Eaton Vance Mutual Funds Trust – ‘N-30D’ for 3/31/99

On:  Friday, 6/4/99   ·   For:  3/31/99   ·   Accession #:  1047469-99-23215   ·   File #:  811-04015

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Annual or Semi-Annual Report Mailed to Shareholders   —   Rule 30d-1
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: N-30D       Annual or Semi-Annual Report Mailed to                49±   184K 
                          Shareholders                                           

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[EATON VANCE LOGO]  INVESTING                            [PHOTO OF            
    FOR THE                              STOCK
            21ST                                 CERTIFICATES]
CENTURY                               

Annual Report March 31, 1999                                  

                 EATON VANCE
                 HIGH INCOME
                  FUND
[PHOTO OF PAUL REVERE STATUE]                                                 

[PHOTO OF BOSTON SKYLINE]                                                 

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EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 1999                               

LETTER TO SHAREHOLDERS                                                          

[PHOTO]                                                                         

James B. Hawkes                                                                 
President                                                                       

Eaton Vance High Income Fund, Class B shares, had a total return of 2.1% for    
the year ended March 31, 1999.(1) That return was the result of a decline in    
net asset value per share to $7.51 on March 31, 1999 from $8.03 on March 31,    
1998, and the reinvestment of $0.662 in dividends.                              

Class C shares had a total return of 2.1% for the year, the result of a         
decline in NAV to $9.88 from $10.56, and the reinvestment of $0.866 in          
dividends.(1)                                                                   

By comparison, the average return of the 266 funds in the High Current Yield    
category, as compiled by Lipper, Inc. - a nationally recognized monitor of      
mutual fund performance - was -1.9% for the same period.(2)                     

Based on closing NAVs on March 31, 1999 of $7.51 for Class B shares and $9.88   
for Class C shares, the distribution rates were 8.85% and 8.81%,                
respectively.(3) The SEC 30-day yields at March 31, 1999 were 8.93% and 8.87%,  
respectively.(4)                                                                

AS INVESTORS SOUGHT THE SAFETY OF TREASURY BONDS, THE HIGH-YIELD MARKET         
PULLED BACK...                                                                  

For the first half of the recent fiscal year, the high-yield markets continued  
to deliver strong performance, as ongoing domestic growth and low inflation     
provided an excellent climate for the corporate sector. Moreover, U.S. economic 
output remained among the strongest in the world. Like most financial markets,  
however, the high-yield bond markets met with some turbulence in the fall of    
1998 amid economic weakness in Asia, a near meltdown in Russia, and concerns    
over the emerging markets. In an uncertain environment, fixed-income investors  
turned increasingly to U.S. Treasury bonds, the world's highest-quality         
security. The performance of non-Treasury markets, including high-yield bonds,  
suffered accordingly.                                                           

THE HIGH-YIELD MARKET RALLIED AT YEAR-END AS INVESTORS RECOGNIZED EXCELLENT     
VALUE...                                                                        

As 1998 drew to a close, the markets regained their equilibrium. The            
high-yield market rallied strongly and continued to gain ground in the first    
quarter of 1999. Against a backdrop of a continuing strong economy, a strong    
stock market, low inflation, and a very low default rate, investors realized    
that high-yield bonds represented unusually good value. High Income Portfolio   
was able to take advantage of the opportunities presented by last year's        
volatile trends. In the pages that follow, portfolio manager Michael Weilheimer 
reviews the past year in the high-yield markets and offers his thoughts for the 
year ahead.                                                                     

Sincerely,            

/s/ James B. Hawkes   

James B. Hawkes       
President             
May 8, 1999           

------------------------------------------------------------------------------- 
FUND INFORMATION                                                                
as of March 31, 1999                                                            

                                                                [Download Table]


Performance(5)                         Class B           Class C               
-------------------------------------------------------------------------------
                                                                               

Average Annual Total Returns (at net asset value)                              
-------------------------------------------------------------------------------
One Year                                2.1%              2.1%                 
Five Years                              9.7               N.A.                 
Ten Years                               9.4               N.A.                 
Life of Fund+                           9.3               9.7                  

SEC Average Annual Total Returns (including sales charge or applicable CDSC)   
-------------------------------------------------------------------------------
One Year                               -2.6%              1.1%                 
Five Years                              9.4               N.A.                 
Ten Years                               9.4               N.A.                 
Life of Fund+                           9.3               9.7                  

+Inception dates: Class B: 8/19/86; Class C: 6/8/94                             

                                                                [Download Table]


Ten Largest Holdings(6)                                                        
-------------------------------------------------------------------------------
                                                                               
Nextel International, Inc.                        3.1%                         
NTL, Inc.                                         2.6%                         
Allegiance Telecommunications Corp.               2.3                          
Esprit Telecommunications Group PLC.              2.3                          
Global Crossing Holdings Ltd.                     1.8                          
MDC Communications Corp.                          1.6                          
Regal Cinemas, Inc.                               1.6                          
Verio, Inc., Common                               1.6                          
Versatel Telecom B.V., Warrants                   1.5                          
RSL Communications PLC                            1.5                          


(1) These returns do not include the applicable contingent deferred sales       
charge (CDSC) for Class B or C shares. (2)It is not possible to invest          
directly in an Average or Index. (3)The Fund's distribution rate represents     
actual distributions paid to shareholders and is calculated by dividing the     
last distribution per share (annualized) by the net asset value. (4)The         
Fund's SEC yield is calculated by dividing the net investment income per        
share for the 30-day period by the offering price at the end of the period      
and annualizing the result. (5)Returns are historical and are calculated by     
determining the percentage change in net asset value with all distributions     
reinvested. SEC returns for Class B reflect applicable CDSC based on the        
following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2%    
- 5th year; 1% - 6th year.  Class C 1-year SEC return reflects 1% CDSC.         
(6)Ten largest holdings account for 19.9% of the Portfolio's investments,       
determined by dividing the total market value of the holdings by the total      
investments of the Portfolio. Holdings are subject to change.                   

Past performance is no guarantee of future results. Investment return and       
principal value will fluctuate so that shares, when redeemed, may be worth      
more or less than their original cost.                                          

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EATON VANCE HIGH INCOME FUND as of March 31, 1999                               

MANAGEMENT DISCUSSION                                                           

[PHOTO]                     AN INTERVIEW WITH                                   
MICHAEL W. WEILHEIMER,  
Michael W. Weilheimer       PORTFOLIO MANAGER OF                                
Portfolio Manager           HIGH INCOME PORTFOLIO.                              

Q: MIKE, THIS PAST YEAR FEATURED UNUSUALLY HIGH VOLATILITY IN FINANCIAL         
MARKETS, BOTH DOMESTIC AND ABROAD. WAS THAT TRUE OF THE HIGH-YIELD MARKET 
AS WELL?                                                                  

A: Yes. This year represented one of the most volatile, difficult investment    
climates in memory for the high-yield market. At the market's lowest point
in October, quality spreads widened to more than 600 basis points (6.0%)  
over Treasuries. The last time that happened was in 1991, when the economy
 was just emerging from a recession. This occasion was noteworthy, given the
fact that the economy was actually GROWING significantly. Following the   
October onslaught, the market mounted a strong recovery in November. The  
market has generally remained on track through the first quarter of 1999. 

Q: THE RISK-ADJUSTED PERFORMANCE OF THE FUND'S CLASS C SHARES AGAIN EARNED IT A 
FIVE-STAR OVERALL MORNINGSTAR RATING-TM- AMONG 1,521 TAXABLE BOND FUNDS.  
 (MORNINGSTAR IS A NATIONAL MONITOR OF MUTUAL FUND PERFORMANCE.)(1) WHAT HAS
DRIVEN THE FUND'S PERFORMANCE?                                            

A: Credit selection has been key in this market. We've focused on areas such    
as telecom and cable, where growth has continued without regard to the    
broader economy. In addition, we managed to avoid some of the market's    
problem areas, such as health care. Finally, we had raised cash in advance
of the October market debacle. That not only helped performance during the
  market correction, but allowed us to take advantage of some excellent values
among strong, B-rated issues when the dust finally settled. Thus, the     
Fund was able to weather the storm relatively well.                       

Q: WHERE HAVE YOU FOCUSED YOUR INVESTMENTS IN RECENT MONTHS?                    

A: The telecom sector, including wireline and wireless communications, has      
 continued to play a major role in the Portfolio. Allegiance Telecom was one
of the Portfolio's largest holdings at March 31, 1999. Allegiance has     
executed its business plan extremely well and the equity market has taken 
notice. It also has an excellent management team in place, led by Royce   
Holland, a former top executive at MFS Communications, one of the pioneers
in the business.                                                          

------------------------------------------------------------------------------- 

Portfolio Credit Quality Ratings(2)                                             
-----------------------------------                                             
                       B3          41.6%                 Aaa    1.4%
                       B2          19.8%                 Ba     1.4%
     [GRAPHIC]         Non-Rated   12.0%                 B1     1.4%
Caa          6.9%     

                                                                [Download Table]


Five Largest Sector Weightings(2)              
-----------------------------------            
                                               
Broadcasting & Cable                      13.6%

Wireline Comm. Services - Intl.           12.8%

Wireline Comm. Services - No. Amer.       11.5%

Wireless Comm. Services                    6.0%

Entertainment                              5.1%

(1)Morningstar ratings reflect historical risk-adjusted performance through     
3/31/99 and are subject to change every month. Past performance is no           
guarantee of future results. Funds are assigned ratings from 1 star (lowest)    
to 5 stars (highest). Ratings are calculated from the Fund's 3-, 5-, and        
10-year average annual returns (with fee adjustment) in excess of 90-day        
Treasury bill returns, and a risk factor that reflects fund performance below   
90-day Treasury bill returns. The top 10% of the funds in a category receive    
5 stars. For the 3-year period, the Fund was rated 5 stars (1,521 funds).       
Ratings refer to Class C only. Ratings for other Classes may vary. (2)Five      
largest Sector Weightings account for 4.90% of the Portfolio's investments,     
determined by dividing the total market value of the holdings by the total      
net assets of the Portfolio. Because the Fund is actively managed, Credit       
Quality Ratings and Sector Weightings are subject to change. Credit ratings     
are those provided by Moody's, Inc., a nationally recognized bond rating        
service.                                                                        

MUTUAL FUND SHARES ARE NOT INSURED BY THE FDIC AND ARE NOT DEPOSITS OR  
OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE  
SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTED. 

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EATON VANCE HIGH INCOME FUND as of March 31, 1999                               

MANAGEMENT DISCUSSION CONT'D                                                    

Unlike many telecom companies that have invested heavily in building out        
fiber networks, Allegiance has LEASED phone lines from the Bell operating       
companies. This "co-locating" with the Bells has allowed the company to focus   
on back-office systems for medium and small businesses. That has proven to be   
a very profitable market niche.                                                 

Also within the telecom sector, we've started to rotate incrementally into      
European companies. These companies have major growth opportunities in a less   
competitive environment. Telephone and Internet usage in Europe are much        
lower than in the U.S., suggesting the possibility of strong growth in the      
future. Esprit Telecom Group PLC is building a high capacity fiber network      
throughout western Europe. In December, the company announced plans to be       
acquired by Global TeleSystems. The merger will create a communications         
company with the muscle to compete globally.                                    

Q: CABLE HAS HISTORICALLY CONSTITUTED A SIGNIFICANT PORTION OF THE PORTFOLIO.   
COULD YOU DISCUSS YOUR STRATEGY WITHIN THE CABLE SECTOR?                  

A:  Yes. The dynamics of the cable business have shifted somewhat, with several 
new trends emerging. First, subscriber growth has slowed for some of the
 larger companies. However, because of their broadband capabilities, these
 companies are able to offer additional services such as Internet. That is
proving to be a major new source of revenue.                            

  Second, we've found good value among SMALLER cable operators. For example,
Avalon Cable is a Michigan-based company that has steadily grown its    
business through purchases of local cable systems. With cable multiples 
 trading at twice their values of a year ago, the value of Avalon's assets
has grown significantly. With its sound fundamentals, good growth       
prospects, and an experienced equity sponsor in Abry Partners, Avalon is
well-positioned in the midwest market and could very likely be an       
acquisition target in coming years.                                     

Finally, we have found good opportunities among FOREIGN cable operators.
United International Holdings, Inc. is Europe's largest cable operator. 
As in the U.S., Europe's cable operators will have the ability to expand
their product offerings into data and voice communications.             

Q:  YOU INDICATED IN OUR LAST REPORT THAT THE PORTFOLIO WAS LIGHT ON CYCLICAL   
ISSUES. IS THAT STILL THE CASE?                                         

A:  Yes. Interestingly, the slowdown that was predicted has not                 
materialized and domestic economic activity remains fairly robust.      
First quarter gross domestic i at 4.5%. However, the                    
slowdown in Asian economies had a fairly deep impact on companies that  
export goods and raw materials abroad. We've nibbled at some cyclical   
issues but we haven't made major commitments. For example, we've        
increased our investments in the linerboard sector through an           
investment in Packaging Corp. of America. But other cyclical sectors,   
such as chemicals and steel, have been slower to recover from the       
downturn in foreign demand.                                             

Q:  DID YOU MAINTAIN YOUR NON-CYCLICAL, DEFENSIVE HOLDINGS?                     

A:  Yes. Del Monte Corp. has been a long-time holding of the Portfolio.         
Branded food companies are less vulnerable to shifts in the economy.    
Over the years, the company has developed strong brand awareness among  
consumers of its fruit and vegetable products. Earlier this year, Del   
Monte came to market with an initial public equity offering that was    
very well received by investors. The company subsequently redeemed some 
expensive debt. The net effect of these actions has been to             
significantly strengthen Del Monte's balance sheet at a time when the   
company's operations are faring very well.                              

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EATON VANCE HIGH INCOME FUND as of March 31, 1999                               

MANAGEMENT DISCUSSION CONT'D                                                    

Q: WERE THERE ANY AREAS OF THE HIGH-YIELD MARKET THAT YOU AVOIDED ALTOGETHER?   

A: Yes. We've avoided commitments among long-term health care providers.        
The outlook for these companies has deteriorated significantly in the     
past year with the implementation of new Medicare reimbursement           
regulations. The new procedures have shifted from a cost-plus basis to    
a capitated payment system. The changes have had a negative impact on     
industry revenues, and, as a result, health care bonds have been          
decimated in the past year.                                               

Q: ARE THERE ANY OTHER AREAS YOU FEEL ARE PROMISING?                            

A: The direct broadcast satellite business has grown tremendously in            
recent years. Satellite penetration is especially strong in non-cabled    
areas, including many rural communities. Echostar is one of the largest   
satellite broadcasters and has executed its business plan well. Two       
other companies, Pegasus Communications Corp. and Golden Sky Systems,     
are Direct TV's largest franchisees and are direct beneficiaries          
of the explosive growth of satellite broadcasting.                        

Q: WHAT IS YOUR OUTLOOK FOR THE HIGH-YIELD MARKET IN THE COMING YEAR?           

A: With little sign of inflation and a still-expanding economy, the             
climate for the high-yield market is quite favorable. Fixed-income        
investors - who were fixated on Treasury bonds during the last year's     
market turmoil - have returned to the high-yield market. We've seen       
increased demand from institutional investors, such as managers of        
pension funds and collateralized bond obligations, as well as growing     
participation by individuals.                                             

Moreover, the market has rebounded somewhat from its lows in October,     
but we believe it is still undervalued. Last year's market decline        
presented a major buying opportunity for the Portfolio. As a result, I    
believe that High Income Portfolio is well-positioned for the coming      
year.                                                                     

EATON VANCE HIGH INCOME FUND, CLASS B VS.                                       
LEHMAN BROTHERS HIGH YIELD BOND INDEX &                                         
FIRST BOSTON HIGH YIELD BOND INDEX                                              

DATE           FUND/NAV        LBHYBI                                 
-------------------------------------------                                     
3/31/89          $10,000         $10,000                                  
4/30/89          $10,015         $10,042                                  
5/31/89          $10,155         $10,237                                  
6/30/89          $10,273         $10,364                                  
7/31/89          $10,306         $10,350                                  
8/31/89          $10,318         $10,385                                  
9/30/89          $10,304         $10,211                                  
10/31/89          $10,115          $9,969                                   
11/30/89          $10,002          $9,949                                   
12/31/89          $10,007          $9,965                                   
1/31/90           $9,774          $9,751                                  
2/28/90           $9,347          $9,550                                  
3/31/90           $9,186          $9,800                                  
4/30/90           $9,261          $9,783                                  
5/31/90           $9,438          $9,972                                  
6/30/90           $9,625         $10,214                                  
7/31/90           $9,838         $10,488                                  
8/31/90           $9,381          $9,892                                  
9/30/90           $8,740          $9,169                                  
10/31/90           $8,450          $8,688                                   
11/30/90           $8,264          $8,959                                   
12/31/90           $8,160          $9,009                                   
1/31/91           $8,067          $9,257                                  
2/28/91           $8,540         $10,270                                  
3/31/91           $8,925         $10,875                                  
4/30/91           $9,592         $11,321                                  
5/31/91           $9,624         $11,341                                  
6/30/91           $9,939         $11,677                                  
7/31/91          $10,323         $12,050                                  
8/31/91          $10,447         $12,327                                  
9/30/91          $10,668         $12,499                                  
10/31/91          $11,055         $12,916                                   
11/30/91          $11,182         $12,983                                   
12/31/91          $11,289         $13,170                                   
1/31/92          $11,743         $13,634                                  
2/28/92          $12,049         $13,971                                  
3/31/92          $12,335         $14,144                                  
4/30/92          $12,469         $14,198                                  
5/31/92          $12,654         $14,398                                  
6/30/92          $12,828         $14,533                                  
7/31/92          $13,000         $14,753                                  
8/31/92          $13,167         $14,946                                  
9/30/92          $13,250         $15,098                                  
10/31/92          $13,054         $14,885                                   
11/30/92          $13,115         $15,073                                   
12/31/92          $13,297         $15,245                                   
1/31/93          $13,524         $15,688                                  
2/28/93          $13,822         $15,965                                  
3/31/93          $13,990         $16,171                                  
4/30/93          $14,101         $16,311                                  
5/31/93          $14,313         $16,505                                  
6/30/93          $14,590         $16,852                                  
7/31/93          $14,752         $17,015                                  
8/31/93          $14,787         $17,158                                  
9/30/93          $14,775         $17,203                                  
10/31/93          $15,099         $17,550                                   
11/30/93          $15,291         $17,635                                   
12/31/93          $15,547         $17,853                                   
1/31/94          $15,853         $18,241                                  
2/28/94          $15,952         $18,193                                  
3/31/94          $15,428         $17,506                                  
4/30/94          $15,247         $17,387                                  
5/31/94          $15,336         $17,396                                  
6/30/94          $15,373         $17,449                                  
7/31/94          $15,306         $17,598                                  
8/31/94          $15,285         $17,722                                  
9/30/94          $15,285         $17,723                                  
10/31/94          $15,289         $17,765                                   
11/30/94          $15,103         $17,541                                   
12/31/94          $15,266         $17,670                                   
1/31/95          $15,331         $17,910                                  
2/28/95          $15,724         $18,524                                  
3/31/95          $15,815         $18,723                                  
4/30/95          $16,250         $19,200                                  
5/31/95          $16,600         $19,738                                  
6/30/95          $16,618         $19,869                                  
7/31/95          $16,873         $20,114                                  
8/31/95          $16,787         $20,177                                  
9/30/95          $16,899         $20,425                                  
10/31/95          $16,917         $20,493                                   
11/30/95          $17,076         $20,733                                   
12/31/95          $17,382         $21,058                                   
1/31/96          $17,647         $21,429                                  
2/28/96          $17,909         $21,446                                  
3/31/96          $17,840         $21,431                                  
4/30/96          $17,982         $21,479                                  
5/31/96          $18,171         $21,608                                  
6/30/96          $18,170         $21,786                                  
7/31/96          $18,301         $21,888                                  
8/31/96          $18,574         $22,124                                  
9/30/96          $19,063         $22,658                                  
10/31/96          $19,093         $22,832                                   
11/30/96          $19,425         $23,282                                   
12/31/96          $19,778         $23,449                                   
1/31/97          $19,932         $23,678                                  
2/28/97          $20,313         $24,069                                  
3/31/97          $19,868         $23,711                                  
4/30/97          $20,094         $23,961                                  
5/31/97          $20,623         $24,474                                  
6/30/97          $21,026         $24,813                                  
7/31/97          $21,615         $25,494                                  
8/31/97          $21,736         $25,437                                  
9/30/97          $22,288         $25,941                                  
10/31/97          $22,231         $25,964                                   
11/30/97          $22,421         $26,212                                   
12/31/97          $22,814         $26,442                                   
1/31/98          $23,271         $26,918                                  
2/28/98          $23,583         $27,075                                  
3/31/98          $23,958         $27,329                                  
4/30/98          $24,052         $27,437                                  
5/31/98          $24,062         $27,533                                  
6/30/98          $24,111         $27,632                                  
7/31/98          $24,216         $27,789                                  
8/31/98          $22,366         $26,255                                  
9/30/98          $22,282         $26,374                                  
10/31/98          $21,675         $25,834                                   
11/30/98          $23,147         $26,906                                   
12/31/98          $23,218         $26,935                                   
1/31/99          $23,722         $27,335                                  
2/28/99          $24,005         $27,174                                  
3/31/99          $24,457         $27,329                                  

                                                                [Download Table]


Performance**                  Class B     Class C                             
-------------------------------------------------------------------------------
                                                                               
Average Annual Total Returns (at net asset value)                              
-------------------------------------------------------------------------------
One Year                           2.1%    2.1%                                
Five Years                         9.7     N.A.                                
Ten Years                          9.4     N.A.                                
Life of Fund+                      9.3     9.7                                 

SEC Average Annual Total Returns (including sales charge or applicable CDSC)   
-------------------------------------------------------------------------------
One Year                           -2.6%   1.1%                                
Five Years                          9.4    N.A.                                
Ten Years                           9.4    N.A.                                
Life of Fund+                       9.3    9.7                                 

+Inception dates: Class B: 8/19/86; Class C: 6/8/94                             

* Source: TowersData, Bethesda, MD.; CS First Boston, Inc.                      

The chart compares the Fund's total return with that of the CS First Boston     
High Yield Bond Index and the Lehman Brothers High Yield Bond Index,            
broad-based, unmanaged market indices of high-yield corporate bonds. With       
this report, we are establishing the CS First Boston Index as the Fund's        
primary benchmark in the belief that it more accurately reflects the Fund's     
investment universe. In compliance with Securities and Exchange Commission      
regulations, we are also including the Fund's previous benchmark, the Lehman    
Brothers High Yield Bond Index, in this report. The lines on the chart          
represent the total returns of $10,000 hypothetical investments in the Fund     
and the Indices. The Indices' total returns do not reflect commissions or       
expenses that would have been incurred if an investor individually purchased    
or sold the securities represented in the Indices. It is not possible to        
invest directly in an Index. An investment in the Fund's Class C shares on      
6/30/94 at net asset value would have been worth $15,811 on March 31, 1999.     

**Returns are calculated by determining the percentage change in net asset      
value (NAV) with all distributions reinvested. SEC returns for Class B          
reflect applicable CDSC based on the following schedule:  5% - 1st and 2nd      
years; 4% - 3rd year; 3% - 4th year; 2% - 5th year; 1% - 6th year. SEC 1-Year   
return for Class C reflects 1% CDSC.                                            

Past performance is no guarantee of future results. Investment return and       
principal value will fluctuate so that shares, when redeemed, may be worth      
more or less than their original cost.                                          

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EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 1999                               

FINANCIAL STATEMENTS                                                            

STATEMENT OF ASSETS AND LIABILITIES                                             

                                                                [Download Table]

AS OF MARCH 31, 1999                                          
                                                              
Assets                                                        
------------------------------------------------------------- 
Investment in High Income Portfolio, at value                 
   (identified cost, $751,232,974)              $ 753,082,989 
Receivable for Fund shares sold                     2,338,803 
------------------------------------------------------------- 
TOTAL ASSETS                                    $ 755,421,792 
------------------------------------------------------------- 
Liabilities                                                   
------------------------------------------------------------- 
Dividends payable                               $   2,789,828 
Payable for Fund shares redeemed                    1,377,409 
Other accrued expenses                                454,655 
------------------------------------------------------------- 
TOTAL LIABILITIES                               $   4,621,892 
------------------------------------------------------------- 
NET ASSETS                                      $ 750,799,900 
------------------------------------------------------------- 

Sources of Net Assets                                         
------------------------------------------------------------- 
Paid-in capital                                 $ 788,452,648 
Accumulated net realized loss from Portfolio                  
   (computed on the basis of                                  
   identified cost)                               (42,760,330)
Accumulated undistributed net investment                      
   income                                           3,257,567 
Net unrealized appreciation from Portfolio                    
   (computed on the basis of identified cost)       1,850,015 
------------------------------------------------------------- 
TOTAL                                           $ 750,799,900 
------------------------------------------------------------- 

Class B Shares                                                
------------------------------------------------------------- 
NET ASSETS                                      $ 689,140,242 
SHARES OUTSTANDING                                 91,719,524 
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION                
   PRICE PER SHARE                                            
   (net assets DIVIDED BY shares of beneficial                
      interest outstanding)                     $        7.51 
------------------------------------------------------------- 
Class C Shares                                                
------------------------------------------------------------- 
NET ASSETS                                      $  61,659,658 
SHARES OUTSTANDING                                  6,241,775 
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION                
   PRICE PER SHARE                                            
   (net assets DIVIDED BY shares of beneficial                
      interest outstanding)                     $        9.88 
------------------------------------------------------------- 

STATEMENT OF OPERATIONS                                                         

                                                                [Download Table]

FOR THE YEAR ENDED                                            
MARCH 31, 1999                                                
                                                              
Investment Income                                             
------------------------------------------------------------- 
Interest allocated from Portfolio               $  68,600,018 
Dividends allocated from Portfolio                  6,040,034 
Miscellaneous income allocated from Portfolio       1,700,812 
Expenses allocated from Portfolio                  (4,548,673)
------------------------------------------------------------- 
NET INVESTMENT INCOME FROM PORTFOLIO            $  71,792,191 
------------------------------------------------------------- 

Expenses                                                      
------------------------------------------------------------- 
Trustees fees and expenses                      $       4,588 
Distribution and service fees                                 
   Class B                                          6,315,506 
   Class C                                            433,814 
Transfer and dividend disbursing agent fees           776,490 
Registration fees                                      91,309 
Printing and postage                                   33,629 
Custodian fee                                          33,117 
Legal and accounting services                          10,391 
Amortization of organization expenses                   3,363 
Miscellaneous                                          57,459 
------------------------------------------------------------- 
TOTAL EXPENSES                                  $   7,759,666 
------------------------------------------------------------- 

NET INVESTMENT INCOME                           $  64,032,525 
------------------------------------------------------------- 

Realized and Unrealized                                       
Gain (Loss) from Portfolio                                    
------------------------------------------------------------- 
Net realized gain (loss) --                                   
   Investment transactions (identified cost                   
      basis)                                    $  (5,310,067)
   Foreign currency transactions                        3,332 
------------------------------------------------------------- 
NET REALIZED LOSS                               $  (5,306,735)
------------------------------------------------------------- 
Change in unrealized appreciation                             
   (depreciation) --                                          
   Investments                                  $ (42,231,862)
------------------------------------------------------------- 
NET CHANGE IN UNREALIZED APPRECIATION                         
   (DEPRECIATION)                               $ (42,231,862)
------------------------------------------------------------- 

NET REALIZED AND UNREALIZED LOSS                $ (47,538,597)
------------------------------------------------------------- 

NET INCREASE IN NET ASSETS FROM OPERATIONS      $  16,493,928 
------------------------------------------------------------- 

SEE NOTES TO FINANCIAL STATEMENTS 

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EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 1999                               

FINANCIAL STATEMENTS CONT'D                                                     

STATEMENTS OF CHANGES IN NET ASSETS                                             

                                                                [Download Table]

Increase (Decrease)                       YEAR ENDED        YEAR ENDED      
in Net Assets                             MARCH 31, 1999    MARCH 31, 1998  
                                                                            
--------------------------------------------------------------------------- 
From operations --                                                          
   Net investment income                   $   64,032,525     $  55,767,094 
   Net realized gain (loss)                    (5,306,735)       33,998,876 
   Net change in unrealized appreciation                                    
      (depreciation)                          (42,231,862)       31,499,701 
--------------------------------------------------------------------------- 
NET INCREASE IN NET ASSETS FROM                                             
   OPERATIONS                              $   16,493,928     $ 121,265,671 
--------------------------------------------------------------------------- 
Distributions to shareholders --                                            
   From net investment income                                               
      Class B                              $  (57,887,205)    $ (52,767,916)
      Class C                                  (3,801,298)               -- 
--------------------------------------------------------------------------- 
TOTAL DISTRIBUTIONS TO SHAREHOLDERS        $  (61,688,503)    $ (52,767,916)
--------------------------------------------------------------------------- 
Transactions in shares of beneficial interest --                            
   Proceeds from sale of shares                                             
      Class B                              $  170,794,418     $ 134,879,881 
      Class C                                  54,928,047                -- 
   Issued in reorganization of EV                                           
      Classic High Income Fund                                              
      Class C                                  33,094,017                -- 
   Net asset value of shares issued to                                      
      shareholders in payment of                                            
      distributions declared                                                
      Class B                                  18,897,976        16,511,135 
      Class C                                   2,251,108                -- 
   Cost of shares redeemed                                                  
      Class B                                (151,322,234)     (124,344,122)
      Class C                                 (26,466,468)               -- 
--------------------------------------------------------------------------- 
NET INCREASE IN NET ASSETS FROM FUND                                        
   SHARE TRANSACTIONS                      $  102,176,864     $  27,046,894 
--------------------------------------------------------------------------- 

NET INCREASE IN NET ASSETS                 $   56,982,289     $  95,544,649 
--------------------------------------------------------------------------- 
Net Assets                                                                  
--------------------------------------------------------------------------- 
At beginning of year                       $  693,817,611     $ 598,272,962 
--------------------------------------------------------------------------- 
AT END OF YEAR                             $  750,799,900     $ 693,817,611 
--------------------------------------------------------------------------- 
Accumulated                                                                 
undistributed                                                               
net investment income                                                       
included in net assets                                                      
--------------------------------------------------------------------------- 
AT END OF YEAR                             $    3,257,567     $     910,213 
--------------------------------------------------------------------------- 

SEE NOTES TO FINANCIAL STATEMENTS 

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EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 1999                               

FINANCIAL STATEMENTS CONT'D                                                     

FINANCIAL HIGHLIGHTS                                                            

                                                        [Enlarge/Download Table]

                                                               YEAR ENDED MARCH 31,                              
                                  -------------------------------------------------------------------------------
                                           1999                 1998          1997          1996          1995   
                                  -----------------------     ---------     ---------     ---------     ---------
                                   CLASS B       CLASS C       CLASS B       CLASS B       CLASS B       CLASS B 
                                                                                                                 
-----------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning                                                                                     
   of year                        $  8.030      $ 10.560      $  7.220      $  7.100      $  6.920      $  7.450 
-----------------------------------------------------------------------------------------------------------------

Income from operations                                                                                           
-----------------------------------------------------------------------------------------------------------------
Net investment income             $  0.685      $  0.901      $  0.658      $  0.652      $  0.665      $  0.671 
Net realized and unrealized                                                                                      
   gain (loss)                      (0.543)       (0.715)        0.774         0.120         0.189        (0.507)
-----------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS      $  0.142      $  0.186      $  1.432      $  0.772      $  0.854      $  0.164 
-----------------------------------------------------------------------------------------------------------------

Less distributions                                                                                               
-----------------------------------------------------------------------------------------------------------------
From net investment income        $ (0.662)     $ (0.866)     $ (0.622)     $ (0.646)     $ (0.665)     $ (0.671)
In excess of net investment                                                                                      
   income                               --            --            --        (0.006)       (0.009)       (0.023)
-----------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS               $ (0.662)     $ (0.866)     $ (0.622)     $ (0.652)     $ (0.674)     $ (0.694)
-----------------------------------------------------------------------------------------------------------------

NET ASSET VALUE -- END OF YEAR    $  7.510      $  9.880      $  8.030      $  7.220      $  7.100      $  6.920 
-----------------------------------------------------------------------------------------------------------------

TOTAL RETURN(1)                       2.08%         2.08%        20.59%        11.37%        12.80%         2.51%
-----------------------------------------------------------------------------------------------------------------

Ratios/Supplemental Data                                                                                         
-----------------------------------------------------------------------------------------------------------------
Net assets, end of year (000's                                                                                   
   omitted)                       $689,140      $ 61,660      $693,818      $598,273      $496,966      $439,171 
Ratios (As a percentage of                                                                                       
   average daily net assets):                                                                                    
   Expenses(2)                        1.75%         1.79%         1.73%         1.77%         1.78%         1.78%
   Net investment income              9.13%         9.18%         8.58%         8.97%         9.38%         9.52%
Portfolio Turnover(3)                   --            --            --            --            --            11%
-----------------------------------------------------------------------------------------------------------------

(1)  Total return is calculated assuming a purchase at the net asset value on   
 the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed     
     reinvested at the net asset value on the reinvestment date. Total return is
not computed on an annualized basis.                                  
(2)  Includes the Fund's share of the Portfolio's allocated expenses for the    
period the Fund was investing in the Portfolio.                       
(3)  Portfolio Turnover represents the rate of portfolio activity for the period
     while the Fund was making investments directly in securities. The portfolio
turnover rate for the period since the Fund transferred all of its    
  investable assets to the Portfolio is shown in the Portfolio's financial
statements which are included elsewhere in this report.               

SEE NOTES TO FINANCIAL STATEMENTS 

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EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 1999                               

NOTES TO FINANCIAL STATEMENTS                                                   

1 Significant Accounting Policies                                               
-------------------------------------------                                     
Eaton Vance High Income Fund (the Fund) is a diversified series of Eaton  
Vance Mutual Funds Trust (the Trust). The Trust is an entity of the type  
  commonly known as a Massachusetts business trust and is registered under the
Investment Company Act of 1940, as amended, as an open-end, management    
   investment company. The Fund offers two classes of shares. Class B shares and
Class C shares are sold at net asset value and are subject to a contingent
   deferred sales charge (see Note 6). Each class represents a pro rata interest
in the Fund, but votes separately on class-specific matters and (as noted 
below) is subject to different expenses. Realized and unrealized gains and
  losses are allocated daily to each class of shares based on the relative net
assets of each class to the total net assets of the Fund. Net investment  
  income, other than class specific expenses, is allocated daily to each class
   of shares based upon the ratio of the value of each class' paid shares to the
total value of all paid shares. Each class of shares differs in its       
   distribution plan and certain other class specific expenses. The Fund invests
 all of its investable assets in interests in the High Income Portfolio (the
Portfolio), a New York Trust, having the same investment objective as the 
   Fund. The value of the Fund's investment in the Portfolio reflects the Fund's
   proportionate interest in the net assets of the Portfolio (72.4% at March 31,
   1999). The performance of the Fund is directly affected by the performance of
the Portfolio. The financial statements of the Portfolio, including the   
   portfolio of investments, are included elsewhere in this report and should be
read in conjunction with the Fund's financial statements.                 

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The  
policies are in conformity with generally accepted accounting principles. 

A Investment Valuations -- Valuation of securities by the Portfolio is        
 discussed in Note 1A of the Portfolio's Notes to Financial Statements which
are included elsewhere in this report.                                    

B Income -- The Fund's net investment income consists of the Fund's pro rata  
share of the net investment income of the Portfolio, less all actual and  
   accrued expenses of the Fund determined in accordance with generally accepted
accounting principles.                                                    

C Federal Taxes -- The Fund's policy is to comply with the provisions of the  
Internal Revenue Code applicable to regulated investment companies and to 
   distribute to shareholders each year all of its taxable income, including any
net realized gain on investments. Accordingly, no provision for federal   
 income or excise tax is necessary. At March 31, 1999, the Fund, for federal
  income tax purposes, had a capital loss carryover of $40,459,481, which will
reduce the Fund's taxable income arising from future net realized gain on 
   investments, if any, to the extent permitted by the Internal Revenue Code and
thus will reduce the amount of distributions to shareholders which would  
otherwise be necessary to relieve the Fund of any liability for federal   
income or excise tax. Such capital loss carryover will expire on March 31,
  2000 ($11,538,107), 2003 ($12,690,352), 2004 ($5,868,015), 2005 ($7,020,394)
   and 2007 ($3,342,613), respectively. At March 31, 1999, net capital losses of
  $1,770,175 attributable to security transactions incurred after Octerber 31,
   1998 are treated as arising on the first day of the Fund's next taxable year.

D Other -- Investment transactions are accounted for on a trade date basis.   

E Use of Estimates -- The preparation of financial statements in conformity   
with generally accepted accounting principles requires management to make 
estimates and assumptions that affect the reported amounts of assets and  
  liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could  
differ from those estimates.                                              

2 Distributions to Shareholders                                                 
-------------------------------------------                                     
 The net income of the Fund is determined daily and substantially all of the
  net income so determined is declared as a dividend to shareholders of record
at the time of declaration. Such daily dividends are paid monthly.        
  Distributions of realized capital gains, if any, are made at least annually.
  Shareholders may reinvest capital gain distributions in additional shares of
   the Fund at the net asset value as of the ex-dividend date. Distributions are
  paid in the form of additional shares of the Fund or, at the election of the
 shareholder, in cash. The Fund distinguishes between distributions on a tax
basis and a financial reporting basis. Generally accepted accounting      
principles require that only distributions in excess of tax basis earnings
 and profits be reported in the financial statements as a return of capital.
Differences in the recognition or classification of income between the    
financial statements and tax earnings and profits which result in over    
distributions for financial statement purposes only are classified as     
  distributions in excess of net investment income or accumulated net realized
gains.                                                                    

Permanent differences between book and tax accounting relating to         
distributions are reclassified to paid-in capital.                        

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EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 1999                               

NOTES TO FINANCIAL STATEMENTS CONT'D                                            

3 Shares of Beneficial Interest                                                 
-------------------------------------------                                     
   The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).    
Transactions in Fund shares were as follows:                              

                                                                [Download Table]

                                          YEAR ENDED       YEAR ENDED     
CLASS B                                   MARCH 31, 1999   MARCH 31, 1998 
                                                                          
------------------------------------------------------------------------- 
Sales                                         22,874,813       17,727,309 
Issued to shareholders electing to                                        
 receive payments of distributions in                                     
 Fund shares                                   2,521,238        2,155,159 
Redemptions                                  (20,058,915)     (16,307,730)
------------------------------------------------------------------------- 
NET INCREASE                                   5,337,136        3,574,738 
------------------------------------------------------------------------- 

                                                                [Download Table]

                                          YEAR ENDED     
CLASS C                                   MARCH 31, 1999 
                                                         
-------------------------------------------------------- 
Sales                                          5,574,324 
Issued to shareholders electing to                       
 receive payments of distributions in                    
 Fund shares                                     228,574 
Redemptions                                   (2,696,157)
Issued to EV Classic High Income Fund                    
 shareholders                                  3,135,034 
-------------------------------------------------------- 
NET INCREASE                                   6,241,775 
-------------------------------------------------------- 

4 Transactions with Affiliates                                                  
-------------------------------------------                                     
Eaton Vance Management (EVM) serves as the administrator of the Fund, but 
receives no compensation. The Portfolio has engaged Boston Management and 
  Research (BMR), a subsidiary of EVM, to render investment advisory services.
See Note 2 of the Portfolio's Notes to Financial Statements which are     
  included elsewhere in this report. Except as to Trustees of the Fund and the
Portfolio who are not members of EVM's or BMR's organization, officers and
Trustees receive remuneration for their services to the Fund out of such  
investment adviser fee.                                                   

Certain of the officers and Trustees of the Fund and the Portfolio are    
officers and directors/trustees of the above organizations.               

5 Distribution and Service Plans                                                
-------------------------------------------                                     
 The Fund has adopted distribution plans (the Class B Plan and Class C Plan)
pursuant to Rule 12b-1 under the Investment Company Act of 1940 for the   
Fund's Class B and Class C shares. The Plan requires the Fund to pay the  
   Principal Underwriter, Eaton Vance Distributors, Inc. (EVD), amounts equal to
1/365 of 0.75% of the Fund's daily net assets attributable to both Class B
   and Class C shares for providing ongoing distribution services and facilities
 to the Fund. The Fund will automatically discontinue payments to EVD during
  any period in which there are no outstanding Uncovered Distribution Charges,
 which are equivalent to the sum of (i) 5% and 6.25% of the aggregate amount
 received by the Fund for the Class B and Class C shares sold, respectively,
   plus, (ii) interest calculated by applying the rate of 1% over the prevailing
prime rate to the outstanding balance of Uncovered Distribution Charges of
EVD of each respective class reduced by the aggregate amount of contingent
   deferred sales charges (see Note 6) and daily amounts theretofore paid to EVD
by each respective class. The Fund paid or accrued $4,933,989 and $325,361
   for Class B and Class C shares, respectively, to EVD for the year ended March
31, 1999, representing 0.75% of average daily net assets for Class B and  
Class C shares. At March 31, 1999 the amount of Uncovered Distribution    
Charges of EVD calculated under the Plan was approximately $17,602,000 and
$4,605,000 for Class B and Class C shares, respectively.                  

  In addition, the Plans also authorize each class to make payments of service
fees to EVD, Authorized Firms and other persons in amounts not exceeding  
0.25% of the Fund's average daily net assets attributable to Class B and  
  Class C shares for each fiscal year. The Trustees have implemented the Plans
   by authorizing the Fund to make quarterly payments of service fees to EVD and
Authorized Firms in amounts not to exceed 0.25% per annum of the Fund's   
   average daily net assets attributable to Class B shares based on the value of
 Fund shares sold by such persons and remaining outstanding for at least one
  year. The Class C plan requires the Fund to make monthly payments of service
  fees in amounts not expected to exceed 0.25% per annum of the Fund's average
   daily net assets attributable to Class C shares. Service fee payments for the
   year ended March 31, 1999 amounted to $1,381,517 and $108,453 for Class B and
Class C, respectively. Service fee payments are made for personal services
  and/or the maintenance of shareholder accounts. Service fees paid to EVD and
Authorized Firms are separate and distinct from the sales commissions and 
   distribution fees payable by the Fund to EVD, and, as such are not subject to
automatic discontinuance where there are no outstanding Uncovered         
Distribution Charges of EVD.                                              

 Certain officers and Trustees of the Fund are officers or directors of EVD.

6 Contingent Deferred Sales Charge                                              
-------------------------------------------                                     
A contingent deferred sales charge (CDSC) is imposed on any redemption of 
  Class B shares made within six years of purchase. A CDSC of 1% is imposed on
   any redemption of Class C shares made within one year of purchase. Generally,
the CDSC is based upon the lower of the net                               

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EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 1999                               

NOTES TO FINANCIAL STATEMENTS CONT'D                                            

   asset value at date of redemption or date of purchase. No charge is levied on
  shares acquired by reinvestment of dividends or capital gains distributions.
Class B CDSC is imposed at declining rates that begin at 5% in the case of
redemptions in the first and second year after purchase, declining one    
   percentage point each subsequent year. No CDSC is levied on shares which have
been sold to EVM or its affiliates or to their respective employees or    
clients. CDSC charges are paid to EVD to reduce the amount of Uncovered   
Distribution Charges calculated under the Fund's Distribution Plan. CDSC  
charges received when no Uncovered Distribution Charges exist will be     
retained by the Fund. EVD received approximately $1,527,000 and $20,000 of
CDSC paid by shareholders for Class B shares and Class C shares,          
respectively, for the year ended March 31, 1999.                          

7 Investment Transactions                                                       
-------------------------------------------                                     
Increases and decreases in the Fund's investment in the Portfolio for the 
year ended March 31, 1999, aggregated $219,490,988 and $220,920,151,      
respectively.                                                             

8 Transfer of Net Assets                                                        
-------------------------------------------                                     
   On April 1, 1998, EV Marathon High Income Fund acquired the net assets of the
EV Classic High Income Fund pursuant to an Agreement and Plan of          
Reorganization dated June 23, 1997. In accordance with the agreement, EV  
   Marathon High Income Fund, at the closing, issued 3,135,034 Class C shares of
the Fund having an aggregate value of $33,094,017. As a result, the Fund  
 issued one Class C share for each share of EV Classic High Income Fund. The
transaction was structured for tax purposes to qualify as a tax free      
reorganization under the Internal Revenue Code. The EV Classic High Income
  Fund's net assets at the date of the transaction were $33,094,017, including
$1,444,205 of unrealized appreciation. Directly after the merger, the     
combined net assets of the Eaton Vance High Income Fund (formerly "EV     
   Marathon High Income Fund") were $726,911,628 with a net asset value of $8.03
and $10.56 for Class B shares and Class C shares, respectively.           

9 Name Change                                                                   
-------------------------------------------                                     
   Effective April 1, 1998, the EV Marathon High Income Fund changed its name to
Eaton Vance High Income Fund.                                             

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EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 1999                               

INDEPENDENT AUDITORS' REPORT                                                    

To the Trustees and Shareholders                                                
of Eaton Vance High Income Fund:                                                
--------------------------------------------------------                        

We have audited the accompanying statement of assets and liabilities of Eaton   
Vance High Income Fund (the Fund) as of March 31, 1999, the related statement of
operations for the year then ended, the statements of changes in net assets for 
the years ended March 31, 1999 and 1998, and the financial highlights for each  
of the years in the five-year period ended March 31, 1999. These financial      
statements and financial highlights are the responsibility of the Fund's        
management. Our responsibility is to express an opinion on these financial      
statements and financial highlights based on our audits.                        

We conducted our audits in accordance with generally accepted auditing          
standards. Those standards require that we plan and perform the audit to obtain 
reasonable assurance about whether the financial statements and financial       
highlights are free of material misstatement. An audit includes examining, on a 
test basis, evidence supporting the amounts and disclosures in the financial    
statements. An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall     
financial statement presentation. We believe that our audits provide a          
reasonable basis for our opinion.                                               

In our opinion, such financial statements and financial highlights present      
fairly, in all material respects, the financial position of the Fund at March   
31, 1999, the results of its operations, the changes in its net assets and its  
financial highlights for the respective stated periods in conformity with       
generally accepted accounting principles.                                       

DELOITTE & TOUCHE LLP         
Boston, Massachusetts         
April 30, 1999                

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HIGH INCOME PORTFOLIO AS OF MARCH 31, 1999                                      

PORTFOLIO OF INVESTMENTS                                                        

(EXPRESSED IN UNITED STATES DOLLARS)                                            

                                                                [Download Table]
                                                                            
CORPORATE BONDS & NOTES -- 84.5%                                            



                                          PRINCIPAL                         
                                          AMOUNT                            
SECURITY                                  (000'S OMITTED)    VALUE          
                                                                            
----------------------------------------------------------------------------
Aerospace and Defense -- 0.4%                                               
----------------------------------------------------------------------------
Transdigm, Inc., Sr. Sub. Notes,                                            
10.375%, 12/1/08(1)                           $  3,700       $     3,774,000
----------------------------------------------------------------------------
                                                             $     3,774,000
----------------------------------------------------------------------------
Apparel -- 0.7%                                                             
----------------------------------------------------------------------------
William Carter Co., Sr. Sub. Notes,                                         
10.375%, 12/1/06                              $  6,275       $     6,745,625
----------------------------------------------------------------------------
                                                             $     6,745,625
----------------------------------------------------------------------------
Auto and Parts -- 1.0%                                                      
----------------------------------------------------------------------------
American Axle and Manufacturing, Inc.,                                      
Sr.                                                                         
Sub. Notes, 9.75%, 3/1/09(1)                  $  4,800       $     4,932,000
Talon Automotive Group, Sr. Sub. Notes,                                     
9.625%, 5/1/08                                   6,100             5,520,500
----------------------------------------------------------------------------
                                                             $    10,452,500
----------------------------------------------------------------------------
Broadcasting and Cable -- 10.8%                                             
----------------------------------------------------------------------------
Adelphia Communications Corp., Sr.                                          
Notes, 9.875%, 3/1/07                         $  4,480       $     4,928,000
Adelphia Communications Corp., Sr.                                          
Notes, 10.50%, 7/15/04                           2,640             2,904,000
Avalon Cable Holdings LLC, Sr. Disc.                                        
Notes, 11.875%, (0% until 2003),                                            
12/1/08(1)                                      11,400             7,353,000
Avalon Cable of Michigan LLC, Sr. Sub.                                      
Notes, 9.375%, 12/1/08(1)                        3,200             3,372,000
Century Communications, Sr. Notes,                                          
8.75%, 10/1/07                                   1,600             1,668,000
Citadel Broadcasting Co., Guaranteed Sr.                                    
Sub. Notes, 9.25%, 11/15/08                      1,360             1,468,800
Digital Television Services, Inc.,                                          
Guaranteed Notes, 12.50%, 8/1/07                 6,410             7,083,050
EchoStar DBS Corp., Sr. Notes, 9.375%,                                      
2/1/09(1)                                        6,400             6,624,000
Golden Sky Systems, Sr. Disc. Notes,                                        
13.50%, (0% until 2004), 3/1/07(1)              12,170             7,119,450
Golden Sky Systems, Sr. Sub. Notes,                                         
144A, 12.375%, 8/1/06(1)                         6,840             7,592,400
Intermedia Capital Partners, Sr. Sub.                                       
Notes, 11.25%, 8/1/06                            2,625             2,985,938
Muzak Holdings LLC, Sr. Disc. Notes,                                        
13.00%, (0% until 2004), 3/15/10(1)              6,563             3,560,428

                                          PRINCIPAL                         
                                          AMOUNT                            
SECURITY                                  (000'S OMITTED)    VALUE          
                                                                            
----------------------------------------------------------------------------

Broadcasting and Cable (continued)                                          
----------------------------------------------------------------------------
Muzak Holdings LLC, Sr. Sub. Notes,                                         
9.875%, 3/15/09(1)                            $  7,900       $     8,176,500
NTL, Inc., Sr. Notes, 9.75%, (0% until                                      
2003), 4/1/08                                    3,700             2,516,000
NTL, Inc., Sr. Notes, 10.00%, 2/15/07            7,080             7,504,800
NTL, Inc., Sr. Notes, 11.50%, 10/1/08(1)        11,600            13,079,000
NTL, Inc., Sr. Notes, 12.375%, (0% until                                    
2003), 10/1/08(1)                                4,900             3,381,000
Pegasus Communications Corp., Sr. Notes,                                    
9.75%, 12/1/06(1)                                  995             1,034,800
RCN Corp., Sr. Disc. Notes, 9.80%, (0%                                      
until 2003), 2/15/08                             2,250             1,411,875
RCN Corp., Sr. Disc. Notes, 11.00%, (0%                                     
until 2003), 7/1/08                              3,400             2,133,500
RCN Corp., Sr. Disc. Notes, 11.125%, (0%                                    
until 2002), 10/15/07                            3,800             2,565,000
Telemundo Holdings, Inc., Sr. Disc.                                         
Notes, 11.50%, (0% until 2003), 8/15/08          9,800             5,635,000
Telewest PLC, Debs., 9.625%, 10/1/06               640               680,000
Telewest PLC, Debs., 11.00%, (0% until                                      
2002), 10/1/07                                   1,930             1,698,400
United International Holdings, Inc., Sr.                                    
Disc. Notes, 10.75%, (0% until 2003),                                       
2/15/08                                          7,935             5,395,800
----------------------------------------------------------------------------
                                                             $   111,870,741
----------------------------------------------------------------------------
Building Products -- 0.8%                                                   
----------------------------------------------------------------------------
Panolam Industries International, Sr.                                       
Sub. Notes, 11.50%, 2/15/09(1)                $  2,400       $     2,472,000
Wesco International, Inc., Sr. Disc.                                        
Notes, 11.125%, (0% until 2003), 6/1/08          8,600             5,934,000
----------------------------------------------------------------------------
                                                             $     8,406,000
----------------------------------------------------------------------------
Business Services-Miscellaneous -- 3.0%                                     
----------------------------------------------------------------------------
AP Holdings, Inc., Sr. Disc. Notes,                                         
11.25%,                                                                     
(0% until 2003), 3/15/08                      $  8,550       $     4,916,250
Apcoa, Inc., Guaranteed Sr. Sub. Notes,                                     
9.25%, 3/15/08                                   3,320             3,137,400
Federal Data Corp., Sr. Sub. Notes,                                         
10.125%, 8/1/05                                  4,740             4,674,825
Intertek Finance PLC, Sr. Sub. Notes,                                       
10.25%, 11/1/06                                  5,600             5,432,000
Richmont Marketing Special, Sr. Sub.                                        
Notes, 10.125%, 12/15/07(1)                     17,770            12,883,250
----------------------------------------------------------------------------
                                                             $    31,043,725
----------------------------------------------------------------------------

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HIGH INCOME PORTFOLIO AS OF MARCH 31, 1999                                      

PORTFOLIO OF INVESTMENTS CONT'D                                                 

(EXPRESSED IN UNITED STATES DOLLARS)                                            

                                                                [Download Table]

                                          PRINCIPAL                         
                                          AMOUNT                            
SECURITY                                  (000'S OMITTED)    VALUE          
----------------------------------------------------------------------------
                                                                            
Business Services-Rental & Leasing -- 3.2%                                  
----------------------------------------------------------------------------
Anthony Crane Rental LP, Guaranteed Sr.                                     
Notes, 10.375%, 8/1/08                        $  4,000       $     4,005,000
NationsRent, Inc., Guaranteed Sr. Sub.                                      
Notes, 10.375%, 12/15/08                         7,200             7,560,000
Neff Corp., Guaranteed Sr. Sub. Notes,                                      
10.25%, 6/1/08                                   3,250             3,388,125
SBA Communications Corp., Sr. Disc.                                         
Notes, 12.00%, (0% until 2003), 3/1/08          11,010             6,991,350
Spectrasite Holdings, Inc., Sr. Disc.                                       
Notes, 12.00%, (0% until 2003),                                             
7/15/08(1)                                      10,600             6,625,000
Unisite, Inc., Sub. Notes, 13.00%, (0%                                      
until 2000), 12/15/04(1)                         4,500             5,127,750
----------------------------------------------------------------------------
                                                             $    33,697,225
----------------------------------------------------------------------------
Chemicals -- 0.9%                                                           
----------------------------------------------------------------------------
Huntsman Corp., Sr. Sub. Notes, 9.50%,                                      
7/1/07(1)                                     $  1,000       $       985,000
NL Industries, Inc., Sr. Notes, 11.75%,                                     
10/15/03                                         5,040             5,399,100
Sterling Chemicals Holdings, Inc., Sr.                                      
Sub. Notes, 11.75%, 8/15/06                      3,480             3,271,200
----------------------------------------------------------------------------
                                                             $     9,655,300
----------------------------------------------------------------------------
Computer Equipment -- 0.9%                                                  
----------------------------------------------------------------------------
Unisys Corp., Sr. Notes, 11.75%,                                            
10/15/04                                      $  2,600       $     2,944,500
Unisys Corp., Sr. Notes,                                                    
12.00%, 4/15/03                                  5,600             6,174,000
----------------------------------------------------------------------------
                                                             $     9,118,500
----------------------------------------------------------------------------
Consumer Products -- 2.4%                                                   
----------------------------------------------------------------------------
Amscan Holdings, Inc., Sr. Sub. Notes,                                      
9.875%, 12/15/07                              $  4,480       $     3,830,400
Diamond Brands Operating Corp.,                                             
Guaranteed Sr. Sub. Notes, 10.125%,                                         
4/15/08                                          4,080             3,447,600
Diamond Brands, Inc., Sr. Debs.,                                            
12.875%,                                                                    
(0% until 2003), 4/15/09                         2,800               661,500
Glenoit Corp., Sr. Sub. Notes, 11.00%,                                      
4/15/07                                          9,000             7,965,000
Icon Health and Fitness, Inc., Sr. Sub.                                     
Notes, 13.00%, 7/15/02                           3,200             2,256,000
Jafra Cosmetics International, Inc.,                                        
Guaranteed Sr. Sub. Notes, 11.75%,                                          
5/1/08                                           4,000             3,590,000


                                          PRINCIPAL                         
                                          AMOUNT                            
SECURITY                                  (000'S OMITTED)    VALUE          
                                                                            
----------------------------------------------------------------------------

Consumer Products (continued)                                               
----------------------------------------------------------------------------
United Industries Corp., Sr. Sub. Notes,                                    
9.875%, 4/1/09(1)                             $  3,388       $     3,485,405
----------------------------------------------------------------------------
                                                             $    25,235,905
----------------------------------------------------------------------------
Containers and Packaging -- 0.9%                                            
----------------------------------------------------------------------------
Consumers International, Inc., Sr.                                          
Notes, 10.25%, 4/1/05                         $  3,935       $     4,161,263
Consumers Packaging, Inc., Sr. Notes,                                       
9.75%, 2/1/07(1)                                 2,025             2,090,813
Packaging Corp. of America, Sr. Sub.                                        
Notes, 9.625%, 4/1/09(1)                         3,400             3,485,000
----------------------------------------------------------------------------
                                                             $     9,737,076
----------------------------------------------------------------------------
Drugs -- 0.5%                                                               
----------------------------------------------------------------------------
King Pharmaceutical, Inc., Sr. Sub.                                         
Notes, 10.75%, 2/15/09(1)                     $  5,000       $     5,125,000
----------------------------------------------------------------------------
                                                             $     5,125,000
----------------------------------------------------------------------------
Electronic Equipment -- 1.8%                                                
----------------------------------------------------------------------------
Jordan Telecom Products, Inc., Sr. Disc.                                    
Notes, 11.75%, (0% until                                                    
2000), 8/1/07                                 $  7,700       $     6,314,000
MCMS, Inc., Sr. Sub. Notes, 9.75%,                                          
3/1/08                                           3,330             1,998,000
Viasystems, Inc., Sr. Sub. Notes, 9.75%,                                    
6/1/07                                           3,565             3,404,575
Viasystems, Inc., Sr. Sub. Notes, 9.75%,                                    
6/1/07                                           3,600             3,438,000
Wavetek Corp., Sr. Sub. Notes, 10.125%,                                     
6/15/07                                          3,360             3,141,600
----------------------------------------------------------------------------
                                                             $    18,296,175
----------------------------------------------------------------------------
Entertainment -- 5.1%                                                       
----------------------------------------------------------------------------
Cinemark USA, Inc., Sr. Sub. Notes,                                         
8.50%, 8/1/08                                 $  6,640       $     6,573,600
Loews Cineplex Entertainment Corp., Sr.                                     
Sub. Notes, 8.875%, 8/1/08                       6,800             6,808,500
Marvel Enterprises, Inc., Sr. Notes,                                        
12.00%, 6/15/09(1)                               5,600             5,712,000
Premier Parks, Inc., Sr. Disc. Notes,                                       
10.00%, (0% until 2003), 4/1/08                  6,800             4,726,000
Premier Parks, Inc., Sr. Notes, 9.25%,                                      
4/1/06                                           4,200             4,347,000
Regal Cinemas, Inc., Sr. Sub. Notes,                                        
8.875%, 12/15/10                                 3,320             3,261,900

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HIGH INCOME PORTFOLIO AS OF MARCH 31, 1999                                      

PORTFOLIO OF INVESTMENTS CONT'D                                                 

(EXPRESSED IN UNITED STATES DOLLARS)                                            

                                                                [Download Table]

                                          PRINCIPAL                         
                                          AMOUNT                            
SECURITY                                  (000'S OMITTED)    VALUE          
----------------------------------------------------------------------------
                                                                            

Entertainment (continued)                                                   
----------------------------------------------------------------------------
Regal Cinemas, Inc., Sr. Sub. Notes,                                        
9.50%, 6/1/08                                 $ 12,530       $    12,874,575
SFX Entertainment, Inc., Sr. Sub. Notes,                                    
9.125%, 2/1/08                                   1,350             1,365,188
SFX Entertainment, Inc., Sr. Sub. Notes,                                    
9.125%, 12/1/08(1)                               7,600             7,809,000
----------------------------------------------------------------------------
                                                             $    53,477,763
----------------------------------------------------------------------------
Financial Services -- 0.6%                                                  
----------------------------------------------------------------------------
Willis Corroon Corp., Sr. Sub. Notes,                                       
9.00%, 2/1/09(1)                              $  6,400       $     6,512,000
----------------------------------------------------------------------------
                                                             $     6,512,000
----------------------------------------------------------------------------
Foods -- 3.4%                                                               
----------------------------------------------------------------------------
B & G Foods, Inc., Sub. Notes, 9.625%,                                      
8/1/07                                        $  7,445       $     7,258,875
Del Monte Corp., Sr. Notes, 12.25%,                                         
4/15/07                                          9,979            11,263,796
Del Monte Foods Co., Sr. Disc. Notes,                                       
12.50%, (0% until 2002), 12/15/07                3,515             2,627,463
Eagle Family Foods, Inc., Guaranteed Sr.                                    
Notes, 8.75%, 1/15/08                            2,800             2,639,000
Grupo Azucarero Mexico, Sr. Notes,                                          
11.50%, 1/15/05                                  4,800             1,716,000
International Home Foods, Inc., Sr. Sub.                                    
Notes, 10.375%, 11/1/06                          9,000             9,832,500
----------------------------------------------------------------------------
                                                             $    35,337,634
----------------------------------------------------------------------------
Health Services -- 0.3%                                                     
----------------------------------------------------------------------------
Alliance Imaging, Sr. Sub Notes, 9.625%,                                    
12/15/05                                      $  2,700       $     2,686,500
----------------------------------------------------------------------------
                                                             $     2,686,500
----------------------------------------------------------------------------
Information Technology Services -- 3.7%                                     
----------------------------------------------------------------------------
Diva Systems Corp., Sr. Notes, 12.625%,                                     
(0% until 2003), 3/1/08                       $  6,000       $     2,010,000
Exodus Communications, Inc., Sr. Notes,                                     
11.25%, 7/1/08                                   5,535             6,081,581
PSINet, Inc., Sr. Notes,                                                    
11.50%, 11/1/08                                 11,600            13,136,999
Splitrock Services, Inc., Guaranteed Sr.                                    
Notes, 11.75%, 7/15/08                           4,000             3,840,000
Verio, Inc., Sr. Notes, 11.25%,                                             
12/1/08(1)                                       8,790             9,954,675
Verio, Inc., Sr. Notes, 13.50%, 6/15/04          3,200             3,712,000
----------------------------------------------------------------------------
                                                             $    38,735,255
----------------------------------------------------------------------------


                                          PRINCIPAL                         
                                          AMOUNT                            
SECURITY                                  (000'S OMITTED)    VALUE          
                                                                            
----------------------------------------------------------------------------
Lodging and Gaming -- 4.5%                                                  
----------------------------------------------------------------------------
Aztar Corp., Sr. Sub. Notes, 13.75%,                                        
10/1/04                                       $  7,040       $     7,752,800
Coast Hotels and Casinos, Inc., Sr. Sub.                                    
Notes, 9.50%, 4/1/09(1)                          5,200             5,278,000
Hollywood Park, Inc., Sr. Sub. Notes,                                       
9.25%, 2/15/07(1)                                2,400             2,478,000
Hollywood Park, Inc., Sr. Sub. Notes,                                       
9.50%, 8/1/07                                    8,220             8,466,600
ITT Corp., Sr. Notes, 6.75%, 11/15/03            3,375             3,160,964
Lady Luck Gaming Corp., First Mortgage                                      
Bonds, 11.875%, 3/1/01                           3,500             3,543,750
Station Casinos, Inc., Sr. Sub. Notes,                                      
9.75%, 4/15/07                                   5,600             5,922,000
Waterford Gaming LLC, Sr. Notes, 9.50%,                                     
3/15/10(1)                                       9,750            10,030,313
----------------------------------------------------------------------------
                                                             $    46,632,427
----------------------------------------------------------------------------
Manufacturing -- 1.2%                                                       
----------------------------------------------------------------------------
IMO Industries, Sr. Sub. Notes, 11.75%,                                     
5/1/06                                        $  4,680       $     4,750,200
Roller Bearing Holdings Co., Sr. Disc.                                      
Notes, 13.00%, (0% until 2002),                                             
6/15/09(1)                                      12,875             7,274,375
----------------------------------------------------------------------------
                                                             $    12,024,575
----------------------------------------------------------------------------
Medical Products -- 0.5%                                                    
----------------------------------------------------------------------------
Dade International, Inc., Sr. Sub.                                          
Notes, 11.125%, 5/1/06                        $  4,800       $     5,256,000
----------------------------------------------------------------------------
                                                             $     5,256,000
----------------------------------------------------------------------------
Metals-Industrial -- 0.4%                                                   
----------------------------------------------------------------------------
Bulong Operations Pty Ltd., Sr. Notes,                                      
12.50%, 12/15/08(1)                           $  4,000       $     4,050,000
----------------------------------------------------------------------------
                                                             $     4,050,000
----------------------------------------------------------------------------
Oil and Gas-Equipment and Services -- 1.3%                                  
----------------------------------------------------------------------------
Dailey International, Inc., Sr. Notes,                                      
9.50%, 2/15/08                                $  8,360       $     3,344,000
Grant Geophysical, Inc., Sr. Notes,                                         
9.75%, 2/15/08                                   4,000             1,800,000
RBF Finance Co., Guaranteed Sr. Notes,                                      
11.375%, 3/15/09(1)                              2,900             3,016,000
Universal Compression, Inc., Sr. Disc.                                      
Notes, 9.875%, (0% until 2003), 2/15/08          9,400             5,781,000
----------------------------------------------------------------------------
                                                             $    13,941,000
----------------------------------------------------------------------------

SEE NOTES TO FINANCIAL STATEMENTS 

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HIGH INCOME PORTFOLIO AS OF MARCH 31, 1999                                      

PORTFOLIO OF INVESTMENTS CONT'D                                                 

(EXPRESSED IN UNITED STATES DOLLARS)                                            

                                                                [Download Table]

                                          PRINCIPAL                         
                                          AMOUNT                            
SECURITY                                  (000'S OMITTED)    VALUE          
----------------------------------------------------------------------------
                                                                            
Oil and Gas-Exploration and Production -- 1.1%                              
----------------------------------------------------------------------------
Energy Corp. of America, Sr. Sub. Notes,                                    
9.50%, 5/15/07                                $  3,600       $     3,352,500
Gulf Canada Resources, Ltd., Sr. Notes,                                     
8.375%, 11/15/05                                 2,200             2,119,238
Ocean Energy, Inc., Sr. Sub. Notes,                                         
10.375%, 10/15/05                                5,950             6,188,000
----------------------------------------------------------------------------
                                                             $    11,659,738
----------------------------------------------------------------------------
Paper and Forest Products -- 1.3%                                           
----------------------------------------------------------------------------
Asia Pulp and Paper, Debs, 12.00%,                                          
12/29/49                                      $  6,000       $     2,520,000
Indah Kiat Finance Mauritius, Sr. Unsec.                                    
Notes, 10.00%, 7/1/07                            3,400             1,632,000
Pindo Deli Finance Mauritius, Ltd.,                                         
Guaranteed Sr. Notes,                                                       
10.75%, 10/1/07                                  2,400             1,326,000
Repap New Brunswick, Inc., Sr. Notes,                                       
9.00%, 6/1/04                                    1,650             1,592,250
S.D. Warren Co., Sr. Sub. Notes, 12.00%,                                    
12/15/04                                         3,800             4,118,250
Tjiwi Kimia Finance Mauritus, Ltd.,                                         
Guaranteed Sr. Sub. Notes, 10.00%,                                          
8/1/04                                           3,800             2,042,500
----------------------------------------------------------------------------
                                                             $    13,231,000
----------------------------------------------------------------------------
Printing and Business Products -- 1.5%                                      
----------------------------------------------------------------------------
MDC Communications Corp., Sr. Sub.                                          
Notes, 10.50%, 12/1/06                        $ 15,600       $    15,989,999
----------------------------------------------------------------------------
                                                             $    15,989,999
----------------------------------------------------------------------------
Publishing -- 0.7%                                                          
----------------------------------------------------------------------------
American Lawyer Media Corp., Sr. Disc.                                      
Notes, 12.25%, (0% until                                                    
2002), 12/15/08                               $  2,920       $     1,898,000
Von Hoffman Press, Inc., Sr. Sub. Notes,                                    
10.875%, 5/15/07(1)                              5,095             5,260,588
----------------------------------------------------------------------------
                                                             $     7,158,588
----------------------------------------------------------------------------
Restaurants -- 0.3%                                                         
----------------------------------------------------------------------------
Dominos, Inc., Sr. Sub. Notes, 10.375%,                                     
1/15/09(1)                                    $  2,800       $     2,905,000
----------------------------------------------------------------------------
                                                             $     2,905,000
----------------------------------------------------------------------------
Retail-Food and Drug -- 2.8%                                                
----------------------------------------------------------------------------
AFC Enterprises, Inc., Sr. Sub Notes,                                       
10.25%, 5/15/07                               $  9,600       $    10,224,000


                                          PRINCIPAL                         
                                          AMOUNT                            
SECURITY                                  (000'S OMITTED)    VALUE          
                                                                            
----------------------------------------------------------------------------

Retail-Food and Drug (continued)                                            
----------------------------------------------------------------------------
Pantry, Inc., Sr. Sub. Notes, 10.25%,                                       
10/15/07                                      $ 10,870       $    11,467,850
Star Markets Co., Sr. Sub. Notes,                                           
13.00%, 11/1/04                                  6,200             6,959,500
----------------------------------------------------------------------------
                                                             $    28,651,350
----------------------------------------------------------------------------
Retail-General -- 2.9%                                                      
----------------------------------------------------------------------------
Advance Holding Corp., Sr. Debs.,                                           
12.875%,                                                                    
(0% until 2003), 4/15/09                      $  4,000       $     2,475,000
Advance Stores Co., Inc., Sr. Sub.                                          
Notes, 10.25%, 4/15/08                           8,400             8,568,000
Franks Nursery and Crafts, Sr. Sub.                                         
Notes, 10.25%, 3/1/08                            4,000             4,020,000
Kindercare Learning Ctrs., Inc., Sr.                                        
Sub. Notes, 9.50%, 2/15/09                       8,100             8,140,500
SpinCycle, Inc., Sr. Disc. Notes,                                           
12.75%,                                                                     
(0% until 2001), 5/1/05                          3,400             1,309,000
Tuesday Morning Corp., Sr. Sub. Notes,                                      
11.00%, 12/15/07                                 5,880             6,027,000
----------------------------------------------------------------------------
                                                             $    30,539,500
----------------------------------------------------------------------------
Transportation -- 0.1%                                                      
----------------------------------------------------------------------------
MTL, Inc., Sr. Sub. Notes, Variable                                         
Rate, 10.498%, 6/15/06(1)                     $  1,600       $     1,512,000
----------------------------------------------------------------------------
                                                             $     1,512,000
----------------------------------------------------------------------------
Utilities -- 0.4%                                                           
----------------------------------------------------------------------------
Calpine Corp., Sr. Notes,                                                   
7.75%, 4/15/09                                $  4,000       $     3,990,000
----------------------------------------------------------------------------
                                                             $     3,990,000
----------------------------------------------------------------------------
Wireless Communication Services -- 4.5%                                     
----------------------------------------------------------------------------
Dobson Communications Corp., Sr. Notes,                                     
12.25%, 12/15/08(1)                           $  7,000       $     7,525,000
ICO Global Communications, Sr. Notes,                                       
15.00%, 8/1/05                                   4,800             2,904,000
Loral Space and Communications Ltd., Sr.                                    
Notes, 9.50%, 1/15/06(1)                         6,480             6,139,800
Nextel Communications, Inc., Sr. Disc.                                      
Notes, 9.75%, (0% until                                                     
1999), 8/15/04                                  11,690            12,099,150
Nextel Communications, Inc., Sr. Disc.                                      
Notes, 9.75%, (0% until 2002),                                              
10/31/07                                         6,400             4,544,000
Nextel Communications, Inc., Sr. Disc.                                      
Notes, 10.65%, (0% until                                                    
2002), 9/15/07                                     250               182,500

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HIGH INCOME PORTFOLIO AS OF MARCH 31, 1999                                      

PORTFOLIO OF INVESTMENTS CONT'D                                                 

(EXPRESSED IN UNITED STATES DOLLARS)                                            

                                                                [Download Table]

                                          PRINCIPAL                         
                                          AMOUNT                            
SECURITY                                  (000'S OMITTED)    VALUE          
----------------------------------------------------------------------------
                                                                            

Wireless Communication Services (continued)                                 
----------------------------------------------------------------------------
Nextel International, Inc., Sr. Disc.                                       
Notes, 12.125%, (0% until 2003), 4/15/08      $ 15,000       $     7,050,000
Nextel Partners, Inc., Sr. Disc. Notes,                                     
14.00%, (0% until 2004), 2/1/09(1)               3,750             2,175,000
Triton PCS, Inc., Guaranteed Sr. Sub.                                       
Notes, 11.00%, (0% until 2003), 5/1/08           1,000               595,000
Winstar Communications, Inc., Sr. Disc.                                     
Notes, 14.00%, (0% until                                                    
2000), 10/15/05                                  5,600             3,948,000
----------------------------------------------------------------------------
                                                             $    47,162,450
----------------------------------------------------------------------------
Wireline Communication Services-International -- 11.2%                      
----------------------------------------------------------------------------
Carrier1, Sr. Notes, 13.25%, 2/15/09          $ 15,000       $    15,149,999
Completel Europe NV, Sr. Disc. Notes,                                       
14.00%, (0% until 2004), 2/15/09                 7,840             4,155,200
Esat Telecom Group PLC, Sr. Deferred                                        
Coupon Notes, 12.50%, (0% until                                             
2002), 2/1/07                                    3,875             2,828,750
Esat Telecom Group PLC, Sr. Deferred                                        
Coupon Notes, 12.50%, (0% until                                             
2002), 2/1/07                                    3,600             2,628,000
Esat Telecom Group PLC, Sr. Notes,                                          
11.875%, 12/1/08(1)                              4,000             4,320,000
Esprit Telecom Group PLC, Sr. Notes,                                        
10.875%, 6/15/08                                 8,825             9,310,375
Esprit Telecom Group PLC, Sr. Notes,                                        
11.50%, 12/15/07                                12,600            13,544,999
Facilicom International, Sr. Notes,                                         
10.50%, 1/15/08                                  4,640             3,584,400
Global Crossing Holding, Ltd., Sr.                                          
Notes, 9.625%, 5/15/08                           2,910             3,241,013
Jazztel PLC, Sr. Notes, 14.00%, 4/1/09           4,000             4,000,000
Netia Holdings B.V., Sr. Disc. Notes,                                       
11.25%, (0% until 2001), 11/1/07                 1,200               774,000
Primus Telecom Group, Sr. Notes, 11.25%,                                    
1/15/09(1)                                       8,550             8,827,875
Primus Telecom Group, Sr. Notes, 11.75%,                                    
8/1/04                                           4,600             4,818,500
RSL Communications PLC, Guaranteed Sr.                                      
Notes, 12.00%, 11/1/08                           2,400             2,652,000
RSL Communications PLC., Guaranteed Sr.                                     
Notes, 10.50%, 11/15/08                          7,000             7,455,000
RSL Communications, Ltd., Sr. Notes,                                        
12.25%, 11/15/06                                 4,565             4,987,263
Versatel Telecom B.V., Sr. Notes,                                           
13.25%, 5/15/08                                  7,840             8,075,200
Versatel Telecom B.V., Sr. Notes,                                           
13.25%, 5/15/08                                  6,160             6,344,800


                                          PRINCIPAL                         
                                          AMOUNT                            
SECURITY                                  (000'S OMITTED)    VALUE          
                                                                            
----------------------------------------------------------------------------

Wireline Communication Services-International (continued)                   
----------------------------------------------------------------------------
Viatel, Inc., Sr. Disc. Notes, 12.50%,                                      
(0% until 2003), 4/15/08                      $  8,665       $     5,350,638
Viatel, Inc., Sr. Notes, 11.25%, 4/15/08         3,760             3,844,600
----------------------------------------------------------------------------
                                                             $   115,892,612
----------------------------------------------------------------------------
Wireline Communication Services-North America -- 9.4%                       
----------------------------------------------------------------------------
Allegiance Telecom, Inc., Sr. Disc.                                         
Notes, 11.75%, (0% until 2003), 2/15/08       $  7,530       $     4,781,550
Allegiance Telecom, Inc., Sr. Notes,                                        
12.875%, 5/15/08                                15,975            17,692,312
Focal Communications Corp., Sr. Disc.                                       
Notes, 12.125%, (0% until 2003), 2/15/08         3,250             1,820,000
GST Telecommunications, Sr. Sub. Notes,                                     
12.75%, 11/15/07                                 3,700             3,570,500
Hyperion Telecommunications, Inc., Sr.                                      
Notes, 12.25%, 9/1/04                            6,910             7,514,625
Hyperion Telecommunications, Inc., Sr.                                      
Sub. Notes, 12.00%, 11/1/07(1)                   4,000             4,160,000
Intermedia Communications, Inc., Sr.                                        
Disc. Notes, 11.25%, (0% until                                              
2002), 7/15/07                                   2,840             2,165,500
Intermedia Communications, Inc., Sr.                                        
Notes, 8.60%, 6/1/08                             4,490             4,490,000
ITC Deltacom Inc., Sr. Notes, 9.75%,                                        
11/15/08                                         3,840             4,041,600
Level 3 Communications, Inc., Sr. Disc.                                     
Notes, 13.50%, (0% until                                                    
2003), 12/1/08(1)                                9,800             6,210,750
McLeodUSA, Inc., Sr. Notes, 8.125%,                                         
2/15/09(1)                                       6,400             6,416,000
Metromedia Fiber Network, Inc., Sr.                                         
Notes, 10.00%, 11/15/08(1)                       6,720             7,190,400
MetroNet Communications Corp., Sr.                                          
Notes, 10.625%, 11/1/08(1)                       3,000             3,510,000
MetroNet Communications Corp., Sr.                                          
Notes, 12.00%, 8/15/07                           5,000             5,875,000
Nextlink Communications, Inc., Sr.                                          
Notes, 12.50%, 4/15/06                           6,720             7,400,400
Worldwide Fiber, Inc., Sr. Notes,                                           
12.50%, 12/15/05(1)                             10,035            10,586,925
----------------------------------------------------------------------------
                                                             $    97,425,562
----------------------------------------------------------------------------
Total Corporate Bonds & Notes                                               
   (identified cost $885,693,781)                            $   877,928,725
----------------------------------------------------------------------------

SEE NOTES TO FINANCIAL STATEMENTS 

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HIGH INCOME PORTFOLIO AS OF MARCH 31, 1999                                      

PORTFOLIO OF INVESTMENTS CONT'D                                                 

(EXPRESSED IN UNITED STATES DOLLARS)                                            

                                                                [Download Table]
                                                                            
COMMON STOCKS, WARRANTS AND                                                 
RIGHTS -- 0.7%                                                              


SECURITY                                  SHARES             VALUE          
                                                                            
----------------------------------------------------------------------------
Broadcasting and Cable -- 0.0%                                              
----------------------------------------------------------------------------
21st Century Telecom Group,                                                 
Warrants(1)(2)                                     800       $            --
Pegasus Communications Corp.,                                               
Warrants(2)(3)                                   5,640               125,490
UIH Australia/Pacific, Inc.,                                                
Warrants(2)(3)                                   3,600                    36
----------------------------------------------------------------------------
                                                             $       125,526
----------------------------------------------------------------------------
Business Services-Rental & Leasing -- 0.0%                                  
----------------------------------------------------------------------------
Unisite, Inc., Warrants(2)(3)                    2,252       $            --
----------------------------------------------------------------------------
                                                             $            --
----------------------------------------------------------------------------
Chemicals -- 0.0%                                                           
----------------------------------------------------------------------------
Sterling Chemicals Holdings, Inc.,                                          
Common(2)(3)                                     9,600       $        60,000
----------------------------------------------------------------------------
                                                             $        60,000
----------------------------------------------------------------------------
Electronic Equipment -- 0.0%                                                
----------------------------------------------------------------------------
Jordan Telecom Products,                                                    
Inc., Common(2)(3)                               2,500       $            --
----------------------------------------------------------------------------
                                                             $            --
----------------------------------------------------------------------------
Foods -- 0.0%                                                               
----------------------------------------------------------------------------
Specialty Foods Acquisition Corp.,                                          
Common(2)(3)                                    48,000       $           480
----------------------------------------------------------------------------
                                                             $           480
----------------------------------------------------------------------------
Information Technology Services -- 0.2%                                     
----------------------------------------------------------------------------
Cellnet Data Systems, Inc., Warrants                                        
Exp. 10/1/07(2)(3)                               8,000       $            80
Diva Systems Corp., Warrants(2)(3)              18,000                    --
Splitrock Services, Inc., Warrants(2)(3)         4,000               280,000
Verio, Inc., Common(2)                          45,067             2,140,683
----------------------------------------------------------------------------
                                                             $     2,420,763
----------------------------------------------------------------------------
Machinery -- 0.0%                                                           
----------------------------------------------------------------------------
MMH Holdings, Inc., Common(2)                       20       $            --
----------------------------------------------------------------------------
                                                             $            --
----------------------------------------------------------------------------

SECURITY                                  SHARES             VALUE          
                                                                            
----------------------------------------------------------------------------
Metals-Industrial -- 0.0%                                                   
----------------------------------------------------------------------------
Gulf States Steel, Warrants(2)(3)                2,400       $            --
----------------------------------------------------------------------------
                                                             $            --
----------------------------------------------------------------------------
Retail-General -- 0.0%                                                      
----------------------------------------------------------------------------
SpinCycle, Inc., Warrants(2)(3)                  3,400       $            --
----------------------------------------------------------------------------
                                                             $            --
----------------------------------------------------------------------------
Wireless Communication Services -- 0.2%                                     
----------------------------------------------------------------------------
Microcell Telecommunications, Inc.,                                         
Common(2)                                      125,234       $     1,041,008
Nextel Communications, Inc., Class A,                                       
Common(2)                                       11,154               409,207
Nextel Communications, Inc., Warrants                                       
Exp. 4/25/99(2)(3)                               7,200                 4,320
----------------------------------------------------------------------------
                                                             $     1,454,535
----------------------------------------------------------------------------
Wireline Communication Services-International -- 0.1%                       
----------------------------------------------------------------------------
Esat Holdings, Ltd., Warrants(2)(3)              3,600       $       311,903
Primus Telecom Group, Warrants Exp.                                         
8/1/04(2)(3)                                     4,600                38,953
Versatel Telecom B.V., Warrants(2)(3)           14,000               840,000
----------------------------------------------------------------------------
                                                             $     1,190,856
----------------------------------------------------------------------------
Wireline Communication Services-North America -- 0.2%                       
----------------------------------------------------------------------------
Allegiance Telecom, Inc., Warrants Exp.                                     
2/15/08(2)(3)                                   26,555       $       871,734
Hyperion Telecommunications, Inc., Class                                    
A, Common(2)                                    24,240               254,520
Intermedia Communications,                                                  
Inc., Common(2)                                 15,492               414,398
MetroNet Communications Corp.,                                              
Common(2)(3)                                     3,086               169,736
MGC Communications, Inc., Warrants Exp.                                     
10/01/04(2)                                      5,680               274,986
OpTel, Inc., Common(2)(3)                        5,840               116,800
----------------------------------------------------------------------------
                                                             $     2,102,174
----------------------------------------------------------------------------
Total Common Stocks, Warrants and Rights                                    
   (identified cost $2,416,304)                              $     7,354,334
----------------------------------------------------------------------------

SEE NOTES TO FINANCIAL STATEMENTS 

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HIGH INCOME PORTFOLIO AS OF MARCH 31, 1999                                      

PORTFOLIO OF INVESTMENTS CONT'D                                                 

(EXPRESSED IN UNITED STATES DOLLARS)                                            

                                                                [Download Table]
                                                                            
PREFERRED STOCKS-- 9.3%                                                     


SECURITY                                  SHARES             VALUE          
                                                                            
----------------------------------------------------------------------------
Apparel -- 0.0%                                                             
----------------------------------------------------------------------------
Cluett American Corp., 12.50% (PIK)(1)             148       $       118,000
----------------------------------------------------------------------------
                                                             $       118,000
----------------------------------------------------------------------------
Broadcasting and Cable -- 2.8%                                              
----------------------------------------------------------------------------
21st Century Telecom Group, 13.75% (PIK)           916       $       366,400
Adelphia Communications Corp., 13% (PIK)        48,000             5,520,000
CSC Holdings, Inc., Series M, 11.125%                                       
(PIK)                                          123,472            14,507,959
Pegasus Communications Corp., 12.75%                                        
(PIK)                                            7,925             8,796,750
----------------------------------------------------------------------------
                                                             $    29,191,109
----------------------------------------------------------------------------
Business Services-Rental & Leasing -- 1.0%                                  
----------------------------------------------------------------------------
Crown Castle International Corp., 12.75%                                    
(PIK)(1)                                         8,255       $     9,080,500
Unisite, Inc., 8.5%(3)                           3,239             1,603,058
----------------------------------------------------------------------------
                                                             $    10,683,558
----------------------------------------------------------------------------
Containers and Packaging -- 0.4%                                            
----------------------------------------------------------------------------
Packaging Corp. of America, 12.375%(1)          40,000       $     4,180,000
----------------------------------------------------------------------------
                                                             $     4,180,000
----------------------------------------------------------------------------
Electronic Equipment -- 0.3%                                                
----------------------------------------------------------------------------
Jordan Telecom Products, Inc.,                                              
13.25% (PIK)                                     3,045       $     3,045,000
----------------------------------------------------------------------------
                                                             $     3,045,000
----------------------------------------------------------------------------
Machinery -- 0.1%                                                           
----------------------------------------------------------------------------
MMH Holdings, Inc., 12% (PIK)                    1,728       $       691,200
----------------------------------------------------------------------------
                                                             $       691,200
----------------------------------------------------------------------------
Wireless Communication Services -- 1.3%                                     
----------------------------------------------------------------------------
Dobson Communications Corp.,                                                
12.25% (PIK)                                     4,284       $     4,069,800
Nextel Communications, Inc.,                                                
11.125% (PIK)                                    5,362             5,442,430
Rural Cellular Corp., 11.375% (PIK)              4,350             4,263,000
----------------------------------------------------------------------------
                                                             $    13,775,230
----------------------------------------------------------------------------

SECURITY                                  SHARES             VALUE          
                                                                            
----------------------------------------------------------------------------
Wireline Communication Services-International -- 1.5%                       
----------------------------------------------------------------------------
Global Crossing Holding, Ltd., 10.5%            13,200       $    15,179,999
Viatel, Inc., 10% (PIK)                          6,590               659,000
----------------------------------------------------------------------------
                                                             $    15,838,999
----------------------------------------------------------------------------
Wireline Communication Services-North America -- 1.9%                       
----------------------------------------------------------------------------
E.spire Communications, Inc., 12.75%                                        
(PIK)                                            4,707       $     2,353,500
Intermedia Communications, Inc., 7%                                         
(PIK)(1)                                       185,000             4,902,500
IXC Communications, Inc., Series B,                                         
12.5% (PIK)                                     10,210            11,026,800
Nextlink Communications, Inc., 14% (PIK)        22,384             1,186,352
----------------------------------------------------------------------------
                                                             $    19,469,152
----------------------------------------------------------------------------
Total Preferred Stocks                                                      
   (identified cost $96,166,425)                             $    96,992,248
----------------------------------------------------------------------------
SHORT-TERM INVESTMENTS -- 4.0%                                              


                                          PRINCIPAL                         
                                          AMOUNT                            
SECURITY                                  (000'S OMITTED)    VALUE          
                                                                            
----------------------------------------------------------------------------

General Electric Capital Co.,                                               
5.00%, 4/1/99                                 $ 41,140       $    41,140,000
----------------------------------------------------------------------------
Total Short-Term Investments                                                
   (at amortized cost $41,140,000)                           $    41,140,000
----------------------------------------------------------------------------
Total Investments -- 98.5%                                                  
   (identified cost $1,025,416,510)                          $ 1,023,415,307
----------------------------------------------------------------------------
Other Assets, Less Liabilities -- 1.5%                       $    15,807,292
----------------------------------------------------------------------------
Net Assets -- 100%                                           $ 1,039,222,599
----------------------------------------------------------------------------

(PIK) Payment-in-kind.                                                          
(1)  Security exempt from registration under Rule 144A of the Securities Act of 
1933. These securities may be resold in transactions exempt from      
registration, normally to qualified institutional buyers. It is the   
Portfolio's intention to hold this security until maturity.           
(2)  Non-income producing security.                                             
(3)  Restricted security.                                                       

SEE NOTES TO FINANCIAL STATEMENTS 

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HIGH INCOME PORTFOLIO AS OF MARCH 31, 1999                                      

FINANCIAL STATEMENTS                                                            

STATEMENT OF ASSETS AND LIABILITIES                                             

                                                                [Download Table]

AS OF MARCH 31, 1999                                      
(EXPRESSED IN UNITED STATES DOLLARS)                      
                                                          
Assets                                                    
--------------------------------------------------------- 
Investments, at value (identified cost,                   
   $1,025,416,510)                        $ 1,023,415,307 
Cash                                                6,271 
Receivable for investments sold                13,119,091 
Interest receivable                            21,896,178 
Deferred organization expenses                        736 
--------------------------------------------------------- 
TOTAL ASSETS                              $ 1,058,437,583 
--------------------------------------------------------- 

Liabilities                                               
--------------------------------------------------------- 
Payable for investments purchased         $    18,492,836 
Payable for non-resident alien                            
   withholding tax                                689,557 
Other accrued expenses                             32,591 
--------------------------------------------------------- 
TOTAL LIABILITIES                         $    19,214,984 
--------------------------------------------------------- 
NET ASSETS APPLICABLE TO INVESTORS'                       
   INTEREST IN PORTFOLIO                  $ 1,039,222,599 
--------------------------------------------------------- 
Sources of Net Assets                                     
--------------------------------------------------------- 
Net proceeds from capital contributions                   
   and withdrawals                        $ 1,041,223,802 
Net unrealized depreciation (computed on                  
   the basis of identified cost)               (2,001,203)
--------------------------------------------------------- 
TOTAL                                     $ 1,039,222,599 
--------------------------------------------------------- 

STATEMENT OF OPERATIONS                                                         

                                                                [Download Table]

FOR THE YEAR ENDED                                      
MARCH 31, 1999                                          
(EXPRESSED IN UNITED STATES DOLLARS)                    
                                                        
Investment Income                                       
------------------------------------------------------- 
Interest                                  $  94,605,136 
Dividends                                     8,669,439 
Miscellaneous                                 2,347,117 
------------------------------------------------------- 
TOTAL INVESTMENT INCOME                   $ 105,621,692 
------------------------------------------------------- 

Expenses                                                
------------------------------------------------------- 
Investment adviser fee                    $   5,895,549 
Trustees fees and expenses                       28,221 
Custodian fee                                   281,289 
Legal and accounting services                    53,492 
Amortization of organization expenses             4,518 
Miscellaneous                                     8,664 
------------------------------------------------------- 
TOTAL EXPENSES                            $   6,271,733 
------------------------------------------------------- 

NET INVESTMENT INCOME                     $  99,349,959 
------------------------------------------------------- 

Realized and Unrealized                                 
Gain (Loss)                                             
------------------------------------------------------- 
Net realized gain (loss) --                             
   Investment transactions (identified                  
      cost basis)                         $ (13,517,888)
   Foreign currency transactions                  4,653 
------------------------------------------------------- 
NET REALIZED LOSS                         $ (13,513,235)
------------------------------------------------------- 
Change in unrealized appreciation                       
   (depreciation) --                                    
   Investments (identified cost basis)    $ (53,977,702)
------------------------------------------------------- 
NET CHANGE IN UNREALIZED APPRECIATION                   
   (DEPRECIATION)                         $ (53,977,702)
------------------------------------------------------- 

NET REALIZED AND UNREALIZED LOSS          $ (67,490,937)
------------------------------------------------------- 

NET INCREASE IN NET ASSETS FROM                         
   OPERATIONS                             $  31,859,022 
------------------------------------------------------- 

SEE NOTES TO FINANCIAL STATEMENTS 

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HIGH INCOME PORTFOLIO AS OF MARCH 31, 1999                                      

FINANCIAL STATEMENTS CONT'D                                                     

STATEMENTS OF CHANGES IN NET ASSETS                                             

(EXPRESSED IN UNITED STATES DOLLARS)                                            

                                                                [Download Table]

Increase (Decrease)                       YEAR ENDED        YEAR ENDED      
in Net Assets                             MARCH 31, 1999    MARCH 31, 1998  
                                                                            
--------------------------------------------------------------------------- 
From operations --                                                          
   Net investment income                  $    99,349,959    $   78,751,905 
   Net realized gain (loss)                   (13,513,235)       40,197,991 
   Net change in unrealized appreciation                                    
      (depreciation)                          (53,977,702)       41,198,260 
--------------------------------------------------------------------------- 
NET INCREASE IN NET ASSETS FROM                                             
   OPERATIONS                             $    31,859,022    $  160,148,156 
--------------------------------------------------------------------------- 
Capital transactions --                                                     
   Contributions                          $   376,878,683    $  306,797,835 
   Withdrawals                               (330,015,816)     (213,156,743)
--------------------------------------------------------------------------- 
NET INCREASE IN NET ASSETS FROM CAPITAL                                     
   TRANSACTIONS                           $    46,862,867    $   93,641,092 
--------------------------------------------------------------------------- 

NET INCREASE IN NET ASSETS                $    78,721,889    $  253,789,248 
--------------------------------------------------------------------------- 

Net Assets                                                                  
--------------------------------------------------------------------------- 
At beginning of year                      $   960,500,710    $  706,711,462 
--------------------------------------------------------------------------- 
AT END OF YEAR                            $ 1,039,222,599    $  960,500,710 
--------------------------------------------------------------------------- 

SEE NOTES TO FINANCIAL STATEMENTS 

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HIGH INCOME PORTFOLIO AS OF MARCH 31, 1999                                      

FINANCIAL STATEMENTS CONT'D                                                     

SUPPLEMENTARY DATA                                                              

(EXPRESSED IN UNITED STATES DOLLARS)                                            

                                                                [Download Table]

                               YEAR ENDED MARCH 31,                             
   -----------------------------------------------------------------------------
      1999          1998          1997          1996              1995(1)       
                                                                                
--------------------------------------------------------------------------------
Ratios to                                                                       
average daily                                                                   
net assets                                                                      
--------------------------------------------------------------------------------
Expenses       0.65%       0.63%       0.67%       0.71%              0.70%(2)  
Net                                                                             
investment                                                                      
   income      10.23%       9.63%      10.02%      10.41%            10.63%(2)  
Portfolio                                                                       
 Turnover        150%        137%         78%         88%               53%     
--------------------------------------------------------------------------------
NET                                                                             
ASSETS,                                                                         
   END                                                                          
   OF                                                                           
   YEAR                                                                         
 (000'S                                                                         
 OMITTED) $1,039,223   $960,501   $706,711     $511,347           $442,552      
--------------------------------------------------------------------------------

(1)  For the period from the start of business, June 1, 1994, to March 31, 1995.
(2)  Annualized.                                                                

SEE NOTES TO FINANCIAL STATEMENTS 

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HIGH INCOME PORTFOLIO AS OF MARCH 31, 1999                                      

NOTES TO FINANCIAL STATEMENTS                                                   

(EXPRESSED IN UNITED STATES DOLLARS)                                            

1 Significant Accounting Policies                                               
-------------------------------------------                                     
High Income Portfolio (the Portfolio) is registered under the Investment  
 Company Act of 1940 as a diversified open-end management investment company
   which was organized as a trust under the laws of the State of New York on May
  1, 1992. The Declaration of Trust permits the Trustees to issue interests in
  the Portfolio. The following is a summary of significant accounting policies
 of the Portfolio. The policies are in conformity with accounting principles
generally accepted in the United States of America.                       

 A Investment Valuations -- Investments listed on securities exchanges or in the
  NASDAQ National Market are valued at closing sale prices. Listed or unlisted
   investments for which closing sale prices are not available are valued at the
   mean between the latest bid and asked prices. Fixed income investments (other
than short-term obligations), including listed investments and investments
for which price quotations are available, will normally be valued on the  
  basis of market valuations furnished by a pricing service. Financial futures
contracts listed on commodity exchanges are valued at closing settlement  
   prices. Short-term obligations, maturing in sixty days or less, are valued at
  amortized cost, which approximates value. Investments for which there are no
   quotations or valuations are valued at fair value using methods determined in
good faith by or at the direction of the Trustees.                        

B Income -- Interest income is determined on the basis of interest accrued,   
adjusted for amortization of premium or discount when required for federal
  income tax purposes. Dividend income is recorded on the ex-dividend date for
dividends received in cash and/or securities.                             

C Income Taxes -- The Portfolio has elected to be treated as a partnership for
   United States Federal tax purposes. No provision is made by the Portfolio for
federal or state taxes on any taxable income of the Portfolio because each
investor in the Portfolio is ultimately responsible for the payment of any
taxes. Since some of the Portfolio's investors are regulated investment   
companies that invest all or substantially all of their assets in the     
Portfolio, the Portfolio normally must satisfy the applicable source of   
  income and diversification requirements (under the Internal Revenue Code) in
   order for its investors to satisfy them. The Portfolio will allocate at least
annually among its investors each investor's distributive share of the    
Portfolio's net taxable investment income, net realized capital gains, and
any other items of income, gain, loss, deduction or credit.               

D Deferred Organization Expenses -- Costs incurred by the Portfolio in        
connection with its organization are being amortized on the straight-line 
basis over five years.                                                    

E Financial Futures Contracts -- Upon the entering of a financial futures     
 contract, the Portfolio is required to deposit ("initial margin") either in
cash or securities an amount equal to a certain percentage of the purchase
price indicated in the financial futures contract. Subsequent payments are
  made or received by the Portfolio ("margin maintenance") each day, dependent
on the daily fluctuations in the value of the underlying security, and are
recorded for book purposes as unrealized gains or losses by the Portfolio.
   The Portfolio's investment in financial futures contracts is designed only to
 hedge against anticipated future changes in interest rates. Should interest
rates move unexpectedly, the Portfolio may not achieve the anticipated    
benefits of the financial futures contracts and may realize a loss.       

F Use of Estimates -- The preparation of financial statements in conformity   
   with accounting principles generally accepted in the United States of America
requires management to make estimates and assumptions that affect the     
reported amounts of assets and liabilities at the date of the financial   
statements and the reported amounts of revenue and expense during the     
reporting period. Actual results could differ from those estimates.       

G Other -- Investment transactions are accounted for on a trade date basis.   

2 Investment Adviser Fee and Other Transactions with Affiliates                 
-------------------------------------------                                     
   The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation
for management and investment advisory services rendered to the Portfolio.
The fee is based upon a percentage of average daily net assets plus a     
percentage of gross income (i.e., income other than gains from the sale of
securities). For the year ended March 31, 1999, the fee was equivalent to 
   0.61% of the Portfolio's average daily net assets and amounted to $5,895,549.
  Except as to Trustees of the Portfolio who are not members of EVM's or BMR's
 organization, officers and Trustees receive remuneration for their services
  to the Portfolio out of such investment adviser fee. Certain of the officers
and Trustees of the Portfolio are officers and directors/trustees of the  
 above organizations. Trustees of the Portfolio that are not affiliated with
the Investment Adviser may elect to defer receipt of all or a portion of  
their annual fees in accordance                                           

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HIGH INCOME PORTFOLIO AS OF MARCH 31, 1999                                      

NOTES TO FINANCIAL STATEMENTS CONT'D                                            

(EXPRESSED IN UNITED STATES DOLLARS)                                            

   with the terms of the Trustees Deferred Compensation Plan. For the year ended
March 31, 1999, 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 $1,491,186,283 and $1,401,920,763,     
respectively, for the year ended March 31, 1999.                          

4 Line of Credit                                                                
-------------------------------------------                                     
   The Portfolio participates with other portfolios and funds managed by BMR and
 EVM and its affiliates in a $130 million unsecured line of credit agreement
  with a group of banks. The Portfolio may temporarily borrow from the line of
credit to satisfy redemption requests or settle investment transactions.  
 Interest is charged to each portfolio or fund based on its borrowings at an
   amount above 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 year ended March 31, 1999.        

5 Federal Income Tax Basis of Investments                                       
-------------------------------------------                                     
   The cost and unrealized appreciation/depreciation in value of the investments
 owned at March 31, 1999, as computed on a federal income tax basis, were as
follows:                                                                  

                                                                [Download Table]
                                                          
AGGREGATE COST                            $ 1,026,473,693 
--------------------------------------------------------- 
Gross unrealized appreciation             $    45,544,924 
Gross unrealized depreciation                 (48,603,310)
--------------------------------------------------------- 
NET UNREALIZED DEPRECIATION               $    (3,058,386)
--------------------------------------------------------- 

6 Restricted Securities                                                         
-------------------------------------------                                     
   At March 31, 1999, the Portfolio owned the following securities (constituting
0.43% of net assets) which were restricted as to public resale and not    
   registered under the Securities Act of 1933 (excluding Rule 144A Securities).
   The Portfolio has various registration rights (exercisable under a variety of
   circumstances) with respect to certain of these securities. The fair value of
 these securities is determined based on valuations provided by brokers when
 available, or if not available, they are valued at fair value using methods
determined in good faith by or at the direction of the Trustees.          

                                                        [Enlarge/Download Table]

                                          DATE OF                                             
DESCRIPTION                               ACQUISITION  SHARES/FACE   COST          FAIR VALUE 
                                                                                              
----------------------------------------------------------------------------------------------
COMMON STOCKS, WARRANTS, AND RIGHTS                                                           
----------------------------------------------------------------------------------------------
Allegiance Telecom, Inc.,                   5/08/98 -                                         
 Wts. Exp. 2/15/08                            6/10/98      26,555              0       871,734
Cellnet Data Systems, Inc.,                                                                   
 Wts. Exp. 10/1/07                            7/13/98       8,000              0            80
Diva Systems Corp., Wts.                     12/30/98      18,000              0             0
Esat Holdings, Ltd., Wts.                     6/19/97       3,600              0       311,903
Gulf States Steel, Wts.                       8/22/95       2,400              0             0
Jordan Telecom Products,                    4/15/98 -                                         
 Inc., Common                                 1/15/99       2,500              0             0
MetroNet Communications                                                                       
 Corp., Common                                6/04/98       3,086             36       169,736
Nextel Communications,                                                                        
 Inc., Wts. Exp. 4/25/99                     10/04/96       7,200              0         4,320
Optel, Inc., Common                        10/21/97 -                                         
                                             10/22/97       5,840              0       116,800
Pegasus Communications                     12/02/98 -                                         
 Corp., Wts.                                 12/07/98       5,640        105,480       125,490
Primus Telecom Group, Wts.                  5/14/98 -                                         
 Exp. 8/1/04                                 11/06/98       4,600              0        38,953
Specialty Foods Acq. Corp.,                                                                   
 Common                                       8/10/93      48,000         34,886           480
SpinCycle, Inc., Wts.                         4/24/98       3,400              0             0
Splitrock Services, Inc., Wts.                7/21/98       4,000              0       280,000
Sterling Chemicals Holdings,                                                                  
 Inc., Common                                10/07/96       9,600             96        60,000
UIH Australia/Pacific, Inc.,                                                                  
 Wts.                                         2/05/98       3,600              0            36
Unisite, Inc., Wts.                          12/09/97       2,252              0             0
Versatel Telecom, B.V. Wts.                 5/20/98 -                                         
                                              1/29/99      14,000              0       840,000
----------------------------------------------------------------------------------------------
                                                                     $   140,498   $ 2,819,532
PREFERRED STOCKS                                                                              
----------------------------------------------------------------------------------------------
Unisite, Inc., 8.5% (PIK)                    12/09/97       3,239    $ 1,499,847   $ 1,603,058
----------------------------------------------------------------------------------------------
                                                                     $ 1,640,345   $ 4,422,590
----------------------------------------------------------------------------------------------

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HIGH INCOME PORTFOLIO AS OF MARCH 31, 1999                                      

INDEPENDENT AUDITORS' REPORT                                                    

To the Trustees and Investors                                                   
of High Income Portfolio:                                                       
--------------------------------------------------------                        

We have audited the accompanying statement of assets and liabilities, including 
the portfolio of investments, of High Income Portfolio (the Portfolio) as of    
March 31, 1999, and the related statement of operations for the year then ended,
the statements of changes in net assets for the years ended March 31, 1999 and  
1998 and the supplementary data for each of the years in the four-year period   
ended March 31, 1999 and for the period from the start of business, June 1,     
1994, to March 31, 1995 (all expressed in United States dollars). These         
financial statements and supplementary data are the responsibility of the       
Portfolio's management. Our responsibility is to express an opinion on these    
financial statements and supplementary data based on our audits.                

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and       
perform the audit to obtain reasonable assurance about whether the financial    
statements and supplementary data are free of material misstatement. An audit   
includes examining, on a test basis, evidence supporting the amounts and        
disclosures in the financial statements. Our procedures included confirmation of
securities held as of March 31, 1999 by correspondence with the custodian and   
brokers; where replies were not received from brokers, we performed other audit 
procedures. An audit also includes assessing the accounting principles used and 
significant estimates made by management, as well as evaluating the overall     
financial statement presentation. We believe that our audits provide a          
reasonable basis for our opinion.                                               

In our opinion, such financial statements and supplementary data present fairly,
in all material respects, the financial position of the Portfolio at March 31,  
1999, the results of its operations, the changes in its net assets and the      
supplementary data for the respective stated periods in conformity with         
accounting principles generally accepted in the United States of America.       

DELOITTE & TOUCHE LLP         
Boston, Massachusetts         
April 30, 1999                

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EATON VANCE HIGH INCOME FUND AS OF MARCH 31, 1999                               

INVESTMENT MANAGEMENT                                                           

EATON VANCE HIGH INCOME FUND                                                    

Officers                                                                        

James B. Hawkes                                                                 
President and Trustee                                                           

William H. Ahern, Jr.                                                           
Vice President                                                                  

Thomas J. Fetter                                                                
Vice President                                                                  

Robert B. MacIntosh                                                             
Vice President                                                                  

James L. O'Connor                                                               
Treasurer                                                                       

Alan R. Dynner                                                                  
Secretary                                                                       

Trustees                                                                        

Jessica M. Bibliowicz                                                           
President and Chief Executive Officer,                                          
National Financial Partners                                                     

Donald R. Dwight                                                                
President, Dwight Partners, Inc.                                                

Samuel L. Hayes, III                                                            
Jacob H. Schiff Professor of Investment Banking                                 
Emeritus, Harvard University Graduate School of                                 
Business Administration                                                         

Norton H. Reamer                                                                
Chairman and Chief Executive Officer, United Asset                              
Management Corporation                                                          

Lynn A. Stout                                                                   
Professor of Law,                                                               
Georgetown University Law Center                                                

John L. Thorndike                                                               
Former Director, Fiduciary Company Incorporated                                 

Jack L. Treynor                                                                 
Investment Adviser and Consultant                                               

HIGH INCOME PORTFOLIO                                                           

Officers                                                                        

James B. Hawkes                                                                 
President and Trustee                                                           

Michael W. Weilheimer                                                           
Vice President and                                                              
Portfolio Manager                                                               

James L. O'Connor                                                               
Treasurer                                                                       

Alan R. Dynner                                                                  
Secretary                                                                       

Trustees                                                                        

Jessica M. Bibliowicz                                                           
President and Chief Executive Officer,                                          
National Financial Partners                                                     

Donald R. Dwight                                                                
President, Dwight Partners, Inc.                                                

Samuel L. Hayes, III                                                            
Jacob H. Schiff Professor of Investment Banking                                 
Emeritus, Harvard University Graduate School of                                 
Business Administration                                                         

Norton H. Reamer                                                                
Chairman and Chief Executive Officer, United Asset                              
Management Corporation                                                          

Lynn A. Stout                                                                   
Professor of Law,                                                               
Georgetown University Law Center                                                

John L. Thorndike                                                               
Former Director, Fiduciary Company Incorporated                                 

Jack L. Treynor                                                                 
Investment Adviser and Consultant                                               

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N-30D
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INVESTMENT ADVISER OF                                                           
HIGH INCOME PORTFOLIO                                                           

Boston Management and Research                                                  
The Eaton Vance Building                                                        
255 State Street                                                                
Boston, MA 02109                                                                

ADMINISTRATOR OF                                                                
EATON VANCE HIGH INCOME FUND                                                    
Eaton Vance Management                                                          
The Eaton Vance Building                                                        
255 State Street                                                                
Boston, MA 02109                                                                

PRINCIPAL UNDERWRITER                                                           
Eaton Vance Distributors, Inc.                                                  
The Eaton Vance Building                                                        
255 State Street                                                                
Boston, MA 02109                                                                

CUSTODIAN                                                                       
Investors Bank & Trust Company                                                  
200 Clarendon Street                                                            
Boston, MA 02116                                                                

TRANSFER AGENT                                                                  
First Data Investor Services Group                                              
Attention: Eaton Vance Funds                                                    
P.O. Box 5123                                                                   
Westborough, MA 01581-5123                                                      

INDEPENDENT ACCOUNTANTS                                                         
Deloitte & Touche LLP                                                           
125 Summer Street                                                               
Boston, MA 02109                                                                

EATON VANCE HIGH INCOME FUND                                                    
THE EATON VANCE BUILDING                                                        
255 STATE STREET                                                                
BOSTON, MA 02109                                                                

------------------------------------------------------------------------------  
This report must be preceded or accompanied by a current prospectus   
which contains more complete information on the Fund, including   
its sales charges and expenses. Please read the prospectus    
carefully before you invest or send money.    
------------------------------------------------------------------------------  

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘N-30D’ Filing		Date		First		Last			Other Filings
		3/31/00		9					24F-2NT,  485BPOS,  N-30D,  NSAR-B
Filed on:		6/4/99
		5/8/99		2
		4/30/99		12		25			N-30D,  NSAR-A
For Period End:		3/31/99		1		26			24F-2NT,  NSAR-B
		4/1/98		11
		3/31/98		2		25			24F-2NT,  N-30D,  NSAR-B
		6/23/97		11
		3/31/95		22		25
		6/1/94		22		25
		5/1/92		23
									List all Filings