269,575 | |||||||||
Equistar Chemical, Sr. Notes, 10.625%, 5/1/11 | 3,900 | 4,368,000 | |||||||||
Hercules, Inc., 11.125%, 11/15/07 | 5,300 | 6,081,750 | |||||||||
Huntsman Advanced Materials, Sr. Notes, 11.00%, 7/15/10(3) | 735 | 841,575 |
See notes to financial statements
14
High Income Portfolio as of April 30, 2005
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security | Principal Amount (000's omitted) | Value | |||||||||
Chemicals (continued) | |||||||||||
Huntsman International LLC, Sr. Notes, 9.875%, 3/1/09 | $ | 1,960 | $ | 2,116,800 | |||||||
Huntsman LLC, 11.625%, 10/15/10 | 2,645 | 3,068,200 | |||||||||
IMC Global, Inc., Sr. Notes, 10.875%, 8/1/13 | 6,000 | 7,110,000 | |||||||||
Innophos, Inc., Sr. Sub. Notes, 8.875%, 8/15/14(3) | 875 | 910,000 | |||||||||
Intertape Polymer US, Inc., Sr. Sub. Notes, 8.50%, 8/1/14 | 3,945 | 3,958,129 | |||||||||
Lyondell Chemical Co., 11.125%, 7/15/12 | 1,170 | 1,342,575 | |||||||||
Lyondell Chemical Co., Sr. Notes, 10.50%, 6/1/13 | 4,680 | 5,417,100 | |||||||||
Nalco Co., Sr. Sub. Notes, 8.875%, 11/15/13 | 3,310 | 3,409,300 | |||||||||
OM Group, Inc., 9.25%, 12/15/11 | 10,260 | 10,413,900 | |||||||||
Polyone Corp., Sr. Notes, 8.875%, 5/1/12 | 30 | 31,725 | |||||||||
Polyone Corp., Sr. Notes, 10.625%, 5/15/10 | 3,030 | 3,355,725 | |||||||||
PQ Corp., 7.50%, 2/15/13(3) | 1,305 | 1,272,375 | |||||||||
Rhodia SA, Sr. Notes, 10.25%, 6/1/10 | 10,015 | 10,665,975 | |||||||||
Rockwood Specialties Group, Sr. Sub. Notes, 10.625%, 5/15/11 | 2,065 | 2,274,081 | |||||||||
$ | 75,645,702 | ||||||||||
Computer Software & Services - 1.1% | |||||||||||
UGS Corp., Sr. Sub. Notes, 10.00%, 6/1/12(3) | $ | 11,955 | $ | 12,851,625 | |||||||
$ | 12,851,625 | ||||||||||
Consumer Products - 0.9% | |||||||||||
Fedders North America, Inc., 9.875%, 3/1/14 | $ | 2,982 | $ | 1,938,300 | |||||||
Jostens Holding Corp., Sr. Disc. Notes, 10.25%, (0.00% until 2008), 12/1/13 | 1,380 | 1,007,400 | |||||||||
Rayovac Corp., Sr. Sub. Notes, 7.375%, 2/1/15(3) | 3,205 | 3,124,875 | |||||||||
Samsonite Corp., Sr. Sub. Notes, 8.875%, 6/1/11 | 4,465 | 4,621,275 | |||||||||
$ | 10,691,850 | ||||||||||
Containers and Packaging - 1.5% | |||||||||||
Crown Euro Holdings SA, 9.50%, 3/1/11 | $ | 1,625 | $ | 1,763,125 | |||||||
Crown Euro Holdings SA, 10.875%, 3/1/13 | 5,755 | 6,603,862 | |||||||||
Pliant Corp., 11.125%, (0% until 2006), 6/15/09 | 3,065 | 2,727,850 | |||||||||
Pliant Corp., 11.125%, 9/1/09 | 1,140 | 1,043,100 | |||||||||
Solo Cup Co., Sr. Sub. Notes, 8.50%, 2/15/14 | 3,975 | 3,855,750 | |||||||||
Stone Container Corp., Sr. Notes, 9.25%, 2/1/08 | 500 | 512,500 | |||||||||
US Can Corp., Sr. Notes, 10.875%, 7/15/10 | 1,220 | 1,238,300 | |||||||||
$ | 17,744,487 |
Security | Principal Amount (000's omitted) | Value | |||||||||
Electronic Equipment - 0.2% | |||||||||||
Danka Business Systems, Sr. Notes, 11.00%, 6/15/10 | $ | 3,125 | $ | 2,875,000 | |||||||
$ | 2,875,000 | ||||||||||
Electronics / Electrical - 0.1% | |||||||||||
CPI Holdco, Inc., Sr. Notes, Variable Rate, 8.83%, 2/1/15(3) | $ | 1,545 | $ | 1,483,200 | |||||||
$ | 1,483,200 | ||||||||||
Energy Services - 1.0% | |||||||||||
Aventine Renewable Energy Holdings, Inc., Variable Rate, 9.01%, 12/15/11(3) | $ | 1,635 | $ | 1,496,025 | |||||||
Port Arthur Finance Corp., 12.50%, 1/15/09 | 8,717 | 9,894,067 | |||||||||
$ | 11,390,092 | ||||||||||
Entertainment - 2.5% | |||||||||||
AMC Entertainment, Inc., Sr. Sub. Notes, 9.875%, 2/1/12 | $ | 2,700 | $ | 2,713,500 | |||||||
LCE Acquisition Corp., Sr. Sub. Notes, 9.00%, 8/1/14(3) | 7,285 | 7,030,025 | |||||||||
Marquee Holdings, Inc., Sr. Disc. Notes, 12.00%, (0.00% until 2009), 8/15/14(3) | 7,210 | 4,542,300 | |||||||||
Royal Caribbean Cruises, Sr. Notes, 8.75%, 2/2/11 | 515 | 579,375 | |||||||||
True Temper Sports, Inc., Sr. Sub. Notes, 8.375%, 9/15/11 | 805 | 708,400 | |||||||||
Universal City Development Partners, Sr. Notes, 11.75%, 4/1/10 | 9,600 | 10,920,000 | |||||||||
Universal City Florida Holding, Sr. Notes, 8.375%, 5/1/10(3) | 270 | 275,400 | |||||||||
Universal City Florida Holding, Sr. Notes, Variable Rate, 7.493%, 5/1/10(3) | 2,160 | 2,251,800 | |||||||||
$ | 29,020,800 | ||||||||||
Financial Services - 1.5% | |||||||||||
Ford Motor Credit Co., 7.875%, 6/15/10 | $ | 10,690 | $ | 10,298,596 | |||||||
General Motors Acceptance Corp., 6.125%, 9/15/06 | 6,800 | 6,761,634 | |||||||||
$ | 17,060,230 | ||||||||||
Food, Beverages and Tobacco - 0.1% | |||||||||||
WH Holdings Ltd./WH Capital Corp., Sr. Notes, 9.50%, 4/1/11 | $ | 1,290 | $ | 1,380,300 | |||||||
$ | 1,380,300 |
See notes to financial statements
15
High Income Portfolio as of April 30, 2005
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security | Principal Amount (000's omitted) | Value | |||||||||
Foods - 1.8% | |||||||||||
American Seafood Group, LLC, 10.125%, 4/15/10 | $ | 6,165 | $ | 6,596,550 | |||||||
ASG Consolidated, LLC/ASG Finance, Inc., Sr. Disc. Notes, 11.50%, (0.00% until 2008), 11/1/11(3) | 5,130 | 3,462,750 | |||||||||
Pinnacle Foods Holdings Corp., Sr. Sub. Notes, 8.25%, 12/1/13 | 5,015 | 4,187,525 | |||||||||
UAP Holding Corp., Sr. Disc. Notes, 10.75%, (0% until 2008) 7/15/12 | 6,370 | 4,904,900 | |||||||||
United Agricultural Products, Sr. Notes, 8.25%, 12/15/11 | 1,632 | 1,607,520 | |||||||||
$ | 20,759,245 | ||||||||||
Health Services - 4.3% | |||||||||||
Ardent Health Services, Inc., Sr. Sub. Notes, 10.00%, 8/15/13 | $ | 5,645 | $ | 6,864,884 | |||||||
Healthsouth Corp., 7.625%, 6/1/12 | 4,070 | 3,927,550 | |||||||||
Healthsouth Corp., Sr. Notes, 8.375%, 10/1/11 | 6,310 | 6,278,450 | |||||||||
National Mentor, Inc., Sr. Sub. Notes, 9.625%, 12/1/12(3) | 1,580 | 1,655,050 | |||||||||
National Nephrology Association, Sr. Sub. Notes, 9.00%, 11/1/11(3) | 1,420 | 1,579,750 | |||||||||
Pacificare Health System, 10.75%, 6/1/09 | 3,127 | 3,486,605 | |||||||||
Quintiles Transnational Corp., Sr. Sub. Notes, 10.00%, 10/1/13 | 8,415 | 9,130,275 | |||||||||
Rotech Healthcare, Inc., 9.50%, 4/1/12 | 1,575 | 1,701,000 | |||||||||
US Oncology, Inc., 9.00%, 8/15/12 | 2,665 | 2,798,250 | |||||||||
US Oncology, Inc., 10.75%, 8/15/14 | 5,315 | 5,740,200 | |||||||||
Vanguard Health Holding Co. II LLC, Sr. Sub. Notes, 9.00%, 10/1/14 | 5,965 | 6,248,337 | |||||||||
$ | 49,410,351 | ||||||||||
Healthcare - 0.4% | |||||||||||
AMR HoldCo, Inc./EmCare HoldCo, Inc., Sr. Sub. Notes, 10.00%, 2/15/15(3) | $ | 4,020 | $ | 4,241,100 | |||||||
$ | 4,241,100 | ||||||||||
Household Products - 0.2% | |||||||||||
Del Laboratories, Inc., Sr. Sub. Notes, 8.00%, 2/1/12(3) | $ | 2,065 | $ | 1,961,750 | |||||||
Interface, Inc., Sr. Sub. Notes, 9.50%, 2/1/14 | 745 | 748,725 | |||||||||
$ | 2,710,475 | ||||||||||
Information Technology - 0.1% | |||||||||||
Stratus Technologies, Inc., Sr. Notes, 10.375%, 12/1/08 | $ | 868 | $ | 850,640 | |||||||
$ | 850,640 |
Security | Principal Amount (000's omitted) | Value | |||||||||
Investment Services - 1.2% | |||||||||||
E*Trade Financial Corp., Sr. Notes, 8.00%, 6/15/11 | $ | 2,875 | $ | 2,961,250 | |||||||
Refco Finance Holdings, LLC, Sr. Sub. Notes, 9.00%, 8/1/12(3) | 9,755 | 10,584,175 | |||||||||
$ | 13,545,425 | ||||||||||
Lodging - 0.7% | |||||||||||
Felcor Lodging L.P., Sr. Notes, Variable Rate, 6.874%, 6/1/11 | $ | 1,660 | $ | 1,709,800 | |||||||
Host Marriott L.P., Sr. Notes, 6.375%, 3/15/15(3) | 510 | 487,688 | |||||||||
Meristar Hospitality Operations/Finance, 10.50%, 6/15/09 | 5,890 | 6,213,950 | |||||||||
$ | 8,411,438 | ||||||||||
Lodging and Gaming - 5.4% | |||||||||||
Chukchansi EDA, Sr. Notes, 14.50%, 6/15/09(3) | $ | 7,220 | $ | 8,808,400 | |||||||
Hollywood Casino Shreveport, First Mortgage Bonds, 13.00%, 8/1/06(2) | $ | 1,175 | $ | 979,656 | |||||||
Inn of the Mountain Gods, Sr. Notes, 12.00%, 11/15/10 | 4,180 | 4,921,950 | |||||||||
Kerzner International, 8.875%, 8/15/11 | 5,600 | 6,020,000 | |||||||||
Majestic Star Casino LLC, 9.50%, 10/15/10 | 4,365 | 4,583,250 | |||||||||
Mohegan Tribal Gaming Authority, Sr. Sub. Notes, 8.00%, 4/1/12 | 1,570 | 1,675,975 | |||||||||
MTR Gaming Group, Series B, 9.75%, 4/1/10 | 2,555 | 2,797,725 | |||||||||
OED Corp./Diamond Jo LLC, 8.75%, 4/15/12 | 4,355 | 4,224,350 | |||||||||
Premier Entertainment Biloxi, LLC/Premier Finance Biloxi Corp., 10.75%, 2/1/12 | 550 | 561,000 | |||||||||
Seneca Gaming Corp., Sr. Notes, 7.25%, 5/1/12 | 2,385 | 2,373,075 | |||||||||
Trump Atlantic City Associates, Inc., 11.25%, 5/1/06(2) | 6,815 | 6,508,325 | |||||||||
Trump Holdings and Funding, Sr. Notes, 11.625%, 3/15/10(2) | 7,780 | 8,441,300 | |||||||||
Waterford Gaming LLC, Sr. Notes, 8.625%, 9/15/12(3) | 10,376 | 11,050,440 | |||||||||
$ | 62,945,446 | ||||||||||
Machinery - 2.4% | |||||||||||
Altra Industrial Motion, 9.00%, 12/1/11(3) | $ | 770 | $ | 768,075 | |||||||
Case New Holland, Inc., Sr. Notes, 9.25%, 8/1/11(3) | 3,720 | 3,813,000 | |||||||||
Flowserve Corp., 12.25%, 8/15/10 | 3,470 | 3,764,950 | |||||||||
Manitowoc Co., Inc. (The), 10.50%, 8/1/12 | 589 | 658,208 | |||||||||
Milacron Escrow Corp., 11.50%, 5/15/11 | 6,985 | 7,508,875 | |||||||||
Terex Corp., 10.375%, 4/1/11 | 4,395 | 4,790,550 | |||||||||
Thermadyne Holdings Corp., Sr. Sub. Notes, 9.25%, 2/1/14 | 6,742 | 6,270,060 | |||||||||
$ | 27,573,718 |
See notes to financial statements
16
High Income Portfolio as of April 30, 2005
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security | Principal Amount (000's omitted) | Value | |||||||||
Manufacturing - 3.5% | |||||||||||
Aearo Co. I, Sr. Sub. Notes, 8.25%, 4/15/12 | $ | 1,905 | $ | 1,924,050 | |||||||
Amsted Industries, Inc., Sr. Notes, 10.25%, 10/15/11(3) | 7,765 | 8,347,375 | |||||||||
Dresser, Inc., 9.375%, 4/15/11 | 8,975 | 9,423,750 | |||||||||
MAAX Corp., Sr. Sub. Notes, 9.75%, 6/15/12 | 2,725 | 2,725,000 | |||||||||
Mueller Group, Inc., Sr. Sub. Notes, 10.00%, 5/1/12 | 2,685 | 2,899,800 | |||||||||
Mueller Holdings, Inc., Disc. Notes, 14.75%, (0.00% until 2009), 4/15/14 | 3,975 | 2,663,250 | |||||||||
Polypore, Inc., Sr. Sub Notes, 8.75%, 5/15/12 | 445 | 378,250 | |||||||||
Roller Bearing Holdings Co., Sr. Disc. Notes, 13.00%, 6/15/09(3) | 11,485 | 11,772,125 | |||||||||
Venture Holding Trust, Sr. Notes, 9.50%, 7/1/05(2) | 3,811 | 42,874 | |||||||||
$ | 40,176,474 | ||||||||||
Medical Products - 1.9% | |||||||||||
CDRV Investors, Inc., Sr. Disc. Notes, 9.625%, (0.00% until 2010), 1/1/15(3) | $ | 4,835 | $ | 2,538,375 | |||||||
Inverness Medical Innovations, Inc., Sr. Sub. Notes, 8.75%, 2/15/12 | 3,715 | 3,677,850 | |||||||||
Medical Device Manufacturing, Inc., Series B, 10.00%, 7/15/12 | 2,850 | 3,063,750 | |||||||||
Medquest, Inc., 11.875%, 8/15/12 | 6,185 | 6,277,775 | |||||||||
VWR International, Inc., Sr. Sub. Notes, 8.00%, 4/15/14 | 3,755 | 3,510,925 | |||||||||
Warner Chilcott Corp., 8.75%, 2/1/15(3) | 3,095 | 3,048,575 | |||||||||
$ | 22,117,250 | ||||||||||
Metals-Aluminum - 0.3% | |||||||||||
Novelis, Inc., Sr. Notes, 7.25%, 2/15/15(3) | $ | 3,880 | $ | 3,773,300 | |||||||
$ | 3,773,300 | ||||||||||
Metals-Industrial - 0.2% | |||||||||||
General Cable Corp., Sr. Notes, 9.50%, 11/15/10 | $ | 1,430 | $ | 1,522,950 | |||||||
Ryerson Tull, Inc., 9.125%, 7/15/06 | 760 | 771,400 | |||||||||
$ | 2,294,350 | ||||||||||
Metals-Steel - 0.4% | |||||||||||
Ispat Inland ULC, Sr. Notes, 9.75%, 4/1/14 | $ | 2,915 | $ | 3,344,963 | |||||||
Oregon Steel Mills, Inc., 10.00%, 7/15/09 | 1,340 | 1,443,850 | |||||||||
$ | 4,788,813 | ||||||||||
Mining-Coal - 0.2% | |||||||||||
Alpha Natural Resources, Sr. Notes, 10.00%, 6/1/12(3) | $ | 1,665 | $ | 1,856,475 | |||||||
$ | 1,856,475 |
Security | Principal Amount (000's omitted) | Value | |||||||||
Music / Entertainment - 0.3% | |||||||||||
WMG Holdings Corp., Sr. Notes, Variable Rate, 7.385%, 12/15/11(3) | $ | 3,625 | $ | 3,751,875 | |||||||
$ | 3,751,875 | ||||||||||
Oil and Gas-Equipment and Services - 4.7% | |||||||||||
ANR Pipeline Co., 8.875%, 3/15/10 | $ | 1,600 | $ | 1,743,598 | |||||||
Coastal Corp., 7.50%, 8/15/06 | 410 | 419,225 | |||||||||
Coastal Corp., Sr. Debs., 9.625%, 5/15/12 | 2,880 | 3,067,200 | |||||||||
Dynegy Holdings, Inc., Sr. Notes, 10.125%, 7/15/13(3) | 4,340 | 4,491,900 | |||||||||
Giant Industries, 8.00%, 5/15/14 | 2,845 | 2,873,450 | |||||||||
Hanover Compressor Co., Sr. Sub. Notes, 0.00%, 3/31/07 | 10,010 | 8,658,650 | |||||||||
Hanover Equipment Trust, Series B, 8.75%, 9/1/11 | 2,120 | 2,233,950 | |||||||||
Northwest Pipeline Corp., 8.125%, 3/1/10 | 825 | 892,031 | |||||||||
Parker Drilling Co., Sr. Notes, 9.625%, 10/1/13 | 1,615 | 1,784,575 | |||||||||
Premcor Refining Group, Sr. Notes, 9.50%, 2/1/13 | 5,035 | 5,739,900 | |||||||||
Premcor Refining Group, Sr. Sub. Notes, 7.75%, 2/1/12 | 1,385 | 1,495,800 | |||||||||
Ram Energy, Inc., Sr. Notes, 11.50%, 2/15/08 | 4,602 | 4,855,110 | |||||||||
SESI, LLC, 8.875%, 5/15/11 | 1,798 | 1,932,850 | |||||||||
Southern Natural Gas, 8.875%, 3/15/10 | 1,200 | 1,310,280 | |||||||||
Titan Petrochemicals Group Ltd., 8.50%, 3/18/12(3) | 975 | 887,250 | |||||||||
Transmontaigne, Inc., Sr. Sub. Notes, 9.125%, 6/1/10 | 6,810 | 7,082,400 | |||||||||
United Refining Co., Sr. Notes, 10.50%, 8/15/12 | 3,515 | 3,462,275 | |||||||||
United Refining Co., Sr. Notes, 10.50%, 8/15/12(3) | 660 | 650,100 | |||||||||
Williams Cos., Inc. (The), 8.75%, 3/15/32 | 1,265 | 1,461,075 | |||||||||
$ | 55,041,619 | ||||||||||
Oil and Gas-Exploration and Production - 0.3% | |||||||||||
El Paso Production Holding Co., 7.75%, 6/1/13 | $ | 630 | $ | 637,875 | |||||||
Petrobras International Finance Co., 7.75%, 9/15/14 | 670 | 680,050 | |||||||||
Petrobras International Finance, Sr. Notes, 9.125%, 7/2/13 | 1,925 | 2,117,500 | |||||||||
$ | 3,435,425 | ||||||||||
Other Energy - 0.4% | |||||||||||
Inergy L.P/ Finance, Sr. Notes, 6.875%, 12/15/14(3) | $ | 4,700 | $ | 4,488,500 | |||||||
$ | 4,488,500 | ||||||||||
Paper - 0.2% | |||||||||||
JSG Funding PLC, Sr. Sub Notes, 7.75%, 4/1/15(3) | $ | 2,295 | $ | 1,916,325 | |||||||
$ | 1,916,325 |
See notes to financial statements
17
High Income Portfolio as of April 30, 2005
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security | Principal Amount (000's omitted) | Value | |||||||||
Paper and Forest Products - 2.9% | |||||||||||
Boise Cascade, LLC, Sr. Notes, Variable Rate, 6.016%, 10/15/12(3) | $ | 1,845 | $ | 1,835,775 | |||||||
Caraustar Industries, Inc., Sr. Sub. Notes, 9.875%, 4/1/11 | 5,630 | 5,545,550 | |||||||||
Georgia-Pacific Corp., 9.375%, 2/1/13 | 2,445 | 2,735,344 | |||||||||
Georgia-Pacific Corp., 9.50%, 12/1/11 | 5,330 | 6,262,750 | |||||||||
MDP Acquisitions/JSG Funding PLC, Sr. Notes, 9.625%, 10/1/12 | 3,760 | 3,741,200 | |||||||||
Mercer International, Inc., Sr. Notes, 9.25%, 2/15/13 | 2,000 | 1,850,000 | |||||||||
Newark Group, Inc., Sr. Sub. Notes, 9.75%, 3/15/14 | 3,290 | 3,257,100 | |||||||||
NewPage Corp., 10.00%, 5/1/12(3) | 8,810 | 8,633,800 | |||||||||
$ | 33,861,519 | ||||||||||
Printing and Business Products - 0.9% | |||||||||||
Merrill Corp., Series A, (PIK), 12.00%, 5/1/09 | $ | 1,780 | $ | 1,896,157 | |||||||
Merrill Corp., Series B, (PIK), 12.00%, 5/1/09 | 8,212 | 8,745,304 | |||||||||
$ | 10,641,461 | ||||||||||
Printing and Publishing - 0.1% | |||||||||||
WDAC Subsidiary Corp., Sr. Notes, 8.375%, 12/1/14(3) | $ | 1,655 | $ | 1,510,188 | |||||||
$ | 1,510,188 | ||||||||||
Publishing - 2.4% | |||||||||||
American Media Operations, Inc., Series B, 10.25%, 5/1/09 | $ | 6,254 | $ | 6,441,620 | |||||||
CanWest Media, Inc., Sr. Sub. Notes, 10.625%, 5/15/11 | 5,310 | 5,787,900 | |||||||||
CBD Media, Inc., Sr. Sub. Notes, 8.625%, 6/1/11 | 1,615 | 1,610,963 | |||||||||
Dex Media West LLC, Sr. Sub. Notes, 9.875%, 8/15/13 | 6,976 | 7,778,240 | |||||||||
Houghton Mifflin Co., Sr. Sub. Notes, 9.875%, 2/1/13 | 6,425 | 6,521,375 | |||||||||
$ | 28,140,098 | ||||||||||
Recycling - 0.2% | |||||||||||
IMCO Recycling Escrow, Inc., Sr. Notes, 9.00%, 11/15/14(3) | $ | 2,335 | $ | 2,393,375 | |||||||
$ | 2,393,375 | ||||||||||
Retail - 0.1% | |||||||||||
Jafra Cosmetics/Distribution, Sr. Sub Notes, 10.75%, 5/15/11 | $ | 1,260 | $ | 1,423,800 | |||||||
$ | 1,423,800 |
Security | Principal Amount (000's omitted) | Value | |||||||||
Retail-Food and Drug - 0.5% | |||||||||||
Pierre Foods, Inc., Sr. Sub. Notes, 9.875%, 7/15/12 | $ | 3,900 | $ | 3,997,500 | |||||||
Rite Aid Corp., 7.125%, 1/15/07 | 1,865 | 1,865,000 | |||||||||
$ | 5,862,500 | ||||||||||
Satellite Communications - 1.7% | |||||||||||
Inmarsat Finance PLC, 7.625%, 6/30/12 | $ | 5,276 | $ | 5,434,280 | |||||||
Intelsat Bermuda Ltd., Sr. Notes, Variable Rate, 7.805%, 1/15/12(3) | 6,315 | 6,362,362 | |||||||||
New Skies Satellites NV, Sr. Notes, Variable Rate, 7.438%, 11/1/11(3) | 2,525 | 2,569,188 | |||||||||
New Skies Satellites NV, Sr. Sub. Notes, 9.125%, 11/1/12(3) | 3,365 | 3,381,825 | |||||||||
PanAmSat Corp., 9.00%, 8/15/14 | 2,245 | 2,346,025 | |||||||||
$ | 20,093,680 | ||||||||||
Semiconductors - 2.0% | |||||||||||
Advanced Micro Devices, Inc., 7.75%, 11/1/12(3) | $ | 7,775 | $ | 7,464,000 | |||||||
Amkor Technologies, Inc., 5.75%, 6/1/06 | 2,380 | 2,124,150 | |||||||||
Amkor Technologies, Inc., Sr. Notes, 7.125%, 3/15/11 | 3,415 | 2,697,850 | |||||||||
Amkor Technologies, Inc., Sr. Notes, 7.75%, 5/15/13 | 10,870 | 8,573,713 | |||||||||
STATS ChipPAC Ltd., Sr. Notes, 6.75%, 11/15/11(3) | 2,730 | 2,593,500 | |||||||||
$ | 23,453,213 | ||||||||||
Services-Movers - 0.3% | |||||||||||
Amerco, Inc., 9.00%, 3/15/09 | $ | 3,725 | $ | 3,939,188 | |||||||
$ | 3,939,188 | ||||||||||
Telecommunication Equipment - 1.3% | |||||||||||
Nortel Networks Ltd., 4.25%, 9/1/08 | 15,980 | $ | 14,521,825 | ||||||||
$ | 14,521,825 | ||||||||||
Textiles and Apparel - 1.3% | |||||||||||
Levi Strauss & Co., Sr. Notes, 12.25%, 12/15/12 | $ | 6,090 | $ | 6,485,850 | |||||||
Levi Strauss & Co., Sr. Notes, Variable Rate, 7.73%, 4/1/12(3) | 3,020 | 2,793,500 | |||||||||
Oxford Industries, Inc., Sr. Notes, 8.875%, 6/1/11 | 5,490 | 5,709,600 | |||||||||
$ | 14,988,950 |
See notes to financial statements
18
High Income Portfolio as of April 30, 2005
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security | Principal Amount (000's omitted) | Value | |||||||||
Transportation - 1.6% | |||||||||||
Grupo Transportacion Ferroviaria Mexicana SA de C.V., Sr. Notes, 9.375%, 5/1/12(3) | $ | 5,190 | $ | 5,241,900 | |||||||
Horizon Lines, LLC, 9.00%, 11/1/12(3) | 3,600 | 3,807,000 | |||||||||
OMI Corp., Sr. Notes, 7.625%, 12/1/13 | 1,260 | 1,285,200 | |||||||||
Petroleum Helicopters, Series B, 9.375%, 5/1/09 | 220 | 231,000 | |||||||||
Progress Rail Services Corp./Progress Metal Reclamation Co., Sr. Notes, 7.75%, 4/1/12(3) | 3,140 | 3,140,000 | |||||||||
Quality Distribution LLC/QD Capital Corp., 9.00%, 11/15/10 | 1,840 | 1,775,600 | |||||||||
Quality Distribution LLC/QD Capital, Variable Rate, 7.641%, 1/15/12(3) | 2,100 | 2,037,000 | |||||||||
TFM SA de C.V., Sr. Notes, 12.50%, 6/15/12 | 1,290 | 1,483,500 | |||||||||
$ | 19,001,200 | ||||||||||
Utilities - 1.4% | |||||||||||
El Paso Corp., 6.95%, 12/15/07 | $ | 2,380 | $ | 2,385,950 | |||||||
NRG Energy, Inc., Sr. Notes, 8.00%, 12/15/13(3) | 1,721 | 1,746,815 | |||||||||
Orion Power Holdings, Inc., Sr. Notes, 12.00%, 5/1/10 | 6,490 | 7,788,000 | |||||||||
Reliant Energy, Inc., 9.25%, 7/15/10 | 1,200 | 1,233,000 | |||||||||
Reliant Energy, Inc., 9.50%, 7/15/13 | 3,300 | 3,440,250 | |||||||||
$ | 16,594,015 | ||||||||||
Utility-Electric Power Generation - 2.8% | |||||||||||
AES Corp., Sr. Notes, 8.75%, 6/15/08 | $ | 5,550 | $ | 5,883,000 | |||||||
AES Corp., Sr. Notes, 8.75%, 5/15/13(3) | 3,535 | 3,844,313 | |||||||||
AES Corp., Sr. Notes, 8.875%, 2/15/11 | 457 | 494,703 | |||||||||
AES Corp., Sr. Notes, 9.00%, 5/15/15(3) | 1,585 | 1,735,575 | |||||||||
AES Corp., Sr. Notes, 9.375%, 9/15/10 | 3,519 | 3,853,305 | |||||||||
AES Eastern Energy, Series 99-A, 9.00%, 1/2/17 | 2,566 | 2,926,545 | |||||||||
Calpine Corp., 8.75%, 7/15/13(3) | 5,645 | 3,923,275 | |||||||||
Calpine Corp., Sr. Notes, 7.625%, 4/15/06 | 2,400 | 1,668,000 | |||||||||
Calpine Corp., Sr. Notes, 8.25%, 8/15/05 | 3,750 | 3,356,250 | |||||||||
Calpine Corp., Sr. Notes, 8.75%, 7/15/07 | 550 | 310,750 | |||||||||
Mission Energy Holding Co., 13.50%, 7/15/08 | 3,895 | 4,586,363 | |||||||||
$ | 32,582,079 | ||||||||||
Waste Management - 1.0% | |||||||||||
Allied Waste North America, Series B, 8.875%, 4/1/08 | $ | 4,935 | $ | 5,095,388 | |||||||
Hydrochem Industrial Services, Inc., Sr. Sub Notes, 9.25%, 2/15/13(3) | 515 | 517,575 | |||||||||
Synagro Technologies, Inc., Sr. Sub. Notes, 9.50%, 4/1/09 | 1,000 | 1,077,500 |
Security | Principal Amount (000's omitted) | Value | |||||||||
Waste Management (continued) | |||||||||||
Waste Services, Inc., Sr. Sub. Notes, 9.50%, 4/15/14(3) | $ | 4,810 | $ | 4,797,975 | |||||||
$ | 11,488,438 | ||||||||||
Wireless Communication Services - 6.4% | |||||||||||
AirGate PCS, Inc., Variable Rate, 6.891%, 10/15/11(3) | $ | 1,350 | $ | 1,387,125 | |||||||
Alamosa Delaware, Inc., Sr. Disc. Notes, 12.00%, (0.00% until 2005), 7/31/09 | 2,270 | 2,485,650 | |||||||||
Alamosa Delaware, Inc., Sr. Notes, 8.50%, 1/31/12 | 360 | 374,400 | |||||||||
Alamosa Delaware, Inc., Sr. Notes, 11.00%, 7/31/10 | 6,010 | 6,738,713 | |||||||||
American Tower Corp., Sr. Notes, 9.375%, 2/1/09 | 2,219 | 2,332,724 | |||||||||
Centennial Cellular Operating Co., LLC, Sr. Sub. Notes, 10.75%, 12/15/08 | 401 | 415,035 | |||||||||
Centennial Cellular Operating Co./Centennial Communications Corp., Sr. Notes, 10.125%, 6/15/13 | 12,970 | 14,234,575 | |||||||||
Crown Castle International Corp., Sr. Disc. Notes, 11.25%, 8/1/11 | 1,465 | 1,545,575 | |||||||||
Crown Castle International Corp., Sr. Notes, 10.75%, 8/1/11 | 160 | 172,000 | |||||||||
IWO Escrow Co., Variable Rate, 6.891%, 1/15/12(3) | 675 | 678,375 | |||||||||
IWO Holdings, Inc., 14.00%, 1/15/11(2) | 7,490 | 0 | |||||||||
LCI International, Inc., Sr. Notes, 7.25%, 6/15/07 | 9,405 | 8,605,575 | |||||||||
Nextel Communications, Inc., Sr. Notes, 7.375%, 8/1/15 | 420 | 449,400 | |||||||||
Rogers Wireless, Inc., 7.50%, 3/15/15 | 5,600 | 5,775,000 | |||||||||
Rogers Wireless, Inc., Sr. Sub. Notes, 8.00%, 12/15/12 | 1,610 | 1,658,300 | |||||||||
Rogers Wireless, Inc., Variable Rate, 6.135%, 12/15/10 | 3,870 | 3,995,775 | |||||||||
SBA Telecommunications, Sr. Disc. Notes, 9.75%, (0.00% until 2007), 12/15/11 | 3,170 | 2,773,750 | |||||||||
Telemig Celular SA/Amazonia Celular SA, 8.75%, 1/20/09(3) | 2,030 | 2,101,050 | |||||||||
UbiquiTel Operating Co., Sr. Notes, 9.875%, 3/1/11 | 5,915 | 6,432,563 | |||||||||
Western Wireless Corp., Sr. Notes, 9.25%, 7/15/13 | 10,310 | 11,830,725 | |||||||||
$ | 73,986,310 | ||||||||||
Wireline Communication Services - 2.3% | |||||||||||
Qwest Capital Funding, Inc., 7.00%, 8/3/09 | $ | 1,160 | $ | 1,052,700 | |||||||
Qwest Capital Funding, Inc., 7.75%, 8/15/06 | 9,590 | 9,685,900 | |||||||||
Qwest Capital Funding, Inc., 7.90%, 8/15/10 | 880 | 814,000 | |||||||||
Qwest Services Corp., 13.50%, 12/15/07(3) | 5,480 | 6,014,300 |
See notes to financial statements
19
High Income Portfolio as of April 30, 2005
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security | Principal Amount (000's omitted) | Value | |||||||||
Wireline Communication Services (continued) | |||||||||||
Qwest Services Corp., 14.00%, 12/15/10(3) | $ | 7,290 | $ | 8,237,700 | |||||||
U.S. West Communications, Debs., 7.20%, 11/10/26 | 585 | 517,725 | |||||||||
$ | 26,322,325 | ||||||||||
Total Corporate Bonds & Notes (identified cost $1,053,266,884) | $ | 1,078,153,510 | |||||||||
Convertible Bonds - 0.4% | |||||||||||
Security | Principal Amount (000's omitted) | Value | |||||||||
Kerzner International Ltd., 2.375%, 4/15/24(3) | $ | 2,720 | $ | 2,934,200 | |||||||
Sinclair Broadcast Group, Inc., 4.875%, 7/15/18 | 1,275 | 1,102,875 | |||||||||
Total Convertible Bonds (identified cost, $3,966,699) | $ | 4,037,075 | |||||||||
Common Stocks - 1.7% | |||||||||||
Security | Shares | Value | |||||||||
Broadcasting and Cable - 0.6% | |||||||||||
Telewest Global, Inc.(5) | 381,958 | $ | 7,081,501 | ||||||||
$ | 7,081,501 | ||||||||||
Lodging and Gaming - 0.0% | |||||||||||
Peninsula Gaming LLC, Convertible Preferred Membership Interests(5)(6) | 25,351 | $ | 152,107 | ||||||||
$ | 152,107 | ||||||||||
Wireless Communication Services - 1.1% | |||||||||||
Crown Castle International Corp.(5) | 42,992 | $ | 691,741 | ||||||||
IWO Holdings, Inc.(5) | 234,063 | 8,426,268 | |||||||||
NTL, Inc.(5) | 54,115 | 3,462,278 | |||||||||
$ | 12,580,287 | ||||||||||
Total Common Stocks (identified cost $15,516,165) | $ | 19,813,895 |
Convertible Preferred Stocks - 1.1% | |||||||||||
Security | Shares | Value | |||||||||
Energy Services - 0.1% | |||||||||||
NRG Energy, Inc.(3) | 865 | $ | 844,024 | ||||||||
$ | 844,024 | ||||||||||
Oil and Gas-Equipment and Services - 0.4% | |||||||||||
Chesapeake Energy Corp. | 11,225 | $ | 1,459,250 | ||||||||
Williams Holdings of Delaware(3) | 45,592 | 3,863,922 | |||||||||
$ | 5,323,172 | ||||||||||
Wireless Communication Services - 0.6% | |||||||||||
Crown Castle International Corp., (PIK) | 138,027 | $ | 6,677,056 | ||||||||
$ | 6,677,056 | ||||||||||
Total Convertible Preferred Stocks (identified cost $10,383,866) | $ | 12,844,252 | |||||||||
Warrants - 0.1% | |||||||||||
Security | Shares | Value | |||||||||
Exercise Equipment - 0.0% | |||||||||||
HF Holdings, Inc., Exp. 9/27/09(4)(5) | 13,600 | $ | 0 | ||||||||
$ | 0 | ||||||||||
Manufacturing - 0.0% | |||||||||||
Mueller Holdings, Inc., Exp. 4/15/14(3)(5) | 2,325 | $ | 186,581 | ||||||||
$ | 186,581 | ||||||||||
Printing and Business Products - 0.0% | |||||||||||
Merrill Corp., Class A, Exp. 1/1/10(4)(5) | 9,547 | $ | 0 | ||||||||
$ | 0 | ||||||||||
Restaurants - 0.0% | |||||||||||
New World Coffee, Exp. 6/15/06(5)(6) | 1,244 | $ | 13 | ||||||||
$ | 13 | ||||||||||
Semiconductors - 0.0% | |||||||||||
Asat Finance, Exp. 11/1/06(3)(4)(5) | 5,660 | $ | 2,943 | ||||||||
$ | 2,943 |
See notes to financial statements
20
High Income Portfolio as of April 30, 2005
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
Security | Shares | Value | |||||||||
Transportation - 0.0% | |||||||||||
Quality Distribution, Inc., Exp.1/15/07(4)(5) | 3,266 | $ | 38,866 | ||||||||
$ | 38,866 | ||||||||||
Wireless Communication Services - 0.1% | |||||||||||
American Tower Corp., Exp. 8/1/08(3)(5) | 5,070 | $ | 1,234,560 | ||||||||
Ono Finance PLC, Exp. 3/16/11(3)(4)(5) | 3,370 | 0 | |||||||||
Ono Finance PLC, Exp. 5/31/09(4)(5) | 9,690 | 0 | |||||||||
Ono Finance PLC, Exp. 5/31/09(4)(5) | 3,390 | 0 | |||||||||
$ | 1,234,560 | ||||||||||
Total Warrants (identified cost $1,182,468) | $ | 1,462,963 | |||||||||
Commercial Paper - 1.1% | |||||||||||
Security | Principal Amount (000's omitted) | Value | |||||||||
General Electric Capital Corp., 2.94%, 5/2/05 | $ | 13,017 | $ | 13,015,937 | |||||||
Total Commercial Paper (at amortized cost, $13,015,937) | $ | 13,015,937 | |||||||||
Short-Term Investments - 0.2% | |||||||||||
Security | Principal Amount (000's omitted) | Value | |||||||||
Investors Bank and Trust Company Time Deposit, 2.96%, 5/2/05 | $ | 2,000 | $ | 2,000,000 | |||||||
Total Short-Term Investments (at amortized cost, $2,000,000) | $ | 2,000,000 | |||||||||
Total Investments - 97.8% (identified cost $1,105,259,864) | $ | 1,137,088,246 | |||||||||
Other Assets, Less Liabilities - 2.2% | $ | 25,508,876 | |||||||||
Net Assets - 100.0% | $ | 1,162,597,122 |
EUR - Euro
PIK - Payment In Kind.
(1) Senior floating-rate interests 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 int erest 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-Interbank 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.
(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, 2005, the aggregate value of the securities is $298,283,532 or 25.7% of the Fund'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
21
High Income Portfolio as of April 30, 2005
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
As of April 30, 2005
Assets | |||||||
Investments, at value (identified cost, $1,105,259,864) | $ | 1,137,088,246 | |||||
Cash | 6,965,850 | ||||||
Receivable for investments sold | 8,918,655 | ||||||
Interest and dividends receivable | 24,610,080 | ||||||
Receivable for open forward foreign currency contracts | 14,794 | ||||||
Total assets | $ | 1,177,597,625 | |||||
Liabilities | |||||||
Payable for investments purchased | $ | 14,925,894 | |||||
Payable to affiliate for Trustees' fees | 1,706 | ||||||
Accrued expenses | 72,903 | ||||||
Total liabilities | $ | 15,000,503 | |||||
Net Assets applicable to investors' interest in Portfolio | $ | 1,162,597,122 | |||||
Sources of Net Assets | |||||||
Net proceeds from capital contributions and withdrawals | $ | 1,130,751,956 | |||||
Net unrealized appreciation (computed on the basis of identified cost) | 31,845,166 | ||||||
Total | $ | 1,162,597,122 |
Statement of Operations
For the Six Months Ended
April 30, 2005
Investment Income | |||||||
Interest | $ | 51,153,901 | |||||
Dividends | 98,727 | ||||||
Miscellaneous | 101,169 | ||||||
Total investment income | $ | 51,353,797 | |||||
Expenses | |||||||
Investment adviser fee | $ | 3,230,119 | |||||
Trustees' fees and expenses | 10,244 | ||||||
Custodian fee | 169,884 | ||||||
Legal and accounting services | 40,550 | ||||||
Miscellaneous | 9,675 | ||||||
Total expenses | $ | 3,460,472 | |||||
Deduct - Reduction of custodian fee | $ | 1,622 | |||||
Total expense reductions | $ | 1,622 | |||||
Net expenses | $ | 3,458,850 | |||||
Net investment income | $ | 47,894,947 | |||||
Realized and Unrealized Gain (Loss) | |||||||
Net realized gain (loss) - Investment transactions (identified cost basis) | $ | 14,427,254 | |||||
Foreign currency and forward foreign currency exchange contract transactions | (229,582 | ) | |||||
Net realized gain | $ | 14,197,672 | |||||
Change in unrealized appreciation (depreciation) - Investments (identified cost basis) | $ | (38,151,849 | ) | ||||
Foreign currency and forward foreign currency exchange contracts | (9,282 | ) | |||||
Net change in unrealized appreciation (depreciation) | $ | (38,161,131 | ) | ||||
Net realized and unrealized loss | $ | (23,963,459 | ) | ||||
Net increase in net assets from operations | $ | 23,931,488 |
See notes to financial statements
22
High Income Portfolio as of April 30, 2005
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
Increase (Decrease) in Net Assets | Six Months Ended April 30, 2005 (Unaudited) | Year Ended October 31, 2004 | |||||||||
From operations - Net investment income | $ | 47,894,947 | $ | 105,551,363 | |||||||
Net realized gain from investments, foreign currency and forward foreign currency exchange contract transactions | 14,197,672 | 13,246,595 | |||||||||
Net change in unrealized appreciation (depreciation) from investments, foreign currency and forward foreign currency exchange contracts | (38,161,131 | ) | 27,536,858 | ||||||||
Net increase in net assets from operations | $ | 23,931,488 | $ | 146,334,816 | |||||||
Capital transactions - Contributions | $ | 100,824,454 | $ | 289,846,419 | |||||||
Withdrawals | (254,131,439 | ) | (308,251,669 | ) | |||||||
Net decrease in net assets from capital transactions | $ | (153,306,985 | ) | $ | (18,405,250 | ) | |||||
Net increase (decrease) in net assets | $ | (129,375,497 | ) | $ | 127,929,566 | ||||||
Net Assets | |||||||||||
At beginning of period | $ | 1,291,972,619 | $ | 1,164,043,053 | |||||||
At end of period | $ | 1,162,597,122 | $ | 1,291,972,619 |
See notes to financial statements
23
High Income Portfolio as of April 30, 2005
FINANCIAL STATEMENTS CONT'D
Supplementary Data
Six Months Ended April 30, 2005 | Year Ended October 31, | Year Ended March 31, | |||||||||||||||||||||||||||||
(Unaudited) | 2004 | 2003 | 2002(1) | 2001 | 2000(2) | 2000 | |||||||||||||||||||||||||
Ratios/Supplemental Data | |||||||||||||||||||||||||||||||
Ratios (As a percentage of average daily net assets): | |||||||||||||||||||||||||||||||
Expenses | 0.57 | %(3) | 0.59 | % | 0.66 | % | 0.64 | % | 0.67 | % | 0.67 | %(3) | 0.64 | % | |||||||||||||||||
Expenses after custodian fee reduction | 0.57 | %(3) | 0.59 | % | 0.66 | % | 0.64 | % | 0.67 | % | 0.67 | %(3) | 0.64 | % | |||||||||||||||||
Net investment income | 7.85 | %(3) | 8.61 | % | 10.04 | % | 10.38 | % | 11.96 | % | 11.46 | %(3) | 10.54 | % | |||||||||||||||||
Portfolio Turnover | 31 | % | 80 | % | 122 | % | 88 | % | 83 | % | 41 | % | 113 | % | |||||||||||||||||
Total Return(4) | 2.13 | % | 12.79 | % | 34.76 | % | (4.36 | )% | - | - | - | ||||||||||||||||||||
Net assets, end of period (000's omitted) | $ | 1,162,597 | $ | 1,291,973 | $ | 1,164,043 | $ | 889,653 | $ | 1,186,751 | $ | 1,163,806 | $ | 1,184,998 |
(1) The Portfolio has adopted the provisions of the revised AICPA Audit and Accounting Guide for Investment Companies and began using the interest method to amortize premiums on fixed-income securities. The effect of this change for the year ended October 31, 2002 was to decrease the ratio of net investment income to average net assets from 10.59% to 10.38%. Ratios for the periods prior to November 1, 2001 have not been restated to reflect this change in presentation.
(2) For the seven-month period ended October 31, 2000.
(3) Annualized.
(4) Total return is required to be disclosed for fiscal years beginning after December 15, 2000.
See notes to financial statements
24
High Income Portfolio as of April 30, 2005
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
High Income Portfolio (the Portfolio) is registered under the Investment Company Act of 1940 as an 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. At April 30, 2005, Eaton Vance High Income Fund, Eaton Vance Floating-Rate High Income Fund and Eaton Vance Strategic Income Fund held an approximate 67.2%, 20.9% and 5.0% interest in the Portfolio, respectively. 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 are valued at closing sale prices. Investments listed on the NASDAQ National Market System are valued at the NASDAQ official closing price. 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 fair value. The Portfolio also invests in interests in senior floating rate loans (Senior Loans). The Portfolio's investment adviser, Boston Management and Research (BMR) a wholly owned subsidiary of Eaton Vance Management (EVM), has characterized certain Senior Loans as liquid based on a predetermined acceptable number and range of market quotations available. Such loans are valued on the basis of market valuations furnished by a pricing service. 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. Other Senior Loans are valued at fair value by BMR under procedures established by the Trustees as permitted by section 2(a)(41).
B Income - Interest income is determined on the basis of interest accrued, adjusted for amortization of premium or discount. Dividend income is recorded on ex-dividend date for dividends received in cash and/or securities. However, if the ex-dividend date has passed, certain dividends from foreign securities are recorded as the Portfolio is informed of the ex-dividend date.
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 I nternal 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 Expense Reduction - Investors Bank & Trust Company (IBT) serves as custodian to 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 credit balances used to reduce the Portfolio's custodian fees are reported as a reduction of total expenses on the Statement of Operations.
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 co ntracts 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 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. Realized gains or losses on investment transactions attributable to changes in foreign currency exchange rates are recorded for financial statement purposes a s net realized gains and losses on investments.
25
High Income Portfolio as of April 30, 2005
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
That portion of unrealized gains and losses on investments that results from fluctuations in foreign currency exchange rates is not separately disclosed.
G 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 contrac ts 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.
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 amount of revenue 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 interestholder s from and against any claim or liability to which such holder may become subject by reason of being or having been an interestholder in the 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 a trade date basis. Realized gains and losses are computed based on the specific identification of the securities sold.
K Interim Financial Statements - The interim financial statements relating to April 30, 2005 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 BMR, a wholly-owned subsidiary of 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 April 30, 2005, the fee was equivalent to 0.55% of the Portfolio's average daily net assets and amounted to $3,230,119. 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 officers and Trustees of the Portfolio are officers 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 an nual fees in accordance with the terms of the Trustees Deferred Compensation Plan. For the six months ended April 30, 2005, 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 $361,984,428 and $404,210,706, respectively, for the six months ended April 30, 2005.
4 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.
26
High Income Portfolio as of April 30, 2005
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
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, 2005.
5 Financial Instruments
The Portfolio regularly trades in financial instruments with off-balance sheet risk in the normal course of its investing activities to assist in managing exposure to various market risks. These financial instruments include written options, forward foreign currency contracts and financial futures contracts and may involve, to a varying degree, elements of risk in excess of the amounts recognized for financial statement purposes. The notional or contractual amounts of these instruments represent the investment the Portfolio has in particular classes of financial instruments and does not necessarily represent the amounts potentially subject to risk. The measurement of the risks associated with these instruments is meaningful only when all related and offsetting transactions are considered. A summary of obligations under these financial instruments at April 30, 2005 is as follows:
Forward Foreign Currency Exchange Contracts
Sales
Settlement Date(s) | Deliver | In exchange for (in United States Dollars) | Net Unrealized Appreciation | ||||||||||||
5/31/05 | Euro 4,386,430 | $ | 5,681,655 | $ | 14,794 | ||||||||||
$ | 5,681,655 | $ | 14,794 |
At April 30, 2005, the Portfolio had sufficient cash and/or securities to cover any commitments under these contracts.
6 Federal Income Tax Basis of Unrealized Appreciation (Depreciation)
The cost and unrealized appreciation (depreciation) in value of the investments owned at April 30, 2005 as computed on a federal income tax basis, were as follows:
Aggregate cost | $ | 1,108,425,746 | |||||
Gross unrealized appreciation | $ | 55,137,355 | |||||
Gross unrealized depreciation | (26,474,855 | ) | |||||
Net unrealized appreciation | $ | 28,662,500 |
7 Restricted Securities
At April 30, 2005, the Portfolio owned the following securities (representing less than 0.1% 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/Face | Cost | Fair Value | |||||||||||||||
Common Stocks and Warrants | |||||||||||||||||||
New World Coffee, Warrants, Exp. 06/15/06 | 9/15/02 - 7/15/02 9/30/02 | 1,244 | $ | 0 | $ | 13 | |||||||||||||
Peninsula Gaming LLC, Convertible Preferred Membership Interests | 7/08/99 | 23,351 | 0 | 152,107 | |||||||||||||||
$ | 0 | $ | 152,120 |
8 Interestholder Meeting
The Portfolio held a Special Meeting of Interestholders on April 29, 2005 to elect Trustees. The results of the vote were as follows:
Interest in the Portfolio | |||||||||||
Nominee for Trustee | Affirmative | Withhold | |||||||||
Benjamin C. Esty | 99 | % | 1 | % | |||||||
James B. Hawkes | 99 | % | 1 | % | |||||||
Samuel L. Hayes, III | 99 | % | 1 | % | |||||||
William H. Park | 99 | % | 1 | % | |||||||
Ronald A. Pearlman | 99 | % | 1 | % | |||||||
Norton H. Reamer | 99 | % | 1 | % | |||||||
Lynn A. Stout | 99 | % | 1 | % | |||||||
Ralph F. Verni | 99 | % | 1 | % |
Results are rounded to the nearest whole number.
27
High Income Portfolio
BOARD OF TRUSTEES' ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT
The investment advisory agreement between High Income Portfolio (the "Portfolio") and its investment adviser, Boston Management and Research, provides that the advisory agreement will continue in effect from year to year so long as its continuance is approved at least annually (i) by a vote of a majority of the noninterested Trustees of the Portfolio cast in person at a meeting called for the purpose of voting on such approval and (ii) by the Trustees of the Portfolio or by vote of a majority of the outstanding interests of the Portfolio.
In considering the annual approval of the investment advisory agreement between the Portfolio and its investment adviser, the Special Committee of the Board of Trustees considered information that had been provided throughout the year at regular Board meetings, as well as information furnished for a series of meetings held in February and March in preparation for a Board meeting held on March 21, 2005 to specifically consider the renewal of the investment advisory agreement. Such information included, among other things, the following:
• An independent report comparing the advisory fees of the Portfolio with those of comparable funds;
• An independent report comparing the expense ratio of the Eaton Vance High Income Fund (the "Fund") to those of comparable funds;
• Information regarding Fund investment performance in comparison to a relevant peer group of funds and appropriate indices;
• The economic outlook and the general investment outlook in relevant investment markets;
• Eaton Vance Management's ("Eaton Vance") results and financial condition and the overall organization of the investment adviser;
• 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;
• Eaton Vance's management of the relationship with the custodian, subcustodians and fund accountants;
• The resources devoted to compliance efforts undertaken by Eaton Vance on behalf of the funds it manages and the record of compliance with the investment policies and restrictions and with policies on personal securities transactions;
• The quality, nature, cost and character of the administrative and other non-investment management services provided by Eaton Vance and its affiliates; and
• The terms of the advisory agreement and the reasonableness and appropriateness of the particular fee paid by the Portfolio for the services described therein.
The Special Committee also considered the investment adviser's portfolio management capabilities, including information relating to the education, experience and number of investment professionals and other personnel who provide services under the investment advisory agreement. Specifically, the Special Committee considered the investment adviser's high-yield portfolio management team, including portfolio managers who perform their own investment and credit analysis and analysts who evaluate issuers' financial resources, operating history and sensitivity to economic conditions. The Special Committee noted the benefits to the Portfolio of the investment adviser's extensive in-house research capabilities. The Special Committee also took into account the time and attention to be devoted by senior management to the Portfolio and the other funds in the complex. The Special Committee evaluated the lev el of skill required to manage the Portfolio and concluded that the human resources available at the investment adviser were appropriate to fulfill effectively its duties on behalf of the Portfolio.
In its review of comparative information with respect to Fund investment performance, the Special Committee concluded that the Fund has performed within a range that the Special Committee deemed competitive. With respect to its review of investment advisory fees, the Special Committee concluded that the fees paid by the Portfolio are within the range of those paid by comparable funds within the mutual fund industry. In reviewing the information regarding the expense ratio of the Fund, the Special Committee concluded that the Fund's expense ratio is within a range that is competitive with comparable funds.
In addition to the factors mentioned above, the Special Committee reviewed the level of the investment adviser's profits in providing investment management services for the Portfolio and for all Eaton Vance funds as a group. The Special Committee also reviewed the benefits to Eaton Vance and its affiliates in providing administration services for the Fund and for all Eaton Vance funds as a group. In addition, the Special Committee considered the fiduciary duty assumed by the investment adviser in connection with the services rendered to the Portfolio and the business reputation of the investment adviser and its financial resources. The Trustees concluded that in light of the services rendered, the profits realized by the investment adviser are not unreasonable. The Special Committee also
28
High Income Portfolio
BOARD OF TRUSTEES' ANNUAL APPROVAL OF THE INVESTMENT ADVISORY AGREEMENT CONT'D
considered the extent to which the investment adviser appears to be realizing benefits from economies of scale in managing the Portfolio, and concluded that the fee breakpoints which are in place will allow for an equitable sharing of such benefits, when realized, with the Portfolio and the shareholders of the Fund.
The Special Committee did not consider any single factor as controlling in determining whether or not to renew the investment advisory agreement. Nor are the items described herein all the matters considered by the Special Committee. In assessing the information provided by Eaton Vance and its affiliates, the Special Committee also took into consideration the benefits to shareholders of investing in a fund that is a part of a large family of funds which provides a large variety of shareholder services.
Based on its consideration of the foregoing factors and conclusions, and such other factors and conclusions as it deemed relevant, and assisted by independent counsel, the Special Committee concluded that the renewal of the investment advisory agreement, including the fee structure, is in the interests of shareholders.
29
Eaton Vance High Income Fund
INVESTMENT MANAGEMENT
Eaton Vance High Income Fund
Officers Thomas E. Faust Jr. President William H. Ahern, Jr. Vice President Thomas J. Fetter Vice President Michael R. Mach Vice President Robert B. MacIntosh Vice President Duncan W. Richardson Vice President Walter A. Row III Vice President Judith A. Saryan Vice President Susan Schiff Vice President James L. O'Connor Treasurer Alan R. Dynner Secretary Paul M. O'Neil Chief Compliance Officer | Trustees Benjamin C. Esty James B. Hawkes Samuel L. Hayes, III William H. Park Ronald A. Pearlman Norton H. Reamer Lynn A. Stout Ralph F. Verni | ||||||
High Income Portfolio
Officers Michael W. Weilheimer President and Co-Portfolio Manager Thomas P. Huggins Vice President and Co-Portfolio Manager Barbara E. Campbell Treasurer Alan R . Dynner Secretary Paul M. O'Neil Chief Compliance Officer | Trustees Benjamin C. Esty James B. Hawkes Samuel L. Hayes, III William H. Park Ronald A. Pearlman Norton H. Reamer Lynn A. Stout Ralph F. Verni | ||||||
30
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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 President and Chief Executive Officer of Prizm Capital Management, LLC (investment management firm). Previously, he served 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. Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers.
Not required in this filing.
Item 9. Submission of Matters to a Vote of Security Holders.
Effective February 7, 2005, the Governance Committee of the Board of Trustees revised the procedures by which a Fund’s shareholders may recommend nominees to the registrant’s Board of Trustees to add the following (highlighted):
The Governance Committee shall, when identifying candidates for the position of Independent Trustee, consider any such candidate recommended by a shareholder of a Fund if such recommendation contains (i)sufficient background information concerning the candidate, including evidence the candidate is willing to serve as an Independent Trustee if selected for the position; and (ii) is received in a sufficiently timely manner (and in any event no later than the date specified for receipt of shareholder proposals in any applicable proxy statement with respect to a Fund). Shareholders shall be directed to address any such recommendations in writing to the attention of the Governance Committee, c/o the Secretary of the Fund. The Secretary shall retain copies of any shareholder recommendations which meet the foregoing requirements for a period of not more than 12 months following receipt. The Secretary shall have no obligation to acknowledge receipt of any shareholder recommendations
Item 10. 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 11. 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. |
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.
High Income Portfolio
By: | /s/Michael W. Weilheimer |
|
| Michael W. Weilheimer | |
| President | |
|
| |
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Date: | June 21, 2005 |
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/Barbara E. Campbell |
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| Barbara E. Campbell | |
| Treasurer | |
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Date: | June 21, 2005 | |
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By: | /s/Michael W. Weilheimer |
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| Michael W. Weilheimer | |
| President | |
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Date: | June 21, 2005 |