<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 27, 1995
1933 ACT FILE NO. 2-90946
1940 ACT FILE NO. 811-4015
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933 [X]
POST-EFFECTIVE AMENDMENT NO. 22 [X]
REGISTRATION STATEMENT
UNDER
THE INVESTMENT COMPANY ACT OF 1940 [X]
AMENDMENT NO. 25 [X]
EATON VANCE GOVERNMENT OBLIGATIONS TRUST
----------------------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN CHARTER)
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
---------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
617-482-8260
-------------------------------
(REGISTRANT'S TELEPHONE NUMBER)
H. DAY BRIGHAM, JR.
24 FEDERAL STREET, BOSTON, MASSACHUSETTS 02110
---------------------------------
(NAME AND ADDRESS OF AGENT FOR SERVICE)
It is proposed that this filing will become effective on May 1, 1995
pursuant to paragraph (b) of Rule 485.
The exhibit index required by Rule 483(a) under the Securities Act of 1933
is located on page __ in the sequential numbering system of the manually signed
copy of this Registration Statement.
The Registrant has filed a Declaration pursuant to Rule 24f-2 and on
February 23, 1995 filed its "Notice" as required by that Rule for the fiscal
year ended December 31, 1994.
Government Obligations Portfolio has also executed this Registration
Statement.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
This Amendment to the registration statement on Form N-1A consists of the
following documents and papers:
Cross Reference Sheets required by Rule 481(a) under the Securities Act of
1933
Part A--The Prospectuses of:
EV Classic Government Obligations Fund
EV Marathon Government Obligations Fund
EV Traditional Government Obligations Fund
Part B--The Statements of Additional Information of:
EV Classic Government Obligations Fund
EV Marathon Government Obligations Fund
EV Traditional Government Obligations Fund
Part C--Other Information
Signatures
Exhibit Index Required by Rule 483(a) under the Securities Act of 1933
Exhibits
This Amendment is not intended to amend the Prospectus and Statement of
Additional Information of any other series of the Registrant not identified
above.
<PAGE>
EATON VANCE GOVERNMENT OBLIGATIONS TRUST
EV CLASSIC GOVERNMENT OBLIGATIONS FUND
EV MARATHON GOVERNMENT OBLIGATIONS FUND
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-1A
---------------------------
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- ------- ------------ ----------------------------
1. ............. Cover Page Cover Page
2. ............. Synopsis Shareholder and Fund Expenses
3. ............. Condensed Financial The Fund's Financial
Information Highlights; Performance
Information
4. ............. General Description of The Fund's Investment
Registrant Objective; How the Fund and
the Portfolio Invest their
Assets; Organization of the
Fund and the Portfolio
5. ............. Management of the Fund Management of the Fund and the
Portfolio
5A.............. Management's Discussion of Not Applicable
Fund Performance
6. ............. Capital Stock and Other Organization of the Fund and
Securities the Portfolio; Report to
Shareholders; The Lifetime
Investing Account/
Distribution Options;
Distributions and Taxes
7. ............. Purchase of Securities Distribution Plan; Valuing
Being Offered Fund Shares; How to Buy Fund
Shares; The Lifetime
Investing Account/
Distribution Options; The
Eaton Vance Exchange
Privilege; Eaton Vance
Shareholder Services
8. ............. Redemption or Repurchase How to Redeem Fund Shares
9. ............. Pending Legal Proceedings Not Applicable
PART B STATEMENT OF ADDITIONAL
ITEM NO. ITEM CAPTION INFORMATION CAPTION
- ------- ------------ ----------------------------
10. ............. Cover Page Cover Page
11. ............. Table of Contents Table of Contents
12. ............. General Information and Other Information
History
13. ............. Investment Objectives and Investment Objective;
Policies Additional Information about
Investment Policies;
Investment Restrictions
14. ............. Management of the Fund Trustees and Officers; Fees
and Expenses
15. ............. Control Persons and Control Persons and Principal
Principal Holders of Holders of Securities
Securities
16. ............. Investment Advisory and Investment Adviser and
Other Services Administrator; Distribution
Plan; Custodian; Independent
Accountants; Fees and
Expenses
17. ............. Brokerage Allocation and Portfolio Security Transactions
Other Practices
18. ............. Capital Stock and Other Other Information
Securities
19. ............. Purchase, Redemption and Determination of Net Asset
Pricing of Securities Value; Principal
Being Offered Underwriter; Service for
Withdrawal; Distribution
Plan; Fees and Expenses
20. ............. Tax Status Taxes; Additional Tax Matters
21. ............. Underwriters Principal Underwriter; Fees
and Expenses
22. ............. Calculation of Performance Investment Performance;
Data Performance Information
23. ............. Financial Statements Financial Statements
<PAGE>
EATON VANCE GOVERNMENT OBLIGATIONS TRUST
EV TRADITIONAL GOVERNMENT OBLIGATIONS FUND
CROSS REFERENCE SHEET
ITEMS REQUIRED BY FORM N-1A
---------------------------
PART A
ITEM NO. ITEM CAPTION PROSPECTUS CAPTION
- ------- ------------ ----------------------------
1. ............. Cover Page Cover Page
2. ............. Synopsis Shareholder and Fund Expenses
3. ............. Condensed Financial The Fund's Financial
Information Highlights; Performance
Information
4. ............. General Description of The Fund's Investment
Registrant Objective; How the Fund and
the Portfolio Invest their
Assets; Organization of the
Fund and the Portfolio
5. ............. Management of the Fund Management of the Fund and the
Portfolio
5A.............. Management's Discussion of Not Applicable
Fund Performance
6. ............. Capital Stock and Other Organization of the Fund and
Securities the Portfolio; Report to
Shareholders; The Lifetime
Investing Account/
Distribution Options;
Distributions and Taxes
7. ............. Purchase of Securities Service Plan; Valuing Fund
Being Offered Shares; How to Buy Fund
Shares; The Lifetime
Investing Account/
Distribution Options; The
Eaton Vance Exchange
Privilege; Eaton Vance
Shareholder Services
8. ............. Redemption or Repurchase How to Redeem Fund Shares
9. ............. Pending Legal Proceedings Not Applicable
PART B STATEMENT OF ADDITIONAL
ITEM NO. ITEM CAPTION INFORMATION CAPTION
- ------- ------------ ----------------------------
10. ............. Cover Page Cover Page
11. ............. Table of Contents Table of Contents
12. ............. General Information and Other Information
History
13. ............. Investment Objectives and Investment Objective;
Policies Additional Information about
Investment Policies;
Investment Restrictions
14. ............. Management of the Fund Trustees and Officers; Fees
and Expenses
15. ............. Control Persons and Control Persons and Principal
Principal Holders of Holders of Securities
Securities
16. ............. Investment Advisory and Investment Adviser and
Other Services Administrator; Distribution
Plan; Custodian; Independent
Accountants; Fees and
Expenses
17. ............. Brokerage Allocation and Portfolio Security
Other Practices Transactions
18. ............. Capital Stock and Other Other Information
Securities
19. ............. Purchase, Redemption and Determination of Net Asset
Pricing of Securities Value; Principal
Being Offered Underwriter; Service for
Withdrawal; Distribution
Plan; Fees and Expenses
20. ............. Tax Status Taxes; Additional Tax Matters
21. ............. Underwriters Principal Underwriter; Fees
and Expenses
22. ............. Calculation of Performance Investment Performance;
Data Performance Information
23. ............. Financial Statements Financial Statements
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV CLASSIC GOVERNMENT OBLIGATIONS FUND
EV CLASSIC GOVERNMENT OBLIGATIONS FUND (THE "FUND") IS A MUTUAL FUND SEEKING
A HIGH CURRENT RETURN, BY INVESTING IN SECURITIES ISSUED, GUARANTEED OR
OTHERWISE BACKED BY THE U.S. GOVERNMENT AND ENGAGING IN ACTIVE MANAGEMENT
STRATEGIES. THE FUND INVESTS ITS ASSETS IN GOVERNMENT OBLIGATIONS PORTFOLIO (THE
"PORTFOLIO"), A DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND
MANAGING ITS OWN PORTFOLIO OF SECURITIES AS WITH HISTORICALLY STRUCTURED MUTUAL
FUNDS. THE FUND IS A SERIES OF EATON VANCE GOVERNMENT OBLIGATIONS TRUST (THE
"TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of some
or all of the principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information dated May 1, 1995 for the Fund, as supplemented from
time to time, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. This Statement of Additional Information is
available without charge from the Fund's principal underwriter, Eaton Vance
Distributors, Inc. (the "Principal Underwriter"), 24 Federal Street, Boston, MA
02110 (telephone (800) 225-6265). The Portfolio's investment adviser is Boston
Management and Research (the "Investment Adviser"), a wholly-owned subsidiary of
Eaton Vance Management, and Eaton Vance Management is the administrator (the
"Administrator") of the Fund. The offices of the Investment Adviser and the
Administrator are located at 24 Federal Street, Boston, MA 02110.
- -------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page Page
<S> <C> <C> <C>
Shareholder and Fund Expenses ..................... 2 How to Redeem Fund Shares ..................... 17
The Fund's Financial Highlights ................... 4 Reports to Shareholders ....................... 18
The Fund's Investment Objective ................... 5 The Lifetime Investing Account/Distribution
How the Fund and the Portfolio Invest their Assets 5 Options .................................... 18
Organization of the Fund and the Portfolio ........ 10 The Eaton Vance Exchange Privilege ............ 20
Management of the Fund and the Portfolio .......... 12 Eaton Vance Shareholder Services .............. 20
Distribution Plan ................................. 13 Distributions and Taxes ....................... 22
Valuing Fund Shares ............................... 15 Performance Information ....................... 23
How to Buy Fund Shares ............................ 15
- ------------------------------------------------------------------------------------------------------------
Prospectus dated May 1, 1995
<PAGE>
</TABLE>
<TABLE>
<CAPTION>
SHAREHOLDER AND FUND EXPENSES<F1>
- ------------------------------------------------------------------------------------------------------------
SHAREHOLDER TRANSACTION EXPENSES
<S> <C>
Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Contingent Deferred Sales Charges Imposed on Redemptions During the First Year 1.00%
(as a percentage of redemption proceeds exclusive of all reinvestments and capital
appreciation in the account)<F2>
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES<F3>
(as a percentage of average daily net assets)
Investment Adviser Fee 0.74%
Rule 12b-1 Distribution (and Service) Fees 1.00%
Other Expenses (including Interest and Securities Lending 0.98%
Expenses of 0.57%)
-----
Total Operating Expenses 2.72%
=====
EXAMPLE<F3>: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------- ------ ------- ------- --------
An investor would pay the following expenses (including a contingent deferred
sales charge in the case of redemption during the first year after purchase)
on a $1,000 investment, assuming (a) 5% annual return and (b) redemption at
the end of each period: $38 $84 $144 $305
An investor would pay the following expenses on the same investment,
assuming (a) 5% return and (b) no redemptions: $28 $84 $144 $305
Notes:
<FN>
<F1>The purpose of the above table and Example is to summarize the aggregate expenses of the Fund and the Portfolio and to
assist investors in understanding the various costs and expenses that investors in the Fund will bear directly or
indirectly. The Trustees of the Trust believe that over time the aggregate per share expenses of the Fund and the Portfolio
should be approximately equal to, or less than, the per share expenses which the Fund would incur if the Trust retained the
services of an investment adviser and the assets of the Fund were invested directly in the type of securities being held by
the Portfolio. The percentages indicated as Annual Fund and Allocated Portfolio Operating Expenses in the table and the
amounts included in the Example are based on the Fund's and the Portfolio's results for the fiscal year ended December 31,
1994. The Example should not be considered a representation of past or future expenses and actual expenses may be greater or
less than those shown. The Example assumes a 5% annual return and the Fund's actual performance may result in an annual
return greater or less than 5%. For further information regarding the expenses of both the Fund and the Portfolio see "The
Fund's Financial Highlights", "Organization of the Fund and the Portfolio", "Management of the Fund and the Portfolio" and
"How to Redeem Fund Shares." Because the Fund makes payments under its Distribution Plan adopted under Rule 12b-1, a
long-term shareholder may pay more than the economic equivalent of the maximum front-end sales charge permitted by a rule of
the National Association of Securities Dealers, Inc. See "Distribution Plan".
<F2>The contingent deferred sales charge is imposed on the redemption of shares purchased on or after January 30, 1995. No
contingent deferred sales charge is imposed on (a) shares purchased more than one year prior to redemption, (b) shares
acquired through the reinvestment of distributions or (c) any appreciation in value of other shares in the account (see "How
to Redeem Fund Shares"), and no such charge is imposed on exchanges of Fund shares for shares of one or more other funds
listed under "The Eaton Vance Exchange Privilege".
<F3>The computation of Annual Fund and Allocated Portfolio Operating Expenses as a percentage of average daily net assets in the
above table and of contingent deferred sales charges and expenses incurred on a $1,000 investment in the above Example is
based in part on interest expense allocated to the Fund from the Portfolio's borrowings and lending fees allocated to the
Fund from the Portfolio's securities lending activities during the fiscal year ended December 31, 1994. The Portfolio's
borrowings, interest expense, securities lending activities and lending fees will vary from year to year (see "How the Fund
and the Portfolio Invest Their Assets -- Active Management Strategies"). If the Fund had not been allocated interest expense
and lending fees in 1994, its Total Operating Expenses as a percentage of average daily net assets would have been 2.15%,
and contingent deferred sales charges and expenses incurred on a $1,000 investment for one, three, five and ten years would
have been $32, $67, $115 and $248, respectively (assuming redemption) and $22, $67, $115 and $248, respectively (assuming no
redemption).
<F4>Other investment companies with different distribution arrangements and fees are investing in the Portfolio and additional
such companies may do so in the future. See "Organization of the Fund and the Portfolio".
</TABLE>
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Statement of Additional Information, all of
which have been so included in reliance upon the report of Coopers & Lybrand
L.L.P., independent accountants, as experts in accounting and auditing, which
report is contained in the Statement of Additional Information. Further
information regarding the performance of the Fund is contained in the Fund's
annual report to shareholders which may be obtained without charge by contacting
the Principal Underwriter.
- ------------------------------------------------------------------------------
Year Ended December 31,
-----------------------
1994 1993<F1>
---- ----
NET ASSET VALUE $ 9.9400 $ 10.0000
-------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income $ 0.6264 $ 0.1067
Net realized and unrealized gain/
(loss) on investments (0.8763) (0.0514)
-------- --------
Total income/ (loss) from investment operations $ (0.2499) $ 0.0553
======== ========
LESS DISTRIBUTIONS:
From net investment income $ (0.6264) $ (0.1067)
In excess of net investment income (0.0837) (0.0086)
-------- ---------
Total distributions $ (0.7101) $ (0.1153)
-------- ---------
NET ASSET VALUE -- End of period $ 8.9800 $ 9.9400
======== =========
TOTAL RETURN<F3> (2.54)% 0.34%
RATIOS/SUPPLEMENTAL DATA:
Ratio of interest expense to average
daily net assets<F4> 0.57% 0.54%<F2>
Ratio of other expenses to average
daily net assets<F4> 2.15% 2.31%<F2>
Ratio of net investment income to average
daily net assets 6.60% 5.45%<F2>
NET ASSETS AT END OF PERIOD (000's omitted) $ 39,586 $ 17,441
[FN]
<F1>For the period from the start of business, November 1, 1993, to December 31,
1993.
<F2>Computed on an annualized basis.
<F3>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 to be reinvested
at the net asset value on the payable date.
<F4>Includes the Fund's share of Government Obligations Portfolio's allocated
expenses.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------
EV CLASSIC GOVERNMENT OBLIGATIONS FUND'S INVESTMENT OBJECTIVE IS TO REALIZE A
HIGH CURRENT RETURN. The Fund currently seeks to meet its investment objective
by investing its assets in the Government Obligations Portfolio, a separate
registered investment company which has the same investment objective and
policies as the Fund. The Fund's and the Portfolio's investment objectives are
nonfundamental and may be changed when authorized by a vote of the Trustees of
the Trust or the Portfolio, respectively, without obtaining the approval of the
Fund's shareholders or the investors in the Portfolio, as the case may be. The
Trustees of the Trust have no present intention to change the Fund's objective
and intend to submit any proposed material change in the investment objective to
shareholders in advance for their approval.
HOW THE FUND AND THE PORTFOLIO INVEST THEIR ASSETS
- ------------------------------------------------------------------------------
IN SEEKING HIGH CURRENT RETURN, THE PORTFOLIO INVESTS IN SECURITIES ISSUED,
GUARANTEED OR OTHERWISE BACKED BY THE U.S. GOVERNMENT, INCLUDING MORTGAGE-BACKED
SECURITIES OF FEDERAL AGENCIES AND FEDERALLY CHARTERED CORPORATIONS, AND ENGAGES
IN ACTIVE MANAGEMENT STRATEGIES, INCLUDING FUTURES TRANSACTIONS AND RELATED
TECHNIQUES PRIMARILY FOR HEDGING PURPOSES. The Portfolio's management believes
that a high current return may be derived from yields on U.S. Government
securities, including market discount accrued on obligations purchased below
their stated redemption value.
U.S. GOVERNMENT SECURITIES. U.S. Government securities include (1) U.S. Treasury
obligations, which differ in their interest rates, maturities and times of
issuance: U.S. Treasury bills (maturities of one year or less), U.S. Treasury
notes (maturities of one to ten years) and U.S. Treasury bonds (generally
maturities of greater than ten years) and (2) obligations issued or guaranteed
by U.S. Government agencies and instrumentalities which are supported by any of
the following: (a) the full faith and credit of the U.S. Treasury, (b) the right
of the issuer to borrow an amount limited to a specific line of credit from the
U.S. Treasury, (c) discretionary authority of the U.S. Government to purchase
certain obligations of the U.S. Government agency or instrumentality or (d) the
credit of the agency or instrumentality. The Portfolio may also invest in any
other security or agreement collateralized or otherwise secured by U.S.
Government securities. Agencies and instrumentalities of the U.S. Government
include but are not limited to: Federal Land Banks, Federal Financing Banks,
Banks for Cooperatives, Federal Intermediate Credit Banks, Farm Credit Banks,
Federal Home Loan Banks, Federal Home Loan Mortgage Corporation ("FHLMC"),
Federal National Mortgage Association ("FNMA"), Government National Mortgage
Association ("GNMA"), Student Loan Marketing Association, United States Postal
Service, Small Business Administration, Tennessee Valley Authority and any other
enterprise established or sponsored by the U.S. Government. Because the U.S.
Government generally is not obligated to provide support to its
instrumentalities, the Portfolio will invest in obligations issued by these
instrumentalities only if the Investment Adviser determines that the credit risk
with respect to such obligations is minimal.
MORTGAGE-BACKED SECURITIES. The Portfolio may invest in mortgage-backed
securities that are either issued by the U.S. Government or one of its agencies
or instrumentalities or, if privately issued, collateralized by mortgages that
are insured, guaranteed or otherwise backed by the U.S. Government, its agencies
or instrumentalities. Mortgage-backed securities represent participation
interests in pools of adjustable and fixed-rate mortgage loans. Unlike
conventional debt obligations, mortgage-backed securities provide monthly
payments derived from the monthly interest and principal payments (including any
prepayments) made by the individual borrowers on the pooled mortgage loans. The
mortgage loans underlying mortgage-backed securities are generally subject to a
greater rate of principal prepayments in a declining interest rate environment
and to a lesser rate of principal prepayments in an increasing interest rate
environment. Under certain interest and prepayment rate scenarios, the Portfolio
may fail to recover the full amount of its investment in mortgage-backed
securities, notwithstanding any direct or indirect governmental or agency
guarantee. Because faster than expected prepayments must usually be invested in
lower yielding securities, mortgage-backed securities are less effective than
conventional bonds in "locking in" a specified interest rate. To mitigate
prepayment risk, the Investment Adviser considers the selection of
mortgage-backed securities that as a group have a history of more stable
prepayment rates relative to interest rate fluctuations. In a rising interest
rate environment, a declining prepayment rate will extend the average life of
many mortgage-backed securities. This possibility is often referred to as
extension risk. Extending the average life of a mortgage-backed security
increases the risk of depreciation due to future increases in market interest
rates. As of December 31, 1994, the Portfolio had approximately 40% of its net
assets invested in FNMA Mortgage-Backed Certificates, approximately 43% of its
net assets invested in Participation Certificates of FHLMC and approximately 8%
of its net assets invested in GNMA Certificates. FNMA guarantees the timely
payment of principal and interest of its Certificates, FHLMC guarantees the
timely payment of interest and ultimate collection of the principal of its
Participation Certificates, and GNMA Certificates are guaranteed by the full
faith and credit of the U.S. Government.
The Portfolio may also invest in classes of collateralized mortgage
obligations ("CMOs") and various other mortgage-backed securities. Senior CMO
classes will typically have priority over residual CMO classes as to the receipt
of principal and/or interest payments on the underlying mortgages. In choosing
among CMO classes, the Investment Adviser will evaluate the total income
potential of each class and other factors. If such obligations or securities are
privately issued they will currently be considered by the Investment Adviser as
possible investments for the Portfolio only when the mortgage collateral is
insured, guaranteed or otherwise backed by the U.S. Government or one or more of
its agencies or instrumentalities. As of December 31, 1994, the Portfolio had
approximately 6% of its net assets invested in CMOs (including one which was
privately issued).
The Portfolio may invest in securities that fluctuate in value with an
index. Such securities generally will either be issued by the U.S. Government or
one of its agencies or instrumentalities or, if privately issued, collateralized
by mortgages that are insured, guaranteed or otherwise backed by the U.S.
Government, its agencies or instrumentalities. The interest rate or, in some
cases, the principal payable at the maturity of an indexed security may change
positively or inversely in relation to one or more interest rates, financial
indices, securities prices or other financial indicators ("reference prices").
An indexed security may be leveraged to the extent that the magnitude of any
change in the interest rate or principal payable on an indexed security is a
multiple of the change in the reference price. Thus, indexed securities may
decline in value due to adverse market changes in reference prices. As of
December 31, 1994, the Portfolio held no such securities. Because
mortgage-backed and indexed securities derive their value from another
instrument, security or index, they are considered derivative debt securities,
and are subject to different combinations of prepayment, extension, interest
rate and/or other market risks.
The Portfolio may enter into contracts to purchase securities for a fixed
price at a future date beyond the customary settlement time if the Portfolio
holds and maintains until the settlement date in a segregated account cash, U.S.
Government securities and liquid high-grade debt obligations in an amount
sufficient to meet the purchase price, or if the Portfolio enters into
offsetting contracts for the forward sale of other securities it owns. Such
contracts are customarily referred to as "forward commitments" and involve a
risk of loss if the value of the security to be purchased declines prior to the
settlement date.
The principal of and/or interest on certain U.S. Government securities which
may be purchased by the Portfolio could be (a) payable in foreign currencies
rather than U.S. dollars or (b) increased or diminished as a result of changes
in the value of the U.S. dollar relative to the value of foreign currencies. The
value of such portfolio securities denominated in foreign currencies may be
affected favorably or unfavorably by changes in the exchange rate between
foreign currencies and the U.S. dollar. In order to limit the risk inherent in
this type of security, it is the current policy of the Portfolio not to purchase
any such security if after such purchase (i) more than 5% of its net assets
(taken at market value) would be invested in securities denominated in foreign
currencies or (ii) more than 2% of its net assets (taken at market value) would
be invested in securities denominated in any one foreign currency.
The Portfolio may from time to time have temporary investments in short-term
debt obligations (including certificates of deposit, bankers' acceptances and
commercial paper) pending the making of other investments or as a reserve to
service redemptions and repurchases of its shares.
ACTIVE MANAGEMENT STRATEGIES
The Portfolio may engage in several active management strategies to enhance
income and reduce investment risk. Each strategy requires the Investment Adviser
to consider special factors.
SECURITIES LENDING. The Portfolio may seek to increase its income by lending
portfolio securities to broker-dealers or other institutional borrowers. During
the existence of a loan, the Portfolio will continue to receive the equivalent
of the interest paid by the issuer on the securities loaned and will also
receive a fee, or all or a portion of the interest on investment of the
collateral, if any. However, the Portfolio may pay lending fees to such
borrowers. As with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the securities loaned if the borrower of the
securities fails financially. However, the loans will be made only to
organizations deemed by the Portfolio's management to be of good standing and
when, in the judgment of the Portfolio's management, the consideration which can
be earned from securities loans of this type justifies the attendant risk. The
financial condition of the borrower will be monitored by the Investment Adviser
on an ongoing basis. The value of the securities loaned will not exceed 30% of
the Portfolio's total assets. During the year ended December 31, 1994, the
Portfolio typically had outstanding approximately $70 million in collateralized
loans with terms of 7 days.
FUTURES CONTRACTS AND OTHER DERIVATIVE INSTRUMENTS. The Portfolio may purchase
or sell derivative instruments (which are instruments that derive their value
from another instrument, security, index or currency) to hedge against
fluctuations in interest rates, securities prices or currency exchange rates, to
change the duration of the Portfolio's fixed income portfolio, as a substitute
for the purchase or sale of securities or currency, or to enhance return. The
Portfolio's transactions in derivative instruments may include the purchase or
sale of futures contracts on securities, (such as U.S. Government securities),
indices, other financial instruments (such as certificates of deposit,
Eurodollar time deposits, and economic indices) or currencies; options on
futures contracts; exchange-traded and over-the-counter ("OTC") options on
securities; indices or currencies; and forward contracts to purchase or sell
currencies. All of the Portfolio's transactions in derivative instruments
involve a risk of loss or depreciation due to unanticipated adverse changes in
interest rates, securities prices or currency exchange rates, the inability to
close out a position or default by the counterparty. The loss on derivative
instruments (other than purchased options) may exceed the Portfolio's initial
investment in these instruments. In addition, the Portfolio may lose the entire
premium paid for purchased options that expire before they can be profitably
exercised by the Portfolio. The Portfolio incurs transaction costs in opening
and closing positions in derivative instruments. There can be no assurance that
the Investment Adviser's use of derivative instruments will be advantageous to
the Portfolio.
The Portfolio's success in using derivative instruments to hedge portfolio
assets depends on the degree of price correlation between the derivative
instrument and the hedged asset. Imperfect correlation may be caused by several
factors, including temporary price disparities among the trading markets for the
derivative instrument, the assets underlying the derivative instrument and the
Portfolio's assets. OTC derivative instruments involve a heightened risk that
the issuer or counterparty will fail to perform its contractual obligations. The
staff of the Securities and Exchange Commission takes the position that
purchased OTC options, assets used as cover for written OTC options, and certain
other derivative instruments (and securities) are subject to the Portfolio's 15%
limit on illiquid investments. The Portfolio's ability to terminate OTC
derivative instruments may depend on the cooperation of the counterparties to
such instruments. For thinly traded derivative securities and contracts, the
only source of price quotations may be the selling dealer or counterparty.
To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC"), in each case
that are not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5% of
the liquidation value of the Portfolio's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Portfolio has
entered into.
SHORT-TERM TRADING. Securities may be sold in anticipation of a market decline
(a rise in interest rates) or purchased in anticipation of a market rise (a
decline in interest rates) and later sold. In addition, a security may be sold
and another purchased at approximately the same time to take advantage of what
the Portfolio believes to be a temporary disparity in the normal yield
relationship between the two securities. Yield disparities may occur for reasons
not directly related to the investment quality of particular issues or the
general movement of interest rates, such as changes in the overall demand for or
supply of various types of fixed-income securities or changes in the investment
objectives of investors.
MORTGAGE ROLLS. The Portfolio may enter into mortgage "dollar rolls" in which
the Portfolio sells mortgage-backed securities for delivery in the current month
and simultaneously contracts to repurchase substantially similar (same type,
coupon and maturity) securities on a specified future date. During the roll
period, the Portfolio forgoes principal and interest paid on the mortgage-backed
securities. The Portfolio is compensated by the difference between the current
sales price and the lower forward price for the future purchase (often referred
to as the "drop") as well as by the interest earned on the cash proceeds of the
initial sale. A "covered roll" is a specific type of dollar roll for which there
is an offsetting cash position or a cash equivalent security position which
matures on or before the forward settlement date of the dollar roll transaction.
The Portfolio will only enter into covered rolls. Covered rolls are not treated
as a borrowing or other senior security and will be excluded from the
calculation of the Portfolio's borrowings and other senior securities.
LEVERAGE THROUGH BORROWING. The Portfolio may borrow from banks to increase its
portfolio holdings of debt securities on which call options may be written and
to acquire U.S. Treasury bills which may be deposited with the Portfolio's
custodian or a broker-dealer in connection with various Portfolio investments.
Such borrowings will be unsecured. The Investment Company Act of 1940 requires
the Portfolio to maintain continuous asset coverage of not less than 300% with
respect to such borrowings. This allows the Portfolio to borrow for such
purposes an amount (when taken together with any borrowings for temporary
extraordinary or emergency purposes as described below) equal to as much as 50%
of the value of its net assets (not including such borrowings). If such asset
coverage should decline to less than 300% due to market fluctuations or other
reasons, the Portfolio may be required to sell some of its portfolio holdings
within three days in order to reduce the Portfolio's debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time. Leveraging will exaggerate any
increase or decrease in the net asset value of the securities held by Portfolio,
and in that respect may be considered a speculative practice. Money borrowed for
leveraging will be subject to interest costs which may or may not exceed the
option premiums and interest received from the securities purchased. The
Portfolio may also be required to maintain minimum average balances in
connection with such borrowings or to pay a commitment or other fee to maintain
a line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements with
respect to U.S. Government securities. Under a repurchase agreement, the seller
agrees to repurchase such securities at the Portfolio's cost plus interest
within a specified time (normally one day). While repurchase agreements involve
certain risks not associated with direct investments in U.S. Government
securities, the Portfolio follows procedures designed to moderate such risks.
These procedures include effecting repurchase transactions only with large,
well-capitalized banks. In addition, the Portfolio's repurchase agreements will
provide that the value of the collateral underlying the repurchase agreements
will always be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement. In the event of a default or
bankruptcy by a selling bank, the Portfolio will seek to liquidate such
collateral. However, the exercise of the Portfolio's right to liquidate such
collateral would involve certain costs or delays and, to the extent that
proceeds from any sale upon a default of the obligation to repurchase are less
than the repurchase price, the Portfolio could suffer a loss.
ADDITIONAL INVESTMENT INFORMATION
The Portfolio expects that various new types of investments, hedging techniques
and management strategies will be developed and made available to institutional
investors in the future. The Investment Adviser will consider making such
investments or adopting such techniques or strategies if it determines that they
are consistent with the Portfolio's investment objective and policies. Of
course, the total mix of the Portfolio's investments can change daily.
FLUCTUATIONS IN VALUE. Because interest yields on U.S. Government and other
securities and opportunities to realize additional income and net gains from
active management strategies will vary from time to time because of general
economic and market conditions and many other factors, the Fund's current return
will fluctuate, and there can be no assurance that the Fund's objective will be
achieved. As a result of their high credit quality and market liquidity, U.S.
Government securities generally provide a lower current return than obligations
of other issuers. As with other debt securities, the value of U.S. Government
securities changes as interest rates fluctuate. Fluctuations in the value of
securities held by the Portfolio will not affect interest income on existing
portfolio securities but will be reflected in the Fund's net asset value. Thus,
a decrease in interest rates will generally result in an increase in the value
of Fund shares. Conversely, during periods of rising interest rates, the value
of Fund shares will generally decline. The magnitude of these fluctuations will
generally be greater at times when the Portfolio's average maturity is longer.
In addition, as set forth above, the derivative securities the Portfolio may
hold may magnify those risks and pose additional risks. Active management
techniques, if successful, may only partly offset these risks. Shares of the
Fund are not government guaranteed.
INVESTMENT RESTRICTIONS. The Fund and the Portfolio have adopted certain
fundamental investment restrictions which are enumerated in detail in the
Statement of Additional Information and which may not be changed unless
authorized by a shareholder vote and an investor vote, respectively. These
restrictions are designed to reduce investment risk. Except for such enumerated
restrictions, the investment objective and policies of the Fund and the
Portfolio are not fundamental policies, and accordingly may be changed by the
Trustees of the Trust and the Portfolio without obtaining the approval of the
Fund's shareholders or the investors in the Portfolio, as the case may be. If
any changes were made in the Fund's investment objective, the Fund might have an
investment objective different from the objective which an investor considered
appropriate at the time the investor became a shareholder of the Fund.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GOVERNMENT OBLIGATIONS TRUST, A
BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF
TRUST DATED MAY 7, 1984, AS AMENDED AND RESTATED. THE TRUST IS A MUTUAL FUND -
AN OPEN-END MANAGEMENT INVESTMENT COMPANY. The Trustees of the Trust are
responsible for the overall management and supervision of its affairs. The Trust
may issue an unlimited number of shares of beneficial interest (no par value per
share) in one or more series and because the Trust can offer separate series
(such as the Fund) it is known as a "series company." Each share represents an
equal proportionate beneficial interest in the Fund. When issued and
outstanding, the shares are fully paid and nonassessable by the Trust and
redeemable as described under "How to Redeem Fund Shares". Shareholders are
entitled to one vote for each full share held. Fractional shares may be voted
proportionately. Shares have no preemptive or conversion rights and are freely
transferable. In the event of the liquidation of the Fund, shareholders are
entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.
THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW
YORK AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. The
Portfolio, as well as the Trust, intends to comply with all applicable Federal
and state securities laws. The Portfolio's Declaration of Trust provides that
the Fund and other entities permitted to invest in the Portfolio (e.g., other
U.S. and foreign investment companies, and common and commingled trust funds)
will each be liable for all obligations of the Portfolio. However, the risk of
the Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio itself
is unable to meet its obligations. Accordingly, the Trustees of the Trust
believe that neither the Fund nor its shareholders will be adversely affected by
reason of the Fund investing in the Portfolio.
SPECIAL INFORMATION ON THE FUND/PORTFOLIO INVESTMENT STRUCTURE. An investor in
the Fund should be aware that the Fund, unlike mutual funds which directly
acquire and manage their own portfolios of securities, seeks to achieve its
investment objective by investing its assets in an interest in the Portfolio
(although the Fund may temporarily hold a de minimus amount of cash), which is a
separate investment company with an identical investment objective. Therefore,
the Fund's interest in the securities owned by the Portfolio is indirect. In
addition to selling an interest to the Fund, the Portfolio may sell interests to
other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, investors in the Fund
should be aware that these differences may result in differences in returns
experienced by investors in the various funds that invest in the Portfolio. Such
differences in returns are also present in other mutual fund structures,
including funds that have multiple classes of shares. For information regarding
the investment objective, policies and restrictions, see "The Fund's Investment
Objective" and "How the Fund and the Portfolio Invest their Assets". Further
information regarding investment practices may be found in the Statement of
Additional Information.
The Trustees of the Trust have considered the advantages and disadvantages
of investing the assets of the Fund in the Portfolio, as well as the advantages
and disadvantages of the two-tier format. The Trustees believe that the
structure offers opportunities for substantial growth in the assets of the
Portfolio, and affords the potential for economies of scale for the Fund, at
least when the assets of the Portfolio exceed $500 million.
The Fund may withdraw (completely redeem) all its assets from the Portfolio
at any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. The investment objective and the
nonfundamental investment policies of the Fund and the Portfolio may be changed
by the Trustees of the Trust and the Portfolio without obtaining the approval of
the shareholders of the Fund or the investors in the Portfolio, as the case may
be. Any such change of the investment objective of the Fund or the Portfolio
will be preceded by thirty days' advance written notice to the shareholders of
the Fund or the investors in the Portfolio, as the case may be. If a shareholder
redeems shares within one year of their purchase because of a change in the
nonfundamental objective or policies of the Fund, those shares may be subject to
a contingent deferred sales charge as described in "How to Redeem Fund Shares."
In the event the Fund withdraws all of its assets from the Portfolio, or the
Board of Trustees of the Trust determines that the investment objective of the
Portfolio is no longer consistent with the investment objective of the Fund,
such Trustees would consider what action might be taken, including investing the
assets of the Fund in another pooled investment entity or retaining an
investment adviser to manage the Fund's assets in accordance with its investment
objective. The Fund's investment performance may be affected by a withdrawal of
all its assets from the Portfolio.
Information regarding other pooled investment entities or funds which invest
in the Portfolio may be obtained by contacting Eaton Vance Distributors, Inc.
(the "Principal Underwriter" or "EVD"), 24 Federal Street, Boston, MA 02110,
(617) 482-8260. Smaller investors in the Portfolio may be adversely affected by
the actions of larger investors in the Portfolio. For example, if a large
investor withdraws from the Portfolio, the remaining investors may experience
higher pro rata operating expenses, thereby producing lower returns.
Additionally, the Portfolio may become less diverse, resulting in increased
portfolio risk, and experience decreasing economies of scale. However, this
possibility exists as well for historically structured funds which have large or
institutional investors.
Until recently, the Administrator sponsored and advised historically
structured funds. Funds which invest all their assets in interests in a separate
investment company are a relatively new development in the mutual fund industry
and, therefore, the Fund may be subject to additional regulations than
historically structured funds.
The Declaration of Trust of the Portfolio provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for Federal income tax purposes. See
"Distributions and Taxes" for further information. Whenever the Fund as an
investor in the Portfolio is requested to vote on matters pertaining to the
Portfolio (other than the termination of the Portfolio's business, which may be
determined by the Trustees of the Portfolio without investor approval), the Fund
will hold a meeting of Fund shareholders and will vote its interest in the
Portfolio for or against such matters proportionately to the instructions to
vote for or against such matters received from Fund shareholders. The Fund shall
vote shares for which it receives no voting instructions in the same proportion
as the shares for which it receives voting instructions. Other investors in the
Portfolio may alone or collectively acquire sufficient voting interests in the
Portfolio to control matters relating to the operation of the Portfolio, which
may require the Fund to withdraw its investment in the Portfolio or take other
appropriate action. Any such withdrawal could result in a distribution "in kind"
of portfolio securities (as opposed to a cash distribution from the Portfolio).
If securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Trustees of the Trust, including a majority of the noninterested
Trustees, have approved written procedures designed to identify and address any
potential conflicts of interest arising from the fact that the Trustees of the
Trust and the Trustees of the Portfolio are the same. Such procedures require
each Board to take action to resolve any conflict of interest between the Fund
and the Portfolio, and it is possible that the creation of separate Boards may
be considered. For further information concerning the Trustees and officers of
the Trust and the Portfolio, see the Statement of Additional Information.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
THE PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED
SUBSIDIARY OF EATON VANCE MANAGEMENT ("EATON VANCE"), AS ITS INVESTMENT ADVISER.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of the
Portfolio, BMR manages the Portfolio's investments and affairs. Under its
investment advisory agreement with the Portfolio, BMR receives a monthly
advisory fee of .0625% (equivalent to .75% annually) of the average daily net
assets of the Portfolio up to $500 million. On net assets of $500 million and
over the annual fee is reduced as follows:
ANNUALIZED FEE RATE
AVERAGE DAILY NET ASSETS FOR THE MONTH (FOR EACH LEVEL)
- -------------------------------------- ----------------
$500 million but less than $1 billion ................... 0.6875%
$1 billion but less than $1.5 billion ................... 0.6250%
$1.5 billion but less than $2 billion ................... 0.5625%
$2 billion but less than $3 billion ..................... 0.5000%
$3 billion and over ..................................... 0.4375%
As at December 31, 1994, the Portfolio had net assets of $515,669,513. For
the fiscal year ended December 31, 1994, the Portfolio paid BMR advisory fees
equivalent to .74% of the Portfolio's average daily net assets for such year.
BMR furnishes for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the investments of the
Portfolio. BMR also places the portfolio transactions of the Portfolio with many
broker-dealer firms and uses its best efforts to obtain execution of such
transactions at prices which are advantageous to the Portfolio and at reasonably
competitive commission rates. Subject to the foregoing, BMR may consider sales
of shares of the Fund or of other investment companies sponsored by BMR or Eaton
Vance as a factor in the selection of broker-dealer firms to execute portfolio
transactions.
Susan Schiff has acted as the portfolio manager of the Portfolio since it
commenced operations. She has been a Vice President of Eaton Vance and of BMR
since 1993.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
APPROXIMATELY $15 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton
Vance Corp., a publicly held holding company. Eaton Vance Corp., through its
subsidiaries and affiliates, engages in investment management and marketing
activities, fiduciary and banking services, oil and gas operations, real estate
investment, consulting and management, and development of precious metals
properties.
The Trust has retained the services of Eaton Vance to act as Administrator
of the Fund. The Trust has not retained the services of an investment adviser
since the Trust seeks to achieve the investment objective of the Fund by
investing the Fund's assets in the Portfolio. As Administrator, Eaton Vance
provides the Fund with general office facilities and supervises the overall
administration of the Fund. For these services Eaton Vance currently receives no
compensation. The Trustees of the Trust may determine, in the future, to
compensate Eaton Vance for such services.
The Portfolio and the Fund, as the case may be, will each be responsible for
all of its respective costs and expenses not expressly stated to be payable by
BMR under the investment advisory agreement, by Eaton Vance under the
administrative services agreement, or by EVD under the distribution agreement.
DISTRIBUTION PLAN
- ------------------------------------------------------------------------------
THE FUND FINANCES DISTRIBUTION ACTIVITIES AND HAS ADOPTED A DISTRIBUTION PLAN
(THE "PLAN") PURSUANT TO RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940.
Rule 12b-1 permits a mutual fund, such as the Fund, to finance distribution
activities and bear expenses associated with the distribution of its shares
provided that any payments made by the Fund are made pursuant to a written plan
adopted in accordance with the Rule. The Plan is subject to and complies with
the sales charge rule of the National Association of Securities Dealers, Inc.
(the "NASD Rule"). The Plan is described further in the Statement of Additional
Information, and the following is a description of the salient features of the
Plan. The Plan provides that the Fund, subject to the NASD Rule, will pay sales
commissions and distribution fees to the Principal Underwriter only after and as
a result of the sale of shares of the Fund. On each sale of Fund shares
(excluding reinvestment of distributions) the Fund will pay the Principal
Underwriter amounts representing (i) sales commissions equal to 6.25% of the
amount received by the Fund for each share sold and (ii) distribution fees
calculated by applying the rate of 1% over the prime rate then reported in The
Wall Street Journal to the outstanding balance of Uncovered Distribution Charges
(as described below) of the Principal Underwriter. On sales of shares made prior
to January 30, 1995, the Principal Underwriter currently pays monthly sales
commissions to a financial service firm (an "Authorized Firm") in amounts
anticipated to be equivalent to .75%, annualized, of the assets maintained in
the Fund by the customers of such Firm. On sales of shares made on January 30,
1995 and thereafter, the Principal Underwriter currently expects to pay to an
Authorized Firm (a) sales commissions (except on exchange transactions and
reinvestments) at the time of sale equal to .75% of the purchase price of the
shares sold by such Firm, and (b) monthly sales commissions approximately
equivalent to 1/12 of .75% of the value of shares sold by such Firm and
remaining outstanding for at least one year. The Plan is designed to permit an
investor to purchase Fund shares through an Authorized Firm without incurring an
initial sales charge and at the same time permit the Principal Underwriter to
compensate Authorized Firms in connection with the sale of Fund shares.
THE NASD RULE REQUIRES THE FUND TO LIMIT ITS ANNUAL PAYMENTS OF SALES
COMMISSIONS AND DISTRIBUTION FEES TO THE PRINCIPAL UNDERWRITER TO AN AMOUNT NOT
EXCEEDING .75% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR.
Under its Plan, the Fund accrues daily an amount at the rate of 1/365 of .75% of
the Fund's net assets, and pays such accrued amounts monthly to the Principal
Underwriter. The Plan requires such accruals to be automatically discontinued
during any period in which there are no outstanding Uncovered Distribution
Charges under the Plan. Uncovered Distribution Charges are calculated daily and,
briefly, are equivalent to all unpaid sales commissions and distribution fees to
which the Principal Underwriter is entitled under the Plan less all contingent
deferred sales charges theretofore paid to the Principal Underwriter. The Eaton
Vance organization may be considered to have realized a profit under the Plan if
at any point in time the aggregate amounts of all payments made to the Principal
Underwriter pursuant to the Plan, including any contingent deferred sales
charges, have exceeded the total expenses theretofore incurred by such
organization in distributing shares of the Fund. Total expenses for this purpose
will include an allocable portion of the overhead costs of such organization and
its branch offices.
Because of the NASD Rule limitation on the amount of sales commissions and
distribution fees paid to the Principal Underwriter during any fiscal year, a
high level of sales of Fund shares during the initial years of the Fund's
operations would cause a large portion of the sales commissions attributable to
a sale of Fund shares to be accrued and paid by the Fund to the Principal
Underwriter in fiscal years subsequent to the year in which such shares were
sold. This spreading of sales commissions payments under the Plan over an
extended period would result in the incurrence and payment of increased
distribution fees under the Plan. For the fiscal year ended December 31, 1994,
the Fund paid or accrued sales commissions under the Plan equivalent to .75% of
the Fund's average daily net assets for such year. As at December 31, 1994, the
outstanding Uncovered Distribution Charges of the Principal Underwriter
calculated under the Plan amounted to approximately $5,572,000 (which amount was
equivalent to 14.08% of the Fund's net assets on such day).
THE PLAN ALSO AUTHORIZES THE FUND TO MAKE PAYMENTS OF SERVICE FEES TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR. The
Trustees of the Trust have initially implemented the Plan by authorizing the
Fund to make monthly service fee payments to the Principal Underwriter in
amounts not expected to exceed .25% of the Fund's average daily net assets for
any fiscal year. The Fund accrues the service fee daily at the rate of 1/365 of
.25% of the Fund's net assets. On sales of shares made prior to January 30,
1995, the Principal Underwriter currently makes monthly service fee payments to
an Authorized Firm in amounts anticipated to be equivalent to .25%, annualized,
of the assets maintained in the Fund by the customers of such Firm. On sales of
shares made on January 30, 1995 and thereafter, the Principal Underwriter
currently expects to pay to an Authorized Firm (a) a service fee (except on
exchange transactions and reinvestments) at the time of sale equal to .25% of
the purchase price of the shares sold by such Firm, and (b) monthly service fees
approximately equivalent to 1/12 of .25% of the value of shares sold by such
Firm and remaining outstanding for at least one year. During the first year
after a purchase of Fund shares, the Principal Underwriter will retain the
service fee as reimbursement for the service fee payment made to the Authorized
Firm at the time of sale. As permitted by the NASD Rule, all service fee
payments are made for personal services and/or the maintenance of shareholder
accounts. Service fees are separate and distinct from the sales commissions and
distribution fees payable by the Fund to the Principal Underwriter, and as such
are not subject to automatic discontinuance when there are no outstanding
Uncovered Distribution Charges of the Principal Underwriter. For the fiscal year
ended December 31, 1994, the Fund paid or accrued service fees under the Plan
equivalent to .25% of the Fund's average daily net assets for such year.
The Principal Underwriter may, from time to time, at its own expense,
provide additional incentives to Authorized Firms which employ registered
representatives who sell a minimum dollar amount of the Fund's shares and/or
shares of other funds distributed by the Principal Underwriter. In some
instances, such additional incentives may be offered only to certain Authorized
Firms whose representatives are expected to sell significant amounts of shares.
In addition, the Principal Underwriter may from time to time increase or
decrease the sales commissions payable to Authorized Firms.
The Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the Fund's management intends to consider all relevant factors,
including without limitation the size of the Fund, the investment climate and
market conditions, the volume of sales and redemptions of Fund shares and the
amount of Uncovered Distribution Charges of the Principal Underwriter. The Plan
may continue in effect and payments may be made under the Plan following any
such suspension, discontinuance or limitation of the offering of Fund shares;
however, the Fund is not contractually obligated to continue the Plan for any
particular period of time. Suspension of the offering of Fund shares would not,
of course, affect a shareholder's ability to redeem shares.
VALUING FUND SHARES
- ------------------------------------------------------------------------------
THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by IBT Fund Services (Canada) Inc., a subsidiary of
Investors Bank & Trust Company ("IBT"), the Fund's and the Portfolio's
custodian, (as agent for the Fund) in the manner authorized by the Trustees of
the Trust. Net asset value is computed by dividing the value of the Fund's total
assets, less its liabilities, by the number of shares outstanding. Because the
Fund invests its assets in an interest in the Portfolio, the Fund's net asset
value will reflect the value of its interest in the Portfolio (which in turn,
reflects the underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per Fund share. It is the Authorized Firms'
responsibility to transmit orders promptly to the Principal Underwriter, which
is a wholly-owned subsidiary of Eaton Vance.
The Portfolio's net asset value is also determined as of the close of
regular trading on the Exchange by IBT Fund Services (Canada) Inc. (as agent for
the Portfolio) in the manner authorized by the Trustees of the Portfolio. Net
asset value is computed by subtracting the liabilities of the Portfolio from the
value of its total assets. Mortgage-backed "pass-through" securities are valued
through use of a matrix pricing system which takes into account closing bond
valuations, yield differentials, anticipated prepayments and interest rates. For
further information regarding the valuation of the Portfolio's assets, see
"Determination of Net Asset Value" in the Statement of Additional Information.
Eaton Vance Corp. owns 77.3% of the outstanding stock of IBT, the Fund's and the
Portfolio's custodian.
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
HOW TO BUY FUND SHARES
- ------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
SECURITIES. Investors may purchase shares of the Fund through Authorized Firms
at the net asset value per share of the Fund next determined after an order is
effective. The Fund may suspend the offering of shares at any time and may
refuse any order for the purchase of shares.
An initial investment in the Fund must be at least $1,000. Once an account
has been established the investor may send investments of $50 or more at any
time directly to the Fund's Transfer Agent (the "Transfer Agent") as follows:
The Shareholder Services Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104.
The $1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services".
In connection with employee benefit or other continuous group purchase plans
under which the average initial purchase by a participant of the plan is $1,000
or more, the Fund may accept initial investments of less than $1,000 on the part
of an individual participant. In the event a shareholder who is a participant of
such a plan terminates participation in the plan, his or her shares will be
transferred to a regular individual account. However, such account will be
subject to the right of redemption by the Fund as described under "How to Redeem
Fund Shares."
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Administrator, in exchange for
Fund shares at their net asset value as determined above. The minimum value of
securities (or securities and cash) accepted for deposit is $5,000. Securities
accepted will be sold by IBT as agent for the account of their owner on the day
of their receipt by IBT or as soon thereafter as possible. The number of Fund
shares to be issued in exchange for securities will be the aggregate proceeds
from the sale of such securities, divided by the applicable net asset value per
Fund share on the day such proceeds are received. Eaton Vance will use
reasonable efforts to obtain the then current market price for such securities
but does not guarantee the best available price. Eaton Vance will absorb any
transaction costs, such as commissions, on the sale of the securities.
Securities determined to be acceptable should be transferred via book entry
or physically delivered, in proper form for transfer, through an Authorized
Firm, together with a completed and signed Letter of Transmittal in approved
form (available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Classic Government Obligations Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Classic Government Obligations Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities to IBT. Eaton
Vance reserves the right to reject any securities. Exchanging securities for
Fund shares may create a taxable gain or loss. Each investor should consult his
or her tax adviser with respect to the particular Federal, state and local tax
consequences of exchanging securities for Fund shares.
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
HOW TO REDEEM FUND SHARES
- ------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM FUND SHARES BY DELIVERING TO THE SHAREHOLDER SERVICES
GROUP, INC., BOS725, P.O. BOX 1559, BOSTON, MASSACHUSETTS 02104, during its
business hours a written request for redemption in good order, plus any share
certificates with executed stock powers. The redemption price will be based on
the net asset value per Fund share next computed after such delivery. Good order
means that all relevant documents must be endorsed by the record owner (s)
exactly as the shares are registered and the signature(s) must be guaranteed by
a member of either the Securities Transfer Association's STAMP program or the
New York Stock Exchange's Medallion Signature Program, or certain banks, savings
and loan institutions, credit unions, securities dealers, securities exchanges,
clearing agencies and registered securities associations as required by a
regulation of the Securities and Exchange Commission and acceptable to The
Shareholder Services Group, Inc. In addition, in some cases, good order may
require the furnishing of additional documents such as where shares are
registered in the name of a corporation, partnership or fiduciary.
Within seven days after receipt of a redemption request in good order by The
Shareholder Services Group, Inc., the Fund will make payment in cash for the net
asset value of the shares as of the date determined above, reduced by the amount
of any applicable contingent deferred sales charge (described below) and any
Federal income tax required to be withheld. Although the Fund normally expects
to make payment in cash for redeemed shares, the Trust, subject to compliance
with applicable regulations, has reserved the right to pay the redemption price
of shares of the Fund, either totally or partially, by a distribution in kind of
readily marketable securities withdrawn by the Fund from the Portfolio. The
securities so distributed would be valued pursuant to the Portfolio's valuation
procedures. If a shareholder received a distribution in kind, the shareholder
could incur brokerage or other charges in converting the securities to cash.
To sell shares at their net asset value through an Authorized Firm (a
repurchase), a shareholder can place a repurchase order with the Authorized
Firm, which may charge a fee. The value of such shares is based upon the net
asset value calculated after EVD, as the Fund's agent, receives the order. It is
the Authorized Firm's responsibility to transmit promptly repurchase orders to
EVD. Throughout this Prospectus, the word "redemption" is generally meant to
include a repurchase.
If shares were recently purchased, the proceeds of a redemption (or
repurchase) will not be sent until the check (including a certified or cashier's
check) received for the shares purchased has cleared. Payment for shares
tendered for redemption may be delayed up to 15 days from the purchase date when
the purchase check has not yet cleared. Redemptions or repurchases may result in
a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem accounts with balances of less than $1,000. Prior to such a
redemption, shareholders will be given 60 days' written notice to make
additional purchases. Thus, an investor making an initial investment of $1,000
would not be able to redeem shares without being subject to this policy.
However, no such redemption would be required by the Fund if the cause of the
low account balance was a reduction in the net asset value of Fund shares. No
contingent deferred sales charge will be imposed with respect to such
involuntary redemptions.
CONTINGENT DEFERRED SALES CHARGE. Shares purchased on or after January 30, 1995
and redeemed within the first year of their purchase (except shares acquired
through the reinvestment of distributions) generally will be subject to a
contingent deferred sales charge. This contingent deferred sales charge is
imposed on any redemption the amount of which exceeds the aggregate value at the
time of redemption of (a) all shares in the account purchased more than one year
prior to the redemption, (b) all shares in the account acquired through
reinvestment of distributions, and (c) the increase, if any, of value in the
other shares in the account (namely those purchased within the year preceding
the redemption) over the purchase price of such shares. Redemptions are
processed in a manner to maximize the amount of redemption proceeds which will
not be subject to a contingent deferred sales charge. That is, each redemption
will be assumed to have been made first from the exempt amounts referred to in
clauses (a), (b) and (c) above, and second through liquidation of those shares
in the account referred to in clause (c) on a first-in-first out basis. Any
contingent deferred sales charge which is required to be imposed on share
redemptions will be equal to 1% of the net asset value of redeemed shares.
In calculating the contingent deferred sales charge upon the redemption of
Fund shares acquired in an exchange for shares of a fund currently listed under
"The Eaton Vance Exchange Privilege," the purchase of Fund shares acquired in
the exchange is deemed to have occurred at the time of the original purchase of
the exchanged shares.
No contingent deferred sales charge will be imposed on Fund shares which
have been sold to Eaton Vance or its affiliates, or to their respective
employees or clients. The contingent deferred sales charge will also be waived
for shares redeemed (1) pursuant to a Withdrawal Plan (see "Eaton Vance
Shareholders Services"), (2) as part of a distribution from a retirement plan
qualified under Section 401, 403(b) or 457 of the Internal Revenue Code of 1986,
as amended (the "Code"), or (3) as part of a minimum required distribution from
other tax-sheltered retirement plans. The contingent deferred sales charge will
be paid to the Principal Underwriter or the Fund.
REPORTS TO SHAREHOLDERS
- ------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent accountants. Shortly after the end of each
calendar year, the Fund will furnish all shareholders with information necessary
for preparing Federal and state tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- ------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE FUND'S TRANSFER
AGENT, THE SHAREHOLDER SERVICES GROUP, INC., WILL SET UP A LIFETIME INVESTING
ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS. This account is a complete
record of all transactions between the investor and the Fund which at all times
shows the balance of shares owned. The Fund will not issue share certificates
except upon request.
At least quarterly, shareholders will receive a statement showing complete
details of any transaction and the current balance in the account. THE LIFETIME
INVESTING ACCOUNT ALSO PERMITS A SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN
SHARES BY SENDING A CHECK FOR $50 OR MORE to The Shareholder Services Group,
Inc.
Any questions concerning a shareholder's account or services available may
be directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2 or in writing to The Shareholder Services Group, Inc., BOS725, P.O.
Box 1559, Boston, MA 02104 (please provide the name of the shareholder, the Fund
and the account number).
The following distribution options will be available to all Lifetime
Investing Accounts and may be changed as often as desired by written notice to
the Fund's dividend disbursing agent, The Shareholder Services Group, Inc.,
BOS725, P.O. Box 1559, Boston, MA 02104. The currently effective option will
appear on each account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under Federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or
capital gains distribution checks which are returned by the United States Postal
Service as not deliverable or which remain uncashed for six months or more will
be reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the Share Option until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares of the Fund are held in a "street name"
account with an Authorized Firm, all recordkeeping, transaction processing and
payments of distributions relating to the beneficial owner's account will be
performed by the Authorized Firm, and not by the Fund and its Transfer Agent.
Since the Fund will have no record of the beneficial owner's transactions, a
beneficial owner should contact the Authorized Firm to purchase, redeem or
exchange shares, to make changes in or give instructions concerning the account,
or to obtain information about the account. The transfer of shares in a "street
name" account to an account with another dealer or to an account directly with a
Fund involves special procedures and will require the beneficial owner to obtain
historical purchase information about the shares in the account from the
Authorized Firm. Before establishing a "street name" account with an investment
firm, or transferring the account to another investment firm, an investor
wishing to reinvest distributions should determine whether the firm which will
hold the shares allows reinvestment of distributions in "street name" accounts.
UNDER A LIFETIME INVESTING ACCOUNT A SHAREHOLDER CAN MAKE ADDITIONAL INVESTMENTS
IN SHARES BY SENDING A CHECK FOR $50 OR MORE.
THE EATON VANCE EXCHANGE PRIVILEGE
- ------------------------------------------------------------------------------
Shares of the Fund currently may be exchanged for shares of one or more other
funds in the Eaton Vance Classic Group of Funds or Eaton Vance Money Market
Fund, which are distributed subject to a contingent deferred sales charge, on
the basis of the net asset value per share of each fund at the time of the
exchange, provided that such exchange offers are available only in states where
shares of the fund being acquired may be legally sold.
Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Fund does not permit the
exchange privilege to be used for "Market Timing" and may terminate the exchange
privilege for any shareholder account engaged in Market Timing activity. Any
shareholder account for which more than two round-trip exchanges are made within
any twelve month period will be deemed to be engaged in Market Timing.
Furthermore, a group of unrelated accounts for which exchanges are entered
contemporaneously by a financial intermediary will be considered to be engaged
in Market Timing.
The Shareholder Services Group, Inc. makes exchanges at the next determined
net asset value after receiving an exchange request in good order (see "How to
Redeem Fund Shares"). Consult The Shareholder Services Group, Inc. for
additional information concerning the exchange privilege. Applications and
prospectuses of other funds are available from Authorized Firms or the Principal
Underwriter. The prospectus for each fund describes its investment objectives
and policies, and shareholders should obtain a prospectus and consider these
objectives and policies carefully before requesting an exchange.
No contingent deferred sales charge is imposed on exchanges. For purposes of
calculating the contingent deferred sales charge upon the redemption of shares
acquired in an exchange, the purchase of shares acquired in one or more
exchanges is deemed to have occurred at the time of the original purchase of the
exchanged shares.
Shares of the other funds in the Eaton Vance Classic Group of Funds (and
shares of Eaton Vance Money Market Fund acquired as the result of an exchange
from an EV Classic fund) may be exchanged for Fund shares on the basis of the
net asset value per share of each fund at the time of the exchange, but subject
to any restrictions or qualifications set forth in the current prospectus of any
such fund.
Telephone exchanges are accepted by The Shareholder Services Group, Inc.
provided that the investor has not disclaimed in writing the use of the
privilege. To effect such exchanges, call The Shareholder Services Group, Inc.
at 800-262-1122 or, within Massachusetts, 617-573-9403, Monday through Friday,
9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone
exchange must be registered in the same name(s) and with the same address as the
shares being exchanged. Neither the Fund, the Principal Underwriter nor The
Shareholder Services Group, Inc. will be responsible for the authenticity of
exchange instructions received by telephone, provided that reasonable procedures
to confirm that instructions communicated are genuine have been followed.
Telephone instructions will be tape recorded. In times of drastic economic or
market changes, a telephone exchange may be difficult to implement. An exchange
may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of EV
Classic Government Obligations Fund may be mailed directly to The Shareholder
Services Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104 at any time --
whether or not dividends are reinvested. The name of the shareholder, the Fund
and the account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from the
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks in an aggregate amount that does not exceed annually
12% of the account balance at the time the plan is established. Such amount will
not be subject to a contingent deferred sales charge. See "How to Redeem Fund
Shares". A minimum deposit of $5,000 in shares is required.
REINVESTMENT PRIVILEGE: A SHAREHOLDER WHO HAS REPURCHASED OR REDEEMED SHARES MAY
REINVEST, WITH CREDIT FOR ANY CONTINGENT DEFERRED SALES CHARGES PAID ON THE
REPURCHASED OR REDEEMED SHARES, ANY PORTION OR ALL OF THE REPURCHASE OR
REDEMPTION PROCEEDS (PLUS THAT AMOUNT NECESSARY TO ACQUIRE A FRACTIONAL SHARE TO
ROUND OFF THE PURCHASE TO THE NEAREST FULL SHARE) IN SHARES OF THE FUND,
provided that the reinvestment is effected within 30 days after such repurchase
or redemption. Shares are sold to a reinvesting shareholder at the next
determined net asset value following timely receipt of a written purchase order
by the Principal Underwriter or by the Fund (or by the Fund's Transfer Agent).
To the extent that any shares of the Fund are sold at a loss and the proceeds
are reinvested in shares of the Fund (or other shares of the Fund are acquired
within the period beginning 30 days before and ending 30 days after the date of
the redemption) some or all of the loss generally will not be allowed as a tax
deduction. Shareholders should consult their tax advisers concerning the tax
consequences of reinvestments.
TAX-SHELTERED RETIREMENT PLANS: Shares of the Fund are available for purchase
in connection with the following tax-sheltered retirement plans:
--Pension and Profit Sharing Plans for self-employed individuals,
corporations and non-profit organizations;
--Individual Retirement Account Plans for individuals and their non-
employed spouses; and
--403(b) Retirement Plans for employees of public school systems, hospitals,
colleges and non-profit organizations meeting certain requirements of the
Code.
Detailed information concerning these plans, including certain exceptions to
minimum investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
Federal income tax consequences of establishing a plan. Under all plans,
dividends and distributions will be automatically reinvested in additional
shares.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
SUBSTANTIALLY ALL OF THE INVESTMENT INCOME ALLOCATED TO THE FUND BY THE
PORTFOLIO, LESS THE FUND'S DIRECT AND ALLOCATED EXPENSES, WILL BE DECLARED DAILY
AS A DISTRIBUTION TO FUND SHAREHOLDERS OF RECORD AT THE TIME OF DECLARATION AND
WILL GENERALLY BE TAXABLE TO SHAREHOLDERS AS ORDINARY INCOME, WHETHER TAKEN IN
CASH OR REINVESTED IN ADDITIONAL SHARES. Such distributions, whether taken in
cash or reinvested in additional shares, will ordinarily be paid on the
twenty-second day of each month or the next business day thereafter. Daily
distribution crediting will commence on the day that collected funds for the
purchase of Fund shares are available at the Transfer Agent. Distributions from
net short-term capital gains and certain net foreign exchange gains are taxable
to shareholders as ordinary income, and distributions from net long-term capital
gains are taxable to shareholders as long-term capital gains, whether received
in cash or additional shares of the Fund and regardless of the length of time
Fund shares have been owned by the shareholders. Gains or losses attributable to
transactions by the Portfolio in options on securities, certain currency forward
contracts, futures contracts and options on futures may be treated as 40%
short-term and 60% long-term capital gains or losses, or, in the case of certain
of such transactions relating to foreign currencies, as ordinary income or loss
for Federal income tax purposes. The Portfolio may have to limit its activities
in these transactions in order to enable the Fund to maintain its qualification
as a regulated investment company.
The amount of the Fund's distributions will vary from time to time depending
on general economic and market conditions, the composition of the Portfolio's
investments, its current investment strategies and the operating expenses of the
Fund and the Portfolio. While distributions will vary from time to time in
response to the factors referred to above, the Fund's management will attempt to
pursue a policy of maintaining a relatively stable monthly distribution payment
to its shareholders. The distributions paid by the Fund during any particular
period may be more or less than the amount of net investment income and net
short-term capital gain actually earned by the Portfolio and allocated to the
Fund during such period. The Portfolio has elected mixed straddle accounting
under the Code for one or more designated classes of activities involving mixed
straddles.
The Portfolio is required to accrue original issue discount on zero coupon
and certain other securities and has elected to accrue market discount on debt
obligations which are purchased at a market discount. While enhancing the Fund's
current return, such accrual will also accelerate the Fund's recognition of
interest income, distributions of which will be taxable as ordinary income.
Furthermore, because the Fund seeks to stabilize monthly distribution payments
and the Portfolio has elected mixed straddle accounting under the Code, it is
possible that a portion of the Fund's aggregate distributions during any year
will be treated as a return of capital for tax purposes, rather than taxable
distributions of dividends or capital gains. The Fund will inform the
shareholders after the end of each year what portion, if any, of such
distributions constitutes a return of capital for tax purposes.
Shareholders will receive annually tax information notices and Forms 1099 to
assist in the preparation of their Federal and state tax returns for the prior
calendar year's distributions, proceeds from the redemption or exchange of Fund
shares, and Federal income tax (if any) withheld by the Fund's Transfer Agent.
In order to qualify as a regulated investment company under the Code, the
Fund must satisfy certain requirements relating to the sources of its income,
the distribution of its income, and the diversification of its assets. In
satisfying these requirements, the Fund will treat itself as owning its
proportionate share of each of the Portfolio's assets and as entitled to the
income of the Portfolio properly attributable to such share.
AS A REGULATED INVESTMENT COMPANY UNDER THE CODE, THE FUND DOES NOT PAY FEDERAL
INCOME OR EXCISE TAXES TO THE EXTENT THAT IT DISTRIBUTES TO SHAREHOLDERS ITS NET
INVESTMENT INCOME AND NET REALIZED CAPITAL GAINS IN ACCORDANCE WITH THE TIMING
REQUIREMENTS IMPOSED BY THE CODE. AS A PARTNERSHIP UNDER THE CODE, THE PORTFOLIO
DOES NOT PAY FEDERAL INCOME OR EXCISE TAXES.
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS YIELD AND/OR AVERAGE ANNUAL TOTAL
RETURN. The Fund's current yield is calculated by dividing the net investment
income per share during a recent 30-day period by the maximum offering price per
share (net asset value) of the Fund on the last day of the period and
annualizing the resulting figure. The Fund's average annual total return is
determined by computing the average annual percentage change in value of $1,000
invested at the maximum public offering price (net asset value) for specified
periods ending with the most recent calendar quarter, assuming reinvestment of
all distributions. The average annual total return calculation assumes a
complete redemption of the investment and the deduction of any applicable
contingent deferred sales charge at the end of the period. The Fund may also
publish annual and cumulative total return figures from time to time.
The Fund may also publish its distribution rate and/or its effective
distribution rate. The Fund's distribution rate is computed by dividing the most
recent monthly distribution per share annualized by the current maximum offering
price per share (net asset value). The Fund's effective distribution rate is
computed by dividing the distribution rate by the ratio used to annualize the
most recent monthly distribution and reinvesting the resulting amount for a full
year on the basis of such ratio. The effective distribution rate will be higher
than the distribution rate because of the compounding effect of the assumed
reinvestment. Investors should note that the Fund's yield is calculated using a
standardized formula the income component of which is computed from the yields
to maturity of all debt obligations held by the Portfolio based on prescribed
methods (with all purchases and sales of securities during such period included
in the income calculation on a settlement date basis), whereas the distribution
rate is based on the Fund's last monthly distribution which tends to be
relatively stable and may be more or less than the amount of net investment
income and short-term capital gain actually earned by the Fund during the month.
Performance figures published by the Fund which do not include the effect of
any applicable contingent deferred sales charge would be reduced if it were
included.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's yield, total return, distribution
rate or effective distribution rate for any prior period should not be
considered as a representation of what an investment may earn or what the Fund's
yield, total return, distribution rate or effective distribution rate may be in
any future period.
<PAGE>
INVESTMENT ADVISER OF
GOVERNMENT OBLIGATIONS PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV CLASSIC
GOVERNMENT OBLIGATIONS FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
EV CLASSIC
GOVERNMENT OBLIGATIONS FUND
24 FEDERAL STREET
BOSTON, MA 02110
EV CLASSIC
GOVERNMENT OBLIGATIONS
FUND
PROSPECTUS
MAY 1, 1995
<PAGE>
Part A
Information Required in a Prospectus
EV MARATHON GOVERNMENT OBLIGATIONS FUND
EV MARATHON GOVERNMENT OBLIGATIONS FUND (THE "FUND") IS A MUTUAL FUND
SEEKING A HIGH CURRENT RETURN, BY INVESTING IN SECURITIES ISSUED, GUARANTEED OR
OTHERWISE BACKED BY THE U.S. GOVERNMENT AND ENGAGING IN ACTIVE MANAGEMENT
STRATEGIES. THE FUND INVESTS ITS ASSETS IN GOVERNMENT OBLIGATIONS PORTFOLIO (THE
"PORTFOLIO"), A DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND
MANAGING ITS OWN PORTFOLIO OF SECURITIES AS WITH HISTORICALLY STRUCTURED MUTUAL
FUNDS. THE FUND IS A SERIES OF EATON VANCE GOVERNMENT OBLIGATIONS TRUST (THE
"TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of some
or all of the principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information dated May 1, 1995 for the Fund, as supplemented from
time to time, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. This Statement of Additional Information is
available without charge from the Fund's principal underwriter, Eaton Vance
Distributors, Inc. (the "Principal Underwriter", 24 Federal Street, Boston, MA
02110 (telephone (800) 225-6265). The Portfolio's Investment Adviser is Boston
Management and Research (the "Investment Adviser"), a wholly-owned subsidiary of
Eaton Vance Management, and Eaton Vance Management is the Administrator (the
"Administrator") of the Fund. The offices of the Investment Adviser and the
Administrator are located at 24 Federal Street, Boston, MA 02110.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS
A CRIMINAL OFFENSE.
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PAGE PAGE
<S> <C> <S> <C>
Shareholder and Fund Expenses ..................... 2 How to Buy Fund Shares ........................ 14
The Fund's Financial Highlights ................... 3 How to Redeem Fund Shares ..................... 15
The Fund's Investment Objective ................... 4 Reports to Shareholders ....................... 17
How the Fund and the Portfolio Invest The Lifetime Investing Account/Distribution
their Assets .................................... 4 Options ..................................... 17
Organization of the Fund and the Portfolio ........ 8 The Eaton Vance Exchange Privilege ............ 19
Management of the Fund and the Portfolio .......... 11 Eaton Vance Shareholder Services .............. 20
Distribution Plan ................................. 12 Distributions and Taxes ....................... 21
Valuing Fund Shares ............................... 13 Performance Information ....................... 22
- ------------------------------------------------------------------------------------------------------------
PROSPECTUS DATED MAY 1, 1995
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDER AND FUND EXPENSES<F1>
- ---------------------------------------------------------------------------------------------------------------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Sales Charges Imposed on Purchases of Shares None
Sales Charges Imposed on Reinvested Distributions None
Fees to Exchange Shares None
Range of Declining Contingent Deferred Sales Charges Imposed on Redemptions During
the First Seven Years (as a percentage of redemption proceeds exclusive of all
reinvestments and capital appreciation in the account)<F2> 5.00%-0%
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES<F3>
(as a percentage of average daily net assets)
Investment Adviser Fee 0.74%
Rule 12b-1 Distribution (and Service) Fees 0.90
Other Expenses (including Interest and Securities Lending Expenses of 0.60%) 0.93
----
Total Operating Expenses 2.57%
=====
EXAMPLE<F3>: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------- ------ ------- ------- --------
An investor would pay the following contingent deferred sales charge
and expenses on a $1,000 investment, assuming (a) 5% annual return and (b)
redemption at the end of each time period: $76 $120 $157 $290
An investor would pay the following expenses on the same investment,
assuming (a) 5% annual return and (b) no redemptions: $26 $ 80 $137 $290
Notes:
<F1>The purpose of the above table and Example is to summarize the aggregate expenses of the Fund and the Portfolio and to
assist investors in understanding the various costs and expenses that investors in the Fund will bear directly or
indirectly. The Trustees of the Trust believe that over time the aggregate per share expenses of the Fund and the
Portfolio should be approximately equal to, or less than, the per share expenses which the Fund would incur if the Trust
retained the services of an investment adviser and the assets of the Fund were invested directly in the type of
securities being held by the Portfolio. The percentages indicated as Annual Fund and Allocated Portfolio Operating
Expenses in the table and the amounts included in the Example are based on the Fund's and the Portfolio's results for
the fiscal year ended December 31, 1994, except for Service Fees, which are estimated to be 0.15% in the current fiscal
year. The Example should not be considered a representation of past or future expenses and actual expenses may be
greater or less than those shown. The Example assumes a 5% annual return and the Fund's actual performance may result in
an annual return greater or less than 5%. For further information regarding the expenses of both the Fund and the
Portfolio see "The Fund's Financial Highlights", "Organization of the Fund and the Portfolio", "Management of the Fund
and the Portfolio" and "How to Redeem Fund Shares". Because the Fund makes payments under its Distribution Plan adopted
under Rule 12b-1, a long-term shareholder may pay more than the economic equivalent of the maximum front-end sales
charge permitted by a rule of the National Association of Securities Dealers, Inc. See "Distribution Plan".
<F2>No contingent deferred sales charge is imposed on (a) shares purchased more than six years prior to redemption, (b)
shares acquired through the reinvestment of distributions or (c) any appreciation in value of other shares in the
account (see "How to Redeem Fund Shares"), and no such charge is imposed on exchanges of Fund shares for shares of one
or more other funds listed under "The Eaton Vance Exchange Privilege".
<F3>The computation of Annual Fund and Allocated Portfolio Operating Expenses as a percentage of average daily net assets in
the above table and of contingent deferred sales charges and expenses incurred on a $1,000 investment in the above
Example is based in part on interest expense allocated to the Fund from the Portfolio's borrowings and lending fees
allocated to the Fund from the Portfolio's securities lending activities during the fiscal year ended December 31, 1994.
The Portfolio's borrowings, interest expense, securities lending activities and lending fees will vary from year to year
(see "How the Fund and the Portfolio Invest Their Assets -- Active Management Strategies"). If the Fund had not been
allocated interest expense and lending fees in 1994, Total Operating Expenses as a percentage of average daily net
assets would have been 1.97%, and contingent deferred sales charges and expenses incurred on a $1,000 investment for
one, three, five and ten years would have been $70, $102, $126 and $230, respectively (assuming redemption), and $20,
$62, $106 and $230, respectively (assuming no redemption).
<F4>Other investment companies with different distribution arrangements and fees are investing in the Portfolio and
additional such companies may do so in the future. See "Organization of the Fund and the Portfolio."
</TABLE>
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Statement of Additional Information, all of
which have been so included in reliance upon the report of Coopers & Lybrand
L.L.P., independent accountants, as experts in accounting and auditing, which
report is contained in the Statement of Additional Information. Further
information regarding the performance of the Fund is contained in the Fund's
annual report to shareholders which may be obtained without charge by contacting
the Principal Underwriter.
- --------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
-------------------------
1994 1993<F1>
------ ------
NET ASSET VALUE -- Beginning of period $ 9.9300 $ 10.0000
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income $ 0.6582 $ 0.1266
Net realized and unrealized gain/(loss) on investments (0.8655) (0.0624)
------- -------
Total income/(loss) from investment operations (0.2073) $ 0.0642
------- -------
LESS DISTRIBUTIONS:
From net investment income $(0.6582) $ (0.1266)
In excess of net investment income (0.0745) (0.0076)
------- -------
Total distributions $(0.7327) $ (0.1342)
------- -------
NET ASSET VALUE -- End of period $ 8.9900 $ 9.9300
------- -------
TOTAL RETURN<F3> (2.09)% 0.25%
RATIOS/SUPPLEMENTAL DATA:
Ratio of interest expense to average
daily net assets<F4> 0.60% 0.54%<F2>
Ratio of other expenses to average
daily net assets<F4> 1.83% 2.06%<F2>
Ratio of net investment income to average daily
net assets 6.91% 5.83%<F2>
NET ASSETS AT END OF PERIOD (000's omitted) $ 85,935 $ 20,951
<F1>For the period from the start of business, November 1, 1993, to December 31,
1993.
<F2>Computed on an annualized basis.
<F3>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 to be reinvested
at the net asset value on the payable date.
<F4>Includes the Fund's share of Government Obligations Portfolio's allocated
expenses.
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------
EV MARATHON GOVERNMENT OBLIGATIONS FUND'S INVESTMENT OBJECTIVE IS TO REALIZE A
HIGH CURRENT RETURN. The Fund currently seeks to meet its investment objective
by investing its assets in the Government Obligations Portfolio, a separate
registered investment company which has the same investment objectives and
policies as the Fund. The Fund's and the Portfolio's investment objectives are
nonfundamental and may be changed when authorized by a vote of the Trustees of
the Trust or the Portfolio, respectively, without obtaining the approval of the
Fund's shareholders or the investors in the Portfolio, as the case may be. The
Trustees of the Trust have no present intention to change the Fund's objective
and intend to submit any proposed material change in the investment objective to
shareholders in advance for their approval.
HOW THE FUND AND THE PORTFOLIO INVEST THEIR ASSETS
- ------------------------------------------------------------------------------
IN SEEKING HIGH CURRENT RETURN, THE PORTFOLIO INVESTS IN SECURITIES ISSUED,
GUARANTEED OR OTHERWISE BACKED BY THE U.S. GOVERNMENT, INCLUDING MORTGAGE-BACKED
SECURITIES OF FEDERAL AGENCIES AND FEDERALLY CHARTERED CORPORATIONS, AND ENGAGES
IN ACTIVE MANAGEMENT STRATEGIES, INCLUDING FUTURES TRANSACTIONS AND RELATED
TECHNIQUES PRIMARILY FOR HEDGING PURPOSES. The Portfolio's management believes
that a high current return may be derived from yields on U.S. Government
securities, including market discount accrued on obligations purchased below
their stated redemption value.
U.S. GOVERNMENT SECURITIES. U.S. Government securities include (1) U.S. Treasury
obligations, which differ in their interest rates, maturities and times of
issuance: U.S. Treasury bills (maturities of one year or less), U.S. Treasury
notes (maturities of one to ten years) and U.S. Treasury bonds (generally
maturities of greater than ten years) and (2) obligations issued or guaranteed
by U.S. Government agencies and instrumentalities which are supported by any of
the following: (a) the full faith and credit of the U.S. Treasury, (b) the right
of the issuer to borrow an amount limited to a specific line of credit from the
U.S. Treasury, (c) discretionary authority of the U.S. Government to purchase
certain obligations of the U.S. Government agency or instrumentality or (d) the
credit of the agency or instrumentality. The Portfolio may also invest in any
other security or agreement collateralized or otherwise secured by U.S.
Government securities. Agencies and instrumentalities of the U.S. Government
include but are not limited to: Federal Land Banks, Federal Financing Banks,
Banks for Cooperatives, Federal Intermediate Credit Banks, Farm Credit Banks,
Federal Home Loan Banks, Federal Home Loan Mortgage Corporation ("FHLMC"),
Federal National Mortgage Association ("FNMA"), Government National Mortgage
Association ("GNMA"), Student Loan Marketing Association, United States Postal
Service, Small Business Administration, Tennessee Valley Authority and any other
enterprise established or sponsored by the U.S. Government. Because the U.S.
Government generally is not obligated to provide support to its
instrumentalities, the Portfolio will invest in obligations issued by these
instrumentalities only if the Investment Adviser determines that the credit risk
with respect to such obligations is minimal.
MORTGAGE-BACKED SECURITIES. The Portfolio may invest in mortgage-backed
securities that are either issued by the U.S. Government or one of its agencies
or instrumentalities or, if privately issued, collateralized by mortgages that
are insured, guaranteed or otherwise backed by the U.S. Government, its agencies
or instrumentalities. Mortgage-backed securities represent participation
interests in pools of adjustable and fixed-rate mortgage loans. Unlike
conventional debt obligations, mortgage-backed securities provide monthly
payments derived from the monthly interest and principal payments (including any
prepayments) made by the individual borrowers on the pooled mortgage loans. The
mortgage loans underlying mortgage-backed securities are generally subject to a
greater rate of principal prepayments in a declining interest rate environment
and to a lesser rate of principal prepayments in an increasing interest rate
environment. Under certain interest and prepayment rate scenarios, the Portfolio
may fail to recover the full amount of its investment in mortgage-backed
securities, notwithstanding any direct or indirect governmental or agency
guarantee. Because faster than expected prepayments must usually be invested in
lower yielding securities, mortgage-backed securities are less effective than
conventional bonds in "locking in" a specified interest rate. To mitigate
prepayment risk, the Investment Adviser considers the selection of
mortgage-backed securities that as a group have a history of more stable
prepayment rates relative to interest rate fluctuations. In a rising interest
rate environment, a declining prepayment rate will extend the average life of
many mortgage-backed securities. This possibility is often referred to as
extension risk. Extending the average life of a mortgage-backed security
increases the risk of depreciation due to future increases in market interest
rates. As of December 31, 1994, the Portfolio had approximately 40% of its net
assets invested in FNMA Mortgage-Backed Certificates, approximately 43% of its
net assets invested in Participation Certificates of FHLMC and approximately 8%
of its net assets invested in GNMA Certificates. FNMA guarantees the timely
payment of principal and interest of its Certificates, FHLMC guarantees the
timely payment of interest and ultimate collection of the principal of its
Participation Certificates, and GNMA Certificates are guaranteed by the full
faith and credit of the U.S. Government.
The Portfolio may also invest in classes of collateralized mortgage
obligations ("CMOs") and various other mortgage-backed securities. Senior CMO
classes will typically have priority over residual CMO classes as to the receipt
of principal and/or interest payments on the underlying mortgages. In choosing
among CMO classes, the Investment Adviser will evaluate the total income
potential of each class and other factors. If such obligations or securities are
privately issued they will currently be considered by the Investment Adviser as
possible investments for the Portfolio only when the mortgage collateral is
insured, guaranteed or otherwise backed by the U.S. Government or one or more of
its agencies or instrumentalities. As of December 31, 1994, the Portfolio had
approximately 6% of its net assets invested in CMOs (including one which was
privately issued).
The Portfolio may invest in securities that fluctuate in value with an
index. Such securities generally will either be issued by the U.S. Government or
one of its agencies or instrumentalities or, if privately issued, collateralized
by mortgages that are insured, guaranteed or otherwise backed by the U.S.
Government, its agencies or instrumentalities. The interest rate or, in some
cases, the principal payable at the maturity of an indexed security may change
positively or inversely in relation to one or more interest rates, financial
indices, securities prices or other financial indicators ("reference prices").
An indexed security may be leveraged to the extent that the magnitude of any
change in the interest rate or principal payable on an indexed security is a
multiple of the change in the reference price. Thus, indexed securities may
decline in value due to adverse market changes in reference prices. As of
December 31, 1994, the Portfolio held no such securities. Because
mortgage-backed and indexed securities derive their value from another
instrument, security or index, they are considered derivative debt securities,
and are subject to different combinations of prepayment, extension, interest
rate and/or other market risks.
The Portfolio may enter into contracts to purchase securities for a fixed
price at a future date beyond the customary settlement time if the Portfolio
holds and maintains until the settlement date in a segregated account cash, U.S.
Government securities and liquid high-grade debt obligations in an amount
sufficient to meet the purchase price, or if the Portfolio enters into
offsetting contracts for the forward sale of other securities it owns. Such
contracts are customarily referred to as "forward commitments" and involve a
risk of loss if the value of the security to be purchased declines prior to the
settlement date.
The principal of and/or interest on certain U.S. Government securities which
may be purchased by the Portfolio could be (a) payable in foreign currencies
rather than U.S. dollars or (b) increased or diminished as a result of changes
in the value of the U.S. dollar relative to the value of foreign currencies. The
value of such portfolio securities denominated in foreign currencies may be
affected favorably or unfavorably by changes in the exchange rate between
foreign currencies and the U.S. dollar. In order to limit the risk inherent in
this type of security, it is the current policy of the Portfolio not to purchase
any such security if after such purchase (i) more than 5% of its net assets
(taken at market value) would be invested in securities denominated in foreign
currencies or (ii) more than 2% of its net assets (taken at market value) would
be invested in securities denominated in any one foreign currency.
The Portfolio may from time to time have temporary investments in short-term
debt obligations (including certificates of deposit, bankers' acceptances and
commercial paper) pending the making of other investments or as a reserve to
service redemptions and repurchases of its shares.
ACTIVE MANAGEMENT STRATEGIES
The Portfolio may engage in several active management strategies to enhance
income and reduce investment risk. Each strategy requires the Investment Adviser
to consider special factors.
SECURITIES LENDING. The Portfolio may seek to increase its income by lending
portfolio securities to broker-dealers or other institutional borrowers. During
the existence of a loan, the Portfolio will continue to receive the equivalent
of the interest paid by the issuer on the securities loaned and will also
receive a fee, or all or a portion of the interest on investment of the
collateral, if any. However, the Portfolio may pay lending fees to such
borrowers. As with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the securities loaned if the borrower of the
securities fails financially. However, the loans will be made only to
organizations deemed by the Portfolio's management to be of good standing and
when, in the judgment of the Portfolio's management, the consideration which can
be earned from securities loans of this type justifies the attendant risk. The
financial condition of the borrower will be monitored by the Investment Adviser
on an ongoing basis. The value of the securities loaned will not exceed 30% of
the Portfolio's total assets. During the year ended December 31, 1994, the
Portfolio typically had outstanding approximately $70 million in collateralized
loans with terms of 7 days.
FUTURES CONTRACTS AND OTHER DERIVATIVE INSTRUMENTS. The Portfolio may purchase
or sell derivative instruments (which are instruments that derive their value
from another instrument, security, index or currency) to hedge against
fluctuations in interest rates, securities prices or currency exchange rates, to
change the duration of the Portfolio's fixed income portfolio, as a substitute
for the purchase or sale of securities or currency, or to enhance return. The
Portfolio's transactions in derivative instruments may include the purchase or
sale of futures contracts on securities, (such as U.S. Government securities),
indices, other financial instruments (such as certificates of deposit,
Eurodollar time deposits, and economic indices) or currencies; options on
futures contracts; exchange-traded and over-the-counter ("OTC") options on
securities; indices or currencies; and forward contracts to purchase or sell
currencies. All of the Portfolio's transactions in derivative instruments
involve a risk of loss or depreciation due to unanticipated adverse changes in
interest rates, securities prices or currency exchange rates, the inability to
close out a position or default by the counterparty. The loss on derivative
instruments (other than purchased options) may exceed the Portfolio's initial
investment in these instruments. In addition, the Portfolio may lose the entire
premium paid for purchased options that expire before they can be profitably
exercised by the Portfolio. The Portfolio incurs transaction costs in opening
and closing positions in derivative instruments. There can be no assurance that
the Investment Adviser's use of derivative instruments will be advantageous to
the Portfolio.
The Portfolio's success in using derivative instruments to hedge portfolio
assets depends on the degree of price correlation between the derivative
instrument and the hedged asset. Imperfect correlation may be caused by several
factors, including temporary price disparities among the trading markets for the
derivative instrument, the assets underlying the derivative instrument and the
Portfolio's assets. OTC derivative instruments involve a heightened risk that
the issuer or counterparty will fail to perform its contractual obligations. The
staff of the Securities and Exchange Commission takes the position that
purchased OTC options, assets used as cover for written OTC options, and certain
other derivative instruments (and securities) are subject to the Portfolio's 15%
limit on illiquid investments. The Portfolio's ability to terminate OTC
derivative instruments may depend on the cooperation of the counterparties to
such instruments. For thinly traded derivative securities and contracts, the
only source of price quotations may be the selling dealer or counterparty.
To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC"), in each case
that are not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5% of
the liquidation value of the Portfolio's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Portfolio has
entered into.
SHORT-TERM TRADING. Securities may be sold in anticipation of a market decline
(a rise in interest rates) or purchased in anticipation of a market rise (a
decline in interest rates) and later sold. In addition, a security may be sold
and another purchased at approximately the same time to take advantage of what
the Portfolio believes to be a temporary disparity in the normal yield
relationship between the two securities. Yield disparities may occur for reasons
not directly related to the investment quality of particular issues or the
general movement of interest rates, such as changes in the overall demand for or
supply of various types of fixed-income securities or changes in the investment
objectives of investors.
MORTGAGE ROLLS. The Portfolio may enter into mortgage "dollar rolls" in which
the Portfolio sells mortgage-backed securities for delivery in the current month
and simultaneously contracts to repurchase substantially similar (same type,
coupon and maturity) securities on a specified future date. During the roll
period, the Portfolio forgoes principal and interest paid on the mortgage-backed
securities. The Portfolio is compensated by the difference between the current
sales price and the lower forward price for the future purchase (often referred
to as the "drop") as well as by the interest earned on the cash proceeds of the
initial sale. A "covered roll" is a specific type of dollar roll for which there
is an offsetting cash position or a cash equivalent security position which
matures on or before the forward settlement date of the dollar roll transaction.
The Portfolio will only enter into covered rolls. Covered rolls are not treated
as a borrowing or other senior security and will be excluded from the
calculation of the Portfolio's borrowings and other senior securities.
LEVERAGE THROUGH BORROWING. The Portfolio may borrow from banks to increase its
portfolio holdings of debt securities on which call options may be written and
to acquire U.S. Treasury bills which may be deposited with the Portfolio's
custodian or a broker-dealer in connection with various Portfolio investments.
Such borrowings will be unsecured. The Investment Company Act of 1940 requires
the Portfolio to maintain continuous asset coverage of not less than 300% with
respect to such borrowings. This allows the Portfolio to borrow for such
purposes an amount (when taken together with any borrowings for temporary
extraordinary or emergency purposes as described below) equal to as much as 50%
of the value of its net assets (not including such borrowings). If such asset
coverage should decline to less than 300% due to market fluctuations or other
reasons, the Portfolio may be required to sell some of its portfolio holdings
within three days in order to reduce the Portfolio's debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time. Leveraging will exaggerate any
increase or decrease in the net asset value of the securities held by Portfolio,
and in that respect may be considered a speculative practice. Money borrowed for
leveraging will be subject to interest costs which may or may not exceed the
option premiums and interest received from the securities purchased. The
Portfolio may also be required to maintain minimum average balances in
connection with such borrowings or to pay a commitment or other fee to maintain
a line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements with
respect to U.S. Government securities. Under a repurchase agreement, the seller
agrees to repurchase such securities at the Portfolio's cost plus interest
within a specified time (normally one day). While repurchase agreements involve
certain risks not associated with direct investments in U.S. Government
securities, the Portfolio follows procedures designed to moderate such risks.
These procedures include effecting repurchase transactions only with large,
well-capitalized banks. In addition, the Portfolio's repurchase agreements will
provide that the value of the collateral underlying the repurchase agreements
will always be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement. In the event of a default or
bankruptcy by a selling bank, the Portfolio will seek to liquidate such
collateral. However, the exercise of the Portfolio's right to liquidate such
collateral would involve certain costs or delays and, to the extent that
proceeds from any sale upon a default of the obligation to repurchase are less
than the repurchase price, the Portfolio could suffer a loss.
ADDITIONAL INVESTMENT INFORMATION
The Portfolio expects that various new types of investments, hedging techniques
and management strategies will be developed and made available to institutional
investors in the future. The Investment Adviser will consider making such
investments or adopting such techniques or strategies if it determines that they
are consistent with the Portfolio's investment objective and policies. Of
course, the total mix of the Portfolio's investments can change daily.
FLUCTUATIONS IN VALUE. Because interest yields on U.S. Government and other
securities and opportunities to realize additional income and net gains from
active management strategies will vary from time to time because of general
economic and market conditions and many other factors, the Fund's current return
will fluctuate, and there can be no assurance that the Fund's objective will be
achieved. As a result of their high credit quality and market liquidity, U.S.
Government securities generally provide a lower current return than obligations
of other issuers. As with other debt securities, the value of U.S. Government
securities changes as interest rates fluctuate. Fluctuations in the value of
securities held by the Portfolio will not affect interest income on existing
portfolio securities but will be reflected in the Fund's net asset value. Thus,
a decrease in interest rates will generally result in an increase in the value
of Fund shares. Conversely, during periods of rising interest rates, the value
of Fund shares will generally decline. The magnitude of these fluctuations will
generally be greater at times when the Portfolio's average maturity is longer.
In addition, as set forth above, the derivative securities the Portfolio may
hold may magnify those risks and pose additional risks. Active management
techniques, if successful, may only partly offset these risks. Shares of the
Fund are not government guaranteed.
INVESTMENT RESTRICTIONS. The Fund and the Portfolio have adopted certain
fundamental investment restrictions which are enumerated in detail in the
Statement of Additional Information and which may not be changed unless
authorized by a shareholder vote and an investor vote, respectively. These
restrictions are designed to reduce investment risk. Except for such enumerated
restrictions, the investment objective and policies of the Fund and the
Portfolio are not fundamental policies, and accordingly may be changed by the
Trustees of the Trust and the Portfolio without obtaining the approval of the
Fund's shareholders or the investors in the Portfolio, as the case may be. If
any changes were made in the Fund's investment objective, the Fund might have an
investment objective different from the objective which an investor considered
appropriate at the time the investor became a shareholder of the Fund.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GOVERNMENT OBLIGATIONS TRUST, A
BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF
TRUST DATED MAY 7, 1984, AS AMENDED AND RESTATED. THE TRUST IS A MUTUAL FUND -
AN OPEN-END MANAGEMENT INVESTMENT COMPANY. The Trustees of the Trust are
responsible for the overall management and supervision of its affairs. The Trust
may issue an unlimited number of shares of beneficial interest (no par value per
share) in one or more series and because the Trust can offer separate series
(such as the Fund) it is known as a "series company." Each share represents an
equal proportionate beneficial interest in the Fund. When issued and
outstanding, the shares are fully paid and nonassessable by the Trust and
redeemable as described under "How to Redeem Fund Shares". Shareholders are
entitled to one vote for each full share held. Fractional shares may be voted
proportionately. Shares have no preemptive or conversion rights and are freely
transferable. In the event of the liquidation of the Fund, shareholders are
entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.
THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW YORK
AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. The
Portfolio, as well as the Trust, intends to comply with all applicable Federal
and state securities laws. The Portfolio's Declaration of Trust provides that
the Fund and other entities permitted to invest in the Portfolio (e.g., other
U.S. and foreign investment companies, and common and commingled trust funds)
will each be liable for all obligations of the Portfolio. However, the risk of
the Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio itself
is unable to meet its obligations. Accordingly, the Trustees of the Trust
believe that neither the Fund nor its shareholders will be adversely affected by
reason of the Fund investing in the Portfolio.
SPECIAL INFORMATION ON THE FUND/PORTFOLIO INVESTMENT STRUCTURE. An investor in
the Fund should be aware that the Fund, unlike mutual funds which directly
acquire and manage their own portfolios of securities, seeks to achieve its
investment objective by investing its assets in an interest in the Portfolio
(although the Fund may temporarily hold a de minimus amount of cash), which is a
separate investment company with an identical investment objective. Therefore,
the Fund's interest in the securities owned by the Portfolio is indirect. In
addition to selling an interest to the Fund, the Portfolio may sell interests to
other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, investors in the Fund
should be aware that these differences may result in differences in returns
experienced by investors in the various funds that invest in the Portfolio. Such
differences in returns are also present in other mutual fund structures,
including funds that have multiple classes of shares. For information regarding
the investment objective, policies and restrictions, see "The Fund's Investment
Objective" and "How the Fund and the Portfolio Invest their Assets". Further
information regarding investment practices may be found in the Statement of
Additional Information.
The Trustees of the Trust have considered the advantages and disadvantages
of investing the assets of the Fund in the Portfolio, as well as the advantages
and disadvantages of the two-tier format. The Trustees believe that the
structure offers opportunities for substantial growth in the assets of the
Portfolio, and affords the potential for economies of scale for the Fund, at
least when the assets of the Portfolio exceed $500 million.
The Fund may withdraw (completely redeem) all its assets from the Portfolio
at any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. The investment objective and the
nonfundamental investment policies of the Fund and the Portfolio may be changed
by the Trustees of the Trust and the Portfolio without obtaining the approval of
the shareholders of the Fund or the investors in the Portfolio, as the case may
be. Any such change of the investment objective of the Fund or the Portfolio
will be preceded by thirty days' advance written notice to the shareholders of
the Fund or the investors in the Portfolio, as the case may be. If a shareholder
redeems shares because of a change in the nonfundamental objective or policies
of the Fund, those shares may be subject to a contingent deferred sales charge,
as described in "How to Redeem Fund Shares". In the event the Fund withdraws all
of its assets from the Portfolio, or the Board of Trustees of the Trust
determines that the investment objective of the Portfolio is no longer
consistent with the investment objective of the Fund, the Board of Trustees of
the Trust would consider what action might be taken, including investing the
assets of the Fund in another pooled investment entity or retaining an
investment adviser to manage the Fund's assets in accordance with its investment
objective. The Fund's investment performance may be affected by a withdrawal of
all its assets from the Portfolio.
Information regarding other pooled investment entities or funds which invest
in the Portfolio may be obtained by contacting Eaton Vance Distributors, Inc.
(the "Principal Underwriter" or "EVD"), 24 Federal Street, Boston, MA 02110,
(617) 482-8260. Smaller investors in the Portfolio may be adversely affected by
the actions of larger investors in the Portfolio. For example, if a large
investor withdraws from the Portfolio, the remaining investors may experience
higher pro rata operating expenses, thereby producing lower returns.
Additionally, the Portfolio may become less diverse, resulting in increased
portfolio risk, and experience decreasing economies of scale. However, this
possibility exists as well for historically structured funds which have large or
institutional investors.
Until recently, the Administrator sponsored and advised historically
structured funds. Funds which invest all their assets in interests in a separate
investment company are a relatively new development in the mutual fund industry
and, therefore, the Fund may be subject to additional regulations than
historically structured funds.
The Declaration of Trust of the Portfolio provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for Federal income tax purposes. See
"Distributions and Taxes" for further information. Whenever the Fund as an
investor in the Portfolio is requested to vote on matters pertaining to the
Portfolio (other than the termination of the Portfolio's business, which may be
determined by the Trustees of the Portfolio without investor approval), the Fund
will hold a meeting of Fund shareholders and will vote its interest in the
Portfolio for or against such matters proportionately to the instructions to
vote for or against such matters received from Fund shareholders. The Fund shall
vote shares for which it receives no voting instructions in the same proportion
as the shares for which it receives voting instructions. Other investors in the
Portfolio may alone or collectively acquire sufficient voting interests in the
Portfolio to control matters relating to the operation of the Portfolio, which
may require the Fund to withdraw its investment in the Portfolio or take other
appropriate action. Any such withdrawal could result in a distribution "in kind"
of portfolio securities (as opposed to a cash distribution from the Portfolio).
If securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Trustees of the Trust, including a majority of the noninterested
Trustees, have approved written procedures designed to identify and address any
potential conflicts of interest arising from the fact that the Trustees of the
Trust and the Trustees of the Portfolio are the same. Such procedures require
each Board to take actions to resolve any conflict of interest between the Fund
and the Portfolio, and it is possible that the creation of separate Boards may
be considered. For further information concerning the Trustees and officers of
the Trust and the Portfolio, see the Statement of Additional Information.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
THE PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED
SUBSIDIARY OF EATON VANCE MANAGEMENT ("EATON VANCE"), AS ITS INVESTMENT ADVISER.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of the
Portfolio, BMR manages the Portfolio's investments and affairs. Under its
investment advisory agreement with the Portfolio, BMR receives a monthly
advisory fee of .0625% (equivalent to .75% annually) of the average daily net
assets of the Portfolio up to $500 million. On net assets of $500 million and
over the annual fee is reduced as follows:
ANNUALIZED FEE RATE
AVERAGE DAILY NET ASSETS FOR THE MONTH (FOR EACH LEVEL)
- ------------------------------------- ---------------
$500 million but less than $1 billion ................... 0.6875%
$1 billion but less than $1.5 billion ................... 0.6250%
$1.5 billion but less than $2 billion ................... 0.5625%
$2 billion but less than $3 billion ..................... 0.5000%
$3 billion and over ..................................... 0.4375%
As at December 31, 1994, the Portfolio had net assets of $515,669,513. For
the fiscal year ended December 31, 1994, the Portfolio paid BMR advisory fees
equivalent to .74% of the Portfolio's average daily net assets for such year.
BMR furnishes for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the investments of the
Portfolio. BMR also places the portfolio transactions of the Portfolio with many
broker-dealer firms and uses its best efforts to obtain execution of such
transactions at prices which are advantageous to the Portfolio and at reasonably
competitive commission rates. Subject to the foregoing, BMR may consider sales
of shares of the Fund or of other investment companies sponsored by BMR or Eaton
Vance as a factor in the selection of broker-dealer firms to execute portfolio
transactions.
Susan Schiff has acted as the portfolio manager of the Portfolio since it
commenced operations. She has been a Vice President of Eaton Vance and of BMR
since 1993.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
APPROXIMATELY $15 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton
Vance Corp., a publicly held holding company. Eaton Vance Corp., through its
subsidiaries and affiliates, engages in investment management and marketing
activities, fiduciary and banking services, oil and gas operations, real estate
investment, consulting and management, and development of precious metals
properties.
The Trust has retained the services of Eaton Vance to act as Administrator
of the Fund. The Trust has not retained the services of an investment adviser
since the Trust seeks to achieve the investment objective of the Fund by
investing the Fund's assets in the Portfolio. As Administrator, Eaton Vance
provides the Fund with general office facilities and supervises the overall
administration of the Fund. For these services Eaton Vance currently receives no
compensation. The Trustees of the Trust may determine, in the future, to
compensate Eaton Vance for such services.
The Portfolio and the Fund, as the case may be, will each be responsible for
all of its respective costs and expenses not expressly stated to be payable by
BMR under the investment advisory agreement, by Eaton Vance under the
administrative services agreement, or by EVD under the distribution agreement.
DISTRIBUTION PLAN
- --------------------------------------------------------------------------------
THE FUND FINANCES DISTRIBUTION ACTIVITIES AND HAS ADOPTED A DISTRIBUTION PLAN
(THE "PLAN") PURSUANT TO RULE 12B-1 UNDER THE INVESTMENT COMPANY ACT OF 1940.
Rule 12b-1 permits a mutual fund, such as the Fund, to finance distribution
activities and bear expenses associated with the distribution of its shares
provided that any payments made by the Fund are made pursuant to a written plan
adopted in accordance with the Rule. The Plan is subject to, and complies with,
the sales charge rule of the National Association of Securities Dealers, Inc.
(the "NASD Rule"). The Plan is described further in the Statement of Additional
Information, and the following is a description of the salient features of the
Plan. The Plan provides that the Fund, subject to the NASD Rule, will pay sales
commissions and distribution fees to the Principal Underwriter only after and as
a result of the sale of shares of the Fund. On each sale of Fund shares
(excluding reinvestment of distributions) the Fund will pay the Principal
Underwriter amounts representing (i) sales commissions equal to 5% of the amount
received by the Fund for each share sold and (ii) distribution fees calculated
by applying the rate of 1% over the prime rate then reported in The Wall Street
Journal to the outstanding balance of Uncovered Distribution Charges (as
described below) of the Principal Underwriter. The Principal Underwriter
currently expects to pay sales commissions (except on exchange transactions and
reinvestments) to a financial service firm (an "Authorized Firm") at the time of
sale equal to 4% of the purchase price of the shares sold by such Firm. The
Principal Underwriter will use its own funds (which may be borrowed from banks)
to pay such commissions. Because the payment of the sales commissions and
distribution fees to the Principal Underwriter is subject to the NASD Rule
described below, it will take the Principal Underwriter a number of years to
recoup the sales commissions paid by it to Authorized Firms from the payments
received by it from the Fund pursuant to the Plan.
THE NASD RULE REQUIRES THE FUND TO LIMIT ITS ANNUAL PAYMENTS OF SALES
COMMISSIONS AND DISTRIBUTION FEES TO THE PRINCIPAL UNDERWRITER TO AN AMOUNT NOT
EXCEEDING .75% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR.
Under its Plan, the Fund accrues daily an amount at the rate of 1/365 of .75% of
the Fund's net assets, and pays such accrued amounts monthly to the Principal
Underwriter. The Plan requires such accruals to be automatically discontinued
during any period in which there are no outstanding Uncovered Distribution
Charges under the Plan. Uncovered Distribution Charges are calculated daily and,
briefly, are equivalent to all unpaid sales commissions and distribution fees to
which the Principal Underwriter is entitled under the Plan less all contingent
deferred sales charges theretofore paid to the Principal Underwriter. The Eaton
Vance organization may be considered to have realized a profit under the Plan if
at any point in time the aggregate amounts of all payments received by the
Principal Underwriter from the Fund pursuant to the Plan, including any
contingent deferred sales charges, have exceeded the total expenses theretofore
incurred by such organization in distributing shares of the Fund. Total expenses
for this purpose will include an allocable portion of the overhead costs of such
organization and its branch offices.
Because of the NASD Rule limitation on the amount of sales commissions and
distribution fees paid to the Principal Underwriter during any fiscal year, a
high level of sales of Fund shares during the initial years of the Fund's
operations would cause a large portion of the sales commission attributable to a
sale of Fund shares to be accrued and paid by the Fund to the Principal
Underwriter in fiscal years subsequent to the year in which such shares were
sold. This spreading of sales commissions payments under the Plan over an
extended period would result in the incurrence and payment of increased
distribution fees under the Plan. For the fiscal year ended December 31, 1994,
the Fund paid sales commissions under the Plan to the Principal Underwriter
equivalent to .75% of the Fund's average daily net assets for such year. As at
December 31, 1994, the outstanding Uncovered Distribution Charges of the
Principal Underwriter calculated under the Plan amounted to approximatley
$3,980,000 (which amount was equivalent to 4.6% of the Fund's net assets on such
day).
THE PLAN ALSO AUTHORIZES THE FUND TO MAKE PAYMENTS OF SERVICE FEES TO THE
PRINCIPAL UNDERWRITER, AUTHORIZED FIRMS AND OTHER PERSONS IN AMOUNTS NOT
EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET ASSETS FOR EACH FISCAL YEAR. The
Trustees of the Trust have initially implemented the Plan by authorizing the
Fund to make quarterly payments of service fees to the Principal Underwriter and
Authorized Firms in amounts not expected to exceed .25% of the Fund's average
daily net assets for any fiscal year based on the value of Fund shares sold by
such persons and remaining outstanding for at least twelve months. As permitted
by the NASD Rule, such payments are made for personal services and/or the
maintenance of shareholder accounts. Service fees are separate and distinct from
the sales commissions and distribution fees payable by the Fund to the Principal
Underwriter, and as such are not subject to automatic discontinuance when there
are no outstanding Uncovered Distribution Charges of the Principal Underwriter.
For the fiscal year ended December 31, 1994, the Fund accrued service fee
payments under the Plan, but did not make any service fee payments to the
Principal Underwriter.
The Principal Underwriter may, from time to time, at its own expense,
provide additional incentives to Authorized Firms which employ registered
representatives who sell a minimum dollar amount of the Fund's shares and/or
shares of other funds distributed by the Principal Underwriter. In some
instances, such additional incentives may be offered only to certain Authorized
Firms whose representatives are expected to sell significant amounts of shares.
In addition, the Principal Underwriter may from time to time increase or
decrease the sales commissions payable to Authorized Firms.
The Fund may, in its absolute discretion, suspend, discontinue or limit the
offering of its shares at any time. In determining whether any such action
should be taken, the Fund's management intends to consider all relevant factors,
including without limitation the size of the Fund, the investment climate and
market conditions, the volume of sales and redemptions of Fund shares, and the
amount of Uncovered Distribution Charges of the Principal Underwriter. The Plan
may continue in effect and payments may be made under the Plan following any
such suspension, discontinuance or limitation of the offering of Fund shares;
however, the Fund is not contractually obligated to continue the Plan for any
particular period of time. Suspension of the offering of Fund shares would not,
of course, affect a shareholder's ability to redeem shares.
VALUING FUND SHARES
- ------------------------------------------------------------------------------
THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by IBT Fund Services (Canada) Inc., a subsidiary of
Investors Bank & Trust Company ("IBT"), the Fund's and the Portfolio's
custodian, (as agent for the Fund), in the manner authorized by the Trustees of
the Trust. Net asset value is computed by dividing the value of the Fund's total
assets, less its liabilities, by the number of shares outstanding. Because the
Fund invests its assets in an interest in the Portfolio, the Fund's net asset
value will reflect the value of its interest in the Portfolio (which in turn,
reflects the underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per Fund share. It is the Authorized Firms'
responsibility to transmit orders promptly to the Principal Underwriter, which
is a wholly-owned subsidiary of Eaton Vance.
The Portfolio's net asset value is also determined as of the close of
regular trading on the Exchange by IBT Fund Services (Canada) Inc. (as agent for
the Portfolio) in the manner authorized by the Trustees of the Portfolio. Net
asset value is computed by subtracting the liabilities of the Portfolio from the
value of its total assets. Mortgage-backed "pass-through" securities are valued
through use of a matrix pricing system which takes into account closing bond
valuations, yield differentials, anticipated prepayments and interest rates. For
further information regarding the valuation of the Portfolio's assets, see
"Determination of Net Asset Value" in the Statement of Additional Information.
Eaton Vance Corp. owns 77.3% of the outstanding stock of IBT, the Fund's and the
Portfolio's custodian.
- --------------------------------------------------------------------------------
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
- --------------------------------------------------------------------------------
HOW TO BUY FUND SHARES
- ------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR MAY BE ACQUIRED IN EXCHANGE FOR
SECURITIES. Investors may purchase shares of the Fund through Authorized Firms
at the net asset value per share of the Fund next determined after an order is
effective. The Fund may suspend the offering of shares at any time and may
refuse any order for the purchase of shares.
An initial investment in the Fund must be at least $1,000. Once an account
has been established the investor may send investments of $50 or more at any
time directly to the Fund's Transfer Agent (the "Transfer Agent") as follows:
The Shareholder Services Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104.
The $1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services".
In connection with employee benefit or other continuous group purchase plans
under which the average initial purchase by a participant of the plan is $1,000
or more, the Fund may accept initial investments of less than $1,000 on the part
of an individual participant. In the event a shareholder who is a participant of
such a plan terminates participation in the plan, his or her shares will be
transferred to a regular individual account. However, such account will be
subject to the right of redemption by the Fund as described under "How to Redeem
Fund Shares."
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Administrator, in exchange for
Fund shares at their net asset value as determined above. The minimum value of
securities (or securities and cash) accepted for deposit is $5,000. Securities
accepted will be sold by IBT as agent for the account of their owner on the day
of their receipt by IBT or as soon thereafter as possible. The number of Fund
shares to be issued in exchange for securities will be the aggregate proceeds
from the sale of such securities, divided by the applicable net asset value per
Fund share on the day such proceeds are received. Eaton Vance will use
reasonable efforts to obtain the then current market price for such securities
but does not guarantee the best available price. Eaton Vance will absorb any
transaction costs, such as commissions, on the sale of the securities.
Securities determined to be acceptable should be transferred via book entry
or physically delivered, in proper form for transfer, through an Authorized
Firm, together with a completed and signed Letter of Transmittal in approved
form (available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Marathon Government Obligations Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Marathon Government Obligations Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities to IBT. Eaton
Vance reserves the right to reject any securities. Exchanging securities for
Fund shares may create a taxable gain or loss. Each investor should consult his
or her tax adviser with respect to the particular Federal, state and local tax
consequences of exchanging securities for Fund shares.
- --------------------------------------------------------------------------------
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
- --------------------------------------------------------------------------------
HOW TO REDEEM FUND SHARES
- ------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM FUND SHARES BY DELIVERING TO THE SHAREHOLDER SERVICES
GROUP, INC., BOS725, P.O. BOX 1559, BOSTON, MASSACHUSETTS 02104, during its
business hours a written request for redemption in good order, plus any share
certificates with executed stock powers. The redemption price will be based on
the net asset value per Fund share next computed after such delivery. Good order
means that all relevant documents must be endorsed by the record owner (s)
exactly as the shares are registered and the signature(s) must be guaranteed by
a member of either the Securities Transfer Association's STAMP program or the
New York Stock Exchange's Medallion Signature Program, or certain banks, savings
and loan institutions, credit unions, securities dealers, securities exchanges,
clearing agencies and registered securities associations as required by a
regulation of the Securities and Exchange Commission and acceptable to The
Shareholder Services Group, Inc. In addition, in some cases, good order may
require the furnishing of additional documents such as where shares are
registered in the name of a corporation, partnership or fiduciary.
Within seven days after receipt of a redemption request in good order by The
Shareholder Services Group, Inc., the Fund will make payment in cash for the net
asset value of the shares as of the date determined above, reduced by the amount
of any applicable contingent deferred sales charges (described below) and any
Federal income tax required to be withheld. Although the Fund normally expects
to make payment in cash for redeemed shares, the Trust, subject to compliance
with applicable regulations, has reserved the right to pay the redemption price
of shares of the Fund, either totally or partially, by a distribution in kind of
readily marketable securities withdrawn by the Fund from the Portfolio. The
securities so distributed would be valued pursuant to the Portfolio's valuation
procedures. If a shareholder received a distribution in kind, the shareholder
could incur brokerage or other charges in converting the securities to cash.
To sell shares at their net asset value through an Authorized Firm (a
repurchase), a shareholder can place a repurchase order with the Authorized
Firm, which may charge a fee. The value of such shares is based upon the net
asset value calculated after EVD, as the Fund's agent, receives the order. It is
the Authorized Firm's responsibility to transmit promptly repurchase orders to
EVD. Throughout this Prospectus, the word "redemption" is generally meant to
include a repurchase.
If shares were recently purchased, the proceeds of a redemption (or
repurchase) will not be sent until the check (including a certified or cashier's
check) received for the shares purchased has cleared. Payment for shares
tendered for redemption may be delayed up to 15 days from the purchase date when
the purchase check has not yet cleared. Redemptions or repurchases may result in
a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem accounts with balances of less than $1,000. Prior to such a
redemption, shareholders will be given 60 days' written notice to make
additional purchases. Thus, an investor making an initial investment of $1,000
would not be able to redeem shares without being subject to this policy.
However, no such redemption would be required by the Fund if the cause of the
low account balance was a reduction in the net asset value of Fund shares. No
contingent deferred sales charge will be imposed with respect to such
involuntary redemptions.
CONTINGENT DEFERRED SALES CHARGE. Shares redeemed within the first six years of
their purchase (except shares acquired through the reinvestment of
distributions) generally will be subject to a contingent deferred sales charge.
This contingent deferred sales charge is imposed on any redemption the amount of
which exceeds the aggregate value at the time of redemption of (a) all shares in
the account purchased more than six years prior to the redemption, (b) all
shares in the account acquired through reinvestment of distributions, and (c)
the increase, if any, of value of all other shares in the account (namely those
purchased within the six years preceding the redemption) over the purchase price
of such shares. Redemptions are processed in a manner to maximize the amount of
redemption proceeds which will not be subject to a contingent deferred sales
charge. That is, each redemption will be assumed to have been made first from
the exempt amounts referred to in clauses (a), (b) and (c) above, and second
through liquidation of those shares in the account referred to in clause (c) on
a first-in-first-out basis. Any contingent deferred sales charge which is
required to be imposed on share redemptions will be made in accordance with the
following schedule:
YEAR OF CONTINGENT
REDEMPTION DEFERRED SALES
AFTER PURCHASE CHARGE
-------------- ---------------
First ............................................. 5%
Second ............................................ 5%
Third ............................................. 4%
Fourth ............................................ 3%
Fifth ............................................. 2%
Sixth ............................................. 1%
Seventh and following ............................. 0%
For shares purchased prior to August 1, 1994, the contingent deferred sales
charge for redemptions within the first year after purchase is 6%. In
calculating the contingent deferred sales charge upon the redemption of Fund
shares acquired in an exchange for shares of a fund currently listed under "The
Eaton Vance Exchange Privilege", the contingent deferred sales charge schedule
applicable to the shares at the time of purchase will apply and the purchase of
Fund shares acquired in the exchange is deemed to have occurred at the time of
the original purchase of the exchanged shares. The contingent deferred sales
charge will be waived for shares redeemed (1) pursuant to a Withdrawal Plan (see
"Eaton Vance Shareholders Services"), (2) as part of a required distribution
from a tax-sheltered retirement plan, or (3) following the death of all
beneficial owners of such shares, provided the redemption is requested within
one year of death (a death certificate and other applicable documents may be
required).
No contingent deferred sales charge will be imposed on Fund shares which
have been sold to Eaton Vance or its affiliates, or to their respective
employees or clients. The contingent deferred sales charge will be paid to the
Principal Underwriter or the Fund.
- --------------------------------------------------------------------------------
THE FOLLOWING EXAMPLE ILLUSTRATES THE OPERATION OF THE CONTINGENT DEFERRED SALES
CHARGE. ASSUME THAT AN INVESTOR PURCHASES $10,000 OF THE FUND'S SHARES AND THAT
16 MONTHS LATER THE VALUE OF THE ACCOUNT HAS GROWN THROUGH INVESTMENT
PERFORMANCE AND REINVESTMENT OF DISTRIBUTIONS TO $12,000. THE INVESTOR THEN MAY
REDEEM UP TO $2,000 OF SHARES WITHOUT INCURRING A CONTINGENT DEFERRED SALES
CHARGE. IF THE INVESTOR SHOULD REDEEM $3,000 OF SHARES, A CONTINGENT DEFERRED
SALES CHARGE WOULD BE IMPOSED ON $1,000 OF THE REDEMPTION. THE RATE WOULD BE 5%
BECAUSE THE REDEMPTION WAS MADE IN THE SECOND YEAR AFTER THE PURCHASE WAS MADE
AND THE CHARGE WOULD BE $50.
- --------------------------------------------------------------------------------
REPORTS TO SHAREHOLDERS
- ------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent accountants. Shortly after the end of each
calendar year, the Fund will furnish all shareholders with information necessary
for preparing Federal and state tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- ------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE FUND'S TRANSFER
AGENT, THE SHAREHOLDER SERVICES GROUP, INC., WILL SET UP A LIFETIME INVESTING
ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS. This account is a complete
record of all transactions between the investor and the Fund which at all times
shows the balance of shares owned. The Fund will not issue share certificates
except upon request.
At least quarterly shareholders will receive a statement showing complete
details of any transaction and the current balance in the account. THE LIFETIME
INVESTING ACCOUNT ALSO PERMITS A SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN
SHARES BY SENDING A CHECK FOR $50 OR MORE to The Shareholder Services Group,
Inc.
Any questions concerning a shareholder's account or services available may
be directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to The Shareholder Services Group, Inc., BOS725, P.O.
Box 1559, Boston, MA 02104 (please provide the name of the shareholder, the Fund
and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME
INVESTING ACCOUNTS and may be changed as often as desired by written notice to
the Fund's dividend disbursing agent, The Shareholder Services Group, Inc.,
BOS725, P.O. Box 1559, Boston, MA 02104. The currently effective option will
appear on each account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under Federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or
capital gains distribution checks which are returned by the United States Postal
Service as not deliverable or which remain uncashed for six months or more will
be reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the Share Option until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares of the Fund are held in a "street name"
account with an Authorized Firm, all recordkeeping, transaction processing and
payments of distributions relating to the beneficial owner's account will be
performed by the Authorized Firm, and not by the Fund and its Transfer Agent.
Since the Fund will have no record of the beneficial owner's transactions, a
beneficial owner should contact the Authorized Firm to purchase, redeem or
exchange shares, to make changes in or give instructions concerning the account,
or to obtain information about the account. The transfer of shares in a "street
name" account to an account with another dealer or to an account directly with a
Fund involves special procedures and will require the beneficial owner to obtain
historical purchase information about the shares in the account from the
Authorized Firm. Before establishing a "street name" account with an investment
firm, or transferring the account to another investment firm, an investor
wishing to reinvest distributions should determine whether the firm which will
hold the shares allows reinvestment of distributions in "street name" accounts.
- -------------------------------------------------------------------------------
UNDER A LIFETIME INVESTING ACCOUNT A SHAREHOLDER CAN MAKE ADDITIONAL INVESTMENTS
IN SHARES BY SENDING A CHECK FOR $50 OR MORE.
- --------------------------------------------------------------------------------
THE EATON VANCE EXCHANGE PRIVILEGE
- ------------------------------------------------------------------------------
Shares of the Fund currently may be exchanged for shares of one or more other
funds in the Eaton Vance Marathon Group of Funds (which includes Eaton Vance
Equity-Income Trust and any EV Marathon fund, except Eaton Vance Prime Rate
Reserves) or Eaton Vance Money Market Fund, which are distributed with a
contingent deferred sales charge, on the basis of the net asset value per share
of each fund at the time of the exchange, provided that such exchange offers are
available only in states where shares of the fund being acquired may be legally
sold.
Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Fund does not permit the
exchange privilege to be used for "Market Timing" and may terminate the exchange
privilege for any shareholder account engaged in Market Timing activity. Any
shareholder account for which more than two round-trip exchanges are made within
any twelve month period will be deemed to be engaged in Market Timing.
Furthermore, a group of unrelated accounts for which exchanges are entered
contemporaneously by a financial intermediary will be considered to be engaged
in Market Timing.
The Shareholder Services Group, Inc. makes exchanges at the next determined
net asset value after receiving an exchange request in good order (see "How to
Redeem Fund Shares"). Consult The Shareholder Services Group, Inc. for
additional information concerning the exchange privilege. Applications and
prospectuses of other funds are available from Authorized Firms or the Principal
Underwriter. The prospectus for each fund describes its investment objectives
and policies, and shareholders should obtain a prospectus and consider these
objectives and policies carefully before requesting an exchange.
No contingent deferred sales charge is imposed on exchanges. For purposes of
calculating the contingent deferred sales charge upon the redemption of shares
acquired in an exchange, the contingent deferred sales charge schedule
applicable to the shares at the time of purchase will apply and the purchase of
shares acquired in one or more exchanges is deemed to have occurred at the time
of the original purchase of the exchanged shares. For the contingent deferred
sales charge schedule applicable to the Eaton Vance Marathon Group of Funds
(except EV Marathon Strategic Income Fund and Class I shares of any EV Marathon
Limited Maturity Fund), see "How to Redeem Fund Shares". The contingent deferred
sales charge schedule applicable to EV Marathon Strategic Income Fund and Class
I shares of any EV Marathon Limited Maturity Fund is 3%, 2.5%, 2% or 1% in the
event of a redemption occurring in the first, second, third or fourth year,
respectively, after the original share purchase.
Shares of the other funds in the Eaton Vance Marathon Group of Funds and
shares of Eaton Vance Money Market Fund may be exchanged for Fund shares on the
basis of the net asset value per share of each fund at the time of the exchange,
but subject to any restrictions or qualifications set forth in the current
prospectus of any such fund.
Telephone exchanges are accepted by The Shareholder Services Group, Inc.
provided that the investor has not disclaimed in writing the use of the
privilege. To effect such exchanges, call The Shareholder Services Group, Inc.
at 800-262-1122 or, within Massachusetts, 617-573-9403, Monday through Friday,
9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone
exchange must be registered in the same name(s) and with the same address as the
shares being exchanged. Neither the Fund, the Principal Underwriter nor The
Shareholder Services Group, Inc. will be responsible for the authenticity of
exchange instructions received by telephone, provided that reasonable procedures
to confirm that instructions communicated are genuine have been followed.
Telephone instructions will be tape recorded. In times of drastic economic or
market changes, a telephone exchange may be difficult to implement. An exchange
may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of EV
Marathon Government Obligations Fund may be mailed directly to The Shareholder
Services Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104 at any time --
whether or not distributions are reinvested. The name of the shareholder, the
Fund and the account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from the
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks in an aggregate amount that does not exceed annually
12% of the account balance at the time the plan is established. Such amount will
not be subject to a contingent deferred sales charge. See "How to Redeem Fund
Shares". A minimum deposit of $5,000 in shares is required.
REINVESTMENT PRIVILEGE: A SHAREHOLDER WHO HAS REPURCHASED OR REDEEMED SHARES MAY
REINVEST, WITH CREDIT FOR ANY CONTINGENT DEFERRED SALES CHARGES PAID ON THE
REPURCHASED OR REDEEMED SHARES, ANY PORTION OR ALL OF THE REPURCHASE OR
REDEMPTION PROCEEDS (PLUS THAT AMOUNT NECESSARY TO ACQUIRE A FRACTIONAL SHARE TO
ROUND OFF THE PURCHASE TO THE NEAREST FULL SHARE) IN SHARES OF THE FUND,
provided that the reinvestment is effected within 30 days after such repurchase
or redemption. Shares are sold to a reinvesting shareholder at the next
determined net asset value following timely receipt of a written purchase order
by the Principal Underwriter or by the Fund (or by the Fund's Transfer Agent).
To the extent that any shares of the Fund are sold at a loss and the proceeds
are reinvested in shares of the Fund (or other shares of the Fund are acquired
within the period beginning 30 days before and ending 30 days after the date of
the redemption) some or all of the loss generally will not be allowed as a tax
deduction. Shareholders should consult their tax advisers concerning the tax
consequences of reinvestments.
TAX-SHELTERED RETIREMENT PLANS: Shares of the Fund are available for purchase
in connection with the following tax-sheltered retirement plans:
--Pension and Profit Sharing Plans for self-employed individuals,
corporations and non-profit organizations;
--Individual Retirement Account Plans for individuals and their non-
employed spouses; and
--403(b) Retirement Plans for employees of public school systems, hospitals,
colleges and non-profit organizations meeting certain requirements of the
Code.
Detailed information concerning these plans, including certain exceptions to
minimum investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
Federal income tax consequences of establishing a plan. Under all plans,
dividends and distributions will be automatically reinvested in additional
shares.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
SUBSTANTIALLY ALL OF THE INVESTMENT INCOME ALLOCATED TO THE FUND BY THE
PORTFOLIO, LESS THE FUND'S DIRECT AND ALLOCATED EXPENSES, WILL BE DECLARED DAILY
AS A DISTRIBUTION TO FUND SHAREHOLDERS OF RECORD AT THE TIME OF DECLARATION AND
WILL GENERALLY BE TAXABLE TO SHAREHOLDERS AS ORDINARY INCOME, WHETHER TAKEN IN
CASH OR REINVESTED IN ADDITIONAL SHARES. Such distributions, whether taken in
cash or reinvested in additional shares, will ordinarily be paid on the
fifteenth day of each month or the next business day thereafter. Daily
distribution crediting will commence on the day that collected funds for the
purchase of Fund shares are available at the Transfer Agent. Distributions from
net short-term capital gains and certain net foreign exchange gains are taxable
to shareholders as ordinary income, and distributions from net long-term capital
gains are taxable to shareholders as long-term capital gains, whether received
in cash or additional shares of the Fund and regardless of the length of time
Fund shares have been owned by the shareholders. Gains or losses attributable to
transactions by the Portfolio in options on securities, certain currency forward
contracts, futures contracts and options on futures may be treated as 40%
short-term and 60% long-term capital gains or losses or, in the case of certain
of such transactions relating to foreign currencies, as ordinary income or loss
for Federal income tax purposes. The Portfolio may have to limit its activities
in these transactions in order to enable the Fund to maintain its qualification
as a regulated investment company.
The amount of the Fund's distributions will vary from time to time depending
on general economic and market conditions, the composition of the Portfolio's
investments, its current investment strategies and the operating expenses of the
Fund and the Portfolio. While distributions will vary from time to time in
response to the factors referred to above, the Fund's management will attempt to
pursue a policy of maintaining a relatively stable monthly distribution payment
to its shareholders. The distributions paid by the Fund during any particular
period may be more or less than the amount of net investment income and net
short-term capital gain actually earned by the Portfolio and allocated to the
Fund during such period. The Portfolio has elected mixed straddle accounting
under the Code for one or more designated classes of activities involving mixed
straddles.
The Portfolio is required to accrue original issue discount on zero coupon
and certain other securities and has elected to accrue market discount on debt
obligations which are purchased at a market discount. While enhancing the Fund's
current return, such accrual will also accelerate the Fund's recognition of
interest income, distributions of which will be taxable as ordinary income.
Furthermore, because the Fund seeks to stabilize monthly distribution payments
and the Portfolio has elected mixed straddle accounting under the Code, it is
possible that a portion of the Fund's aggregate distributions during any year
will be treated as a return of capital for tax purposes, rather than taxable
distributions of dividends or capital gains. The Fund will inform the
shareholders after the end of each year what portion, if any, of such
distributions constitutes a return of capital for tax purposes.
Shareholders will receive annually tax information notices and Forms 1099 to
assist in the preparation of their Federal and state tax returns for the prior
calendar year's distributions, proceeds from the redemption or exchange of Fund
shares, and Federal income tax (if any) withheld by the Fund's Transfer Agent.
In order to qualify as a regulated investment company under the Code, the
Fund must satisfy certain requirements relating to the sources of its income,
the distribution of its income, and the diversification of its assets. In
satisfying these requirements, the Fund will treat itself as owning its
proportionate share of each of the Portfolio's assets and as entitled to the
income of the Portfolio properly attributable to such share.
- --------------------------------------------------------------------------------
AS A REGULATED INVESTMENT COMPANY UNDER THE CODE, THE FUND DOES NOT PAY FEDERAL
INCOME OR EXCISE TAXES TO THE EXTENT UTHAT IT DISTRIBUTES TO SHAREHOLDERS ITS
NET INVESTMENT INCOME AND NET REALIZED CAPITAL GAINS IN ACCORDANCE WITH THE
TIMING REQUIREMENTS IMPOSED BY THE CODE. AS A PARTNERSHIP UNDER THE CODE, THE
PORTFOLIO DOES NOT PAY FEDERAL INCOME OR EXCISE TAXES.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS YIELD AND/OR AVERAGE ANNUAL TOTAL
RETURN. The Fund's current yield is calculated by dividing the net investment
income per share during a recent 30-day period by the maximum offering price per
share (net asset value) of the Fund on the last day of the period and
annualizing the resulting figure. The Fund's average annual total return is
determined by computing the average annual percentage change in value of $1,000
invested at the maximum public offering price (net asset value) for specified
periods ending with the most recent calendar quarter, assuming reinvestment of
all distributions. The average annual total return calculation assumes a
complete redemption of the investment and the deduction of any applicable
contingent deferred sales charge at the end of the period. The Fund may also
publish annual and cumulative total return figures from time to time.
The Fund may also publish its distribution rate and/or its effective
distribution rate. The Fund's distribution rate is computed by dividing the most
recent monthly distribution per share annualized, by the current maximum
offering price per share (net asset value). The Fund's effective distribution
rate is computed by dividing the distribution rate by the ratio used to
annualize the most recent monthly distribution and reinvesting the resulting
amount for a full year on the basis of such ratio. The effective distribution
rate will be higher than the distribution rate because of the compounding effect
of the assumed reinvestment. Investors should note that the Fund's yield is
calculated using a standardized formula the income component of which is
computed from the yields to maturity of all debt obligations held by the
Portfolio based on prescribed methods (with all purchases and sales of
securities during such period included in the income calculation on a settlement
date basis), whereas the distribution rate is based on the Fund's last monthly
distribution which tends to be relatively stable and may be more or less than
the amount of net investment income and short-term capital gain actually earned
by the Fund during the month.
The Fund may also publish total return figures which do not take into
account any contingent deferred sales charge which may be imposed upon
redemptions at the end of the specified period. Any performance figure which
does not take into account the contingent deferred sales charge would be reduced
to the extent such charge is imposed upon a redemption.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's yield, total return, distribution
rate or effective distribution rate for any prior period should not be
considered as a representation of what an investment may earn or what the Fund's
yield, total return, distribution rate or effective distribution rate may be in
any future period.
<PAGE>
INVESTMENT ADVISER OF
GOVERNMENT OBLIGATIONS PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF EV MARATHON
GOVERNMENT OBLIGATIONS FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
EV MARATHON
GOVERNMENT OBLIGATIONS FUND
24 FEDERAL STREET
BOSTON, MA 02110
M-GOP
EV MARATHON
GOVERNMENT
OBLIGATIONS
FUND
PROSPECTUS
MAY 1, 1995
<PAGE>
PART A
INFORMATION REQUIRED IN A PROSPECTUS
EV TRADITIONAL GOVERNMENT OBLIGATIONS FUND
EV TRADITIONAL GOVERNMENT OBLIGATIONS FUND (THE "FUND") IS A MUTUAL FUND
SEEKING A HIGH CURRENT RETURN, BY INVESTING IN SECURITIES ISSUED, GUARANTEED OR
OTHERWISE BACKED BY THE U.S. GOVERNMENT AND ENGAGING IN ACTIVE MANAGEMENT
STRATEGIES. THE FUND INVESTS ITS ASSETS IN GOVERNMENT OBLIGATIONS PORTFOLIO (THE
"PORTFOLIO"), A DIVERSIFIED OPEN-END INVESTMENT COMPANY HAVING THE SAME
INVESTMENT OBJECTIVE AS THE FUND, RATHER THAN BY DIRECTLY INVESTING IN AND
MANAGING ITS OWN PORTFOLIO OF SECURITIES AS WITH HISTORICALLY STRUCTURED MUTUAL
FUNDS. THE FUND IS A SERIES OF EATON VANCE GOVERNMENT OBLIGATIONS TRUST (THE
"TRUST").
Shares of the Fund are not deposits or obligations of, or guaranteed or
endorsed by, any bank or other insured depository institution, and are not
federally insured by the Federal Deposit Insurance Corporation, the Federal
Reserve Board or any other government agency. Shares of the Fund involve
investment risks, including fluctuations in value and the possible loss of some
or all of the principal investment.
This Prospectus is designed to provide you with information you should know
before investing. Please retain this document for future reference. A Statement
of Additional Information dated May 1, 1995 for the Fund, as supplemented from
time to time, has been filed with the Securities and Exchange Commission and is
incorporated herein by reference. This Statement of Additional Information is
available without charge from the Fund's principal underwriter, Eaton Vance
Distributors, Inc. (the "Principal Underwriter"), 24 Federal Street, Boston, MA
02110 (telephone (800) 225-6265). The Portfolio's investment adviser is Boston
Management and Research (the "Investment Adviser"), a wholly-owned subsidiary of
Eaton Vance Management, and Eaton Vance Management is the administrator (the
"Administrator") of the Fund. The offices of the Investment Adviser and the
Administrator are located at 24 Federal Street, Boston, MA 02110.
- ------------------------------------------------------------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Page Page
<S> <C> <C> <C>
Shareholder and Fund Expenses ..................... 2 How to Redeem Fund Shares ..................... 15
The Fund's Financial Highlights ................... 3 Reports to Shareholders ....................... 16
The Fund's Investment Objective ................... 4 The Lifetime Investing Account/Distribution
How the Fund and the Portfolio Invest their Assets 4 Options .................................... 16
Organization of the Fund and the Portfolio ........ 9 The Eaton Vance Exchange Privilege ............ 17
Management of the Fund and the Portfolio .......... 11 Eaton Vance Shareholder Services .............. 18
Service Plan ...................................... 12 Distributions and Taxes ....................... 19
Valuing Fund Shares ............................... 12 Performance Information ....................... 21
How to Buy Fund Shares ............................ 13 Statement of Intention and Escrow Agreement ... 21
- ------------------------------------------------------------------------------------------------------------
PROSPECTUS DATED MAY 1, 1995
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
SHAREHOLDER AND FUND EXPENSES\1/
- ------------------------------------------------------------------------------
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES
Maximum Sales Charge Imposed on Purchases
(as a percentage of offering price) 3.75%
Sales Charges Imposed on Reinvested Distributions None
Redemption Fees None
Fees to Exchange Shares None
Contingent Deferred Sales Charges Imposed
on Redemptions None
ANNUAL FUND AND ALLOCATED PORTFOLIO OPERATING EXPENSES<F2>
(as a percentage of average daily net assets)
Investment Adviser Fee
0.74%
Rule 12b-1 Fees (Service Plan) 0.22%
Other Expenses (including Interest and Securities
Lending Expenses of 0.56%) 0.77%
-----
Total Operating Expenses 1.73%
=====
<CAPTION>
EXAMPLE\2/: 1 YEAR 3 YEARS 5 YEARS 10 YEARS
- ----------- ------ ------- ------- --------
<S> <C> <C> <C> <C>
An investor would pay the following maximum initial sales charge and
expenses on a $1,000 investment, assuming (a) 5% annual return and (b)
redemption at the end of each time period: $54 $90 $128 $234
Notes:
<FN>
<F1>The purpose of the above table and Example is to summarize the aggregate expenses of the Fund and the Portoflio and
to assist investors in understanding the various costs and expenses that investors in the Fund will bear directly or
indirectly. The Trustees of the Trust believe that over time the aggregate per share expenses of the Fund and the
Portfolio should be approximately equal to the per share expenses which the Fund would incur if the Trust retained
the services of an investment adviser and the assets of the Fund were invested directly in the type of securities
being held by the Portfolio. The percentages indicated as Annual Fund and Allocated Portfolio Operating Expenses in
the table and the amounts included in the Example are based on the Fund's and the Portfolio's results for the fiscal
year ended December 31, 1994. The Example should not be considered a representation of past or future expenses and
actual expenses may be greater or less than those shown. The Example assumes a 5% annual return and the Fund's actual
performance may result in an annual return greater or less than 5%. For further information regarding the expenses of
both the Fund and the Portfolio see "The Fund's Financial Highlights", "Organization of the Fund and the Portfolio",
"Management of the Fund and the Portfolio" and "How to Redeem Fund Shares".
<F2>The computation of Annual Fund and Allocated Portfolio Operating Expenses as a percentage of average daily net assets
in the above table and of maximum initial sales charge and expenses incurred on a $1,000 investment in the above
Example is based in part on interest expense allocated to the Fund from the Portfolio's borrowings and lending fees
allocated to the Fund from the Portfolio's securities lending activities during the fiscal year ended December 31,
1994. The Portfolio's borrowings, interest expense, securities lending activities and lending fees will vary from
year to year (see "How the Fund and the Portfolio Invest their Assets -- Active Management Strategies"). If the Fund
had not been allocated interest expense and lending fees in 1994, Total Operating Expenses as a percentage of average
daily net assets would have been 1.17%, and maximum initial sales charge and expenses incurred on a $1,000 investment
for one, three, five and ten years would have been $49, $73, $99 and $174, respectively.
<F3>Other investment companies with different distribution arrangements and fees are investing in the Portfolio and
additional such companies may do so in the future. See "Organization of the Fund and the Portfolio".
</TABLE>
<PAGE>
THE FUND'S FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------
The following information should be read in conjunction with the audited
financial statements included in the Statement of Additional Information, all of
which have been so included in reliance upon the report of Coopers & Lybrand
L.L.P., independent accountants, as experts in accounting and auditing, which
report is contained in the Statement of Additional Information. The financial
highlights for each of the two years in the period ending December 31, 1987 and
the six months ended December 31, 1985 and for the period from August 24, 1984
(commencement of operations) to December 31, 1985, presented here, were audited
by other auditors whose report dated January 15, 1988, expressed an unqualified
opinion on such financial highlights. Further information regarding the
performance of the Fund is contained in the Fund's annual report to shareholders
which may be obtained without charge by contacting the Principal Underwriter.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------
1994<F9> 1993 1992 1991 1990 1989 1988
------ ------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C> <C>
Net Asset Value -- Beginning of year ............. $ 11.4800 $11.3800 $11.8000 $11.3700 $11.5200 $11.2300 $11.5400
-------- ------- ------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income .......................... $ 0.8052 $ 0.9192 $ 0.9751 $ 1.1005 $ 1.1085 $ 1.1280 $ 1.1260
Net realized and unrealized gain (loss) on
investments .................................. (1.0290) 0.1058 (0.3886) 0.4395 (0.1485) 0.2745 (0.2960)
-------- ------- ------- ------- ------- ------- -------
Total income from investment operations ...... $ (0.2238) $ 1.0250 $ 0.5865 $ 1.5400 $ 0.9600 $ 1.4025 $ 0.8300
======== ======= ======= ======= ======= ======= =======
LESS DISTRIBUTIONS:
From net investment income ..................... $ (0.8052) $(0.9192) $(1.0065) $ -- -- -- --
In excess of net investment income ............. $ (0.0310) (0.0058) -- -- -- -- --
-------- ------- ------- ------- ------- ------- ------
Total distributions .......................... $ (0.8362) $(0.9250) $(1.0065) $(1.1100) $(1.1100) $(1.1125) $ (1.1400)
-------- ------- ------- ------- ------- ------- ------
NET ASSET VALUE -- End of year ................... $ 10.4200 $11.4800 $11.3800 $11.8000 $11.3700 $11.5200 $11.2300
======== ======= ======= ======= ======= ======= ======
TOTAL RETURN<F6> .................................. (2.03)% 9.26% 5.29% 14.42% 8.97% 13.21% 7.46%
RATIOS/SUPPLEMENTAL DATA:
Ratio of interest expense to average
daily net assets ............................... 0.56%<F1> 0.40%<F1> 0.31% 0.78% 1.19% 1.11% 0.66%
Ratio of other expenses to average
daily net assets ............................... 1.17%<F1> 1.12%<F1> 1.10% 1.18% 1.22% 1.22% 1.19%
Ratio of net investment income to average
daily net assets................................ 7.70% 7.86% 8.52% 9.61% 9.86% 10.02% 9.82%
PORTFOLIO TURNOVER<F7>............................ -- 52% 26% 25% 22% 25% 42%
NET ASSETS, End of year (000 omitted) ............ $ 386,186 $503,150 $468,960 $ 352,480 $279,747 $ 296,405 $321,584
LEVERAGE ANALYSIS<F8>:
Amount of debt outstanding at end of
period (000 omitted) ............................ -- -- -- -- $ 4,695 $ 259 $ 7,006
Average daily balance of debt outstanding during
period (000 omitted) ........................... -- $ 2,313 $ 1,687 $ 2,321 $ 11,009 $ 3,218 $ 18,301
Average weekly balance of shares outstanding
during period (000 omitted) ...................... -- 43,731 37,474 25,915 25,285 26,839 30,570
Average amount of debt per share during period ... -- $ 0.053 $ 0.045 $ 0.090 $ 0.435 $ 0.120 $ 0.599
<PAGE>
1987<F5> 1986<F5> 1985<F5><F2> 1985<F5><F3>
-------- -------- ------------ ------------
<S> <C> <C> <C> <C>
Net Asset Value -- Beginning of year .............. $12.3600 $12.2600 $12.1800 $11.6600
------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income ........................... $ 1.1360 $ 1.1580 $ 0.5990 $ 1.0140
Net realized and unrealized gain (loss) on
investments ................................... (0.6610) 0.3920 0.2310 0.6260
------- ------- ------- -------
Total income from investment operations ....... $ 0.4750 $ 1.5500 $ 0.8300 $ 1.6400
======= ======= ======= =======
LESS DISTRIBUTIONS:
From net investment income ...................... $(1.1600) $(1.2000) $(0.6000) $(0.8700)
In excess of net investment income .............. (0.1350) (0.2500) (0.1500) (0.2500)
------- ------- ------- -------
Total distributions ............................... $(1.2950) $(1.4500) $(0.7500) $(1.1200)
------- ------- ------- -------
NET ASSET VALUE -- End of year .................... $11.5400 $12.3600 $12.2600 $12.1800
======= ======= ======= =======
TOTAL RETURN<F6>................................... 4.17% 13.37% 7.17% 14.56%
RATIOS/SUPPLEMENTAL DATA:
Ratio of interest expense to average daily net
assets ....................................... 0.22% 0.26% 0.51%<F4> 0.21%
Ratio of other expenses to average daily net
assets ....................................... 1.19% 1.20% 1.23%<F4> 1.10%
Ratio of net investment income to average daily
net assets 9.63% 9.40% 10.12%<F4> 9.70%
PORTFOLIO TURNOVER<F7>............................ 36% 37% 19% 82%
NET ASSETS, End of year (000 omitted) ............ $374,936 $416,095 $336,859 $250,236
LEVERAGE ANALYSIS<F8>
Amount of debt outstanding at end of period
(000 omitted) ................................... $ 18,285 $ 11,076 $ 16,356 $ 16,887
Average daily balance of debt outstanding during
period (000 omitted) ........................... $ 10.900 $ 10,421 $ 11,722 $ 1,883
Average weekly balance of shares outstanding
during period (000 omitted) ...................... 34,372 27,263 17,874 6,633
Average amount of debt per share during period ... $ 0.317 $ 0.382 $ 0.656 $ 0.284
<FN>
<F1>Includes the Fund's share of Government Obligations Portfolio's allocated expenses.
<F2>Six months ended December 31, 1985 (The Fund changed its year end from June 30 to December 31, effective July 1, 1985).
<F3>August 24, 1984 to June 30, 1985.
<F4>Computed on an annualized basis.
<F5>Audited by the Fund's previous auditors.
<F6>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 to be reinvested at the net
asset value on the payable date.
<F7>Portfolio Turnover represents the rate of portfolio activity for the period while the Fund was making investments
directly in securities. The portfolio turnover for the period since the Fund transferred its assets to the Portfolio is
shown in the Portfolio's financial statements which are included in the Fund's Statement of Additional Information.
<F8>The Leverage Analysis is for the period prior to the close of business October 27, 1993, when the Fund transferred its
assets to the Portfolio. For the year ended December 31, 1994, the leverage analysis is shown in the Portfolio's
financial statements which are included in the Fund's Statement of Additional Information.
<F9>As of January 1, 1994 the Fund discontinued the use of equalization accounting. (See "Notes to Financial Statements",
which are included in the Fund's Statement of Additional Information.)
</TABLE>
<PAGE>
THE FUND'S INVESTMENT OBJECTIVE
- ------------------------------------------------------------------------------
EV TRADITIONAL GOVERNMENT OBLIGATIONS FUND'S INVESTMENT OBJECTIVE IS TO REALIZE
A HIGH CURRENT RETURN. The Fund currently seeks to meet its investment objective
by investing its assets in the Government Obligations Portfolio a separate
registered investment company which has the same investment objective and
policies as the Fund. The Fund's and the Portfolio's investment objectives are
nonfundamental and may be changed when authorized by a vote of the Trustees of
the Trust or the Portfolio, respectively, without obtaining the approval of the
Fund's shareholders or the investors in the Portfolio, as the case may be. The
Trustees of the Trust have no present intention to change the Fund's objective
and intend to submit any proposed material change in the investment objective to
shareholders in advance for their approval.
HOW THE FUND AND THE PORTFOLIO INVEST THEIR ASSETS
- ------------------------------------------------------------------------------
IN SEEKING HIGH CURRENT RETURN, THE PORTFOLIO INVESTS IN SECURITIES ISSUED,
GUARANTEED OR OTHERWISE BACKED BY THE U.S. GOVERNMENT, INCLUDING MORTGAGE-BACKED
SECURITIES OF FEDERAL AGENCIES AND FEDERALLY CHARTERED CORPORATIONS, AND ENGAGES
IN ACTIVE MANAGEMENT STRATEGIES, INCLUDING FUTURES TRANSACTIONS AND RELATED
TECHNIQUES PRIMARILY FOR HEDGING PURPOSES. The Portfolio's management believes
that a high current return may be derived from yields on U.S. Government
securities, including market discount accrued on obligations purchased below
their stated redemption value.
U.S. GOVERNMENT SECURITIES. U.S. Government securities include (1) U.S. Treasury
obligations, which differ in their interest rates, maturities and times of
issuance: U.S. Treasury bills (maturities of one year or less), U.S. Treasury
notes (maturities of one to ten years) and U.S. Treasury bonds (generally
maturities of greater than ten years) and (2) obligations issued or guaranteed
by U.S. Government agencies and instrumentalities which are supported by any of
the following: (a) the full faith and credit of the U.S. Treasury, (b) the right
of the issuer to borrow an amount limited to a specific line of credit from the
U.S. Treasury, (c) discretionary authority of the U.S. Government to purchase
certain obligations of the U.S. Government agency or instrumentality or (d) the
credit of the agency or instrumentality. The Portfolio may also invest in any
other security or agreement collateralized or otherwise secured by U.S.
Government securities. Agencies and instrumentalities of the U.S. Government
include but are not limited to: Federal Land Banks, Federal Financing Banks,
Banks for Cooperatives, Federal Intermediate Credit Banks, Farm Credit Banks,
Federal Home Loan Banks, Federal Home Loan Mortgage Corporation ("FHLMC"),
Federal National Mortgage Association ("FNMA"), Government National Mortgage
Association ("GNMA"), Student Loan Marketing Association, United States Postal
Service, Small Business Administration, Tennessee Valley Authority and any other
enterprise established or sponsored by the U.S. Government. Because the U.S.
Government generally is not obligated to provide support to its
instrumentalities, the Portfolio will invest in obligations issued by these
instrumentalities only if the Investment Adviser determines that the credit risk
with respect to such obligations is minimal.
MORTGAGE-BACKED SECURITIES. The Portfolio may invest in mortgage-backed
securities that are either issued by the U.S. Government or one of its agencies
or instrumentalities or, if privately issued, collateralized by mortgages that
are insured, guaranteed or otherwise backed by the U.S. Government, its agencies
or instrumentalities. Mortgage-backed securities represent participation
interests in pools of adjustable and fixed-rate mortgage loans. Unlike
conventional debt obligations, mortgage-backed securities provide monthly
payments derived from the monthly interest and principal payments (including any
prepayments) made by the individual borrowers on the pooled mortgage loans. The
mortgage loans underlying mortgage-backed securities are generally subject to a
greater rate of principal prepayments in a declining interest rate environment
and to a lesser rate of principal prepayments in an increasing interest rate
environment. Under certain interest and prepayment rate scenarios, the Portfolio
may fail to recover the full amount of its investment in mortgage-backed
securities, notwithstanding any direct or indirect governmental or agency
guarantee. Because faster than expected prepayments must usually be invested in
lower yielding securities, mortgage-backed securities are less effective than
conventional bonds in "locking in" a specified interest rate. To mitigate
prepayment risk, the Investment Adviser considers the selection of
mortgage-backed securities that as a group have a history of more stable
prepayment rates relative to interest rate fluctuations. In a rising interest
rate environment, a declining prepayment rate will extend the average life of
many mortgage-backed securities. This possibility is often referred to as
extension risk. Extending the average life of a mortgage-backed security
increases the risk of depreciation due to future increases in market interest
rates. As of December 31, 1994, the Portfolio had approximately 40% of its net
assets invested in FNMA Mortgage-Backed Certificates, approximately 43% of its
net assets invested in Participation Certificates of FHLMC and approximately 8%
of its net assets invested in GNMA Certificates. FNMA guarantees the timely
payment of principal and interest of its Certificates, FHLMC guarantees the
timely payment of interest and ultimate collection of the principal of its
Participation Certificates, and GNMA Certificates are guaranteed by the full
faith and credit of the U.S. Government.
The Portfolio may also invest in classes of collateralized mortgage
obligations ("CMOs") and various other mortgage-backed securities. Senior CMO
classes will typically have priority over residual CMO classes as to the receipt
of principal and/or interest payments on the underlying mortgages. In choosing
among CMO classes, the Investment Adviser will evaluate the total income
potential of each class and other factors. If such obligations or securities are
privately issued they will currently be considered by the Investment Adviser as
possible investments for the Portfolio only when the mortgage collateral is
insured, guaranteed or otherwise backed by the U.S. Government or one or more of
its agencies or instrumentalities. As of December 31, 1994, the Portfolio had
approximately 6% of its net assets invested in CMOs (including one which was
privately issued).
The Portfolio may invest in securities that fluctuate in value with an
index. Such securities generally will either be issued by the U.S. Government or
one of its agencies or instrumentalities or, if privately issued, collateralized
by mortgages that are insured, guaranteed or otherwise backed by the U.S.
Government, its agencies or instrumentalities. The interest rate or, in some
cases, the principal payable at the maturity of an indexed security may change
positively or inversely in relation to one or more interest rates, financial
indices, securities prices or other financial indicators ("reference prices").
An indexed security may be leveraged to the extent that the magnitude of any
change in the interest rate or principal payable on an indexed security is a
multiple of the change in the reference price. Thus, indexed securities may
decline in value due to adverse market changes in reference prices. As of
December 31, 1994, the Portfolio held no such securities. Because
mortgage-backed and indexed securities derive their value from another
instrument, security or index, they are considered derivative debt securities,
and are subject to different combinations of prepayment, extension, interest
rate and/or other market risks.
The Portfolio may enter into contracts to purchase securities for a fixed
price at a future date beyond the customary settlement time if the Portfolio
holds and maintains until the settlement date in a segregated account cash, U.S.
Government securities and liquid high-grade debt obligations in an amount
sufficient to meet the purchase price, or if the Portfolio enters into
offsetting contracts for the forward sale of other securities it owns. Such
contracts are customarily referred to as "forward commitments" and involve a
risk of loss if the value of the security to be purchased declines prior to the
settlement date.
The principal of and/or interest on certain U.S. Government securities which
may be purchased by the Portfolio could be (a) payable in foreign currencies
rather than U.S. dollars or (b) increased or diminished as a result of changes
in the value of the U.S. dollar relative to the value of foreign currencies. The
value of such portfolio securities denominated in foreign currencies may be
affected favorably or unfavorably by changes in the exchange rate between
foreign currencies and the U.S. dollar. In order to limit the risk inherent in
this type of security, it is the current policy of the Portfolio not to purchase
any such security if after such purchase (i) more than 5% of its net assets
(taken at market value) would be invested in securities denominated in foreign
currencies or (ii) more than 2% of its net assets (taken at market value) would
be invested in securities denominated in any one foreign currency.
The Portfolio may from time to time have temporary investments in short-term
debt obligations (including certificates of deposit, bankers' acceptances and
commercial paper) pending the making of other investments or as a reserve to
service redemptions and repurchases of its shares.
ACTIVE MANAGEMENT STRATEGIES
The Portfolio may engage in several active management strategies to enhance
income and reduce investment risk. Each strategy requires the Investment Adviser
to consider special factors.
SECURITIES LENDING. The Portfolio may seek to increase its income by lending
portfolio securities to broker-dealers or other institutional borrowers. During
the existence of a loan, the Portfolio will continue to receive the equivalent
of the interest paid by the issuer on the securities loaned and will also
receive a fee, or all or a portion of the interest on investment of the
collateral, if any. However, the Portfolio may pay lending fees to such
borrowers. As with other extensions of credit, there are risks of delay in
recovery or even loss of rights in the securities loaned if the borrower of the
securities fails financially. However, the loans will be made only to
organizations deemed by the Portfolio's management to be of good standing and
when, in the judgment of the Portfolio's management, the consideration which can
be earned from securities loans of this type justifies the attendant risk. The
financial condition of the borrower will be monitored by the Investment Adviser
on an ongoing basis. The value of the securities loaned will not exceed 30% of
the Portfolio's total assets. During the year ended December 31, 1994, the
Portfolio typically had outstanding approximately $70 million in collateralized
loans with terms of 7 days.
FUTURES CONTRACTS AND OTHER DERIVATIVE INSTRUMENTS. The Portfolio may purchase
or sell derivative instruments (which are instruments that derive their value
from another instrument, security, index or currency) to hedge against
fluctuations in interest rates, securities prices or currency exchange rates, to
change the duration of the Portfolio's fixed income portfolio, as a substitute
for the purchase or sale of securities or currency, or to enhance return. The
Portfolio's transactions in derivative instruments may include the purchase or
sale of futures contracts on securities, (such as U.S. Government securities),
indices, other financial instruments (such as certificates of deposit,
Eurodollar time deposits, and economic indices) or currencies; options on
futures contracts; exchange-traded and over-the-counter ("OTC") options on
securities; indices or currencies; and forward contracts to purchase or sell
currencies. All of the Portfolio's transactions in derivative instruments
involve a risk of loss or depreciation due to unanticipated adverse changes in
interest rates, securities prices or currency exchange rates, the inability to
close out a position or default by the counterparty. The loss on derivative
instruments (other than purchased options) may exceed the Portfolio's initial
investment in these instruments. In addition, the Portfolio may lose the entire
premium paid for purchased options that expire before they can be profitably
exercised by the Portfolio. The Portfolio incurs transaction costs in opening
and closing positions in derivative instruments. There can be no assurance that
the Investment Adviser's use of derivative instruments will be advantageous to
the Portfolio.
The Portfolio's success in using derivative instruments to hedge portfolio
assets depends on the degree of price correlation between the derivative
instrument and the hedged asset. Imperfect correlation may be caused by several
factors, including temporary price disparities among the trading markets for the
derivative instrument, the assets underlying the derivative instrument and the
Portfolio's assets. OTC derivative instruments involve a heightened risk that
the issuer or counterparty will fail to perform its contractual obligations. The
staff of the Securities and Exchange Commission takes the position that
purchased OTC options, assets used as cover for written OTC options, and certain
other derivative instruments (and securities) are subject to the Portfolio's 15%
limit on illiquid investments. The Portfolio's ability to terminate OTC
derivative instruments may depend on the cooperation of the counterparties to
such instruments. For thinly traded derivative securities and contracts, the
only source of price quotations may be the selling dealer or counterparty.
To the extent that the Portfolio enters into futures contracts, options on
futures contracts and options on foreign currencies traded on an exchange
regulated by the Commodity Futures Trading Commission ("CFTC"), in each case
that are not for bona fide hedging purposes (as defined by the CFTC), the
aggregate initial margin and premiums required to establish these positions
(excluding the amount by which options are "in-the-money") may not exceed 5% of
the liquidation value of the Portfolio's portfolio, after taking into account
unrealized profits and unrealized losses on any contracts the Portfolio has
entered into.
SHORT-TERM TRADING. Securities may be sold in anticipation of a market decline
(a rise in interest rates) or purchased in anticipation of a market rise (a
decline in interest rates) and later sold. In addition, a security may be sold
and another purchased at approximately the same time to take advantage of what
the Portfolio believes to be a temporary disparity in the normal yield
relationship between the two securities. Yield disparities may occur for reasons
not directly related to the investment quality of particular issues or the
general movement of interest rates, such as changes in the overall demand for or
supply of various types of fixed-income securities or changes in the investment
objectives of investors.
MORTGAGE ROLLS. The Portfolio may enter into mortgage "dollar rolls" in which
the Portfolio sells mortgage-backed securities for delivery in the current month
and simultaneously contracts to repurchase substantially similar (same type,
coupon and maturity) securities on a specified future date. During the roll
period, the Portfolio forgoes principal and interest paid on the mortgage-backed
securities. The Portfolio is compensated by the difference between the current
sales price and the lower forward price for the future purchase (often referred
to as the "drop") as well as by the interest earned on the cash proceeds of the
initial sale. A "covered roll" is a specific type of dollar roll for which there
is an offsetting cash position or a cash equivalent security position which
matures on or before the forward settlement date of the dollar roll transaction.
The Portfolio will only enter into covered rolls. Covered rolls are not treated
as a borrowing or other senior security and will be excluded from the
calculation of the Portfolio's borrowings and other senior securities.
LEVERAGE THROUGH BORROWING. The Portfolio may borrow from banks to increase its
portfolio holdings of debt securities on which call options may be written and
to acquire U.S. Treasury bills which may be deposited with the Portfolio's
custodian or a broker-dealer in connection with various Portfolio investments.
Such borrowings will be unsecured. The Investment Company Act of 1940 requires
the Portfolio to maintain continuous asset coverage of not less than 300% with
respect to such borrowings. This allows the Portfolio to borrow for such
purposes an amount (when taken together with any borrowings for temporary
extraordinary or emergency purposes as described below) equal to as much as 50%
of the value of its net assets (not including such borrowings). If such asset
coverage should decline to less than 300% due to market fluctuations or other
reasons, the Portfolio may be required to sell some of its portfolio holdings
within three days in order to reduce the Portfolio's debt and restore the 300%
asset coverage, even though it may be disadvantageous from an investment
standpoint to sell securities at that time. Leveraging will exaggerate any
increase or decrease in the net asset value of the securities held by Portfolio,
and in that respect may be considered a speculative practice. Money borrowed for
leveraging will be subject to interest costs which may or may not exceed the
option premiums and interest received from the securities purchased. The
Portfolio may also be required to maintain minimum average balances in
connection with such borrowings or to pay a commitment or other fee to maintain
a line of credit; either of these requirements would increase the cost of
borrowing over the stated interest rate.
REPURCHASE AGREEMENTS. The Portfolio may enter into repurchase agreements with
respect to U.S. Government securities. Under a repurchase agreement, the seller
agrees to repurchase such securities at the Portfolio's cost plus interest
within a specified time (normally one day). While repurchase agreements involve
certain risks not associated with direct investments in U.S. Government
securities, the Portfolio follows procedures designed to moderate such risks.
These procedures include effecting repurchase transactions only with large,
well-capitalized banks. In addition, the Portfolio's repurchase agreements will
provide that the value of the collateral underlying the repurchase agreements
will always be at least equal to the repurchase price, including any accrued
interest earned on the repurchase agreement. In the event of a default or
bankruptcy by a selling bank, the Portfolio will seek to liquidate such
collateral. However, the exercise of the Portfolio's right to liquidate such
collateral would involve certain costs or delays and, to the extent that
proceeds from any sale upon a default of the obligation to repurchase are less
than the repurchase price, the Portfolio could suffer a loss.
ADDITIONAL INVESTMENT INFORMATION
The Portfolio expects that various new types of investments, hedging techniques
and management strategies will be developed and made available to institutional
investors in the future. The Investment Adviser will consider making such
investments or adopting such techniques or strategies if it determines that they
are consistent with the Portfolio's investment objective and policies. Of
course, the total mix of the Portfolio's investments can change daily.
FLUCTUATIONS IN VALUE. Because interest yields on U.S. Government and other
securities and opportunities to realize additional income and net gains from
active management strategies will vary from time to time because of general
economic and market conditions and many other factors, the Fund's current return
will fluctuate, and there can be no assurance that the Fund's objective will be
achieved. As a result of their high credit quality and market liquidity, U.S.
Government securities generally provide a lower current return than obligations
of other issuers. As with other debt securities, the value of U.S. Government
securities changes as interest rates fluctuate. Fluctuations in the value of
securities held by the Portfolio will not affect interest income on existing
portfolio securities but will be reflected in the Fund's net asset value. Thus,
a decrease in interest rates will generally result in an increase in the value
of Fund shares. Conversely, during periods of rising interest rates, the value
of Fund shares will generally decline. The magnitude of these fluctuations will
generally be greater at times when the Portfolio's average maturity is longer.
In addition, as set forth above, the derivative securities the Portfolio may
hold may magnify those risks and pose additional risks. Active management
techniques, if successful, may only partly offset these risks. Shares of the
Fund are not government guaranteed.
INVESTMENT RESTRICTIONS. The Fund and the Portfolio have adopted certain
fundamental investment restrictions which are enumerated in detail in the
Statement of Additional Information and which may not be changed unless
authorized by a shareholder vote and an investor vote, respectively. These
restrictions are designed to reduce investment risk. Except for such enumerated
restrictions, the investment objective and policies of the Fund and the
Portfolio are not fundamental policies, and accordingly may be changed by the
Trustees of the Trust and the Portfolio without obtaining the approval of the
Fund's shareholders or the investors in the Portfolio, as the case may be. If
any changes were made in the Fund's investment objective, the Fund might have an
investment objective different from the objective which an investor considered
appropriate at the time the investor became a shareholder of the Fund.
ORGANIZATION OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
THE FUND IS A DIVERSIFIED SERIES OF EATON VANCE GOVERNMENT OBLIGATIONS TRUST, A
BUSINESS TRUST ESTABLISHED UNDER MASSACHUSETTS LAW PURSUANT TO A DECLARATION OF
TRUST DATED MAY 7, 1984, AS AMENDED AND RESTATED. THE TRUST IS A MUTUAL FUND -
AN OPEN-END MANAGEMENT INVESTMENT COMPANY. The Trustees of the Trust are
responsible for the overall management and supervision of its affairs. The Trust
may issue an unlimited number of shares of beneficial interest (no par value per
share) in one or more series and because the Trust can offer separate series
(such as the Fund) it is known as a "series company." Each share represents an
equal proportionate beneficial interest in the Fund. When issued and
outstanding, the shares are fully paid and nonassessable by the Trust and
redeemable as described under "How to Redeem Fund Shares". Shareholders are
entitled to one vote for each full share held. Fractional shares may be voted
proportionately. Shares have no preemptive or conversion rights and are freely
transferable. In the event of the liquidation of the Fund, shareholders are
entitled to share pro rata in the net assets of the Fund available for
distribution to shareholders.
THE PORTFOLIO IS ORGANIZED AS A TRUST UNDER THE LAWS OF THE STATE OF NEW YORK
AND INTENDS TO BE TREATED AS A PARTNERSHIP FOR FEDERAL TAX PURPOSES. The
Portfolio, as well as the Trust, intends to comply with all applicable Federal
and state securities laws. The Portfolio's Declaration of Trust provides that
the Fund and other entities permitted to invest in the Portfolio (e.g., other
U.S. and foreign investment companies, and common and commingled trust funds)
will each be liable for all obligations of the Portfolio. However, the risk of
the Fund incurring financial loss on account of such liability is limited to
circumstances in which both inadequate insurance exists and the Portfolio itself
is unable to meet its obligations. Accordingly, the Trustees of the Trust
believe that neither the Fund nor its shareholders will be adversely affected by
reason of the Fund investing in the Portfolio.
SPECIAL INFORMATION ON THE FUND/PORTFOLIO INVESTMENT STRUCTURE. An investor in
the Fund should be aware that the Fund, unlike mutual funds which directly
acquire and manage their own portfolios of securities, seeks to achieve its
investment objective by investing its assets in an interest in the Portfolio
(although the Fund may temporarily hold a de minimus amount of cash), which is a
separate investment company with an identical investment objective. Therefore,
the Fund's interest in the securities owned by the Portfolio is indirect. In
addition to selling an interest to the Fund, the Portfolio may sell interests to
other affiliated and non-affiliated mutual funds or institutional investors.
Such investors will invest in the Portfolio on the same terms and conditions and
will pay a proportionate share of the Portfolio's expenses. However, the other
investors investing in the Portfolio are not required to sell their shares at
the same public offering price as the Fund due to variations in sales
commissions and other operating expenses. Therefore, investors in the Fund
should be aware that these differences may result in differences in returns
experienced by investors in the various funds that invest in the Portfolio. Such
differences in returns are also present in other mutual fund structures,
including funds that have multiple classes of shares. For information regarding
the investment objective, policies and restrictions, see "The Fund's Investment
Objective" and "How the Fund and the Portfolio Invest their Assets". Further
information regarding investment practices may be found in the Statement of
Additional Information.
The Trustees of the Trust have considered the advantages and disadvantages
of investing the assets of the Fund in the Portfolio, as well as the advantages
and disadvantages of the two-tier format. The Trustees believe that the
structure offers opportunities for substantial growth in the assets of the
Portfolio, and affords the potential for economies of scale for the Fund, at
least when the assets of the Portfolio exceed $500 million. The shareholders of
the Fund have previously approved the policy of investing the Fund's assets in
an interest in the Portfolio.
The Fund may withdraw (completely redeem) all its assets from the Portfolio
at any time if the Board of Trustees of the Trust determines that it is in the
best interest of the Fund to do so. The investment objective and the
nonfundamental investment policies of the Fund and the Portfolio may be changed
by the Trustees of the Trust and the Portfolio without obtaining the approval of
the shareholders of the Fund or the investors in the Portfolio, as the case may
be. Any such change of the investment objective of the Fund or the Portfolio
will be preceded by thirty days' advance written notice to the shareholders of
the Fund or the investors in the Portfolio, as the case may be. In the event the
Fund withdraws all of its assets from the Portfolio, or the Board of Trustees of
the Trust determines that the investment objective of the Portfolio is no longer
consistent with the investment objective of the Fund, the Board of Trustees of
the Trust would consider what action might be taken, including investing the
assets of the Fund in another pooled investment entity or retaining an
investment adviser to manage the Fund's assets in accordance with its investment
objective. The Fund's investment performance may be affected by a withdrawal of
all its assets from the Portfolio.
Information regarding other pooled investment entities or funds which invest
in the Portfolio may be obtained by contacting Eaton Vance Distributors, Inc.
(the "Principal Underwriter" or "EVD"), 24 Federal Street, Boston, MA 02110,
(617) 482-8260. Smaller investors in the Portfolio may be adversely affected by
the actions of larger investors in the Portfolio. For example, if a large
investor withdraws from the Portfolio, the remaining investors may experience
higher pro rata operating expenses, thereby producing lower returns.
Additionally, the Portfolio may become less diverse, resulting in increased
portfolio risk, and experience decreasing economies of scale. However, this
possibility exists as well for historically structured funds which have large or
institutional investors.
Until recently, the Administrator sponsored and advised historically
structured funds. Funds which invest all their assets in interests in a separate
investment company are a relatively new development in the mutual fund industry
and, therefore, the Fund may be subject to additional regulations than
historically structured funds.
The Declaration of Trust of the Portfolio provides that the Portfolio will
terminate 120 days after the complete withdrawal of the Fund or any other
investor in the Portfolio, unless either the remaining investors, by unanimous
vote at a meeting of such investors, or a majority of the Trustees of the
Portfolio, by written instrument consented to by all investors, agree to
continue the business of the Portfolio. This provision is consistent with
treatment of the Portfolio as a partnership for Federal income tax purposes. See
"Distributions and Taxes" for further information. Whenever the Fund as an
investor in the Portfolio is requested to vote on matters pertaining to the
Portfolio (other than the termination of the Portfolio's business, which may be
determined by the Trustees of the Portfolio without investor approval), the Fund
will hold a meeting of Fund shareholders and will vote its interest in the
Portfolio for or against such matters proportionately to the instructions to
vote for or against such matters received from Fund shareholders. The Fund shall
vote shares for which it receives no voting instructions in the same proportion
as the shares for which it receives voting instructions. Other investors in the
Portfolio may alone or collectively acquire sufficient voting interests in the
Portfolio to control matters relating to the operation of the Portfolio, which
may require the Fund to withdraw its investment in the Portfolio or take other
appropriate action. Any such withdrawal could result in a distribution "in kind"
of portfolio securities (as opposed to a cash distribution from the Portfolio).
If securities are distributed, the Fund could incur brokerage, tax or other
charges in converting the securities to cash. In addition, the distribution in
kind may result in a less diversified portfolio of investments or adversely
affect the liquidity of the Fund. Notwithstanding the above, there are other
means for meeting shareholder redemption requests, such as borrowing.
The Trustees of the Trust, including a majority of the noninterested
Trustees, have approved written procedures designed to identify and address any
potential conflicts of interest arising from the fact that the Trustees of the
Trust and the Trustees of the Portfolio are the same. Such procedures require
each Board to take actions to resolve any conflict of interest between the Fund
and the Portfolio, and it is possible that the creation of separate Boards may
be considered. For further information concerning the Trustees and officers of
the Trust and the Portfolio, see the Statement of Additional Information.
MANAGEMENT OF THE FUND AND THE PORTFOLIO
- ------------------------------------------------------------------------------
THE PORTFOLIO ENGAGES BOSTON MANAGEMENT AND RESEARCH ("BMR"), A WHOLLY-OWNED
SUBSIDIARY OF EATON VANCE MANAGEMENT ("EATON VANCE"), AS ITS INVESTMENT ADVISER.
EATON VANCE, ITS AFFILIATES AND ITS PREDECESSOR COMPANIES HAVE BEEN MANAGING
ASSETS OF INDIVIDUALS AND INSTITUTIONS SINCE 1924 AND MANAGING INVESTMENT
COMPANIES SINCE 1931.
Acting under the general supervision of the Board of Trustees of the
Portfolio, BMR manages the Portfolio's investments and affairs. Under its
investment advisory agreement with the Portfolio BMR receives a monthly advisory
fee of .0625% (equivalent to .75% annually) of the average daily net assets of
the Portfolio up to $500 million. On net assets of $500 million and over the
annual fee is reduced as follows:
ANNUALIZED FEE RATE
AVERAGE DAILY NET ASSETS FOR THE MONTH (FOR EACH LEVEL)
-------------------------------------- ---------------
$500 million but less than $1 billion .................... 0.6875%
$1 billion but less than $1.5 billion .................... 0.6250%
$1.5 billion but less than $2 billion .................... 0.5625%
$2 billion but less than $3 billion ...................... 0.5000%
$3 billion and over ...................................... 0.4375%
As at December 31, 1994, the Portfolio had net assets of $515,669,513. For
the fiscal year ended December 31, 1994, the Portfolio paid BMR advisory fees
equivalent to .74% of the Portfolio's average daily net assets for such year.
BMR furnishes for the use of the Portfolio office space and all necessary
office facilities, equipment and personnel for servicing the investments of the
Portfolio. BMR also places the portfolio transactions of the Portfolio with many
broker-dealer firms and uses its best efforts to obtain execution of such
transactions at prices which are advantageous to the Portfolio and at reasonably
competitive commission rates. Subject to the foregoing, BMR may consider sales
of shares of the Fund or of other investment companies sponsored by BMR or Eaton
Vance as a factor in the selection of broker-dealer firms to execute portfolio
transactions.
Susan Schiff has acted as the portfolio manager of the Portfolio since it
commenced operations. She has been a Vice President of Eaton Vance and BMR since
1993.
BMR OR EATON VANCE ACTS AS INVESTMENT ADVISER TO INVESTMENT COMPANIES AND
VARIOUS INDIVIDUAL AND INSTITUTIONAL CLIENTS WITH ASSETS UNDER MANAGEMENT OF
APPROXIMATELY $15 BILLION. Eaton Vance is a wholly-owned subsidiary of Eaton
Vance Corp., a publicly held holding company. Eaton Vance Corp., through its
subsidiaries and affiliates, engages in investment management and marketing
activities, fiduciary and banking services, oil and gas operations, real estate
investment, consulting and management, and development of precious metals
properties.
The Trust has retained the services of Eaton Vance to act as Administrator
of the Fund. The Trust has not retained the services of an investment adviser
since the Trust seeks to achieve the investment objective of the Fund by
investing the Fund's assets in the Portfolio. As Administrator, Eaton Vance
provides the Fund with general office facilities and supervises the overall
administration of the Fund. For these services Eaton Vance currently receives no
compensation. The Trustees of the Trust may determine, in the future, to
compensate Eaton Vance for such services.
The Portfolio and the Fund, as the case may be, will each be responsible for
all of its respective costs and expenses not expressly stated to be payable by
BMR under the investment advisory agreement, by Eaton Vance under the
administrative services agreement, or by EVD under the distribution agreement.
SERVICE PLAN
- --------------------------------------------------------------------------------
In addition to advisory fees and other expenses, the Fund pays service fees
pursuant to a Service Plan (the "Plan") designed to meet the requirements of
Rule 12b-1 under the Investment Company Act of 1940 and the service fee
requirements of the revised sales charge rule of the National Association of
Securities Dealers, Inc. THE PLAN PROVIDES THAT THE FUND MAY MAKE SERVICE FEE
PAYMENTS FOR PERSONAL SERVICES AND/OR THE MAINTENANCE OF SHAREHOLDER ACCOUNTS TO
THE PRINCIPAL UNDERWRITER, FINANCIAL SERVICES FIRMS ("AUTHORIZED FIRMS") AND
OTHER PERSONS IN AMOUNTS NOT EXCEEDING .25% OF THE FUND'S AVERAGE DAILY NET
ASSETS FOR ANY FISCAL YEAR. The Trustees of the Trust have implemented the Plan
by authorizing the Fund to make quarterly service fee payments to the Principal
Underwriter and Authorized Firms in amounts not expected to exceed .25% of the
Fund's average daily net assets for any fiscal year based on the value of Fund
shares sold by such persons and remaining outstanding for at least twelve
months. During the fiscal year ended December 31, 1994, the Fund paid or accrued
service fees under the Plan equivalent to .22% of the Fund's average daily net
assets for such year. The Plan is described further in the Statement of
Additional Information,
VALUING FUND SHARES
- ------------------------------------------------------------------------------
THE FUND VALUES ITS SHARES ONCE ON EACH DAY THE NEW YORK STOCK EXCHANGE (THE
"EXCHANGE") IS OPEN FOR TRADING, as of the close of regular trading on the
Exchange (normally 4:00 p.m. New York time). The Fund's net asset value per
share is determined by IBT Fund Services (Canada) Inc., a subsidiary of
Investors Bank & Trust Company ("IBT"), the Fund's and the Portfolio's
custodian, (as agent for the Fund) in the manner authorized by the Trustees of
the Trust. Net asset value is computed by dividing the value of the Fund's total
assets, less its liabilities, by the number of shares outstanding. Because the
Fund invests its assets in an interest in the Portfolio, the Fund's net asset
value will reflect the value of its interest in the Portfolio (which in turn,
reflects the underlying value of the Portfolio's assets and liabilities).
Authorized Firms must communicate an investor's order to the Principal
Underwriter prior to the close of the Principal Underwriter's business day to
receive that day's net asset value per Fund share and the public offering price
based thereon. It is the Authorized Firms' responsibility to transmit orders
promptly to the Principal Underwriter, which is a wholly-owned subsidiary of
Eaton Vance.
The Portfolio's net asset value is also determined as of the close of
regular trading on the Exchange by IBT Fund Services (Canada) Inc. (as agent for
the Portfolio) in the manner authorized by the Trustees of the Portfolio. Net
asset value is computed by subtracting the liabilities of the Portfolio from the
value of its total assets. Mortgage-backed "pass-through" securities are valued
through use of a matrix pricing system which takes into account closing bond
valuations, yield differentials, anticipated prepayments and interest rates. For
further information regarding the valuation of the Portfolio's assets, see
"Determination of Net Asset Value" in the Statement of Additional Information.
Eaton Vance Corp. owns 77.3% of the outstanding stock of IBT, the Fund's and the
Portfolio's custodian.
- --------------------------------------------------------------------------------
SHAREHOLDERS MAY DETERMINE THE VALUE OF THEIR INVESTMENT BY MULTIPLYING THE
NUMBER OF FUND SHARES OWNED BY THE CURRENT NET ASSET VALUE PER SHARE.
- --------------------------------------------------------------------------------
HOW TO BUY FUND SHARES
- ------------------------------------------------------------------------------
SHARES OF THE FUND MAY BE PURCHASED FOR CASH OR ACQUIRED IN EXCHANGE FOR
SECURITIES. Investors may purchase shares of the Fund through Authorized Firms
at the effective public offering price, which price is based on the effective
net asset value per share plus the applicable sales charge. The Fund receives
the net asset value, while the sales charge is divided between the Authorized
Firm and the Principal Underwriter. The Principal Underwriter will furnish the
names of Authorized Firms to an investor upon request. The Fund may suspend the
offering of shares at any time and may refuse any order for the purchase of
shares.
The sales charge may vary depending on the size of the purchase and the
number of shares of Eaton Vance funds the investor may already own, any
arrangement to purchase additional shares during a 13-month period or special
purchase programs. Complete details of how investors may purchase shares at
reduced sales charges under a Statement of Intention, Right of Accumulation, or
various Employee Benefit Plans are available from Authorized Firms or the
Principal Underwriter.
The current sales charges and dealer commissions are:
<TABLE>
<CAPTION>
SALES CHARGE AS SALES CHARGE AS DEALER COMMISSION
PERCENTAGE OF PERCENTAGE OF AS PERCENTAGE OF
AMOUNT OF PURCHASE OFFERING PRICE AMOUNT INVESTED OFFERING PRICE
------------------ -------------- ---------------- --------------
<S> <C> <C> <C>
Less than $50,000 ............................................... 3.75% 3.90% 4.00%
$50,000 but less than $100,000 .................................. 2.75 2.83 3.00
$100,000 but less than $250,000 ................................. 2.25 2.30 2.50
$250,000 but less than $500,000 ................................. 1.75 1.78 2.00
$500,000 but less than $1,000,000 ............................... 1.25 1.27 1.50
$1,000,000 or more .............................................. 0.00* 0.00* 0.25**
<FN>
<F1>Fund shares purchased before March 27, 1995, at net asset value with no initial sales charge by virtue of the purchase
having been in the amount of $1 million or more may be subject to a contingent deferred sales charge upon redemption.
<F2>The Principal Underwriter may pay Authorized Firms that initiate and are responsible for purchases of $1 million or more
a commission at an annual rate of .25% of average daily net assets paid quarterly for one year.
</TABLE>
The Principal Underwriter may at times allow discounts up to the full sales
charge. During periods when the discount includes the full sales charge,
Authorized Firms may be deemed to be underwriters as that term is defined in the
Securities Act of 1933. The Principal Underwriter may, from time to time, at its
own expense, provide additional incentives to Authorized Firms which employ
registered representatives who sell a minimum dollar amount of the Fund's shares
and/or shares of other funds distributed by the Principal Underwriter. In some
instances, such additional incentives may be offered only to certain Authorized
Firms whose representatives are expected to sell significant amounts of shares.
An initial investment in the Fund must be at least $1,000. Once an account
has been established the investor may send investments of $50 or more at any
time directly to the Fund's Transfer Agent (the "Transfer Agent") as follows:
The Shareholder Services Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104.
The $1,000 minimum initial investment is waived for Bank Automated Investing
accounts, which may be established with an investment of $50 or more. See "Eaton
Vance Shareholder Services".
Shares of the Fund may be sold at net asset value to current and retired
Directors and Trustees of Eaton Vance funds, including the Portfolio; to
officers and employees and clients of Eaton Vance and its affiliates; to
registered representatives and employees of Authorized Firms and bank employees
who refer customers to registered representatives of Authorized Firms; and to
such persons' spouses and children under the age of 21 and their beneficial
accounts. Shares may also be issued at net asset value (1) in connection with
the merger of an investment company with the Fund, (2) to investors making an
investment as part of a fixed fee program whereby an entity unaffiliated with
the investment adviser provides multiple investment services, such as
management, brokerage and custody, and (3) where the amount invested represents
redemption proceeds from a mutual fund unaffiliated with Eaton Vance, if the
redemption occurred no more than 60 days prior to the purchase of Fund shares
and the redeemed shares were subject to a sales charge.
No initial sales charge and no contingent deferred sales charge will be
payable or imposed with respect to shares of the Fund purchased by retirement
plans qualified under Section 401, 403(b) or 457 of the Internal Revenue Code of
1986, as amended (the "Code") ("Eligible Plans"). In order to purchase shares
without a sales charge, the plan sponsor of an Eligible Plan must notify the
Transfer Agent of the Fund of its status as an Eligible Plan. Participant
accounting services (including trust fund reconciliation services) will be
offered only through third party recordkeepers and not by EVD. The Fund's
Principal Underwriter may pay commissions to Authorized Firms who initiate and
are responsible for purchases of shares of the Fund by Eligible Plans of up to
1.00% of the amount invested in such shares.
ACQUIRING FUND SHARES IN EXCHANGE FOR SECURITIES. IBT, as escrow agent, will
receive securities acceptable to Eaton Vance, as Administrator, in exchange for
Fund shares at the applicable public offering price as determined above. The
minimum value of securities (or securities and cash) accepted for deposit is
$5,000. Securities accepted will be sold by IBT as agent for the account of
their owner on the day of their receipt by IBT or as soon thereafter as
possible. The number of Fund shares to be issued in exchange for securities will
be the aggregate proceeds from the sale of such securities, divided by the
applicable public offering price per Fund share on the day such proceeds are
received. Eaton Vance will use reasonable efforts to obtain the then current
market price for such securities but does not guarantee the best available
price. Eaton Vance will absorb any transaction costs, such as commissions, on
the sale of the securities.
Securities determined to be acceptable should be transferred via book entry
or physically delivered, in proper form for transfer, through an Authorized
Firm, together with a completed and signed Letter of Transmittal in approved
form (available from Authorized Firms), as follows:
IN THE CASE OF BOOK ENTRY:
Deliver through Depository Trust Co.
Broker #2212
Investors Bank & Trust Company
For A/C EV Traditional Government Obligations Fund
IN THE CASE OF PHYSICAL DELIVERY:
Investors Bank & Trust Company
Attention: EV Traditional Government Obligations Fund
Physical Securities Processing Settlement Area
89 South Street
Boston, MA 02111
Investors who are contemplating an exchange of securities for shares of the
Fund, or their representatives, must contact Eaton Vance to determine whether
the securities are acceptable before forwarding such securities to IBT. Eaton
Vance reserves the right to reject any securities. Exchanging securities for
Fund shares may create a taxable gain or loss. Each investor should consult his
or her tax adviser with respect to the particular Federal, state and local tax
consequences of exchanging securities for Fund shares.
- --------------------------------------------------------------------------------
IF YOU DON'T HAVE AN AUTHORIZED FIRM, EATON VANCE CAN RECOMMEND ONE.
- --------------------------------------------------------------------------------
HOW TO REDEEM FUND SHARES
- ------------------------------------------------------------------------------
A SHAREHOLDER MAY REDEEM FUND SHARES BY DELIVERING TO THE SHAREHOLDER SERVICES
GROUP, INC., BOS725, P.O. BOX 1559, BOSTON, MASSACHUSETTS 02104, during its
business hours a written request for redemption in good order, plus any share
certificates with executed stock powers. The redemption price will be based on
the net asset value per Fund share next computed after such delivery. Good order
means that all relevant documents must be endorsed by the record owner (s)
exactly as the shares are registered and the signature(s) must be guaranteed by
a member of either the Securities Transfer Association's STAMP program or the
New York Stock Exchange's Medallion Signature Program, or certain banks, savings
and loan institutions, credit unions, securities dealers, securities exchanges,
clearing agencies and registered securities associations as required by a
regulation of the Securities and Exchange Commission and acceptable to The
Shareholder Services Group, Inc. In addition, in some cases, good order may
require the furnishing of additional documents such as where shares are
registered in the name of a corporation, partnership or fiduciary.
Within seven days after receipt of a redemption request in good order by The
Shareholder Services Group, Inc., the Fund will make payment in cash for the net
asset value of the shares as of the date determined above, reduced by the amount
of any Federal income tax required to be withheld. Although the Fund normally
expects to make payment in cash for redeemed shares, the Trust, subject to
compliance with applicable regulations, has reserved the right to pay the
redemption price of shares of the Fund, either totally or partially, by a
distribution in kind of readily marketable securities withdrawn by the Fund from
the Portfolio. The securities so distributed would be valued pursuant to the
Portfolio's valuation procedures. If a shareholder received a distribution in
kind, the shareholder could incur brokerage or other charges in converting the
securities to cash.
To sell shares at their net asset value through an Authorized Firm (a
repurchase), a shareholder can place a repurchase order with the Authorized
Firm, who may charge a fee. The value of such shares is based upon the net asset
value calculated after EVD, as the Fund's agent, receives the order. It is the
Authorized Firm's responsibility to transmit promptly repurchase orders to EVD.
Throughout this Prospectus, the word "redemption" is generally meant to include
a repurchase.
If shares were recently purchased, the proceeds of a redemption (or
repurchase) will not be sent until the check (including a certified or cashier's
check) received for the shares purchased has cleared. Payment for shares
tendered for redemption may be delayed up to 15 days from the purchase date when
the purchase check has not yet cleared. Redemptions or repurchases may result in
a taxable gain or loss.
Due to the high cost of maintaining small accounts, the Fund reserves the
right to redeem accounts with balances of less than $1,000. Prior to such a
redemption, shareholders will be given 60 days' written notice to make
additional purchases. Thus, an investor making an initial investment of $1,000
would not be able to redeem shares without being subject to this policy.
However, no such redemption would be required by the Fund if the cause of the
low account balance was a reduction in the net asset value of Fund shares.
REPORTS TO SHAREHOLDERS
- ------------------------------------------------------------------------------
THE FUND WILL ISSUE TO ITS SHAREHOLDERS SEMI-ANNUAL AND ANNUAL REPORTS
CONTAINING FINANCIAL STATEMENTS. Financial statements included in annual reports
are audited by the Fund's independent accountants. Shortly after the end of each
calendar year, the Fund will furnish all shareholders with information necessary
for preparing Federal and state tax returns.
THE LIFETIME INVESTING ACCOUNT/DISTRIBUTION OPTIONS
- ------------------------------------------------------------------------------
AFTER AN INVESTOR MAKES AN INITIAL PURCHASE OF FUND SHARES, THE FUND'S TRANSFER
AGENT, THE SHAREHOLDER SERVICES GROUP, INC., WILL SET UP A LIFETIME INVESTING
ACCOUNT FOR THE INVESTOR ON THE FUND'S RECORDS. This account is a complete
record of all transactions between the investor and the Fund which at all times
shows the balance of shares owned. The Fund will not issue share certificates
except upon request.
At least quarterly, shareholders will receive a statement showing complete
details of any transaction and the current balance in the account. THE LIFETIME
INVESTING ACCOUNT ALSO PERMITS A SHAREHOLDER TO MAKE ADDITIONAL INVESTMENTS IN
SHARES BY SENDING A CHECK FOR $50 OR MORE to The Shareholder Services Group,
Inc.
Any questions concerning a shareholder's account or services available may
be directed by telephone to EATON VANCE SHAREHOLDER SERVICES at 800-225-6265,
extension 2, or in writing to The Shareholder Services Group, Inc., BOS725, P.O.
Box 1559, Boston, MA 02104 (please provide the name of the shareholder, the Fund
and the account number).
THE FOLLOWING DISTRIBUTION OPTIONS WILL BE AVAILABLE TO ALL LIFETIME
INVESTING ACCOUNTS and may be changed as often as desired by written notice to
the Fund's dividend disbursing agent, The Shareholder Services Group, Inc.,
BOS725, P.O. Box 1559, Boston, MA 02104. The currently effective option will
appear on each account statement.
Share Option -- Dividends and capital gains will be reinvested in additional
shares.
Income Option -- Dividends will be paid in cash, and capital gains will be
reinvested in additional shares.
Cash Option -- Dividends and capital gains will be paid in cash.
The Share Option will be assigned if no other option is specified.
Distributions, including those reinvested, will be reduced by any withholding
required under Federal income tax laws.
If the Income Option or Cash Option has been selected, dividend and/or
capital gains distribution checks which are returned by the United States Postal
Service as not deliverable or which remain uncashed for six months or more will
be reinvested in the account in shares at the then current net asset value.
Furthermore, the distribution option on the account will be automatically
changed to the Share Option until such time as the shareholder selects a
different option.
DISTRIBUTION INVESTMENT OPTION. In addition to the distribution options set
forth above, dividends and/or capital gains may be invested in additional shares
of another Eaton Vance fund. Before selecting this option, a shareholder should
obtain a prospectus of the other Eaton Vance fund and consider its objectives
and policies carefully.
"STREET NAME" ACCOUNTS. If shares of the Fund are held in a "street name"
account with an Authorized Firm, all recordkeeping, transaction processing and
payments of distributions relating to the beneficial owner's account will be
performed by the Authorized Firm, and not by the Fund and its Transfer Agent.
Since the Fund will have no record of the beneficial owner's transactions, a
beneficial owner should contact the Authorized Firm to purchase, redeem or
exchange shares, to make changes in or give instructions concerning the account,
or to obtain information about the account. The transfer of shares in a "street
name" account to an account with another dealer or to an account directly with a
Fund involves special procedures and will require the beneficial owner to obtain
historical purchase information about the shares in the account from the
Authorized Firm. Before establishing a "street name" account with an investment
firm, or transferring the account to another investment firm, an investor
wishing to reinvest distributions should determine whether the firm which will
hold the shares allows reinvestment of distributions in "street name" accounts.
- --------------------------------------------------------------------------------
UNDER A LIFETIME INVESTING ACCOUNT A SHAREHOLDER CAN MAKE ADDITIONAL INVESTMENTS
IN SHARES BY SENDING A CHECK FOR $50 OR MORE.
- --------------------------------------------------------------------------------
THE EATON VANCE EXCHANGE PRIVILEGE
- ------------------------------------------------------------------------------
Shares of the Fund currently may be exchanged for shares of any of the following
funds: Eaton Vance Cash Management Fund, Eaton Vance Income Fund of Boston,
Eaton Vance Municipal Bond Fund L.P., Eaton Vance Tax Free Reserves and any fund
in the Eaton Vance Traditional Group of Funds on the basis of the net asset
value per share of each fund at the time of the exchange (plus, in the case of
an exchange made within six months of the date of purchase, an amount equal to
the difference, if any, between the sales charge previously paid on the shares
being exchanged and the sales charge payable on the shares being acquired). Such
exchange offers are available only in states where shares of the fund being
acquired may be legally sold.
Each exchange must involve shares which have a net asset value of at least
$1,000. The exchange privilege may be changed or discontinued without penalty.
Shareholders will be given sixty (60) days' notice prior to any termination or
material amendment of the exchange privilege. The Fund does not permit the
exchange privilege to be used for "Market Timing" and may terminate the exchange
privilege for any shareholder account engaged in Market Timing activity. Any
shareholder account for which more than two round-trip exchanges are made within
any twelve month period will be deemed to be engaged in Market Timing.
Furthermore, a group of unrelated accounts for which exchanges are entered
contemporaneously by a financial intermediary will be considered to be engaged
in Market Timing.
The Shareholder Services Group, Inc. makes exchanges at the next determined
net asset value after receiving an exchange request in good order (see "How to
Redeem Fund Shares"). Consult The Shareholder Services Group, Inc. for
additional information concerning the exchange privilege. Applications and
prospectuses of other funds are available from Authorized Firms or the Principal
Underwriter. The prospectus for each fund describes its investment objectives
and policies, and shareholders should obtain a prospectus and consider these
objectives and policies carefully before requesting an exchange.
Shares of certain other funds for which Eaton Vance acts as investment
adviser or administrator may be exchanged for Fund shares on the basis of the
net asset value per share of each fund at the time of the exchange, but subject
to any restrictions or qualifications set forth in the current prospectus of any
such fund.
Telephone exchanges are accepted by The Shareholder Services Group, Inc.
provided that the investor has not disclaimed in writing the use of the
privilege. To effect such exchanges, call The Shareholder Services Group, Inc.
at 800-262-1122 or, within Massachusetts, 617-573-9403, Monday through Friday,
9:00 a.m. to 4:00 p.m. (Eastern Standard Time). Shares acquired by telephone
exchange must be registered in the same name(s) and with the same address as the
shares being exchanged. Neither the Fund, the Principal Underwriter nor The
Shareholder Services Group, Inc. will be responsible for the authenticity of
exchange instructions received by telephone, provided that reasonable procedures
to confirm that instructions communicated are genuine have been followed.
Telephone instructions will be tape recorded. In times of drastic economic or
market changes, a telephone exchange may be difficult to implement. An exchange
may result in a taxable gain or loss.
EATON VANCE SHAREHOLDER SERVICES
- ------------------------------------------------------------------------------
THE FUND OFFERS THE FOLLOWING SERVICES, WHICH ARE VOLUNTARY, INVOLVE NO EXTRA
CHARGE, AND MAY BE CHANGED OR DISCONTINUED WITHOUT PENALTY AT ANY TIME. Full
information on each of the services described below and an application, where
required, are available from Authorized Firms or the Principal Underwriter. The
cost of administering such services for the benefit of shareholders who
participate in them is borne by the Fund as an expense to all shareholders.
INVEST-BY-MAIL -- FOR PERIODIC SHARE ACCUMULATION: Once the $1,000 minimum
investment has been made, checks of $50 or more payable to the order of EV
Traditional Government Obligations Fund may be mailed directly to The
Shareholder Services Group, Inc., BOS725, P.O. Box 1559, Boston, MA 02104 at any
time -- whether or not distributions are reinvested. The name of the
shareholder, the Fund and the account number should accompany each investment.
BANK AUTOMATED INVESTING -- FOR REGULAR SHARE ACCUMULATION: Cash investments of
$50 or more may be made automatically each month or quarter from the
shareholder's bank account. The $1,000 minimum initial investment and small
account redemption policy are waived for these accounts.
STATEMENT OF INTENTION: Purchases of $50,000 or more made over a 13-month
period are eligible for reduced sales charges. See "Statement of Intention and
Escrow Agreement".
RIGHT OF ACCUMULATION: Purchases may qualify for reduced sales charges when the
current market value of holdings (shares at current offering price), plus new
purchases, reaches $50,000 or more. Shares of the Eaton Vance funds listed under
"The Eaton Vance Exchange Privilege" may be combined under the Statement of
Intention and Right of Accumulation.
WITHDRAWAL PLAN: A shareholder may draw on shareholdings systematically with
monthly or quarterly checks in an amount specified by the shareholder. A minimum
deposit of $5,000 in shares is required.
REINVESTMENT PRIVILEGE: A SHAREHOLDER WHO HAS REPURCHASED OR REDEEMED SHARES MAY
REINVEST ANY PORTION OR ALL OF THE REPURCHASE OR REDEMPTION PROCEEDS (PLUS THAT
AMOUNT NECESSARY TO ACQUIRE A FRACTIONAL SHARE TO ROUND OFF THE PURCHASE TO THE
NEAREST FULL SHARE) IN SHARES OF THE FUND, or, provided that the shares
repurchased or redeemed have been held for at least 30 days, in shares of any of
the other funds offered by the Principal Underwriter subject to an initial sales
charge, at net asset value, provided that the reinvestment is effected within 30
days after such repurchase or redemption. Shares are sold to a reinvesting
shareholder at the next determined net asset value following timely receipt of a
written purchase order by the Principal Underwriter or by the fund whose shares
are to be purchased (or by such fund's transfer agent). The privilege is also
available to holders of shares of the other funds offered subject to an initial
sales charge by the Principal Underwriter who wish to reinvest such redemption
or repurchase proceeds in shares of the Fund. To the extent that any shares of
the Fund are sold at a loss and the proceeds are reinvested in shares of the
Fund (or other shares of the Fund are acquired within the period beginning 30
days before and ending 30 days after the date of the redemption) some or all of
the loss generally will not be allowed as a tax deduction. Special rules may
apply to the computation of gain or loss and to the deduction of loss on a
repurchase or redemption followed by a reinvestment. See "Distributions and
Taxes". Shareholders should consult their tax advisers concerning the tax
consequences of reinvestments.
TAX-SHELTERED RETIREMENT PLANS: Shares of the Fund are available for purchase in
connection with the following tax-sheltered retirement plans:
-- Pension and Profit Sharing Plans for self-employed individuals,
corporations and non-profit organizations;
-- Individual Retirement Account Plans for individuals and their non-
employed spouses; and
-- 403(b) Retirement Plans for employees of public school systems,
hospitals, colleges and non-profit organizations meeting certain
requirements of the Code.
Detailed information concerning these plans, including certain exceptions to
minimum investment requirements, and copies of the plans are available from the
Principal Underwriter. This information should be read carefully and
consultation with an attorney or tax adviser may be advisable. The information
sets forth the service fee charged for retirement plans and describes the
Federal income tax consequences of establishing a plan. Under all plans,
dividends and distributions will be automatically reinvested in additional
shares.
DISTRIBUTIONS AND TAXES
- ------------------------------------------------------------------------------
SUBSTANTIALLY ALL OF THE INVESTMENT INCOME ALLOCATED TO THE FUND BY THE
PORTFOLIO, LESS THE FUND'S DIRECT AND ALLOCATED EXPENSES, WILL BE DECLARED DAILY
AS A DISTRIBUTION TO FUND SHAREHOLDERS OF RECORD AT THE TIME OF THE DECLARATION
AND WILL GENERALLY BE TAXABLE TO SHAREHOLDERS AS ORDINARY INCOME, WHETHER TAKEN
IN CASH OR REINVESTED IN ADDITIONAL SHARES. Such distributions, whether taken in
cash or reinvested in additional shares, will ordinarily be paid on the
fifteenth day of each month or the next business day thereafter. Daily
distribution crediting will commence on the day that collected funds for the
purchase of Fund shares are available at the Transfer Agent. Distributions from
net short-term capital gains and certain net foreign exchange gains are taxable
to shareholders as ordinary income, and distributions from net long-term capital
gains are taxable to shareholders as long-term capital gains, whether received
in cash or additional shares of the Fund and regardless of the length of time
Fund shares have been owned by the shareholders. Gains or losses attributable to
transactions by the Portfolio in options on securities, certain currency forward
contracts, futures contracts and options on futures may be treated as 40%
short-term and 60% long-term capital gains or losses or, in the case of certain
of such transactions relating to foreign currencies, as ordinary income or loss
for Federal income tax purposes. The Portfolio may have to limit its activities
in these transactions in order to enable the Fund to maintain its qualification
as a regulated investment company.
The amount of the Fund's distributions will vary from time to time depending
on general economic and market conditions, the composition of the Portfolio's
investments, its current investment strategies and the operating expenses of the
Fund and the Portfolio. While distributions will vary from time to time in
response to the factors referred to above, the Fund's management will attempt to
pursue a policy of maintaining a relatively stable monthly distribution payment
to its shareholders. The distributions paid by the Fund during any particular
period may be more or less than the amount of net investment income and net
short-term capital gain actually earned by the Portfolio and allocated to the
Fund during such period. The Portfolio has elected mixed straddle accounting
under the Code for one or more designated classes of activities involving mixed
straddles.
The Portfolio is required to accrue original issue discount on zero coupon
and certain other securities and has elected to accrue market discount on debt
obligations which are purchased at a market discount. While enhancing the Fund's
current return, such accrual will also accelerate the Fund's recognition of
interest income, distributions of which will be taxable as ordinary income.
Furthermore, because the Fund seeks to stabilize monthly distribution payments
and the Portfolio has elected mixed straddle accounting under the Code, it is
possible that a portion of the Fund's aggregate distributions during any year
will be treated as a return of capital for tax purposes, rather than taxable
distributions of dividends or capital gains. The Fund will inform the
shareholders after the end of each year what portion, if any, of such
distributions constitutes a return of capital for tax purposes.
Sales charges paid upon a purchase of shares of the Fund cannot be taken
into account for purposes of determining gain or loss on a redemption or
exchange of the shares before the 91st day after their purchase to the extent
shares of the Fund or of another fund are subsequently acquired pursuant to the
Fund's reinvestment or exchange privilege. Any disregarded amounts will result
in an adjustment to the shareholder's tax basis in some or all of any other
shares acquired.
Shareholders will receive annually tax information notices and Forms 1099 to
assist in the preparation of their Federal and state tax returns for the prior
calendar year's distributions, proceeds from the redemption or exchange of Fund
shares, and Federal income tax (if any) withheld by the Fund's Transfer Agent.
In order to qualify as a regulated investment company under the Code, the
Fund must satisfy certain requirements relating to the sources of its income,
the distribution of its income, and the diversification of its assets. In
satisfying these requirements, the Fund will treat itself as owning its
proportionate share of each of the Portfolio's assets and as entitled to the
income of the Portfolio properly attributable to such share.
- --------------------------------------------------------------------------------
AS A REGULATED INVESTMENT COMPANY UNDER THE CODE, THE FUND DOES NOT PAY FEDERAL
INCOME OR EXCISE TAXES TO THE EXTENT THAT IT DISTRIBUTES TO SHAREHOLDERS ITS NET
INVESTMENT INCOME AND NET REALIZED CAPITAL GAINS IN ACCORDANCE WITH THE TIMING
REQUIREMENTS IMPOSED BY THE CODE. AS A PARTNERSHIP UNDER THE CODE, THE PORTFOLIO
DOES NOT PAY FEDERAL INCOME OR EXCISE TAXES.
- --------------------------------------------------------------------------------
PERFORMANCE INFORMATION
- ------------------------------------------------------------------------------
FROM TIME TO TIME, THE FUND MAY ADVERTISE ITS YIELD AND/OR AVERAGE ANNUAL TOTAL
RETURN. The Fund's current yield is calculated by dividing the net investment
income per share during a recent 30-day period by the maximum offering price per
share of the Fund on the last day of the period and annualizing the resulting
figure. The Fund's average annual total return is determined by multiplying a
hypothetical initial purchase order of $1,000 by the average annual compounded
rate of return (including capital appreciation/ depreciation, and dividends and
distributions paid and reinvested) for the stated period and annualizing the
result. The average annual total return calculation assumes the maximum sales
charge is deducted from the initial $1,000 purchase order and that all dividends
and distributions are reinvested at net asset value on the reinvestment dates
during the period. The Fund may also publish annual and cumulative total return
figures from time to time.
The Fund may also publish its distribution rate and/or its effective
distribution rate. The Fund's distribution rate is computed by dividing the most
recent monthly distribution per share annualized, by the current maximum
offering price per share (including the maximum sales charge). The Fund's
effective distribution rate is computed by dividing the distribution rate by the
ratio used to annualize the most recent monthly distribution and reinvesting the
resulting amount for a full year on the basis of such ratio. The effective
distribution rate will be higher than the distribution rate because of the
compounding effect of the assumed reinvestment. Investors should note that the
Fund's yield is calculated using a standardized formula the income component of
which is computed from the yields to maturity of all debt obligations held by
the Portfolio based on prescribed methods (with all purchases and sales of
securities during such period included in the income calculation on a settlement
date basis), whereas the distribution rate is based on the Fund's last monthly
distribution, which tends to be relatively stable and may be more or less than
the amount of net investment income and short-term capital gain actually earned
by the Fund during the month.
The Fund may also furnish total return calculations based on investments at
various sales charge levels or at net asset value. Any performance data which is
based on the Fund's net asset value per share would be reduced if a sales charge
were taken into account.
Investors should note that the investment results of the Fund will fluctuate
over time, and any presentation of the Fund's yield, total return, distribution
rate or effective distribution rate for any prior period should not be
considered as a representation of what an investment may earn or what the Fund's
yield, total return, distribution rate or effective distribution rate may be in
any future period.
STATEMENT OF INTENTION AND ESCROW AGREEMENT
- ------------------------------------------------------------------------------
TERMS OF ESCROW. If the investor, on an application, makes a Statement of
Intention to invest a specified amount over a thirteen-month period, then out of
the initial purchase (or subsequent purchases if necessary) 5% of the dollar
amount specified on the application shall be held in escrow by the escrow agent
in the form of shares (computed to the nearest full share at the public offering
price applicable to the initial purchase hereunder) registered in the investor's
name. All income dividends and capital gain distributions on escrowed shares
will be paid to the investor or to the investor's order.
When the minimum investment so specified is completed, the escrowed shares
will be delivered to the investor. If the investor has an accumulation account
the shares will remain on deposit under the investor's account.
If total purchases under this Statement of Intention are less than the
amount specified, the investor will promptly remit to EVD any difference between
the sales charge on the amount specified and on the amount actually purchased.
If the investor does not within 20 days after written request by EVD or the
Authorized Firm pay such difference in sales charge, the escrow agent will
redeem an appropriate number of the escrowed shares in order to realize such
difference. Full shares remaining after any such redemption together with any
excess cash proceeds of the shares so redeemed will be delivered to the investor
or to the investor's order by the escrow agent.
In signing the application, the investor irrevocably constitutes and
appoints the escrow agent the investor's attorney to surrender for redemption
any or all escrowed shares with full power of substitution in the premises.
PROVISION FOR RETROACTIVE PRICE ADJUSTMENT. If total purchases made under this
Statement are large enough to qualify for a lower sales charge than that
applicable to the amount specified, all transactions will be computed at the
expiration date of this Statement to give effect to the lower charge. Any
difference in sales charge will be refunded to the investor in cash, or applied
to the purchase of additional shares at the lower charge if specified by the
investor. This refund will be made by the Authorized Firm and by EVD. If at the
time of the recomputation a firm other than the original firm is placing the
orders, the adjustment will be made only on those shares purchased through the
firm then handling the account.
<PAGE>
INVESTMENT ADVISER OF
GOVERNMENT OBLIGATIONS PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF EV TRADITIONAL
GOVERNMENT OBLIGATIONS FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
EV TRADITIONAL
GOVERNMENT OBLIGATIONS FUND
24 FEDERAL STREET
BOSTON, MA 02110
T-GOP
EV TRADITIONAL
GOVERNMENT
OBLIGATIONS
FUND
PROSPECTUS
MAY 1, 1995
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
May 1, 1995
EV CLASSIC GOVERNMENT OBLIGATIONS FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides information about EV Classic Government Obligations Fund (the "Fund")
and certain other series of Eaton Vance Government Obligations Trust (the
"Trust"). Part II provides information solely about the Fund. Where appropriate,
Part I includes cross-references to the relevant sections of Part II that
provide additional, Fund-specific information.
TABLE OF CONTENTS Page
PART I
Investment Objective .......................................... 2
Additional Information about Investment Policies .............. 2
Investment Restrictions ....................................... 7
Trustees and Officers ......................................... 8
Investment Adviser and Administrator .......................... 10
Custodian ..................................................... 13
Service for Withdrawal ........................................ 13
Determination of Net Asset Value .............................. 13
Investment Performance ........................................ 14
Taxes ......................................................... 16
Portfolio Security Transactions ............................... 18
Other Information ............................................. 19
Independent Accountants ....................................... 20
PART II
Fees and Expenses ............................................. a-1
Principal Underwriter ......................................... a-1
Distribution Plan ............................................. a-2
Performance Information ....................................... a-4
Additional Tax Matters ........................................ a-4
Control Persons and Principal Holders of Securities ........... a-5
Financial Statements .......................................... a-6
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED MAY 1, 1995, AS SUPPLEMENTED FROM
TIME TO TIME. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN
CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE
BY CONTACTING EATON VANCE DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE
BACK COVER FOR ADDRESS AND PHONE NUMBER).
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
May 1, 1995
EV MARATHON GOVERNMENT OBLIGATIONS FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides information about EV Marathon Government Obligations Fund (the "Fund")
and certain other series of Eaton Vance Government Obligations Trust (the
"Trust"). Part II provides information solely about the Fund. Where appropriate,
Part I includes cross-references to the relevant sections of Part II that
provide additional, Fund-specific information.
TABLE OF CONTENTS Page
PART I
Investment Objective ........................................... 2
Additional Information about Investment Policies ............... 2
Investment Restrictions ........................................ 7
Trustees and Officers .......................................... 8
Investment Adviser and Administrator ........................... 10
Custodian ...................................................... 13
Service for Withdrawal ......................................... 13
Determination of Net Asset Value ............................... 13
Investment Performance ......................................... 14
Taxes .......................................................... 16
Portfolio Security Transactions ................................ 18
Other Information .............................................. 19
Independent Accountants ........................................ 20
PART II
Fees and Expenses .............................................. a-1
Principal Underwriter .......................................... a-1
Distribution Plan .............................................. a-2
Performance Information ........................................ a-4
Additional Tax Matters ......................................... a-5
Control Persons and Principal Holders of Securities ............ a-5
Financial Statements ........................................... a-6
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED MAY 1, 1995, AS SUPPLEMENTED FROM
TIME TO TIME. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN
CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE
BY CONTACTING EATON VANCE DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE
BACK COVER FOR ADDRESS AND PHONE NUMBER).
<PAGE>
PART B
INFORMATION REQUIRED IN A STATEMENT OF ADDITIONAL INFORMATION
STATEMENT OF
ADDITIONAL INFORMATION
May 1, 1995
EV TRADITIONAL GOVERNMENT OBLIGATIONS FUND
24 Federal Street
Boston, Massachusetts 02110
(800) 225-6265
This Statement of Additional Information consists of two parts. Part I
provides information about EV Traditional Government Obligations Fund (the
"Fund") and certain other series of Eaton Vance Government Obligations Trust
(the "Trust"). Part II provides information solely about the Fund. Where
appropriate, Part I includes cross-references to the relevant sections of Part
II that provide additional, Fund-specific information.
TABLE OF CONTENTS
Page
PART I
Investment Objective ............................................ 2
Additional Information about Investment Policies ................ 2
Investment Restrictions ......................................... 7
Trustees and Officers ........................................... 8
Investment Adviser and Administrator ............................ 10
Custodian ....................................................... 13
Service for Withdrawal .......................................... 13
Determination of Net Asset Value ................................ 13
Investment Performance .......................................... 14
Taxes ........................................................... 16
Portfolio Security Transactions ................................. 18
Other Information ............................................... 19
Independent Accountants ......................................... 26
PART II
Fees and Expenses ............................................... a-1
Services For Accumulation ....................................... a-2
Principal Underwriter ........................................... a-2
Service Plan .................................................... a-3
Performance Information ......................................... a-4
Additional Tax Matters .......................................... a-5
Control Persons and Principal Holders of Securities ............. a-5
Financial Statements ............................................ a-6
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS AND IS
AUTHORIZED FOR DISTRIBUTION TO PROSPECTIVE INVESTORS ONLY IF PRECEDED OR
ACCOMPANIED BY THE FUND'S PROSPECTUS DATED MAY 1, 1995, AS SUPPLEMENTED FROM
TIME TO TIME. THIS STATEMENT OF ADDITIONAL INFORMATION SHOULD BE READ IN
CONJUNCTION WITH SUCH PROSPECTUS, A COPY OF WHICH MAY BE OBTAINED WITHOUT CHARGE
BY CONTACTING EATON VANCE DISTRIBUTORS, INC. (THE "PRINCIPAL UNDERWRITER") (SEE
BACK COVER FOR ADDRESS AND PHONE NUMBER).
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART I
This Part I provides information about the Fund and certain other series of
the Trust.
INVESTMENT OBJECTIVE
The investment objective of the Fund is to realize a high current return.
The Fund currently seeks to meet its investment objective by investing its
assets in the Government Obligations Portfolio (the "Portfolio"), a separate
registered investment company with the same investment objective as the Fund and
substantially the same investment policies and restrictions as the Fund. The
Portfolio seeks to achieve its investment objective by investing its securities
issued, guaranteed or otherwise backed by the U.S. Government, including
mortgage-backed securities of federal agencies and federally chartered
corporations, and by engaging in active management strategies, including futures
transactions and related techniques for hedging purposes.
The Trustees of the Trust may withdraw the Fund's investment from the
Portfolio at any time, if they determine that it is in the best interests of the
Fund to do so. Upon any such withdrawal, the Fund's assets would be invested in
another investment company with substantially the same investment objective,
policies and restrictions as those of the Fund or directly in investment
securities in accordance with the Portfolio's investment policies, as described
below. The approval of the Fund's shareholders would not be required to change
the Portfolio's investment objective or any of the Portfolio's investment
policies discussed below, including those concerning security transactions.
ADDITIONAL INFORMATION ABOUT INVESTMENT POLICIES
Because the investment characteristics of the Fund will correspond directy
to those of the Portfolio, the following is a discussion of the various
investments of and techniques employed by the Portfolio.
MORTGAGE-BACKED SECURITIES
The Portfolio's investments in mortgage-backed securities may include
conventional mortgage pass-through securities, SMBS and certain classes of
multiple class CMOs (as described below). Examples of SMBS include interest only
and principal only securities. The CMO classes in which the Portfolio may invest
include sequential and parallel pay CMOs, including planned amortization class
and target amortization class securities. The Portfolio may also invest in the
floating rate mortgage-backed securities listed under "Indexed Securities."
GNMA Certificates are mortgage-backed securities representing part ownership
of a pool of mortgage loans. These loans -- issued by lenders such as mortgage
bankers, commercial banks and savings and loan associations -- are either
insured by the Federal Housing Administration or guaranteed by the Veterans
Administration. A "pool" or group or such mortgages is assembled and, after
being approved by GNMA, is offered to investors through securities dealers. Once
such pool is approved by GNMA, the timely payment of interest and principal on
the Certificates issued representing such pool is guaranteed by the full faith
and credit of the U.S. Government. As mortgage-backed securities, GNMA
Certificates differ from bonds in that the principal is paid back by the
borrower over the length of the loan rather than returned in a lump sum at
maturity. GNMA Certificates are called "pass-through" securities because a pro
rata share of both regular interest and principal payments, as well as
unscheduled early prepayments, on the underlying mortgage pool is passed through
monthly to the holder of the Certificate (i.e., the Portfolio). As indicated
below, since the unscheduled prepayment rate of the underlying mortgage pool
covered by a "pass-through" security cannot be predicted with accuracy, the
average life of a particular issue of GNMA Certificates cannot be accurately
predicted. The Portfolio may purchase GNMA Certificates and various other
mortgage-backed securities on a when-issued basis subject to certain limitations
and requirements.
The Federal Home Loan Mortgage Corporation ("FHLMC"), a corporate
instrumentality of the U.S. Government created by Congress for the purposes of
increasing the availability of mortgage credit for residential housing, issues
participation certificates ("PCs") representing undivided interests in FHLMC's
mortgage portfolio. While FHLMC guarantees the timely payment of interest and
ultimate collection of the principal of its PCs, its PCs are not backed by the
full faith and credit of the U.S. Government. FHLMC PCs differ from GNMA
Certificates in that the mortgages underlying the PCs are mostly "conventional"
mortgages rather than mortgages insured or guaranteed by a federal agency or
instrumentality. However, in several other respects, such as the monthly
pass-through of interest and principal (including unscheduled prepayments) and
the unpredictability of future unscheduled prepayments on the underlying
mortgage pools, FHLMC PCs are similar to GNMA Certificates.
The Federal National Mortgage Association ("FNMA"), a federally chartered
corporation owned entirely by private stockholders, purchases both conventional
and federally insured or guaranteed residential mortgages from various entities,
including savings and loan associations, savings banks, commercial banks, credit
unions and mortgage bankers, and packages pools of such mortgages in the form of
pass-through securities generally called FNMA Mortgage-Backed Certificates,
which are guaranteed as to timely payment of principal and interest by FNMA but
are not backed by the full faith and credit of the U.S. Government. Like GNMA
Certificates and FHLMC PCs, these pass-through securities are subject to the
unpredictability of unscheduled prepayments on the underlying mortgage pools.
While it is not possible to accurately predict the life of a particular
issue of a mortgage-backed "pass-through" security held by the Portfolio, the
actual life of any such security is likely to be substantially less than the
average maturity of the mortgage pool underlying the security. This is because
unscheduled early prepayments of principal on the security owned by the
Portfolio will result from the prepayment, refinancing or foreclosure of the
underlying mortgage loans in the mortgage pool. The Portfolio, when the monthly
payments (which may include unscheduled prepayments) on such a security are
passed through to it, may be able to reinvest them only at a lower rate of
interest. Because of the regular scheduled payments of principal and the early
unscheduled prepayments of principal, the mortgage-backed "pass-through"
security is less effective than other types of obligations as a means of
"locking-in" attractive long-term interest rates. As a result, this type of
security may have less potential for capital appreciation during periods of
declining interest rates than other U.S. Government securities of comparable
maturities, although many issues of mortgage-backed "pass-through" securities
may have a comparable risk of decline in market value during periods of rising
interest rates. If such a security has been purchased by the Portfolio at a
premium above its par value, both a scheduled payment of principal and an
unscheduled prepayment of principal, which would be made at par, will accelerate
the realization of a loss equal to that portion of the premium applicable to the
payment or prepayment and will reduce the Fund's total return. If such a
security has been purchased by the Portfolio at a discount from its par value,
both a scheduled payment of principal and an unscheduled prepayment of principal
will increase current and total returns and will accelerate the recognition of
income, which, when distributed to Fund shareholders, will be taxable as
ordinary income. The Portfolio intends to acquire the majority of its holdings
of mortgage-backed "pass-through" securities at a discount from par value.
COLLATERALIZED MORTGAGE OBLIGATIONS ("CMOS")
CMOs are debt securities issued by the FHLMC and by financial institutions
and other mortgage lenders which are generally fully collateralized by a pool of
mortgages held under an indenture. The key feature of the CMO structure is the
prioritization of the cash flows from a pool of mortgages among the several
classes of CMO holders, thereby creating a series of obligations with varying
rates and maturities appealing to a wide range of investors. CMOs generally are
secured by an assignment to a trustee under the indenture pursuant to which the
bonds are issued of collateral consisting of a pool of mortgages. Payments with
respect to the underlying mortgages generally are made to the trustee under the
indenture. Payments of principal and interest on the underlying mortgages are
not passed through to the holders of the CMOs as such (that is, the character of
payments of principal and interest is not passed through and therefore payments
to holders of CMOs attributable to interest paid and principal repaid on the
underlying mortgages do not necessarily constitute income and return of capital,
respectively, to such holders), but such payments are dedicated to payment of
interest on and repayment of principal of the CMOs. CMOs are issued in two or
more classes or series with varying maturities and stated rates of interest
determined by the issuer. Because the interest and principal payments on the
underlying mortgages are not passed through to holders of CMOs, CMOs of varying
maturities may be secured by the same pool of mortgages, the payments on which
are used to pay interest to each class and to retire successive maturities in
sequence. CMOs are designed to be retired as the underlying mortgages are
repaid. In the event of sufficient early prepayments on such mortgages, the
class or series of CMO first to mature generally will be retired prior to
maturity. Therefore, although in most cases the issuer of CMOs will not supply
additional collateral in the event of such prepayments, there will be sufficient
collateral to secure CMOs that remain outstanding. Currently, Boston Management
& Research (the "Investment Adviser") will consider privately issued CMOs or
other mortgage-backed securities as possible investments for the Portfolio only
when the mortgage collateral is insured, guaranteed or otherwise backed by the
U.S. Government or one or more of its agencies or instrumentalities (e.g.,
insured by the Federal Housing Administration or Farmers Home Administration or
guaranteed by the Administrator of Veterans Affairs or consisting in whole or in
part of U.S. Government securities).
STRIPPED MORTGAGE-BACKED SECURITIES ("SMBS")
The Portfolio may invest in SMBS, which are derivative multiclass mortgage
securities. The Portfolio may only invest in SMBS issued or guaranteed by the
U.S. Government, its agencies or instrumentalities. SMBS are usually structured
with two classes that receive different proportions of the interest and
principal distributions from a pool of mortgages. A common type of SMBS will
have one class receiving all of the interest from the mortgages, while the other
class will receive all of the principal. However, in some instances, one class
will receive some of the interest and most of the principal while the other
class will receive most of the interest and the remainder of the principal. If
the underlying mortgages experience greater than anticipated prepayments of
principal, the Portfolio may fail to fully recoup its initial investment in
these securities. Although the market for such securities is increasingly
liquid, certain SMBS may not be readily marketable and will be considered
illiquid for purposes of the Portfolio's limitation on investments in illiquid
securities. The determination of whether a particular SMBS is liquid will be
made by the Investment Adviser under guidelines and standards established by the
Trustees of the Portfolio. The market value of the class consisting entirely of
principal payments generally is unusually volatile in response to changes in
interest rates. The yields on a class of SMBS that receives all or most of the
interest from mortgages are generally higher than prevailing market yields on
other mortgage-backed securities because their cash flow patterns are more
volatile and there is a greater risk that the initial investment will not be
fully recouped. The Investment Adviser will seek to manage these risks (and
potential benefits) by investing in a variety of such securities and by using
certain hedging techniques.
INDEXED SECURITIES
The indexed securities purchased by the Portfolio may include interest only
("IO") and principal only ("PO") securities, floating rate securities linked to
the Cost of Funds Index ("COFI floaters"), other "lagging rate" floating rate
securities, floating rate securities that are subject to a maximum interest rate
("capped floaters"), leveraged floating rate securities ("super floaters"),
leveraged inverse floating rate securities ("inverse floaters"), dual index
floaters, range floaters, index amortizing notes and various currency indexed
notes.
RISKS OF CERTAIN MORTGAGE-BACKED AND INDEXED SECURITIES
The risk of early prepayments is the primary risk associated with mortgage
IOs, super floaters and other leveraged floating rate mortgage-backed
securities. The primary risks associated with COFI floaters, other "lagging
rate" floaters, capped floaters, inverse floaters, POs and leveraged inverse IOs
are the potential extension of average life and/or depreciation due to rising
interest rates. Although not mortgage-backed securities, index amortizing notes
and other callable securities are subject to extension risk resulting from the
issuer's failure to exercise its option to call or redeem the notes before their
stated maturity date. The residual classes of CMOs are subject to both
prepayment and extension risk.
Other types of floating rate derivative debt securities present more complex
types of interest rate risks. For example, range floaters are subject to the
risk that the coupon will be reduced to below market rates if a designated
interest rate floats outside of a specified interest rate band or collar. Dual
index or yield curve floaters are subject to depreciation in the event of an
unfavorable change in the spread between two designated interest rates. The
market values of currency-linked securities may be very volatile and may decline
during periods of unstable currency exchange rates.
LEVERAGE THROUGH BORROWING
The Portfolio and the other investment companies managed by the Investment
Adviser or Eaton Vance Management participate in a Line of Credit Agreement (the
"Credit Agreement") with Citibank, N.A. ("Citibank"). Citibank agrees, in the
Credit Agreement, to consider requests from the Portfolio and such other
investment companies that Citibank make advances ("Advances") to the Portfolio
and such other investment companies from time to time. The aggregate amount of
all such Advances to all such borrowers will not exceed $120,000,000, of which
$100,000,000 is a discretionary facility and $20,000,000 a committed facility.
The Portfolio has currently determined that its borrowings under the Credit
Agreement will not exceed, at any one time outstanding, the lesser of (a) 1/3 of
the current market value of the net assets of the Portfolio or (b) $7,500,000
(the "Amount Available to the Portfolio"). The Portfolio is obligated to pay to
Citibank, in addition to interest on the Advances made to it, a quarterly fee on
the average daily unused portion of the Amount Available to the Portfolio at the
rate of 1/4 of 1% per annum. The Credit Agreement may be terminated by Citibank
or the borrowers at any time upon 30 days' prior written notice. The Portfolio
expects to use the proceeds of the Advances primarily for leveraging purposes.
As at December 31, 1994, the Portfolio had no outstanding loans pursuant to the
Credit Agreement. The average daily loan balance for the fiscal year ended
December 31, 1994, was $981,635 and the average daily interest rate was 5.87%.
The Portfolio, like many other investment companies, may also borrow money
for temporary extraordinary or emergency purposes. Such borrowings may not
exceed 5% of the value of the Portfolio's total assets at the time of borrowing.
The Portfolio may pledge up to 10% of the lesser of cost or value of its total
assets to secure such borrowings.
WHEN-ISSUED SECURITIES AND FORWARD COMMITMENTS
The Portfolio may purchase and sell securities on a "forward commitment" or
"when-issued" basis. Forward commitment or when-issued transactions arise when
securities are purchased or sold by the Portfolio with payment and delivery
taking place in the future in order to secure what is considered to be an
advantageous price and yield to the Portfolio at the time of entering into the
transaction. However, the yield on a comparable security when the transaction is
consummated may vary from the yield on the security at the time that the forward
commitment or when-issued transaction was made. From the time of entering into
the transaction until delivery and payment is made at a later date, the
securities that are the subject of the transaction are subject to market
fluctuations. When the Portfolio engages in forward commitment or when- issued
transactions, the Portfolio relies on the seller or buyer, as the case may be,
to consummate the sale. Failure to do so may result in the Portfolio missing the
opportunity of obtaining a price or yield considered to be advantageous. Forward
commitment or when-issued transactions may be expected to occur a month or more
before delivery is due. However, no payment or delivery is made by the Portfolio
until it receives payment or delivery from the other party to the transaction.
The Portfolio will maintain in a segregated account with its custodian cash,
U.S. Government securities or other liquid high-grade debt securities having an
aggregate value equal to the amount of such purchase commitments until payment
is made. To the extent the Portfolio engages in forward commitment or
when-issued transactions, it will do so for the purpose of acquiring or
disposing of securities held by the Portfolio consistent with the Portfolio's
investment objective and policies and not for the purpose of investment
leverage.
LENDING PORTFOLIO SECURITIES
The Portfolio may seek to increase its income by lending portfolio
securities to broker-dealers or other institutional borrowers. Under present
regulatory policies of the Securities and Exchange Commission ("SEC"), such
loans are required to be secured continuously by collateral in cash, cash
equivalents or U.S. Government securities held by the Portfolio's custodian and
maintained on a current basis at an amount at least equal to the market value of
the securities loaned, which will be marked to market daily. Cash equivalents
include certificates of deposit, commercial paper and other short-term money
market instruments. The Portfolio would have the right to call a loan and obtain
the securities loaned at any time on up to five business days' notice. The
Portfolio would not have the right to vote any securities having voting rights
during the existence of a loan, but would call the loan in anticipation of an
important vote to be taken among holders of the securities or the giving or
withholding of their consent on a material matter affecting the investment.
WRITING AND PURCHASING CALL AND PUT OPTIONS
The Portfolio may write covered put and call options on U.S. Government
securities. The Portfolio does not intend to write a covered option on U.S.
Government securities if after such transaction more than 25% of its net assets,
as measured by the aggregate value of such securities underlying all covered
calls and puts written by the Portfolio, would be subject to such options. The
Portfolio will only write a put option on a security which it intends to
ultimately acquire for its investment portfolio. The Portfolio does not intend
to purchase an option on any U.S. Government security if after such transaction
more than 5% of its net assets, as measured by the aggregate of all premiums
paid for all options held by the Portfolio, would be so invested.
Securities dealers make over-the-counter ("OTC") markets in options on
certain "pass-through" mortgage-backed securities, such as GNMA Certificates,
FHLMC PCs and FNMA Mortgage-Backed Certificates. These dealers buy and sell call
and put options on such securities, and the Portfolio may enter into option
transactions with such dealers. Since the remaining principal balance of a
"pass-through" mortgage-backed security declines each month as a result of
regular scheduled payments and early unscheduled prepayments of principal, the
Portfolio, as a writer of a call option holding such a security as "cover" to
satisfy its delivery obligation in the event of exercise, may find that the
security it holds no longer has a sufficient remaining principal balance for
this purpose. Should this occur, the Portfolio will purchase additional
securities in order to maintain its "cover."
FUTURES CONTRACTS AND OPTIONS ON FUTURES CONTRACTS
Futures Contracts. The Portfolio may enter into futures contracts traded on
an exchange regulated by the Commodity Futures Trading Commission ("CFTC") and
on foreign exchanges, but, with respect to foreign exchange-traded futures
contracts, only if the Investment Adviser determines that trading on each such
foreign exchange does not subject the Portfolio to risks, including credit and
liquidity risks, that are materially greater than the risks associated with
trading on CFTC-regulated exchanges.
Hedging Strategies. In order to hedge its current or anticipated portfolio
positions, the Portfolio may use futures contracts on securities held in its
Portfolio or on securities with characteristics similar to those of the
securities held by the Portfolio. If, in the opinion of the Investment Adviser,
there is a sufficient degree of correlation between price trends for the
securities held by the Portfolio and futures contracts based on other financial
instruments, securities indices or other indices, the Portfolio may also enter
into such futures contracts as part of its hedging strategy. Although under some
circumstances prices of securities held by the Portfolio may be more or less
volatile than prices of such futures contracts, the Investment Adviser will
attempt to estimate the extent of this difference in volatility based on
historical patterns and to compensate for it by having the Portfolio enter into
a greater or lesser number of futures contracts or by attempting to achieve only
a partial hedge against price changes affecting the securities held by the
Portfolio.
Options on Futures Contracts. The Portfolio may purchase and write call and
put options on futures contracts which are traded on a United States exchange or
board of trade or any foreign exchange on which the Portfolio is permitted to
trade futures contracts. The Portfolio will not purchase or write options on
futures contracts unless, in the opinion of the Investment Adviser, the market
for such options has developed sufficiently that the risks associated with such
options transactions are not greater than the risks associated with futures
transactions.
Some derivative securities are not readily marketable or may become illiquid
under adverse market conditions. In addition, during periods of market
volatility, a commodity exchange may suspend or limit in an exchange-traded
derivative instrument, which may make the instrument temporarily illiquid and
difficult to price. Commodity exchanges may also establish daily limits on the
amount that the price of a futures contract or futures option can vary from the
previous day's settlement price. Once the daily limit is reached, no trades may
be made that day at a price beyond the limit. This may prevent the Portfolio
from closing out positions and limiting its losses.
LIMITATIONS ON THE USE OF FUTURES CONTRACTS AND CERTAIN OPTIONS The Portfolio
will engage in futures and related options transactions for
bona fide hedging or non-hedging purposes as defined in or permitted by CFTC
regulations. In general, the Portfolio will determine that the price
fluctuations in the futures contracts and options on futures used for hedging
purposes are substantially related to price fluctuations in securities held by
the Portfolio or that it expects to purchase. To evidence its hedging intent,
the Portfolio expects that, on 75% or more of the occasions on which it takes a
long futures (or option on futures) position, the Portfolio will have purchased,
or will be in the process of purchasing, equivalent amounts of related
securities at the time when the futures (or option) position is closed out.
However, in particular cases, when it is economically advantageous for the
Portfolio to do so, a long futures (or options) position may be terminated (or
an option may expire) without the corresponding purchase of securities. The
Portfolio will engage in transactions in futures contracts and related options
only to the extent such transactions are consistent with the requirements of the
Internal Revenue Code for maintaining the qualification of the Fund as a
regulated investment company for Federal income tax purposes (see "Taxes").
FORWARD FOREIGN CURRENCY EXCHANGE CONTRACTS
Forward contracts are individually negotiated and privately traded by
currency traders and their customers. A forward contract involves an obligation
to purchase or sell a specific currency (or basket of currencies) for an agreed
price at a future date, which may be any fixed number of days from the date of
the contract. The Portfolio may engage in cross-hedging by using forward
contracts in one currency (or basket of currencies) to hedge against
fluctuations in the value of securities denominated in a different currency if
the Investment Adviser determines that there is an established historical
pattern of correlation between the two currencies (or the basket of currencies
and the underlying currency). Use of a different foreign currency magnifies the
Portfolio's exposure to foreign currency exchange rate fluctuations.
The precise projection of short-term currency market movements is not
possible and short-term hedging provides a means of fixing the dollar value of
only a portion of the Portfolio's foreign assets. The Portfolio will not enter
into forward contracts or maintain a net exposure to such contracts where the
consummation of the contracts would obligate the Portfolio to deliver an amount
of foreign currency in excess of the value of the securities held by the
Portfolio or other assets denominated in that currency.
ASSET COVERAGE FOR DERIVATIVE INSTRUMENTS
Transactions using forward contracts, futures contracts and options (other
than options that the Portfolio has purchased) expose the Portfolio to an
obligation to another party. The Portfolio will not enter into any such
transactions unless it owns either (1) an offsetting ("covered") position in
securities, currencies, or other options, futures contracts or forward
contracts, or (2) cash, receivables and short-term debt securities with a value
sufficient at all times to cover its potential obligations not covered as
provided in (1) above. The Portfolio will comply with SEC guidelines regarding
cover for these instruments and, if the guidelines so require, set aside cash,
U.S. Government securities or other liquid, high-grade debt securities in a
segregated account with its custodian in the prescribed amount.
Assets used as cover or held in a segregated account cannot be sold while
the position in the corresponding forward contract, futures contract or option
is open, unless they are replaced with other appropriate assets. As a result,
the commitment of a large portion of the Portfolio's assets to cover or
segregated accounts could impede portfolio management or the Portfolio's ability
to meet redemption requests or other current obligations.
PORTFOLIO TURNOVER
If the Portfolio writes a substantial number of call options and the market
prices of the underlying securities appreciate, or if the Portfolio writes a
substantial number of put options and the market prices of the underlying
securities depreciate, there may be a very substantial turnover of securities
held by the Portfolio. Although it is not anticipated that the annual portfolio
turnover rate will exceed 200% under such circumstance, portfolio turnover may
be greater than 200% but is not expected to exceed 300%. A 200% turnover rate
would occur if all of the securities held by the Portfolio were sold and either
repurchased or replaced twice within one year. High portfolio turnover involves
correspondingly greater brokerage commissions and other transaction costs, which
will be borne directly by the Portfolio. It may also result in the realization
of capital gains. The Portfolio pays brokerage commissions in connection with
futures transactions and the writing of options and effecting of closing
purchase or sale transactions, as well as for purchases and sales of portfolio
securities. See "Portfolio Security Transactions" for a discussion of the
Portfolio's brokerage practices.
INVESTMENT RESTRICTIONS
The following investment restrictions are designated as fundamental policies
and as such cannot be changed without the approval of the holders of a majority
of the Fund's outstanding voting securities, which as used in this Statement of
Additional Information means the lesser of (a) 67% of the shares of the Fund
present or represented by proxy at a meeting if the holders of more than 50% of
the shares are present or represented at the meeting or (b) more than 50% of the
shares of the Fund. Accordingly, the Fund may not:
(1) With respect to 75% of its total assets, invest more than 5% of its
total assets in the securities of a single issuer or purchase more than 10% of
the outstanding voting securities of a single issuer, except obligations issued
or guaranteed by the U.S. Government, its agencies or instrumentalities and
except securities of other investment companies; or invest more than 25% of its
total assets in any single industry (other than securities issued or guaranteed
by the U.S. Government or its agencies or instrumentalities);
(2) Borrow money or issue senior securities except as permitted by the
Investment Company Act of 1940;
(3) Purchase securities on margin (but the Fund may obtain such short-term
credits as may be necessary for the clearance of purchases and sales of
securities). The deposit or payment by the Fund of initial or maintenance margin
in connection with futures contracts or related options transactions is not
considered the purchase of a security on margin;
(4) Underwrite or participate in the marketing of securities of others,
except insofar as it may technically be deemed to be an underwriter in selling a
portfolio security under circumstances which may require the registration of the
same under the Securities Act of 1933;
(5) Purchase or sell real estate, although it may purchase and sell
securities which are secured by real estate and securities of companies which
invest or deal in real estate;
(6) Purchase or sell physical commodities or contracts for the purchase or
sale of physical commodities;
(7) Make loans to any person except by (a) the acquisition of debt
instruments and making portfolio investments, (b) entering into repurchase
agreements and (c) lending portfolio securities; or
(8) Buy investment securities from or sell them to any of its officers or
Trustees of the Trust, the investment adviser or its underwriter, as principal;
however, any such person or concerns may be employed as a broker upon customary
terms.
Notwithstanding the investment policies and restrictions of the Fund, the
Fund may invest its assets in an open-end management investment company with
substantially the same investment objective, policies and restrictions as the
Fund.
The Portfolio has adopted substantially the same fundamental investment
restrictions as the foregoing numbered investment restrictions adopted by the
Fund; such restrictions cannot be changed without the approval of a "majority of
the outstanding voting securities" of the Portfolio, which as used in this
Statement of Additional Information means the lesser of (a) 67% of the
outstanding voting securities of the Portfolio present or represented by proxy
at a meeting if the holders of more than 50% of the outstanding voting
securities of the Portfolio are present or represented at the meeting or (b)
more than 50% of the outstanding voting securities of the Portfolio. The term
"voting securities" as used in this paragraph has the same meaning as in the
Investment Company Act of 1940 (the "1940 Act"). Whenever the Trust is requested
to vote on a change in the investment restrictions of the Portfolio, the Trust
will hold a meeting of Fund shareholders and will cast its vote as instructed by
the shareholders.
The Fund and the Portfolio have each adopted the following nonfundamental
investment policies which may be changed with respect to the Fund by the
Trustees of the Trust without approval by the Fund's shareholders or may be
changed with respect to the Portfolio by the Trustees of the Portfolio with or
without the approval of the Fund or the Portfolio's other investors. As a matter
of nonfundamental policy, neither the Fund nor the Portfolio may: (a) purchase
put or call options on U.S. Government securities if after such purchase more
than 5% or its net assets, as measured by the aggregate of the premiums paid for
such options held by the Fund or the Portfolio, would be so invested; (b)
purchase any put options, long futures contracts, or call options on a futures
contract if at the date of such purchase realized net losses from such
transactions during the fiscal year to date exceed 5% of its average net assets
during such period; (c) make short sales of securities or maintain a short
position, unless at all times when a short position is open it owns an equal
amount of such securities or securities convertible into or exchangeable,
without payment of any further consideration, for securities of the same issue
as, and equal in amount to, the securities sold short, and unless not more than
25% of its net assets (taken at current value) is held as collateral for such
sales at any one time. (The Fund and the Portfolio will make such sales only for
the purpose of deferring realization of gain or loss for Federal income tax
purposes and such sales would not be made of securities subject to outstanding
options); (d) purchase securities of any issuer which, including predecessors,
has not been in continuous operation for at least three years, except that 5% of
its total assets (taken at market value) may be invested in certain issuers not
in such continuous operation but substantially all of whose assets are (i)
securities of one or more issuers which have had a record of three years'
continuous operation or (ii) assets of an independent division of an issuer
which division has had a record of three years' continuous operation; provided,
however, that exempted from this restriction are U.S. Government securities,
securities of issuers which are rated by at least one nationally recognized
statistical rating organization, municipal obligations and obligations issued or
guaranteed by any foreign government or its agencies or instrumentalities; (e)
invest more than 15% of net assets in investments which are not readily
marketable, including restricted securities and repurchase agreements maturing
in more than seven days. Restricted securities for the purposes of this
limitation do not include securities elegible for resale pursuant to Rule 144A
of the Securities Act of 1933 that the Board of Trustees of the Trust or the
Portfolio, or its delegate, determine to be liquid, based upon the trading
markets for the specific security; (f) purchase or retain in its portfolio any
securities issued by an issuer any of whose officers, directors, trustees or
security holders is an officer or Trustee of the Trust or the Portfolio or is a
member, officer, director or trustee of any investment adviser of the Trust or
the Portfolio, if after the purchase of the securities of such issuer by the
Fund or the Portfolio one or more of such persons owns beneficially more than
1/2 of 1% of the shares or securities or both (all taken at market value) of
such issuer and such persons owning more than 1/2 of 1% of such shares or
securities together own beneficially more than 5% of such shares or securities
or both (all taken at market value); or (g) purchase oil, gas or other mineral
leases or purchase partnership interests in oil, gas or other mineral
exploration or development programs.
In order to permit the sale of shares of the Fund in certain states, the
Fund may make commitments more restrictive than the fundamental policies
described above. Should the Fund determine that any such commitment is no longer
in the best interests of the Fund and its shareholders, it will revoke the
commitment by terminating sales of its shares in the state(s) involved.
TRUSTEES AND OFFICERS
The Trustees and officers of the Trust and the Portfolio are listed below.
Except as indicated, each individual has held the office shown or other offices
in the same company for the last five years. Unless otherwise noted, the
business address of each Trustee and officer is 24 Federal Street, Boston,
Massachusetts 02110, which is also the address of the Portfolio's investment
adviser, Boston Management and Research ("BMR" or the "Investment Adviser"), a
wholly-owned subsidiary of Eaton Vance Management ("Eaton Vance"); of Eaton
Vance's parent, Eaton Vance Corp. ("EVC"); and of BMR's and Eaton Vance's
trustee, Eaton Vance, Inc. ("EV"). Eaton Vance and EV are both wholly-owned
subsidiaries of EVC. Those Trustees who are "interested persons" of the Trust,
the Portfolio, BMR, Eaton Vance, EVC or EV, as defined in the 1940 Act, by
virtue of their affiliation with any one or more of the Trust, the Portfolio,
BMR, Eaton Vance, EVC or EV, are indicated by an asterisk(*).
TRUSTEES OF THE TRUST AND THE PORTFOLIO
M. DOZIER GARDNER (61), President and Trustee*
President and Chief Executive Officer of BMR, Eaton Vance, EVC and EV, and a
Director of EVC and EV. Director, Trustee and officer of various investment
companies managed by Eaton Vance or BMR.
DONALD R. DWIGHT (64), Trustee
President of Dwight Partners, Inc. (a corporate relations and communications
company) founded in 1988. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Clover Mill Lane, Lyme, New Hampshire 03768
JAMES B. HAWKES (53), Vice President and Trustee*
Executive Vice President, BMR, Eaton Vance, EVC and EV and a Director of EVC and
EV. Director, Trustee and officer of various investment companies managed by
Eaton Vance or BMR. Mr. Hawkes was elected Vice President and Trustee of the
Trust on December 16, 1991.
SAMUEL L. HAYES, III (60), Trustee
Jacob H. Schiff, Professor of Investment Banking at Harvard University Graduate
School of Business Administration. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: Harvard University Graduate School of Business Administration,
Soldiers Field Road, Boston, Massachusetts 02163
NORTON H. REAMER (59), Trustee
President and Director, United Asset Management Corporation, a holding company
owning institutional investment management firms. Chairman, President and
Director, The Regis Fund, Inc. (mutual fund). Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: One International Place, Boston, Massachusetts 02110
JOHN L. THORNDIKE (68), Trustee
Director, Fiduciary Company Incorporated. Director or Trustee of various
investment companies managed by Eaton Vance or BMR.
Address: 175 Federal Street, Boston, Massachusetts 02110
JACK L. TREYNOR (65), Trustee
Investment Adviser and Consultant. Director or Trustee of various investment
companies managed by Eaton Vance or BMR.
Address: 504 Via Almar, Palos Verdes Estates, California 90274
OFFICERS OF THE TRUST AND THE PORTFOLIO
SUSAN SCHIFF (34), Vice President
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR. Ms. Schiff was elected Vice
President of the Trust on February 24, 1992.
MICHAEL B. TERRY (52), Vice President of the Trust
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR. Mr. Terry was elected Vice
President of the Trust on December 17, 1990.
MARK S. VENEZIA (45), Vice President
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
JAMES L. O'CONNOR (50), Treasurer
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
THOMAS OTIS (63, Secretary
Vice President and Secretary of BMR, Eaton Vance, EVC and EV. Officer of various
investment companies managed by Eaton Vance or BMR.
JANET E. SANDERS (59), Assistant Treasurer and Assistant Secretary
Vice President of BMR, Eaton Vance and EV. Officer of various investment
companies managed by Eaton Vance or BMR.
JAMES F. ALBAN (33), Assistant Treasurer
Assistant Vice President of BMR since August 11, 1992, and of Eaton Vance and EV
since January 17, 1992, and an employee of Eaton Vance since September 23,
1991. Tax Consultant and Audit Senior with Deloitte & Touche (1987- 1991).
Officer of various investment companies managed by Eaton Vance or BMR. Mr.
Alban was elected Assistant Treasurer of the Trust on December 16, 1991.
A. JOHN MURPHY (32), Assistant Secretary of the Trust
Assistant Vice President of BMR, Eaton Vance and EV since March 1, 1994;
employee of Eaton Vance since March 1993. State Regulations Supervisor, The
Boston Company (1991-1993) and Registration Specialist, Fidelity Management
& Research Co. (1986-1991). Officer of various investment companies managed
by Eaton Vance or BMR. Mr. Murphy was elected Assistant Secretary of the
Trust on March 27, 1995.
CARMEN THOMPSON (41), Vice President of the Portfolio Trust Officer of The Bank
of Nova Scotia Trust Company (Cayman) Limited. Officer of various investment
companies managed by BMR or Eaton Vance. Mr. Thompson was elected Vice
President of the Portfolio on November 21, 1994.
Address: The Bank of Nova Scotia Trust Company (Cayman) Ltd., The Bank of Nova
Scotia Building, P.O. Box 501, George Town, Grand Cayman, Cayman Islands,
British West Indies.
PAUL LAURET (53), Vice President of the Portfolio
Senior Trust Officer of The Bank of Nova Scotia Trust Company (Cayman)
Limited. Officer of various investment companies managed by BMR or Eaton
Vance. Mr. Lauret was elected Vice President of the Portfolio on November
21, 1994.
Address: The Bank of Nova Scotia Trust Company (Cayman) Ltd., The Bank of Nova
Scotia Building, P.O. Box 501, George Town, Grand Cayman, Cayman Islands,
British West Indies.
RAYMOND O'NEILL (33), Vice President of the Portfolio Managing Director of IBT
Trust and Custodian Services (Ireland) Limited.
Officer of various investment companies managed by BMR or Eaton Vance. Mr.
O'Neill was elected Vice President of the Portfolio on November 21, 1994.
Address: Earlsfort Terrace, Dublin 2, Ireland.
Messrs. Thorndike (Chairman), Hayes and Reamer are members of the Special
Committee of the Board of Trustees of the Trust and of the Portfolio. The
Special Committee's functions include a continuous review of the Trust's
contractual relationship with the Administrator and the Portfolio's contractual
relationship with the Investment Adviser, making recommendations to the Trustees
regarding the compensation of those Trustees who are not members of the Eaton
Vance organization, and making recommendations to the Trustees regarding
candidates to fill vacancies, as and when they occur, in the ranks of those
Trustees who are not "interested persons" of the Trust, the Portfolio, or the
Eaton Vance organization.
Messrs. Treynor (Chairman) and Dwight are members of the Audit Committee of
the Board of Trustees of the Trust and of the Portfolio. The Audit Committee's
functions include making recommendations to the Trustees regarding the selection
of the independent accountants, and reviewing with such accountants and the
Treasurer of the Trust and of the Portfolio matters relative to accounting and
auditing practices and procedures, accounting records, internal accounting
controls, and the functions performed by the custodian and transfer agent of the
Fund and of the Portfolio.
Trustees of the Portfolio who are not affiliated with the Investment Adviser
may elect to defer receipt of all or a percentage of their annual fees in
accordance with the terms of a Trustees Deferred Compensation Plan (the "Plan").
Under the Plan, an eligible Trustee may elect to have his deferred fees invested
by the Portfolio in the shares of one or more funds in the Eaton Vance Family of
Funds, and the amount paid to the Trustees under the Plan will be determined
based upon the performance of such investments. Deferral of Trustees' fees in
accordance with the Plan will have a negligible effect on the Portfolio's
assets, liabilities, and net income per share, and will not obligate the
Portfolio to retain the services of any Trustee or obligate the Portfolio to pay
any particular level of compensation to the Trustee.
The fees and expenses of those Trustees of the Trust and the Portfolio who
are not members of the Eaton Vance organization (the noninterested Trustees) are
paid by the Fund (and the other series of the Trust) and the Portfolio,
respectively. For the compensation received by the noninterested Trustees of the
Trust and the Portfolio, see "Fees and Expenses" in Part II of this Statement of
Additional Information.
INVESTMENT ADVISER AND ADMINISTRATOR
The Portfolio engages BMR as its investment adviser pursuant to an
Investment Advisory Agreement. BMR or Eaton Vance acts as investment adviser to
investment companies and various individual and institutional clients with
combined assets under management of approximately $15 billion.
Eaton Vance, its affiliates and its predecessor companies have been managing
assets of individuals and institutions since 1924 and managing investment
companies since 1931. They maintain a large staff of experienced fixed-income
and equity investment professionals to service the needs of their clients. The
fixed-income division focuses on all kinds of taxable investment-grade and
high-yield securities, tax-exempt investment-grade and high-yield securities,
and U.S. Government securities. The equity division covers stocks ranging from
blue chip to emerging growth companies.
BMR manages the investments and affairs of the Portfolio subject to the
supervision of the Portfolio's Board of Trustees. BMR furnishes to the Portfolio
investment research, advice and supervision, furnishes an investment program and
determines what securities will be purchased, held or sold by the Portfolio and
what portion, if any, of the Portfolio's assets will be held uninvested. The
Investment Advisory Agreement requires BMR to pay the salaries and fees of all
officers and Trustees of the Portfolio who are members of the BMR organization
and all personnel of BMR performing services relating to research and investment
activities. The Portfolio is responsible for all expenses not expressly stated
to be payable by BMR under the Investment Advisory Agreement, including, without
implied limitation, (i) expenses of maintaining the Portfolio and continuing its
existence, (ii) registration of the Portfolio under the 1940 Act, (iii)
commissions, fees and other expenses connected with the acquisition, holding and
disposition of securities and other investments, (iv) auditing, accounting and
legal expenses, (v) taxes and interest, (vi) governmental fees, (vii) expenses
of issue, sale and redemption of interests in the Portfolio, (viii) expenses of
registering and qualifying the Portfolio and interests in the Portfolio under
Federal and state securities laws and of preparing and printing registration
statements or other offering statements or memoranda for such purposes and for
distributing the same to investors, and fees and expenses of registering and
maintaining registrations of the Portfolio and of the Portfolio's placement
agent as broker-dealer or agent under state securities laws, (ix) expenses of
reports and notices to investors and of meetings of investors and proxy
solicitations therefor, (x) expenses of reports to governmental officers and
commissions, (xi) insurance expenses, (xii) association membership dues, (xiii)
fees, expenses and disbursements of custodians and subcustodians for all
services to the Portfolio (including without limitation safekeeping of funds,
securities and other investments, keeping of books, accounts and records, and
determination of net asset values, book capital account balances and tax capital
account balances), (xiv) fees, expenses and disbursements of transfer agents,
dividend disbursing agents, investor servicing agents and registrars for all
services to the Portfolio, (xv) expenses for servicing the accounts of
investors, (xvi) any direct charges to investors approved by the Trustees of the
Portfolio, (xvii) compensation and expenses of Trustees of the Portfolio who are
not members of BMR's organization, and (xviii) such non-recurring items as may
arise, including expenses incurred in connection with litigation, proceedings
and claims and the obligation of the Portfolio to indemnify its Trustees,
officers and investors with respect thereto.
The Investment Advisory Agreement between BMR and the Portfolio provides for
a monthly advisory fee of .0625% (equivalent to .75% annually) of the average
daily net assets of the Portfolio up to $500 million. On net assets of $500
million and over the annual fee is reduced as follows:
ANNUALIZED FEE RATE
AVERAGE DAILY NET ASSETS FOR THE MONTH (FOR EACH LEVEL)
-------------------------------------- -------------------
$500 million but less than $1 billion ................... 0.6875%
$1 billion but less than $1.5 billion ................... 0.6250%
$1.5 billion but less than $2 billion ................... 0.5625%
$2 billion but less than $3 billion ..................... 0.5000%
$3 billion and over ..................................... 0.4375%
This fee is higher than that paid by most investment companies due to the
additional research and management efforts required in connection with the
writing and purchase of options, the formation and implementation of option
investment strategies and the structuring of transactions in futures contracts
and related options. On March 28, 1994, the Trustees of the Portfolio voted to
accept a waiver of BMR's compensation by instituting the above breakpoints
(effective as of April 1, 1994) in the advisory fee rate then provided for in
the Investment Advisory Agreement. Prior to April 1, 1994, the Investment
Advisory Agreement provided for a monthly advisory fee of .0625% (equivalent to
.75% annually) of the average daily net assets of the Portfolio.
As at December 31, 1994, the Portfolio had net assets of $515,669,513. For
the fiscal year ended December 31, 1994, the Adviser earned advisory fees of
$4,259,500 (equivalent to .74% of the Portfolio's average daily net assets for
such year). For the period from the start of business, October 28, 1993, to
December 31, 1993, the Adviser earned advisory fees of $727,254 (equivalent to
.75% (annualized) of the Portfolio's average daily net assets for such period).
The Investment Advisory Agreement with BMR is dated October 28, 1993 and
remains in effect until February 28, 1996. It may be continued indefinitely so
long as such continuance after February 28, 1996 is approved at least annually
(i) by the vote of a majority of the Trustees of the Portfolio who are not
interested persons of the Portfolio or of BMR cast in person at a meeting
specifically called for the purpose of voting on such approval and (ii) by the
Board of Trustees of the Portfolio or by vote of a majority of the outstanding
voting securities of the Portfolio. The Agreement may be terminated at any time
without penalty on sixty (60) days' written notice by the Board of Trustees of
either party, or by vote of the majority of the outstanding voting securities of
the Portfolio, and the Agreement will terminate automatically in the event of
its assignment. The Agreement provides that BMR may render services to others
and engage in other business activities and may permit other fund clients and
other corporations and organizations to use the words "Eaton Vance" or "Boston
Management and Research" in their names. The Agreement also provides that BMR
shall not be liable for any loss incurred in connection with the performance of
its duties, or action taken or omitted under that Agreement, in the absence of
willful misfeasance, bad faith, gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and duties
thereunder, or for any losses sustained in the acquisition, holding or
disposition of any security or other investment.
The Bank of Nova Scotia Trust Company (Cayman) Ltd. maintains the
Portfolio's principal office and certain of its records and provides
administrative assistance in connection with meetings of the Portfolio's
Trustees and interestholders, for which services the Portfolio pays $1,500 per
annum.
As indicated in the Prospectus, Eaton Vance serves as Administrator of the
Fund, but receives no compensation for providing administrative services to the
Fund. Under its agreement with the Fund, Eaton Vance has been engaged to
administer the Fund's affairs, subject to the supervision of the Trustees of the
Trust, and shall furnish for the use of the Fund office space and all necessary
office facilities, equipment and personnel for administering the affairs of the
Fund.
The Fund pays all of its own expenses including, without limitation, (i)
expenses of maintaining the Fund and continuing its existence, (ii) registration
of the Trust under the 1940 Act, (iii) commissions, fees and other expenses
connected with the purchase or sale of securities and other investments, (iv)
auditing, accounting and legal expenses, (v) taxes and interest, (vi)
governmental fees, (vii) expenses of issue, sale, repurchase and redemption of
shares, (viii) expenses of registering and qualifying the Fund and its shares
under federal and state securities laws and of preparing and printing
prospectuses for such purposes and for distributing the same to shareholders and
investors, and fees and expenses of registering and maintaining registrations of
the Fund and of the Fund's principal underwriter, if any, as broker-dealer or
agent under state securities laws, (ix) expenses of reports and notices to
shareholders and of meetings of shareholders and proxy solicitations therefor,
(x) expenses of reports to governmental officers and commissions, (xi) insurance
expenses, (xii) association membership dues, (xiii) fees, expenses and
disbursements of custodians and subcustodians for all services to the Fund
(including without limitation safekeeping of funds, securities and other
investments, keeping of books and accounts and determination of net asset
values), (xiv) fees, expenses and disbursements of transfer agents, dividend
disbursing agents, shareholder servicing agents and registrars for all services
to the Fund, (xv) expenses for servicing shareholder accounts, (xvi) any direct
charges to shareholders approved by the Trustees of the Trust, (xvii)
compensation and expenses of Trustees of the Trust who are not members of the
Eaton Vance organization, and (xviii) such non-recurring items as may arise,
including expenses incurred in connection with litigation, proceedings and
claims and the obligation of the Trust to indemnify its Trustees and officers
with respect thereto.
BMR is a wholly-owned subsidiary of Eaton Vance. Eaton Vance and EV are both
wholly-owned subsidiaries of EVC. BMR and Eaton Vance are both Massachusetts
business trusts, and EV is the trustee of BMR and Eaton Vance. The Directors of
EV are Landon T. Clay, H. Day Brigham, Jr., M. Dozier Gardner, James B. Hawkes
and Benjamin A. Rowland, Jr. The Directors of EVC consist of the same persons
and John G. L. Cabot and Ralph Z. Sorenson. Mr. Clay is chairman and Mr. Gardner
is president and chief executive officer of EVC, BMR, Eaton Vance and EV. All of
the issued and outstanding shares of Eaton Vance and EV are owned by EVC. All of
the issued and outstanding shares of BMR are owned by Eaton Vance. All shares of
the outstanding Voting Common Stock of EVC are deposited in a Voting Trust which
expires on December 31, 1996, the Voting Trustees of which are Messrs. Clay,
Brigham, Gardner, Hawkes and Rowland. The Voting Trustees have unrestricted
voting rights for the election of Directors of EVC. All of the outstanding
voting trust receipts issued under said Voting Trust are owned by certain of the
officers of BMR and Eaton Vance who are also officers and Directors of EVC and
EV. As of March 31, 1995, Messrs. Clay, Gardner and Hawkes each owned 24% of
such voting trust receipts, and Messrs. Rowland and Brigham owned 15% and 13%,
respectively, of such voting trust receipts. Messrs. Gardner, Hawkes and Otis
are officers or Trustees of the Trust and the Portfolio and are members of the
EVC, BMR, Eaton Vance and EV organizations. Messrs. Alban, O'Connor, Murphy,
Terry and Venezia and Ms. Sanders and Ms. Schiff are officers or Trustees of the
Trust and/or the Portfolio and are also members of the BMR, Eaton Vance and EV
organizations. BMR will receive the fees paid under the Investment Advisory
Agreement.
Eaton Vance owns all of the stock of Energex Corporation, which is engaged
in oil and gas operations. EVC owns all of the stock of Marblehead Energy Corp.
(which is engaged in oil and gas operations) and 77.3% of the stock of Investors
Bank & Trust Company, custodian of the Fund and the Portfolio, which provides
custodial, trustee and other fiduciary services to investors, including
individuals, employee benefit plans, corporations, investment companies, savings
banks and other institutions. In addition, Eaton Vance owns all the stock of
Northeast Properties, Inc., which is engaged in real estate investment,
management and consulting. EVC owns all of the stock of Fulcrum Management, Inc.
and MinVen, Inc., which are engaged in the development of precious metal
properties. EVC, BMR, Eaton Vance and EV may also enter into other businesses.
EVC and its affiliates and their officers and employees from time to time
have transactions with various banks, including the custodian of the Fund and
the Portfolio, Investors Bank & Trust Company. It is Eaton Vance's opinion that
the terms and conditions of such transactions were not and will not be
influenced by existing or potential custodial or other relationships between the
Trust or the Portfolio and such banks.
CUSTODIAN
Investors Bank & Trust Company ("IBT"), 24 Federal Street, Boston,
Massachusetts (a 77.3% owned subsidiary of EVC) acts as custodian for the Fund
and the Portfolio. IBT has the custody of all cash and securities representing
the Fund's interest in the Portfolio and has custody of all the Portfolio's
assets, and its subsidiary, IBT Fund Services (Canada) Inc., 1 First Canadian
Place, King Street West, Toronto, Ontario, Canada, maintains the general ledger
of the Portfolio and the Fund and computes the daily net asset value of
interests in the Portfolio and the net asset value of shares of the Fund. In its
capacity as custodian, IBT it attends to details in connection with the sale,
exchange, substitution, transfer or other dealings with the Portfolio's
investments, receives and disburses all funds and performs various other
ministerial duties upon receipt of proper instructions from the Fund and the
Portfolio. IBT charges fees which are competitive within the industry. A portion
of the fee relates to custody, bookkeeping and valuation services and is based
upon a percentage of Fund and Portfolio net assets and a portion of the fee
relates to activity charges, primarily the number of portfolio transactions.
These fees are then reduced by a credit for cash balances of the particular
investment company at the custodian equal to 75% of the 91-day, U.S. Treasury
Bill auction rate applied to the particular investment company's average daily
collected balances for the week. In view of the ownership of EVC in IBT, the
Portfolio is treated as a self-custodian pursuant to Rule 17f-2 under the 1940
Act, and the Portfolio's investments held by IBT as custodian are thus subject
to the additional examinations by the Portfolio's independent accountants as
called for by such Rule. For the fiscal year ended December 31, 1994, the
Portfolio paid IBT $181,138. For the custody fees that the Fund paid to IBT, see
"Fees and Expenses" in Part II of this Statement of Additional Information.
SERVICE FOR WITHDRAWAL
By a standard agreement, the Trust's Transfer Agent will send to the
shareholder regular monthly or quarterly payments of any permitted amount
designated by the shareholder (see "Eaton Vance Shareholder Services --
Withdrawal Plan" in the Fund's Prospectus) based upon the value of the shares
held. The checks will be drawn from share redemptions and hence are a return of
principal. Income dividends and capital gains distributions in connection with
withdrawal accounts will be credited at net asset value as of the record date
for each distribution. Continued withdrawals in excess of current income will
eventually use up principal, particularly in a period of declining market
prices.
To use this service, at least $5,000 in cash or shares at the public
offering price will have to be deposited with the Transfer Agent. The
maintenance of a withdrawal plan concurrently with purchases of additional Fund
shares would be disadvantageous if a sales charge is included in such purchases.
A shareholder may not have a withdrawal plan in effect at the same time he has
authorized Bank Automated Investing or is otherwise making regular purchases of
Fund shares. Either the shareholder, the Transfer Agent or the Principal
Underwriter will be able to terminate the withdrawal plan at any time without
penalty.
DETERMINATION OF NET ASSET VALUE
The net asset value of the Portfolio and of shares of the Fund is determined
by the Custodian (as agent for the Fund and the Portfolio) in the manner
described under "Valuing Fund Shares" in the Fund's current Prospectus. The Fund
and the Portfolio will be closed for business and will not price their
respective shares or interests on the following business holidays: New Year's
Day, Presidents' Day, Good Friday (a New York Stock Exchange holiday), Memorial
Day, Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
Except as described below, debt securities for which the over-the-counter
market is the primary market are normally valued at the mean between the latest
available bid and asked prices. OTC options are valued at the mean between the
bid and asked prices provided by dealers. Financial futures contracts listed on
commodity exchanges and exchange-traded options are valued at closing settlement
prices. Short-term obligations having remaining maturities of less than 60 days
are valued at amortized cost, which approximates value, unless the Trustees
determine that under particular circumstances such method does not result in
fair value. As authorized by the Trustees, debt securities (other than
short-term obligations) may be valued on the basis of valuations furnished by a
pricing service which determines valuations based upon market transactions for
normal, institutional-size trading units of such securities. Mortgage-backed
"pass-through" securities are valued through use of a matrix pricing system
which takes into account closing bond valuations, yield differentials,
anticipated prepayments and interest rates. Securities for which there is no
such quotation or valuation and all other assets are valued at fair value as
determined in good faith by or at the direction of the Trustees of the
Portfolio.
Each investor in the Portfolio, including the Fund, may add to or reduce its
investment in the Portfolio on each day the New York Stock Exchange (the
"Exchange") is open for trading ("Portfolio Business Day") as of the close of
regular trading on the Exchange (the "Portfolio Valuation Time"). The value of
each investor's interest in the Portfolio will be determined by multiplying the
net asset value of the Portfolio by the percentage, determined on the prior
Portfolio Business Day, which represented that investor's share of the aggregate
interests in the Portfolio on such prior day. Any additions or withdrawals for
the current Portfolio Business Day will then be recorded. Each investor's
percentage of the aggregate interest in the Portfolio will then be recomputed as
a percentage equal to a fraction (i) the numerator of which is the value of such
investor's investment in the Portfolio as of the Portfolio Valuation Time on the
prior Portfolio Business Day plus or minus, as the case may be, the amount of
any additions to or withdrawals from the investor's investment in the Portfolio
on the current Portfolio Business Day and (ii) the denominator of which is the
aggregate net asset value of the Portfolio as of the Portfolio Valuation Time on
the prior Portfolio Business Day plus or minus, as the case may be, the amount
of the net additions to or withdrawals from the aggregate investment in the
Portfolio on the current Portfolio Business Day by all investors in the
Portfolio. The percentage so determined will then be applied to determine the
value of the investor's interest in the Portfolio for the current Portfolio
Business Day.
INVESTMENT PERFORMANCE
The average annual total return is determined by multiplying a hypothetical
initial purchase order of $1,000 by the average annual compound rate of return
(including capital appreciation/depreciation, and dividends and distributions
paid and reinvested) for the stated period and annualizing the result. The
calculation assumes that all dividends and distributions are reinvested at net
asset value on the reinvestment dates during the period, and either (i) the
deduction of the maximum sales charge from the initial $1,000 purchase order, or
(ii) a complete redemption of the investment and, if applicable, the deduction
of the contingent deferred sales charge at the end of the period. For
information concerning the total return of the Fund, see "Performance
Information" in Part II of this Statement of Additional Information.
The Fund's yield is computed pursuant to a standardized formula by dividing
its net investment income per share earned during a recent thirty-day period by
the maximum offering price (including, if applicable, the maximum sales charge)
per share on the last day of the period and annualizing the resulting figure.
Net investment income per share is calculated from the yields to maturity of all
obligations held by the Portfolio based on prescribed methods, reduced by
accrued Fund expenses for the period with the resulting number being divided by
the average daily number of Fund shares outstanding and entitled to receive
distributions during the period. The yield figure does not reflect the deduction
of any contingent deferred sales charges which are imposed on certain
redemptions at the rate set forth under "How to Redeem Fund Shares" in the
Prospectus. For the yield of the Fund, see "Performance Information" in Part II
of this Statement of Additional Information.
The Fund may also publish its distribution rate and/or its effective
distribution rate. The Fund's distribution rate is computed by dividing the most
recent monthly distribution per share annualized, by the current net asset value
per share. The Fund's effective distribution rate is computed by dividing the
distribution rate by the ratio (the days in a year divided by the accrual days
of the monthly period) used to annualize the most recent monthly distribution
and reinvesting the resulting amount for a full year on the basis of such ratio.
The effective distribution rate will be higher than the distribution rate
because of the compounding effect of the assumed reinvestment. Investors should
note that the Fund's yield is calculated using a standardized formula the income
component of which is computed from the yields to maturity of all obligations
held by the Portfolio based prescribed methods (with all purchases and sales of
securities during such period included in the income calculation on a settlement
date basis), whereas the distribution rate is based on the Fund's last monthly
distribution which tends to be relatively stable and may be more or less than
the amount of net investment income and short-term capital gain actually earned
by the Fund during the month. See "Distributions and Taxes" in the Fund's
current Prospectus. For the Fund's distribution rate and effective distribution
rate, see "Performance Information" in Part II of this Statement of Additional
Information.
The Fund's total return may be compared to the Consumer Price Index and
various domestic securities indices. The Fund's total return and comparisons
with these indices may be used in advertisements and in information furnished to
present or prospective shareholders. The Fund's performance may differ from that
of other investors in the Portfolio, including any other investment companies.
From time to time, information, charts and illustrations showing the effects
of compounding interest may be included in advertisements and other material
furnished to present and prospective shareholders. Compounding is the process of
earning interest on principal plus interest that was earned earlier. Interest
can be compounded annually, semi-annually, quarterly or daily, e.g. $1,000
compounded annually at 9% will grow to $1,090 at the end of the first year and
$1,188 at the end of the second year. The extra $8, which was earned on the $90
interest from the first year, is the compound interest. $1,000 compounded
annually at 9% grows to $2,367 at the end of 10 years and $5,604 at the end of
20 years. Other examples of compounding $1,000 annually are 7% grows to $1,967
at the end of 10 years and $3,870 at the end of 20 years. At 12% the $1,000
grows to $3,106 at the end of 10 years and $9,646 at the end of 20 years. All of
these examples are for illustrative purposes only and are not meant to indicate
performance of the Fund.
From time to time, information, charts and illustrations relating to
inflation and the effects of inflation on the dollar may be included in
advertisements and other material furnished to present and prospective
shareholders. For example: After 10 years, the purchasing power of $25,000 would
shrink to $16,621, $14,968, $13,465 and $12,100, if the annual rates of
inflation during such period were 4%, 5%, 6% and 7%, respectively. (To calculate
the purchasing power, the value at the end of each year is reduced by the above
inflation rates for 10 consecutive years.)
From time to time, evaluations of the Fund's performance may be made by
independent sources, e.g. Lipper Analytical Services, Inc., CDA/Wiesenberger and
Morningstar, Inc., may be used in advertisements and in information furnished to
present or prospective shareholders.
From time to time, information about the portfolio allocation and holdings
of the Portfolio at a particular date may be included in advertisements and
other material furnished to present and prospective shareholders. Such
information, for example, may include the Portfolio's diversification by asset
type, including mortgage-backed securities which have pools of individual
mortgages originated 15 to 20 years ago having interest rates of 4-8% and having
balances of approximately $10,000 ("low-coupon seasoned mortgages"); and
mortgage-backed securities which have pools of individual mortgages originated 5
to 10 years ago having interest rates of 11-16% and having balances of
approximately $25,000 ("high-coupon seasoned mortgages").
For example, the Portfolio's diversification by asset type as of March 31,
1995 was:
PORTFOLIO ASSET ALLOCATION PERCENT OF INVESTMENTS
-------------------------- ----------------------
Mortgage-Backed Securities
Low Coupons: 4-8% 59%
High Coupons: 11-16% 23%
Other 5%
U.S. Treasuries, U.S. Government Agency
Debentures & Other Mortgage-Backed Securities 13%
----
TOTAL 100%
Information used in advertisements and in materials furnished to present and
prospective shareholders may include statements or illustrations relating to the
appropriateness of types of securities and/or mutual funds which may be employed
to meet specific financial goals, such as (1) funding retirement, (2) paying for
children's education, and (3) financially supporting aging parents. These three
financial goals may be referred to in such advertisements or materials as the
"Triple Squeeze."
For additional information, charts and illustrations relating to the Fund's
investment performance, see "Performance Information" in Part II of this
Statement of Additional Information.
TAXES
See "Distributions and Taxes" in the Fund's current Prospectus and
"Additional Tax Matters" in Part II of this Statement of Additional Information.
Each series of the Trust is treated as a separate entity for Federal income
tax purposes. The Fund has elected or will elect to be treated and intends to
qualify each year as a regulated investment company ("RIC") under the Internal
Revenue Code ("the Code"). Accordingly, the Fund intends to satisfy certain
requirements relating to sources of its income and diversification of its assets
and to distribute all of its net investment income and net realized capital
gains (after reduction by any available capital loss carryforwards) in
accordance with the timing requirements imposed by the Code, so as to avoid any
Federal income or excise tax to the Fund. Because the Fund invests its assets in
the Portfolio, the Portfolio normally must satisfy the applicable source of
income and diversification requirements in order for the Fund to satisfy them.
The Portfolio will allocate at least annually among its investors, including the
Fund, the Portfolio's net investment income, net realized capital gains, and any
other items of income, gain, loss, deduction or credit. The Portfolio will make
allocations to the Fund in accordance with the Code and applicable regulations
and will make moneys available for withdrawal at appropriate times and in
sufficient amounts to enable the Fund to satisfy the tax distribution
requirements that apply to the Fund and that must be satisfied in order to avoid
Federal income and/or excise tax on the Fund. For purposes of applying the
requirements of the Code regarding qualification as a RIC, the Fund will be
deemed (i) to own its proportionate share of each of the assets of the Portfolio
and (ii) to be entitled to the gross income of the Portfolio attributable to
such share.
In order to avoid Federal excise tax, the Code requires that the Fund
distribute (or be deemed to have distributed) by December 31 of each calendar
year at least 98% of its ordinary income (not including tax-exempt income) for
such year, at least 98% of the excess of its realized capital gains over its
realized capital losses, generally computed on the basis of the one-year period
ending on October 31 of such year, after reduction by any available capital loss
carryforwards, and 100% of any ordinary income and capital gains from the prior
year (as previously computed) that was not paid out during such year and on
which the Fund paid no Federal income tax. Further, under current law, provided
that the Fund qualifies as a RIC for Federal income tax purposes and the
Portfolio is treated as a partnership for Massachusetts and Federal tax
purposes, neither the Fund nor the Portfolio is liable for any income, corporate
excise or franchise tax in the Commonwealth of Massachusetts.
The Portfolio's transactions in foreign currency, foreign currency
denominated debt securities, payables and receivables, options and futures on
foreign currency and forward foreign currency exchange contracts are subject to
special tax rules that may convert capital gain or loss into ordinary income or
loss and may affect the amount, timing and character of the Portfolio's income
or loss and hence of allocations and/or distributions to the Fund's
shareholders.
Positions held by the Portfolio which consist of one or more debt securities
and one or more listed options or futures contracts which substantially diminish
the risk of loss of the Portfolio with respect to such debt securities will be
treated as "mixed straddles" for Federal income tax purposes. Such straddles are
ordinarily subject to the provisions of Section 1092 of the Code, the operation
of which can result in deferral of losses, adjustments in the holding periods of
the Portfolio's debt securities and conversion of short-term capital losses into
long-term capital losses. The operation of these rules can be mitigated or
eliminated by means of various elections which are available to the Portfolio
for Federal income tax purposes.
To eliminate the application of these rules, the Portfolio has elected mixed
straddle accounting for one or more designated classes of activities involving
mixed straddles. Under this method of accounting, figures are derived for
aggregate short-term and long-term capital gains and losses associated with all
positions in a mixed straddle account on a daily basis. Specifically, gains and
losses are computed for all positions disposed of on a given day, and all
outstanding positions on such day are marked to market (subject to subsequent
adjustments to reflect the gain or loss realized thereby). Gains and losses from
all positions in debt securities in the account are netted, as are gains and
losses from all positions in options and futures. If the two resulting figures
both represent net gains or net losses, the net gain or loss attributable to the
debt securities is treated as short-term capital gain or loss, and the net gain
or loss attributable to the options and futures contracts is treated as 60%
long-term and 40% short-term capital gain or loss. Alternatively, if the
resulting figures represent a net gain and a net loss, the two figures are
further netted to arrive at a single figure for the day. This figure is treated
as 60% long-term and 40% short-term capital gain or loss unless it reflects the
fact that the net gain or loss from the debt securities outweighed the net gain
or loss from the options and futures, in which case this figure is treated as
short-term capital gain or loss.
On the last business day of the taxable year the annual account net gain or
loss for each mixed straddle account is determined by netting the daily net
gains or losses for each business day during the taxable year. (The annual
account net gain or loss is adjusted to take into account any interest and
carrying charges incurred in connection with positions in the account which were
required to be capitalized.) Annual account net gains or losses are then netted
for all mixed straddle accounts to yield the total annual account net gain or
loss. This figure is subject to an overall limitation such that no more than 50%
of it will be treated as long-term capital gain and no more than 40% of it will
be treated as short-term capital loss.
The Portfolio may make other tax elections with respect to mixed straddles
which do not properly belong in any of its mixed straddle accounts.
In the absence of a mixed straddle election, futures or currency forward
contracts entered into by the Portfolio and listed nonequity options written or
purchased by the Portfolio (including options on debt securities, options on
futures contracts, options on securities indexes and options on broad-based
stock indexes, but possibly excluding certain foreign currency-related options,
futures or forward contracts) will be governed by Section 1256 of the Code.
Absent a tax election to the contrary, gain or loss attributable to the lapse,
exercise or closing out of any such position will be treated as 60% long-term
and 40% short-term capital gain or loss, and on the last trading day of the
Portfolio's taxable year all outstanding Section 1256 positions will be marked
to market (i.e., treated as if such positions were closed out at their closing
price on such day), and any resulting gain or loss will be recognized as 60%
long-term and 40% short-term capital gain or loss. Under certain circumstances,
entry into a futures contract to sell a security or the purchase of a put option
with respect to a security may constitute a short sale for Federal income tax
purposes, causing an adjustment in the holding period of the underlying security
or a substantially identical security held by the Portfolio.
The Portfolio will monitor its transactions in options, futures contracts
and forward contracts in order to enable the Fund to maintain its qualification
as a RIC for Federal income tax purposes.
The Portfolio's investment in securities acquired at a market discount, or
zero coupon and certain other securities with original issue discount will cause
it to realize income prior to the receipt of cash payments with respect to these
securities. Such income will be allocated daily to interests in the Portfolio
and, in order to enable the Fund to distribute its proportionate share of this
income and avoid a tax payable by the Fund, the Portfolio may be required to
liquidate portfolio securities that it might otherwise have continued to hold in
order to generate cash that the Fund may withdraw from the Portfolio for
subsequent distribution to Fund shareholders.
Redemptions (including exchanges) of Fund shares are taxable transactions.
Any loss realized upon the redemption or exchange of shares of the Fund with a
tax holding period of 6 months or less will be treated as a long-term capital
loss to the extent of any distribution of net long-term capital gains with
respect to such shares. All or a portion of a loss realized upon a taxable
disposition of Fund shares may be disallowed under "wash sale" rules if other
Fund shares are purchased (whether through reinvestment of dividends or
otherwise) within 30 days before or after the disposition. Any disallowed loss
will result in an adjustment to the shareholder's tax basis in some or all of
the other shares acquired.
Distributions by the Fund reduce the net asset value of the Fund's shares.
Should a distribution reduce the net asset value below a shareholder's cost
basis, such distribution would be taxable to the shareholder even though, from
an investment standpoint, it may constitute a return of a portion of the
purchase price. Therefore, investors should consider the tax implications of
buying shares immediately before a distribution. Certain distributions declared
in October, November or December and paid the following January will be taxed to
shareholders as if received on December 31 of the year in which they are
declared.
Distributions of the Fund will not qualify for the dividends received
deduction available to certain corporations, subject to applicable limitations
under the Code. A state income (and possibly local income and/or intangible
property) tax exemption is generally available to the extent the Fund's
distributions are derived from interest on (or, in the case of intangibles
taxes, the value of its assets is attributable to) certain U.S. Government
obligations, provided in some states that certain thresholds for holdings of
such obligations and/or reporting requirements are satisfied. The Fund will
inform shareholders of the proportion of its distributions which are derived
from interest on such obligations. Shareholders are urged to consult their tax
advisers regarding the proper treatment of such portion of their distributions
for state and local income tax purposes.
Special tax rules apply to Individual Retirement Accounts ("IRAs") and to
other retirement plans, and persons investing through such plans should consult
their tax advisers for more information.
Amounts paid by the Fund to individuals and certain other shareholders who
have not provided the Fund with their correct taxpayer identification number and
certain required certifications, as well as shareholders with respect to whom
the Fund has received notification from the Internal Revenue Service or a
broker, may be subject to "backup" withholding of Federal income tax from the
Fund's dividends and distributions and the proceeds of redemptions (including
repurchases and exchanges) at a rate of 31%. An individual's taxpayer
identification number is generally his or her social security number.
Non-resident alien individuals and certain foreign corporations and other
foreign entities generally will be subject to a U.S. withholding tax at a rate
of 30% on the Fund's distributions from its ordinary income and the excess of
its net short-term capital gain over its net long-term capital loss, unless the
tax is reduced or eliminated by an applicable tax treaty. Distributions from the
excess of the Fund's net long-term capital gain over its net short-term capital
loss received by such shareholders and any gain from the sale or other
disposition of shares of the Fund generally will not be subject to U.S. Federal
income taxation, provided that non-resident alien status has been certified by
the shareholder. Different U.S. tax consequences may result if the shareholder
is engaged in a trade or business in the United States, is present in the United
States for a sufficient period of time during a taxable year to be treated as a
U.S. resident, or fails to provide any required certifications regarding status
as a non-resident alien investor. Foreign shareholders should consult their tax
advisers regarding the U.S. and foreign tax consequences of an investment in the
Fund.
The foregoing discussion does not describe many of the tax rules applicable
to certain classes of investors, such as IRAs and other retirement plans,
tax-exempt entities, insurance companies and financial institutions.
Shareholders should consult their own tax advisers with respect to these or
other special tax rules that may apply in their particular situations, as well
as the state, local or foreign tax consequences of investing in the Fund.
PORTFOLIO SECURITY TRANSACTIONS
Decisions concerning the execution of portfolio security transactions,
including the selection of the market and the firm, are made by BMR. BMR is also
responsible for the execution of transactions for all other accounts managed by
it.
BMR places the portfolio security transactions of the Portfolio and of all
other accounts managed by it for execution with many firms. Eaton Vance uses its
best efforts to obtain execution of portfolio security transactions at prices
which are advantageous to the Portfolio and at reasonably competitive spreads or
(when a disclosed commission is being charged) at reasonably competitive
commission rates. In seeking such execution, BMR will use its best judgment in
evaluating the terms of a transaction, and will give consideration to various
relevant factors, including without limitation the size and type of the
transaction, the general execution and operational capabilities of the executing
firm, the nature and character of the market for the security, the
confidentiality, speed and certainty of effective execution required for the
transaction, the reputation, reliability, experience and financial condition of
the firm, the value and quality of the services rendered by the firm in other
transactions, and the reasonableness of the commission or spread, if any. The
debt securities and obligations purchased and sold by the Portfolio are
generally traded in the domestic over-the-counter markets on a net basis (i.e.
without commission) through broker-dealers and banks acting for their own
accounts rather than as brokers, or otherwise involve transactions with the
issuer of such obligations. Such firms attempt to profit from such transactions
by buying at the bid price and selling at the higher asked price of the market
for such obligations, and the difference between the bid and asked price is
customarily referred to as the spread. The Portfolio may also purchase such
obligations from domestic underwriters, the cost of which may include
undisclosed fees and concessions to the underwriters. Although spreads or
commissions paid on portfolio security transactions will, in the judgment of
BMR, be reasonable in relation to the value of the services provided, spreads or
commissions exceeding those which another firm might charge may be paid to firms
who were selected to execute transactions on behalf of the Portfolio and BMR's
other clients for providing brokerage and research services to BMR.
As authorized in Section 28(e) of the Securities Exchange Act of 1934, a
broker or dealer who executes a portfolio security transaction on behalf of the
Portfolio may receive compensation which is in excess of the amount of
compensation another broker or dealer would have charged for effecting that
transaction if BMR determines in good faith that such compensation was
reasonable in relation to the value of the brokerage and research services
provided. This determination may be made on the basis of either that particular
transaction or on the basis of overall responsibilities which BMR and its
affiliates have for accounts over which they exercise investment discretion. In
making any such determination, BMR will not attempt to place a specific dollar
value on the brokerage and research services provided or to determine what
portion of the compensation should be related to such services. Brokerage and
research services may include advice as to the value of securities, the
advisability of investing in, purchasing, or selling securities, and the
availability of securities or purchasers or sellers of securities; furnishing
analyses and reports concerning issuers, industries, securities, economic
factors and trends, portfolio strategy and the performance of accounts;
effecting securities transactions and performing functions incidental thereto
(such as clearance and settlement); and the "Research Services" referred to in
the next paragraph.
It is a common practice of the investment advisory industry for the advisers
of investment companies, institutions and other investors to receive research,
statistical and quotation services, data, information and other services,
products and materials which assist such advisers in the performance of their
investment responsibilities ("Research Services") from broker-dealer firms which
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, BMR receives Research Services from many broker-dealer firms with
which BMR places the Portfolio transactions and from third parties with which
these broker-dealers have arrangements. These Research Services include such
matters as general economic and market reviews, industry and company reviews,
evaluations of securities and portfolio strategies and transactions,
recommendations as to the purchase and sale of securities and other portfolio
transactions, financial, industry and trade publications, news and information
services, pricing and quotation equipment and services, and research oriented
computer hardware, software, data bases and services. Any particular Research
Service obtained through a broker-dealer may be used by BMR in connection with
client accounts other than those accounts which pay commissions to such
broker-dealer. Any such Research Service may be broadly useful and of value to
BMR in rendering investment advisory services to all or a significant portion of
its clients, or may be relevant and useful for the management of only one
client's account or of a few clients' accounts, or may be useful for the
management of merely a segment of certain clients' accounts, regardless of
whether any such account or accounts paid commissions to the broker-dealer
through which such Research Service was obtained. The advisory fee paid by the
Portfolio is not reduced because BMR receives such Research Services. BMR
evaluates the nature and quality of the various Research Services obtained
through broker-dealer firms and attempts to allocate sufficient commissions to
such firms to ensure the continued receipt of Research Services which BMR
believes are useful or of value to it in rendering investment advisory services
to its clients.
Subject to the requirement that BMR shall use its best efforts to seek to
execute portfolio security transactions at advantageous prices and at reasonably
competitive spreads or commission rates, BMR is authorized to consider as a
factor in the selection of any broker-dealer firm with whom portfolio orders may
be placed the fact that such firm has sold or is selling shares of the Fund or
of other investment companies sponsored by BMR or Eaton Vance. This policy is
not inconsistent with a rule of the National Association of Securities Dealers,
Inc., which rule provides that no firm which is a member of the Association
shall favor or disfavor the distribution of shares of any particular investment
company or group of investment companies on the basis of brokerage commissions
received or expected by such firm from any source.
Securities considered as investments for the Portfolio may also be
appropriate for other investment accounts managed by BMR or its affiliates. BMR
will attempt to allocate equitably portfolio security transactions among the
Portfolio and the portfolios of its other investment accounts whenever decisions
are made to purchase or sell securities by the Portfolio and one or more of such
other accounts simultaneously. In making such allocations, the main factors to
be considered are the respective investment objectives of the Portfolio and such
other accounts, the relative size of portfolio holdings of the same or
comparable securities, the availability of cash for investment by the Portfolio
and such accounts, the size of investment commitments generally held by the
Portfolio and such accounts and the opinions of the persons responsible for
recommending investments to the Portfolio and such accounts. While this
procedure could have a detrimental effect on the price or amount of the
securities available to the Portfolio from time to time, it is the opinion of
the Trust's and the Portfolio's Board of Trustees that the benefits available
from the BMR organization outweigh any disadvantage that may arise from exposure
to simultaneous transactions. For the fiscal year ended December 31, 1994, and
for the period from the start of business, October 28, 1993, to December 31,
1993, the Portfolio paid no brokerage commissions on portfolio security
transactions.
OTHER INFORMATION
Eaton Vance, pursuant to its agreement with the Trust, controls the use of
the words "Eaton Vance" in the Fund's name and may use the words "Eaton Vance"
in other connections and for other purposes.
As permitted by Massachusetts law, there will normally be no meetings of
shareholders for the purpose of electing Trustees unless and until such time as
less than a majority of the Trustees of the Trust holding office have been
elected by shareholders. In such an event the Trustees then in office will call
a shareholders' meeting for the election of Trustees. Except for the foregoing
circumstances and unless removed by action of the shareholders in accordance
with the Trust's by-laws, the Trustees shall continue to hold office and may
appoint successor Trustees.
The Trust's Amended and Restated Declaration of Trust may be amended by the
Trustees when authorized by vote of a majority of the outstanding voting
securities of the Trust, the financial interests of which are affected by the
amendment. The Trustees may also amend the Declaration of Trust without the vote
or consent of shareholders to change the name of the Trust or any series or to
make such other changes as do not have a materially adverse effect on the
financial interests of shareholders or if they deem it necessary to conform it
to applicable Federal or state laws or regulations. The Trust or any series or
class thereof may be terminated by: (1) the affirmative vote of the holders of
not less than two-thirds of the shares outstanding and entitled to vote at any
meeting of shareholders of the Trust or the appropriate series or class thereof,
or by an instrument or instruments in writing without a meeting, consented to by
the holders of two-thirds of the shares of the Trust or a series or class
thereof, provided, however, that, if such termination is recommended by the
Trustees, the vote of a majority of the outstanding voting securities of the
Trust or a series or class thereof entitled to vote thereon shall be sufficient
authorization; or (2) by means of an instrument in writing signed by a majority
of the Trustees, to be followed by a written notice to shareholders stating that
a majority of the Trustees has determined that the continuation of the Trust or
a series or a class thereof is not in the best interest of the Trust, such
series or class or of their respective shareholders.
The Declaration of Trust further provides that the Trustees will not be
liable for errors of judgment or mistakes of fact or law; but nothing in the
Declaration of Trust protects a Trustee against any liability to which he would
otherwise be subject by reason of willful misfeasance, bad faith, gross
negligence, or reckless disregard of the duties involved in the conduct of his
office. In addition, the By-Laws of the Trust provide that no natural person
shall serve as a Trustee of the Trust after the holders of record of not less
than two-thirds of the outstanding shares have declared that he be removed from
office either by declaration in writing filed with the custodian of the assets
of the Trust or by votes cast in person or by proxy at a meeting called for the
purpose. The By-laws further provide that under certain circumstances the
shareholders may call a meeting to remove a Trustee and that the Trust is
required to provide assistance in communicating with shareholders about such a
meeting. The By-Laws also provide that the Trustees shall promptly call a
meeting of shareholders for the purpose of voting upon a question of removal of
a Trustee when requested so to do by the record holders of not less than 10 per
centum of the outstanding shares.
In accordance with the Declaration of Trust of the Portfolio, there will
normally be no meetings of the investors for the purpose of electing Trustees
unless and until such time as less than a majority of the Trustees holding
office have been elected by investors. In such an event the Trustees of the
Portfolio then in office will call an investors' meeting for the election of
Trustees. Except for the foregoing circumstances and unless removed by action of
the investors in accordance with the Portfolio's Declaration of Trust, the
Trustees shall continue to hold office and may appoint successor Trustees.
The Declaration of Trust of the Portfolio provides that no person shall
serve as a Trustee if investors holding two-thirds of the outstanding interest
have removed him from that office either by a written declaration filed with the
Portfolio's custodian or by votes cast at a meeting called for that purpose. The
Declaration of Trust further provides that under certain circumstances the
investors may call a meeting to remove a Trustee and that the Portfolio is
required to provide assistance in communicating with investors about such a
meeting.
The right to redeem shares of the Fund can be suspended and the payment of
the redemption price deferred when the Exchange is closed (other than for
customary weekend and holiday closings), during periods when trading on the
Exchange is restricted as determined by the SEC, or during any emergency as
determined by the Commission which makes it impracticable for the Portfolio to
dispose of its securities or value its assets, or during any other period
permitted by order of the SEC for the protection of investors.
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P., One Post Office Square, Boston, Massachusetts are
the independent accountants of the Fund, providing audit services, tax return
preparation, and assistance and consultation with respect to the preparation of
filings with the Securities and Exchange Commission. Coopers & Lybrand Chartered
Accountants, Toronto, Canada, are the independent
accountants of the Portfolio.
For the financial statements of the Fund and the Portfolio, see "Financial
Statements" in Part II of this Statement of Additional Information.
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV CLASSIC GOVERNMENT OBLIGATIONS
FUND. On September 27, 1993, the Fund became a series of the Trust.
FEES AND EXPENSES
DISTRIBUTION PLAN
For the fiscal year ended December 31, 1994, the Fund accrued sales
commissions under the Plan aggregating $365,704, of which $361,009 was paid to
the Principal Underwriter. The Principal Underwriter paid $360,374 as sales
commissions to Authorized Firms and the balance was retained by the Principal
Underwriter. As at December 31, 1994, the outstanding Uncovered Distribution
Charges of the Principal Underwriter calculated under the Plan amounted to
approximately $5,572,000 (which amount was equivalent to 14.07% of the Fund's
net assets on such day). For the fiscal year ended December 31, 1994, the Fund
accrued service fees under the Plan aggregating $121,154, of which $119,640 was
paid to the Principal Underwriter. The Principal Underwriter paid $119,442 as
service fee payments to Authorized Firms and the balance was retained by the
Principal Underwriter.
PRINCIPAL UNDERWRITER
For the fiscal year ended December 31, 1994, the Fund paid the Principal
Underwriter $2,025 for repurchase transactions handled by the Principal
Underwriter (being $2.50 for each such transaction).
CUSTODIAN
For the fiscal year ended December 31, 1994, the Fund paid IBT $11,984.
<TABLE>
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested Trustees)
are paid by the Fund (and the other series of the Trust) and the Portfolio,
respectively. (The Trustees of the Trust and the Portfolio who are members of
the Eaton Vance organization receive no compensation from the Fund or the
Portfolio.) During the fiscal year ended December 31, 1994, the noninterested
Trustees of the Trust and the Portfolio earned the following compensation in
their capacities as Trustees from the Fund, the Portfolio and the other funds in
the Eaton Vance fund complex<F1>:
<CAPTION>
AGGREGATE AGGREGATE RETIREMENT TOTAL COMPENSATION
COMPENSATION COMPENSATION BENEFIT ACCRUED FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FROM FUND COMPLEX FUND COMPLEX
---- ------------ -------------- ----------------- --------------
<S> <C> <C> <C> <C>
Donald R. Dwight $295 $4,119<F2> $8,750 $135,000
Samuel L. Hayes, III 287 4,079<F3> 8,865 142,500
Norton H. Reamer 276 4,002 --0-- 135,000
John L. Thorndike 284 4,140 --0-- 140,000
Jack L. Treynor 303 4,247 --0-- 140,000
<FN>
<F1> The Eaton Vance fund complex consists of 201 registered investment
companies or series thereof.
<F2> Includes $331 of deferred compensation.
<F3> Includes $334 of deferred compensation.
</TABLE>
PRINCIPAL UNDERWRITER
Under the Distribution Agreement the Principal Underwriter acts as principal
in selling shares of the Fund. The expenses of printing copies of prospectuses
used to offer shares to financial service firms or investors and other selling
literature and of advertising is borne by the Principal Underwriter. The fees
and expenses of qualifying and registering and maintaining qualifications and
registrations of the Fund and its shares under Federal and state securities laws
is borne by the Fund. In addition, the Fund makes payments to the Principal
Underwriter pursuant to its Distribution Plan as described in the Fund's current
prospectus; the provisions of the Fund's Distribution Plan relating to such
payments are included in the Distribution Agreement. The Distribution Agreement
is renewable annually by the Trust's Board of Trustees (including a majority of
its Trustees who are not interested persons of the Trust and who have no direct
or indirect financial interest in the operation of the Fund's Distribution Plan
or the Distribution Agreement), may be terminated on sixty days' notice either
by such Trustees or by vote of a majority of the outstanding voting securities
of the Fund or on six months' notice by the Principal Underwriter and is
automatically terminated upon assignment. The Principal Underwriter distributes
Fund shares on a "best efforts" basis under which it is required to take and pay
for only such shares as may be sold.
The Fund has authorized the Principal Underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction handled
by the Principal Underwriter. The Principal Underwriter estimates that the
expenses incurred by it in acting as repurchase agent for the Fund will exceed
the amounts paid therefor by the Fund. For the amount paid by the Fund to the
Principal Underwriter for acting as repurchase agent, see "Fees and Expenses" in
this Part II.
DISTRIBUTION PLAN
The Distribution Plan ("the Plan") is described in the Prospectus and is
designed to meet the requirements of Rule 12b-1 under the 1940 Act and the sales
charge rule of the National Association of Securities Dealers, Inc. (the "NASD
Rule"). The purpose of the Plan is to compensate the Principal Underwriter for
its distribution services and facilities provided to the Fund by paying the
Principal Underwriter sales commissions and a separate distribution fee in
connection with sales of Fund shares. The following supplements the discussion
of the Plan contained in the Fund's Prospectus.
The amount payable to the Principal Underwriter pursuant to the Plan as
sales commissions and distribution fees with respect to each day will be accrued
on such day as a liability of the Fund and will accordingly reduce the Fund's
net assets upon such accrual, all in accordance with generally accepted
accounting principles. The amount payable on each day is limited to 1/365 of
.75% of the Fund's net assets on such day. The level of the Fund's net assets
changes each day and depends upon the amount of sales and redemptions of Fund
shares, the changes in the value of the investments held by the Portfolio, the
expenses of the Fund and the Portfolio accrued and allocated to the Fund on such
day, income on portfolio investments of the Portfolio accrued and allocated to
the Fund on such day, and any dividends and distributions declared on Fund
shares. The Fund does not accrue possible future payments as a liability of the
Fund or reduce the Fund's current net assets in respect of unknown amounts which
may become payable under the Plan in the future because the standards for
accrual of a liability under such accounting principles have not been satisfied.
The Plan provides that the Fund will receive all contingent deferred sales
charges and will make no payments to the Principal Underwriter in respect of any
day on which there are no outstanding Uncovered Distribution Charges of the
Principal Underwriter. Contingent deferred sales charges and accrued amounts
will be paid by the Fund to the Principal Underwriter whenever there exist
Uncovered Distribution Charges under the Fund's Plan.
Periods with a high level of sales of Fund shares accompanied by a low level
of early redemptions of Fund shares resulting in the imposition of contingent
deferred sales charges will tend to increase the time during which there will
exist Uncovered Distribution Charges of the Principal Underwriter. Conversely,
periods with a low level of sales of Fund shares accompanied by a high level of
early redemptions of Fund shares resulting in the imposition of contingent
deferred sales charges will tend to reduce the time during which there will
exist Uncovered Distribution Charges of the Principal Underwriter.
In calculating daily the amount of Uncovered Distribution Charges,
distribution charges will include the aggregate amount of sales commissions and
distribution fees theretofore paid plus the aggregate amount of sales
commissions and distribution fees which the Principal Underwriter is entitled to
be paid under the Plan since its inception. Payments theretofore paid or payable
under the Plan by the Fund to the Principal Underwriter and contingent deferred
sales charges theretofore paid or payable to the Principal Underwriter will be
subtracted from such distribution charges; if the result of such subtraction is
positive, a distribution fee (computed at 1% over the prime rate then reported
in The Wall Street Journal) will be computed on such amount and added thereto,
with the resulting sum constituting the amount of outstanding Uncovered
Distribution Charges with respect to such day. The amount of outstanding
Uncovered Distribution Charges of the Principal Underwriter calculated on any
day does not constitute a liability recorded on the financial statements of the
Fund.
The amount of Uncovered Distribution Charges of the Principal Underwriter at
any particular time depends upon various changing factors, including the level
and timing of sales of Fund shares, the nature of such sales (i.e., whether they
result from exchange transactions, reinvestments or from cash sales through
Authorized Firms), the level and timing of redemptions of Fund shares upon which
a contingent deferred sales charge will be imposed, the level and timing of
redemptions of Fund shares upon which no contingent deferred sales charge will
be imposed (including redemptions involving exchanges of Fund shares for shares
of another fund in the Eaton Vance Classic Group of Funds which result in a
reduction of Uncovered Distribution Charges), changes in the level of the net
assets of the Fund, and changes in the interest rate used in the calculation of
the distribution fee under the Plan. (For shares sold prior to January 30, 1995,
Plan payments are as follows: the Principal Underwriter pays monthly sales
commissions and service fee payments to Authorized Firms equivalent to
approximately .75% and .25%, respectively, annualized, of the assets maintained
in the Fund by their customers beginning at the time of sale. No payments were
made at the time of sale and there is no contingent deferred sales charge.)
As currently implemented by the Trustees, the Plan authorizes payments of
sales commissions, distribution fees and service fees to the Principal
Underwriter which may be equivalent, on an aggregate basis during any fiscal
year of the Fund, to 1% of the Fund's average daily net assets for such year.
For the sales commission and service fee payments made by the Fund and the
outstanding Uncovered Distribution Charges of the Principal Underwriter, see
"Fees and Expenses -- Distribution Plan" in this Part II. The Fund believes that
the combined rate of all these payments may be higher than the rate of payments
made under distribution plans adopted by other investment companies pursuant to
Rule 12b-1. Although the Principal Underwriter will use its own funds (which may
be borrowed from banks) to pay sales commissions and service fees at the time of
sale, it is anticipated that the Eaton Vance organization will profit by reason
of the operation of the Plan through an increase in the Fund's assets (thereby
increasing the advisory fee payable to BMR by the Portfolio) resulting from sale
of Fund shares and through the amounts paid to the Principal Underwriter,
including contingent deferred sales charges, pursuant to the Plan. The Eaton
Vance organization may be considered to have realized a profit under the Plan if
at any point in time the aggregate amounts theretofore received by the Principal
Underwriter pursuant to the Plan and from contingent deferred sales charges have
exceeded the total expenses theretofore incurred by such organization in
distributing shares of the Fund. Total expenses for this purpose will include an
allocable portion of the overhead costs of such organization and its branch
offices, which costs will include without limitation leasing expense,
depreciation of building and equipment, utilities, communication and postage
expense, compensation and benefits of personnel, travel and promotional expense,
stationery and supplies, literature and sales aids, interest expense, data
processing fees, consulting and temporary help costs, insurance, taxes other
than income taxes, legal and auditing expense and other miscellaneous overhead
items. Overhead is calculated and allocated for such purpose by the Eaton Vance
organization in a manner deemed equitable to the Fund.
The provisions of the Plan relating to payments of sales commissions and
distribution fees to the Principal Underwriter are also included in the
Distribution Agreement between the Trust on behalf of the Fund and the Principal
Underwriter. Pursuant to Rule 12b-1, the Plan has been approved by the Fund's
initial sole shareholder (Eaton Vance) and by the Board of Trustees of the
Trust, including the Rule 12b-1 Trustees. The Plan continues in effect through
and including April 28, 1996, and shall continue in effect indefinitely
thereafter for so long as such continuance is approved at least annually by the
vote of both a majority of (i) the Trustees of the Trust who are not interested
persons of the Trust and who have no direct or indirect financial interest in
the operation of the Plan or any agreements related to the Plan (the "Rule 12b-1
Trustees") and (ii) all of the Trustees then in office, and the Distribution
Agreement contains a similar provision. The Plan and Distribution Agreement may
be terminated at any time by vote of a majority of the Rule 12b-1 Trustees or by
a vote of a majority of the outstanding voting securities of the Fund. Under the
Plan, the President or a Vice President of the Trust shall provide to the
Trustees for their review, and the Trustees shall review at least quarterly, a
written report of the amount expended under the Plan and the purposes for which
such expenditures were made. The Plan may not be amended to increase materially
the payments described therein without approval of the shareholders of the Fund,
and all material amendments of the Plan must also be approved by the Trustees as
required by Rule 12b-1. So long as the Plan is in effect, the selection and
nomination of Trustees who are not interested persons of the Trust shall be
committed to the discretion of the Trustees who are not such interested persons.
The Trustees believe that the Plan will be a significant factor in the
expected growth of the Fund's assets, and will result in increased investment
flexibility and advantages which will benefit the Fund and its shareholders.
Payments for sales commissions and distribution fees made to the Principal
Underwriter under the Plan will compensate the Principal Underwriter for its
services and expenses in distributing shares of the Fund. Service fee payments
made to the Principal Underwriter and Authorized Firms under the Plan provide
incentives to provide continuing personal services to investors and the
maintenance of shareholder accounts. By providing incentives to the Principal
Underwriter and Authorized Firms, the Plan is expected to result in the
maintenance of, and possible future growth in, the assets of the Fund. Based on
the foregoing and other relevant factors, the Trustees have determined that in
their judgment there is a reasonable likelihood that the Plan will benefit the
Fund and its shareholders.
PERFORMANCE INFORMATION
The table below indicates the total return (capital changes plus
reinvestment of all distributions) on a hypothetical investment of $1,000 in the
Fund covering the life of the Fund from November 1, 1993 through December 31,
1994 and the one-year period ended December 31, 1994.
<TABLE>
VALUE OF A $1,000 INVESTMENT<F2>
<CAPTION>
VALUE OF TOTAL RETURN
INVESTMENT AMOUNT OF INVESTMENT ------------------------------------
INVESTMENT PERIOD DATE INVESTMENT ON 12/31/94 CUMULATIVE ANNUALIZED
- ----------- ------ ------ ------ ------- ------
<S> <C> <C> <C> <C> <C>
Life of the Fund<F1> 11/01/93 $1,000 $977.90 -2.21% -1.90%
1 Year Ended 12/31/94 12/31/93 1,000 $974.56 -2.54% -2.54%
<CAPTION>
PERCENTAGE CHANGES<F2>
NOVEMBER 1, 1993 -- DECEMBER 31, 1994
NET ASSET VALUE TO NET ASSET VALUE
WITH ALL DISTRIBUTIONS REINVESTE
---------------------------------------------------------
FISCAL YEAR ENDED ANNUAL CUMULATIVE AVERAGE ANNUAL
- ----------------- ------ ---------- --------------
<S> <C> <C> <C>
12/31/93<F1> -- 0.34% --
12/31/94 -2.54% -2.21% -1.90%
Past performance is not indicative of future results. Investment return
and principal value will fluctuate and shares, when redeemed, may be worth more
or less than their original cost.
<FN>
- ----------
<F1> Investment operations began on November 1, 1993.
<F2> If the contingent deferred sales charge applicable to shares purchased on
or after January 30, 1995 had been imposed, the Fund would have had lower
returns.
</TABLE>
For the thirty-day period ended December 31, 1994, the yield of the Fund was
4.70%. The Fund's distribution rate (calculated on December 31, 1994 and based
on the Fund's monthly distribution paid on December 22, 1994) was 6.93%, and the
Fund's effective distribution rate (calculated on the same date and based on the
same monthly distribution) was 7.16%.
From time to time, advertisements and other material furnished to present
and prospective shareholders may include information, charts and/or
illustrations of the Fund's net asset value per share history.
MONTH -- NET ASSET VALUES
INCEPTION DATE: NOVEMBER 1, 1993 -- PRICE $10.00
1993 1994 1995
--- --- ---
January n/a 9.96 9.06
February n/a 9.81 9.18
March n/a 9.61 9.18
April n/a 9.45
May n/a 9.38
June n/a 9.31
July n/a 9.35
August n/a 9.32
September n/a 9.16
October n/a 9.11
November 9.97 9.00
December 9.94 8.98
ADDITIONAL TAX MATTERS
The Fund qualified as a RIC under the Code for its taxable year ended
December 31, 1994 (see Notes to Financial Statements).
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at March 31, 1995, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As at
March 31, 1995, Merrill Lynch, Pierce, Fenner & Smith, Inc., New Brunswick, NJ
was the record owner of approximately 29.23% of the outstanding shares, which it
held on behalf of its customers who are the beneficial owners of such shares,
and as to which it had voting power under certain limited circumstances. In
addition, on such date, Chicago Public Schools Dept. of Treasury Fund, Chicago,
IL was the record and beneficial owner of approximately 11.28% of the
outstanding shares. To the Trust's knowledge, no other person owned of record or
beneficially 5% or more of the Fund's outstanding shares on such date.
<PAGE>
FINANCIAL STATEMENTS
Registrant incorporates by reference the audited financial information for
the Fund and the Portfolio contained in the Fund's shareholder report for the
fiscal year ended December 31, 1994 as previously filed electronically with the
Securities and Exchange Commission (Accession Number: 0000950156-95-000085).
<PAGE>
INVESTMENT ADVISER OF
GOVERNMENT OBLIGATIONS PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF
EV CLASSIC
GOVERNMENT OBLIGATIONS FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
EV CLASSIC
GOVERNMENT OBLIGATIONS FUND
24 FEDERAL STREET
BOSTON, MA 02110
EV Classic
Government Obligations
Fund
Statement of
Additional
Information
May 1, 1995
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV MARATHON GOVERNMENT OBLIGATIONS
FUND. On September 27, 1993, the Fund became a series of the Trust.
FEES AND EXPENSES
DISTRIBUTION PLAN
For the fiscal year ended December 31, 1994, the Fund paid sales commissions
under the Plan aggregating $472,478, which amount was used by the Principal
Underwriter to partially defray sales commissions aggregating $2,704,473 paid
during such period by the Principal Underwriter to Authorized Firms on sales of
Fund shares. During such period, contingent deferred sales charges aggregating
approximately $577,800 were imposed on early redeeming shareholders and paid to
the Principal Underwriter, which amount was used by the Principal Underwriter to
partially defray such sales commissions. As at December 31, 1994, the
outstanding Uncovered Distribution Charges of the Principal Underwriter
calculated under the Plan amounted to approximately $3,980,000 (which amount was
equivalent to 4.6% of the Fund's net assets on such day). For the fiscal year
ended December 31, 1994, the Fund accrued service fees under the Plan
aggregating $5,588, but did not make any service fee payments to the Principal
Underwriter.
PRINCIPAL UNDERWRITER
For the fiscal year ended December 31, 1994, the Fund paid the Principal
Underwriter $1,307.50 for repurchase transactions handled by the Principal
Underwriter (being $2.50 for each such transaction).
CUSTODIAN
For the fiscal year ended December 31, 1994, the Fund paid IBT $12,161.
<TABLE>
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested Trustees)
are paid by the Fund (and the other series of the Trust) and the Portfolio,
respectively. (The Trustees of the Trust and the Portfolio who are members of
the Eaton Vance organization receive no compensation from the Fund or the
Portfolio.) During the fiscal year ended December 31, 1994, the noninterested
Trustees of the Trust and the Portfolio earned the following compensation in
their capacities as Trustees from the Fund, the Portfolio and the other funds in
the Eaton Vance fund complex<F1>:
<CAPTION>
AGGREGATE AGGREGATE RETIREMENT TOTAL COMPENSATION
COMPENSATION COMPENSATION BENEFIT ACCRUED FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FROM FUND COMPLEX FUND COMPLEX
---- ------------ -------------- ----------------- --------------
<S> <C> <C> <C> <C>
Donald R. Dwight $216 $4,119<F2> $8,750 $135,000
Samuel L. Hayes, III 208 4,079<F3> 8,865 142,500
Norton H. Reamer 203 4,002 --0-- 135,000
John L. Thorndike 207 4,140 --0-- 140,000
Jack L. Treynor 224 4,247 --0-- 140,000
<FN>
<F1> The Eaton Vance fund complex consists of 201 registered investment
companies or series thereof.
<F2> Includes $331 of deferred compensation.
<F3> Includes $334 of deferred compensation.
</TABLE>
PRINCIPAL UNDERWRITER
Under the Distribution Agreement the Principal Underwriter acts as principal
in selling shares of the Fund. The expenses of printing copies of prospectuses
used to offer shares to financial service firms or investors and other selling
literature and of advertising is borne by the Principal Underwriter. The fees
and expenses of qualifying and registering and maintaining qualifications and
registrations of the Fund and its shares under Federal and state securities laws
is borne by the Fund. In addition, the Fund makes payments to the Principal
Underwriter pursuant to its Distribution Plan as described in the Fund's current
Prospectus; the provisions of the Fund's Distribution Plan relating to such
payments are included in the Distribution Agreement. The Distribution Agreement
is renewable annually by the Trust's Board of Trustees (including a majority of
its Trustees who are not interested persons of the Trust and who have no direct
or indirect financial interest in the operation of the Fund's Distribution Plan
or the Distribution Agreement), may be terminated on sixty days' notice either
by such Trustees or by vote of a majority of the outstanding voting securities
of the Fund or on six months' notice by the Principal Underwriter and is
automatically terminated upon assignment. The Principal Underwriter distributes
Fund shares on a "best efforts" basis under which it is required to take and pay
for only such shares as may be sold.
The Fund has authorized the Principal Underwriter to act as its agent in
repurchasing shares at the rate of $2.50 for each repurchase transaction handled
by the Principal Underwriter. The Principal Underwriter estimates that the
expenses incurred by it in acting as repurchase agent for the Fund will exceed
the amounts paid therefor by the Fund. For the amount paid by the Fund to the
Principal Underwriter for acting as repurchase agent, see "Fees and Expenses" in
this Part II.
DISTRIBUTION PLAN
The Distribution Plan ("the Plan") is described in the Prospectus and is
designed to meet the requirements of Rule 12b-1 under the 1940 Act and the sales
charge rule of the National Association of Securities Dealers, Inc. (the "NASD
Rule"). The purpose of the Plan is to compensate the Principal Underwriter for
its distribution services and facilities provided to the Fund by paying the
Principal Underwriter sales commissions and a separate distribution fee in
connection with sales of Fund shares. The following supplements the discussion
of the Plan contained in the Fund's Prospectus.
The amount payable to the Principal Underwriter pursuant to the Plan as
sales commissions and distribution fees with respect to each day will be accrued
on such day as a liability of the Fund and will accordingly reduce the Fund's
net assets upon such accrual, all in accordance with generally accepted
accounting principles. The amount payable on each day is limited to 1/365 of
.75% of the Fund's net assets on such day. The level of the Fund's net assets
changes each day and depends upon the amount of sales and redemptions of Fund
shares, the changes in the value of the investments held by the Portfolio, the
expenses of the Fund and the Portfolio accrued and allocated to the Fund on such
day, income on portfolio investments of the Portfolio accrued and allocated to
the Fund on such day, and any dividends and distributions declared on Fund
shares. The Fund does not accrue possible future payments as a liability of the
Fund or reduce the Fund's current net assets in respect of unknown amounts which
may become payable under the Plan in the future because the standards for
accrual of a liability under such accounting principles have not been satisfied.
The Plan provides that the Fund will receive all contingent deferred sales
charges and will make no payments to the Principal Underwriter in respect of any
day on which there are no outstanding Uncovered Distribution Charges of the
Principal Underwriter. Contingent deferred sales charges and accrued amounts
will be paid by the Fund to the Principal Underwriter whenever there exist
Uncovered Distribution Charges under the Fund's Plan.
Periods with a high level of sales of Fund shares accompanied by a low level
of early redemptions of Fund shares resulting in the imposition of contingent
deferred sales charges will tend to increase the time during which there will
exist Uncovered Distribution Charges of the Principal Underwriter. Conversely,
periods with a low level of sales of Fund shares accompanied by a high level of
early redemptions of Fund shares resulting in the imposition of contingent
deferred sales charges will tend to reduce the time during which there will
exist Uncovered Distribution Charges of the Principal Underwriter.
In calculating daily the amount of Uncovered Distribution Charges,
distribution charges will include the aggregate amount of sales commissions and
distribution fees theretofore paid plus the aggregate amount of sales
commissions and distribution fees which the Principal Underwriter is entitled to
be paid under the Plan since its inception. Payments theretofore paid or payable
under the Plan by the Fund to the Principal Underwriter and contingent deferred
sales charges theretofore paid or payable to the Principal Underwriter will be
subtracted from such distribution charges; if the result of such subtraction is
positive, a distribution fee (computed at 1% over the prime rate then reported
in The Wall Street Journal) will be computed on such amount and added thereto,
with the resulting sum constituting the amount of outstanding Uncovered
Distribution Charges with respect to such day. The amount of outstanding
Uncovered Distribution Charges of the Principal Underwriter calculated on any
day does not constitute a liability recorded on the financial statements of the
Fund.
The amount of Uncovered Distribution Charges of the Principal Underwriter at
any particular time depends upon various changing factors, including the level
and timing of sales of Fund shares, the nature of such sales (i.e., whether they
result from exchange transactions, reinvestments or from cash sales through
Authorized Firms), the level and timing of redemptions of Fund shares upon which
a contingent deferred sales charge will be imposed, the level and timing of
redemptions of Fund shares upon which no contingent deferred sales charge will
be imposed (including redemptions involving exchanges of Fund shares for shares
of another fund in the Eaton Vance Marathon Group of Funds which result in a
reduction of uncovered distribution charges), changes in the level of the net
assets of the Fund, and changes in the interest rate used in the calculation of
the distribution fee under the Plan.
As currently implemented by the Trustees, the Plan authorizes payments of
sales commissions and distribution fees to the Principal Underwriter and service
fees to the Principal Underwriter and Authorized Firms which may be equivalent,
on an aggregate basis during any fiscal year of the Fund, to 1% of the Fund's
average daily net assets for such year. For the sales commissions and service
fee payments made by the Fund and the outstanding Uncovered Distribution Charges
of the Principal Underwriter, see "Fees and Expenses -- Distribution Plan" in
this Part II. The Fund believes that the combined rate of all these payments may
be higher than the rate of payments made under distribution plans adopted by
other investment companies pursuant to Rule 12b- 1. It is anticipated that the
Eaton Vance organization will profit by reason of the operation of the Plan
through an increase in the Fund's assets (thereby increasing the advisory fee
payable to BMR by the Portfolio) resulting from sale of Fund shares and through
the amounts paid to the Principal Underwriter, including contingent deferred
sales charges, pursuant to the Plan. The Eaton Vance organization may be
considered to have realized a profit under the Plan if at any point in time the
aggregate amounts theretofore received by the Principal Underwriter pursuant to
the Plan and from contingent deferred sales charges have exceeded the total
expenses theretofore incurred by such organization in distributing shares of the
Fund. Total expenses for this purpose will include an allocable portion of the
overhead costs of such organization and its branch offices, which costs will
include without limitation leasing expense, depreciation of building and
equipment, utilities, communication and postage expense, compensation and
benefits of personnel, travel and promotional expense, stationery and supplies,
literature and sales aids, interest expense, data processing fees, consulting
and temporary help costs, insurance, taxes other than income taxes, legal and
auditing expense and other miscellaneous overhead items. Overhead is calculated
and allocated for such purpose by the Eaton Vance organization in a manner
deemed equitable to the Fund.
The provisions of the Plan relating to payments of sales commissions and
distribution fees to the Principal Underwriter are also included in the
Distribution Agreement between the Trust on behalf of the Fund and the Principal
Underwriter. Pursuant to Rule 12b-1, the Plan has been approved by the Fund's
initial sole shareholder (Eaton Vance) and by the Board of Trustees of the
Trust, including the Rule 12b-1 Trustees. The Plan continues in effect through
and including April 28, 1996, and shall continue in effect indefinitely
thereafter for so long as such continuance is approved at least annually by the
vote of both a majority of (i) the Trustees of the Trust who are not interested
persons of the Trust and who have no direct or indirect financial interest in
the operation of the Plan or any agreements related to the Plan (the "Rule 12b-1
Trustees") and (ii) all of the Trustees then in office, and the Distribution
Agreement contains a similar provision. The Plan and Distribution Agreement may
be terminated at any time by vote of a majority of the Rule 12b-1 Trustees or by
a vote of a majority of the outstanding voting securities of the Fund. Under the
Plan, the President or a Vice President of the Trust shall provide to the
Trustees for their review, and the Trustees shall review at least quarterly, a
written report of the amount expended under the Plan and the purposes for which
such expenditures were made. The Plan may not be amended to increase materially
the payments described therein without approval of the shareholders of the Fund,
and all material amendments of the Plan must also be approved by the Trustees as
required by Rule 12b-1. So long as the Plan is in effect, the selection and
nomination of Trustees who are not interested persons of the Trust shall be
committed to the discretion of the Trustees who are not such interested persons.
The Trustees believe that the Plan will be a significant factor in the
expected growth of the Fund's assets, and will result in increased investment
flexibility and advantages which will benefit the Fund and its shareholders.
Payments for sales commissions and distribution fees made to the Principal
Underwriter under the Plan will compensate the Principal Underwriter for its
services and expenses in distributing shares of the Fund. Service fee payments
made to the Principal Underwriter and Authorized Firms under the Plan provide
incentives to provide continuing personal services to investors and the
maintenance of shareholder accounts. By providing incentives to the Principal
Underwriter and Authorized Firms, the Plan is expected to result in the
maintenance of, and possible future growth in, the assets of the Fund. Based on
the foregoing and other relevant factors, the Trustees have determined that in
their judgment there is a reasonable likelihood that the Plan will benefit the
Fund and its shareholders.
PERFORMANCE INFORMATION
The table below indicates the total return (capital changes plus
reinvestment of all distributions) on a hypothetical investment of $1,000 in the
Fund covering the life of the Fund from November 1, 1993, through December 31,
1994, and the one-year period ended December 31, 1994.
VALUE OF A $1,000 INVESTMENT
<TABLE>
<CAPTION>
VALUE OF VALUE OF
INVESTMENT INVESTMENT
BEFORE AFTER
DEDUCTING THE DEDUCTING THE TOTAL RETURN BEFORE TOTAL RETURN AFTER
CONTINGENT CONTINGENT DEDUCTING THE CONTINGENT DEDUCTING THE CONTINGENT
DEFERRED DEFERRED DEFERRED SALES CHARGE DEFERRED SALES CHARGE<F2>
INVESTMENT INVESTMENT AMOUNT OF SALES CHARGE SALES CHARGE<F2> ------------------------ --------------------------
PERIOD DATE INVESTMENT ON 12/31/94 ON 12/31/94 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- --------- --------- ---------- ------------- ------------ ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Life of Fund<F1> 11/01/93 $1,000 $981.56 $936.61 -1.84% -1.59% -6.34% -5.47%
1 Year Ended
12/31/94 12/31/93 $1,000 $979.10 $933.83 -2.09% -2.09% -6.62% -6.62%
<CAPTION>
PERCENTAGE CHANGES
NOVEMBER 1, 1993 -- DECEMBER 31, 1994
NET ASSET VALUE TO NET ASSET VALUE NET ASSET VALUE TO NET ASSET VALUE
BEFORE DEDUCTING THE CONTINGENT DEFERRED AFTER DEDUCTING THE CONTINGENT DEFERRED
FISCAL SALES CHARGE WITH ALL DISTRIBUTIONS REINVESTED SALES CHARGE<F2> WITH ALL DISTRIBUTIONS REINVESTED
YEAR ---------------------------------------------- ------------------------------------------------
ENDED ANNUAL CUMULATIVE AVERAGE ANNUAL ANNUAL CUMULATIVE AVERAGE ANNUAL
- ----- ------ ---------- -------------- ------ ---------- --------------
<C> <C> <C> <C> <C> <C> <C>
12/31/93<F1> -- 0.25% -- -- -4.71% --
12/31/94 -2.09% -1.84% -1.59% -6.62% -6.34% -5.47%
Past performance is not indicative of future results. Investment return
and principal value will fluctuate and shares, when redeemed, may be worth more
or less than their original cost.
<FN>
- ----------
<F1> Investment operations began on November 1, 1993.
<F2> No contingent deferred sales charge is imposed on shares purchased more
than six years prior to the redemption, shares acquired through the
reinvestment of distributions, or any appreciation in value of other shares
in the account, and no such charge is imposed on exchanges of Fund shares
for shares of one or more other funds listed under "The Eaton Vance
Exchange Privilege" in the Prospectus.
</TABLE>
For the thirty-day period ended December 31, 1994, the yield of the Fund was
5.14%. The Fund's distribution rate (calculated on December 31, 1994 and based
on the Fund's monthly distribution paid on December 22, 1994) was 7.23%, and the
Fund's effective distribution rate (calculated on the same date and based on the
same monthly distribution) was 7.48%.
From time to time, advertisements and other material furnished to present
and prospective shareholders may include information, charts and/or
illustrations of the Fund's net asset value per share history.
MONTH -- NET ASSET VALUES
INCEPTION DATE: NOVEMBER 1, 1993 -- PRICE $10.00
1993 1994 1995
---- ---- ----
January n/a 9.96 9.07
February n/a 9.80 9.19
March n/a 9.60 9.19
April n/a 9.45
May n/a 9.37
June n/a 9.30
July n/a 9.34
August n/a 9.31
September n/a 9.16
October n/a 9.10
November 9.96 9.01
December 9.93 8.99
ADDITIONAL TAX MATTERS
The Fund qualified as a RIC under the Code for its taxable year ended
December 31, 1994 (see Notes to Financial Statements).
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at March 31, 1995, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As at
March 31, 1995, Merrill Lynch, Pierce, Fenner & Smith, Inc., New Brunswick, NJ
was the record owner of approximately 14.23% of the outstanding shares, which it
held on behalf of its customers who are the beneficial owners of such shares,
and as to which it had voting power under certain limited circumstances. To the
Trust's knowledge, no other person owned of record or beneficially 5% or more of
the Fund's outstanding shares on such date.
<PAGE>
FINANCIAL STATEMENTS
Registrant incorporates by reference the audited financial information for
the Fund and the Portfolio contained in the Fund's shareholder report for the
fiscal year ended December 31, 1994 as previously filed electronically with the
Securities and Exchange Commission (Accession Number: 0000950156-95-000118).
<PAGE>
INVESTMENT ADVISER OF
GOVERNMENT OBLIGATIONS PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF EV MARATHON
GOVERNMENT OBLIGATIONS FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
EV MARATHON
GOVERNMENT OBLIGATIONS FUND
24 FEDERAL STREET
BOSTON, MA 02110
[LOGO]
EV MARATHON
GOVERNMENT
OBLIGATIONS
FUND
STATEMENT OF
ADDITIONAL
INFORMATION
MAY 1, 1995
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
PART II
This Part II provides information about EV TRADITIONAL GOVERNMENT
OBLIGATIONS FUND. On February 1, 1991, the Fund became a series of the Trust and
redesignated its name from Eaton Vance Government Obligations Fund to Eaton
Vance Traditional Government Obligations Fund. On September 27, 1993, the Fund
changed its name to EV Traditional Government Obligations Fund.
FEES AND EXPENSES
INVESTMENT ADVISER
Prior to the close of business on October 27, 1993 (when the Fund
transferred its assets to the Portfolio in exchange for an interest in the
Portfolio), the Fund retained Eaton Vance as its investment adviser. For the
period from January 1, 1993, to October 27, 1993, the Fund paid Eaton Vance
advisory fees of $3,124,314 (equivalent to .75% (annualized) of the Fund's
average daily net assets for such period). For the fiscal year ended December
31, 1992, the Fund paid Eaton Vance advisory fees of $3,212,369.
PRINCIPAL UNDERWRITER
For the fiscal year ended December 31, 1994, the Fund paid the Principal
Underwriter $6,640 (being $2.50 for each repurchase transaction handled by the
Principal Underwriter).
The total sales charges for sales of shares of the Fund during the fiscal
years ended December 31, 1994, 1993 and 1992, were $727,826, $2,735,964 and
$6,599,616, respectively, of which $119,053, $424,933 and $601,912,
respectively, was received by the Principal Underwriter. For the fiscal years
ended December 31, 1994, 1993 and 1992, Authorized Firms received $608,773,
$2,311,031 and $5,997,704, respectively, from the total sales charges.
SERVICE PLAN
For the fiscal year ended December 31, 1994, the Fund made service fee
payments under the Plan to the Principal Underwriter aggregating $926,094, of
which $909,806 was paid to Authorized Firms and the balance was retained by the
Principal Underwriter.
CUSTODIAN
During the fiscal year ended December 31, 1994, the Fund paid IBT $41,940.
BROKERAGE COMMISSIONS
During the period from January 1, 1993, to October 27, 1993, and the fiscal
year ended December 31, 1992, the Fund paid no brokerage commissions on
portfolio security transactions.
<TABLE>
TRUSTEES
The fees and expenses of those Trustees of the Trust and of the Portfolio
who are not members of the Eaton Vance organization (the noninterested Trustees)
are paid by the Fund (and the other series of the Trust) and the Portfolio,
respectively. (The Trustees of the Trust and the Portfolio who are members of
the Eaton Vance organization receive no compensation from the Fund or the
Portfolio.) During the fiscal year ended December 31, 1994, the noninterested
Trustees of the Trust and the Portfolio earned the following compensation in
their capacities as Trustees from the Fund, the Portfolio and the other funds in
the Eaton Vance fund complex<F1>:
<CAPTION>
AGGREGATE AGGREGATE RETIREMENT TOTAL COMPENSATION
COMPENSATION COMPENSATION BENEFIT ACCRUED FROM TRUST AND
NAME FROM FUND FROM PORTFOLIO FROM FUND COMPLEX FUND COMPLEX
---- ------------ -------------- ----------------- --------------
<S> <C> <C> <C> <C>
Donald R. Dwight .............. $ 675 $4,119<F2> $8,750 $135,000
Samuel L. Hayes, III .......... 653 4,079<F3> 8,865 142,500
Norton H. Reamer .............. 630 4,002 -- 0 -- 135,000
John L. Thorndike ............. 647 4,140 -- 0 -- 140,000
Jack L. Treynor ............... 691 4,247 -- 0 -- 140,000
<FN>
- ----------
<F1> The Eaton Vance fund complex consists of 201 registered investment
companies or series thereof.
<F2> Includes $331 of deferred compensation.
<F3> Includes $334 of deferred compensation.
</TABLE>
SERVICES FOR ACCUMULATION
The following services are voluntary, involve no extra charge other than the
sales charge included in the offering price, and may be changed or discontinued
without penalty at any time.
INTENDED QUANTITY INVESTMENT -- STATEMENT OF INTENTION. If it is anticipated
that $50,000 or more of Fund shares and shares of the other continuously offered
open-end funds listed under "The Eaton Vance Exchange Privilege" in the current
Prospectus of the Fund will be purchased within a 13-month period, a Statement
of Intention should be signed so that shares may be obtained at the same reduced
sales charge as though the total quantity were invested in one lump sum. Shares
held under Right of Accumulation (see below) as of the date of the Statement
will be included toward the completion of the Statement. The Statement
authorizes the Transfer Agent to hold in escrow sufficient shares (5% of the
dollar amount specified in the Statement) which can be redeemed to make up any
difference in sales charge on the amount intended to be invested and the amount
actually invested. Execution of a Statement does not obligate the shareholder to
purchase or the Fund to sell the full amount indicated in the Statement, and
should the amount actually purchased during the 13-month period be more or less
than that indicated on the Statement, price adjustments will be made. For sales
charges and other information on quantity purchases, see "How to Buy Fund
Shares" in the Fund's current Prospectus. Any investor considering signing a
Statement of Intention should read it carefully.
RIGHT OF ACCUMULATION -- CUMULATIVE QUANTITY DISCOUNT. The applicable sales
charge level for the purchase of Fund shares is calculated by taking the dollar
amount of the current purchase and adding it to the value (calculated at the
maximum current offering price) of the shares the shareholder owns in his
account(s) in the Fund and in the other continuously offered open-end funds
listed under "The Eaton Vance Exchange Privilege" in the current Prospectus of
the Fund for which Eaton Vance acts as adviser or administrator at the time of
purchase. The sales charge on the shares being purchased will then be at the
rate applicable to the aggregate. For example, if the shareholder owned shares
valued at $30,000 in EV Traditional California Municipals Fund, and purchased an
additional $20,000 of Fund shares, the sales charge for the $20,000 purchase
would be at the rate of 2.75% of the offering price (2.83% of the net amount
invested) which is the rate applicable to single transactions of $50,000. For
sales charges on quantity purchases, see "How to Buy Fund Shares" in the Fund's
current Prospectus. Shares purchased (i) by an individual, his or her spouse and
their children under the age of twenty-one, and (ii) by a trustee, guardian or
other fiduciary of a single trust estate or a single fiduciary account, will be
combined for the purpose of determining whether a purchase will qualify for the
Right of Accumulation and if qualifying, the applicable sales charge level.
For any such discount to be made available, at the time of purchase a
purchaser or his or her Authorized Firm must provide Eaton Vance Distributors,
Inc. (the "Principal Underwriter") (in the case of a purchase made through an
Authorized Firm) or the Transfer Agent (in the case of an investment made by
mail) with sufficient information to permit verification that the purchase order
qualifies for the accumulation privilege. Corfirmation of the order is subject
to such verification. The Right of Accumulation privilege may be amended or
terminated at any time as to purchases occurring thereafter.
PRINCIPAL UNDERWRITER
Shares of the Fund may be continuously purchased at the public offering
price through certain Authorized Firms which have agreements with the Principal
Underwriter. The Principal Underwriter is a wholly-owned subsidiary of Eaton
Vance.
The public offering price is the net asset value next computed after receipt
of the order, plus, where applicable, a variable percentage (sales charge)
depending upon the amount of purchase as indicated by the sales charge table set
forth in the Fund's current Prospectus (see "How to Buy Fund Shares").
Such table is applicable to purchases of the Fund alone or in combination
with purchases of the other funds offered by the Principal Underwriter, made at
a single time by (i) an individual, or an individual, his or her spouse and
their children under the age of twenty-one, purchasing shares for his or their
own account; and (ii) a trustee or other fiduciary purchasing shares for a
single trust estate or a single fiduciary account.
The table is also presently applicable to (1) purchases of Fund shares,
alone or in combination with purchases of any of the other funds offered by the
Principal Underwriter through one dealer aggregating $50,000 or more made by any
of the persons enumerated above within a thirteen-month period starting with
first purchase pursuant to a written Statement of Intention, in the form
provided by the Principal Underwriter, which includes provisions for a price
adjustment depending upon the amount actually purchased within such period (a
purchase not made pursuant to such Statement may be included thereunder if the
Statement is filed within 90 days of such purchase); or (2) purchases of the
Fund pursuant to the Right of Accumulation and declared as such at the time of
purchase.
Subject to the applicable provisions of the 1940 Act, the Fund may issue
shares at net asset value in the event that an investment company (whether a
regulated or private investment company or a personal holding company) is merged
or consolidated with or acquired by the Fund. Normally no sales charges will be
paid in connection with an exchange of Fund shares for the assets of such
investment company.
Shares may be sold at net asset value to any officer, director, trustee,
general partner or employee of the Fund, the Portfolio or any investment company
for which Eaton Vance or BMR acts as investment adviser, any investment
advisory, agency, custodial or trust account managed or administered by Eaton
Vance or by any parent, subsidiary or other affiliate of Eaton Vance, or any
officer, director or employee of any parent, subsidiary or other affiliate of
Eaton Vance. The terms "officer," "director," "trustee," "general partner" or
"employee" as used in this paragraph include any such person's spouse and minor
children, and also retired officers, directors, trustees, general partners and
employees and their spouses and minor children. Shares of the Fund may also be
sold at net asset value to registered representatives and employees of certain
Authorized Firms and to such persons' spouses and children under the age of 21
and their beneficial accounts.
The Trust reserves the right to suspend or limit the offering of shares of
the Fund to the public at any time.
The Principal Underwriter acts as principal in selling shares of the Fund
under the Distribution Agreement with the Trust on behalf of the Fund. The
expenses of printing copies of prospectuses used to offer shares to financial
service firms or investors and other selling literature and of advertising are
borne by the Principal Underwriter. The fees and expenses of qualifying and
registering and maintaining qualifications and registrations of the Fund and its
shares under Federal and state securities laws are borne by the Fund. The
Distribution Agreement is renewable annually by the Board of Trustees of the
Trust (including a majority of its Trustees who are not interested persons of
the Principal Underwriter or the Trust), may be terminated on six months' notice
by either party, and is automatically terminated upon assignment. The Principal
Underwriter distributes Fund shares on a "best efforts" basis under which it is
required to take and pay for only such shares as may be sold. The Fund has
authorized the Principal Underwriter to act as its agent in repurchasing shares
at the rate of $2.50 for each repurchase transaction handled by the Principal
Underwriter. The Principal Underwriter estimates that the expenses incurred by
it in acting as repurchase agent for the Fund will exceed the amounts paid
therefor by the Fund. For the amount paid by the Fund to the Principal
Underwriter for acting as repurchase agent, see "Fees and Expenses" in this Part
II. The Principal Underwriter allows Authorized Firms discounts from the
applicable public offering price which are alike for all Firms. However, the
Principal Underwriter may allow, upon notice to all Authorized Firms with whom
it has agreements, discounts up to the full sales charge during the periods
specified in the notice. During periods when the discount includes the full
sales charge, such Firms may be deemed to be underwriters as that term is
defined in the Securities Act of 1933. For the amount of sales charges for sales
of Fund shares paid to the Principal Underwriter (and Authorized Firms) see
"Fees and Expenses" in this Part II.
See the Statement of Assets and Liabilities in the Fund's Financial
Statements in this Part II for a specimen price make-up sheet showing the
computation of maximum offering price per share as at December 31, 1994.
SERVICE PLAN
The Trust on behalf of the Fund has adopted a Service Plan (the "Plan")
designed to meet the requirements of Rule 12b-1 (the "Rule") under the 1940 Act
and the service fee requirements of the revised sales charge rule of the
National Association of Securities Dealers, Inc. (Management believes service
fee payments are not distribution expenses governed by the Rule, but has chosen
to have the Plan approved as if the Rule were applicable.) The following
supplements the discussion of the Plan contained in the Fund's Prospectus.
Pursuant to such Rule, the Plan has been approved by the independent
Trustees of the Trust, who have no direct or indirect financial interest in the
Plan, and by all of the Trustees of the Trust on behalf of the Fund. The Plan
amends and replaces the Fund's original distribution plan (which originally
became effective on July 9, 1984 and which was approved by the Fund's
shareholders).
The Plan remains in effect through April 28, 1996, and from year to year
thereafter, provided such continuance is approved by a vote of both a majority
of (i) those Trustees who are not interested persons of the Trust and who have
no direct or indirect financial interest in the operation of the Plan or any
agreements related to it (the "Rule 12b-1 Trustees") and (ii) all of the
Trustees then in office, cast in person at a meeting (or meetings) called for
the purpose of voting on this Plan. The Plan may be terminated any time by vote
of the Rule 12b-1 Trustees or by a vote of a majority of the outstanding voting
securities of the Fund.
Under the Plan, the President or a Vice President of the Trust shall provide
to the Trustees for their review, and the Trustees shall review at least
quarterly, a written report of the amount expended under the Plan and the
purposes for which such expenditures were made. The Plan may not be amended to
increase materially the payments described herein without approval of the
shareholders of the Fund, and all material amendments of the Plan must also be
approved by the Trustees of the Trust as prescribed by Rule 12b-1. So long as
the Plan is in effect, the selection and nomination of Trustees who are not
interested persons of the Trust shall be committed to the discretion of the
Trustees who are not such interested persons. The Trustees have determined that
in their judgment there is a reasonable likelihood that the Plan will benefit
the Fund and its shareholders. For the service fees paid by the Fund under the
Plan see "Fees and Expenses" in this Part II.
PERFORMANCE INFORMATION
The table below indicates the total return (capital changes plus
reinvestment of all distributions) on a hypothetical investment of $1,000 in the
Fund covering the ten-, five- and one-year periods ended December 31, 1994.
VALUE OF A $1,000 INVESTMENT
<TABLE>
<CAPTION>
TOTAL RETURN TOTAL RETURN
EXCLUDING SALES CHARGE INCLUDING SALES CHARGE
VALUE OF ---------------------------- ----------------------------
INVESTMENT AMOUNT OF INVESTMENT
INVESTMENT PERIOD DATE INVESTMENT<F1> ON 12/31/94 CUMULATIVE ANNUALIZED CUMULATIVE ANNUALIZED
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C> <C>
10 Years Ended 12/31/94 12/31/84<F2> $952.45 $2,176.77 128.54% 8.62% 117.69% 8.09%
5 Years Ended 12/31/94 12/31/89 $952.85 $1,338.94 40.52% 7.04% 33.84% 6.00%
1 Year Ended 12/31/94 12/31/93 $952.70 $ 933.37 -2.03% -2.03% -6.68% -6.68%
PERCENTAGE CHANGES
DECEMBER 31, 1985 -- DECEMBER 31, 1994
<CAPTION>
NET ASSET VALUE TO NET ASSET VALUE MAXIMUM OFFERING PRICE TO NET ASSET VALUE
FISCAL WITH ALL DISTRIBUTIONS REINVESTED WITH ALL DISTRIBUTIONS REINVESTED
YEAR ------------------------------------------------- ---------------------------------------------------
ENDED ANNUAL CUMULATIVE AVERAGE ANNUAL ANNUAL CUMULATIVE AVERAGE ANNUAL
- -----------------------------------------------------------------------------------------------------------------------------------
<C> <C> <C> <C> <C> <C> <C>
12/31/85 13.19% 13.19% 13.19% 7.82% 7.82% 7.82%
12/31/86 13.37% 28.33% 13.28% 7.98% 22.23% 10.56%
12/31/87 4.17% 33.67% 10.16% -0.78% 27.32% 8.39%
12/31/88 7.46% 43.65% 9.48% 2.36% 36.83% 8.15%
12/31/89 13.21% 62.63% 10.21% 7.84% 54.91% 9.15%
12/31/90 8.97% 77.21% 10.01% 3.79% 68.79% 9.12%
12/31/91 14.42% 102.76% 10.63% 8.99% 93.13% 9.86%
12/31/92 5.28% 113.48% 9.94% 0.28% 103.34% 9.28%
12/31/93 9.26% 133.26% 9.87% 4.07% 122.18% 9.28%
12/31/94 -2.03% 128.54% 8.62% -6.68% 117.68% 8.09%
Past performance is not indicative of future results. Investment return and
principal value will fluctuate and shares, when redeemed, may be worth more or
less than their original cost.
<FN>
- ------------
<F1> Initial investment less the then applicable maximum sales charge of 4.75%.
Effective March 27, 1995, the current maximum sales charge is 3.75% (see
"How to Buy Fund Shares" in the Fund's current Prospectus).
<F2> Investment operations began on August 24, 1984.
</TABLE>
For the 30-day period ended December 31, 1994, the yield of the Fund was
5.56%. The Fund's distribution rate (calculated on December 31, 1994 and based
on the Fund's monthly distribution paid on December 15, 1994) was 7.4% and the
Fund's effective distribution rate (calculated on the same date and based on the
same monthly distribution) was 7.66%.
From time to time, advertisements and other material furnished to present
and prospective shareholders may include information, charts and/or
illustrations of the Fund's net asset value per share history.
<TABLE>
<CAPTION>
MONTH-NET ASSET VALUES
INCEPTION DATE: AUGUST 24, 1984 - PRICE $11.66
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
January n/a 12.35 12.10 12.34 11.78 11.25 11.33 11.41 11.59 11.52 11.50 10.51
February n/a 12.02 12.54 12.37 11.83 11.11 11.26 11.37 11.55 11.65 11.31 10.65
March n/a 12.03 12.80 12.24 11.69 10.97 11.21 11.33 11.38 11.67 11.07 10.65
April n/a 11.99 12.60 11.95 11.57 11.14 11.05 11.37 11.34 11.69 10.90
May n/a 12.20 12.32 11.85 11.45 11.27 11.20 11.33 11.38 11.60 10.82
June n/a 12.18 12.40 11.87 11.54 11.46 11.26 11.28 11.44 11.65 10.75
July n/a 11.94 12.32 11.69 11.41 11.63 11.33 11.30 11.53 11.65 10.81
August 11.65 12.00 12.57 11.61 11.32 11.39 11.16 11.43 11.56 11.72 10.77
September 12.06 11.93 12.31 11.40 11.41 11.36 11.16 11.52 11.64 11.70 10.61
October 12.38 11.97 12.27 11.48 11.49 11.53 11.21 11.58 11.46 11.64 10.54
November 12.38 12.07 12.27 11.51 11.33 11.54 11.31 11.60 11.33 11.51 10.44
December 12.22 12.26 12.36 11.54 11.23 11.52 11.37 11.80 11.38 11.48 10.42
</TABLE>
ADDITIONAL TAX MATTERS
The Fund qualified as a RIC under the Code for its taxable year ended
December 31, 1994 (see Notes to Financial Statements).
CONTROL PERSONS AND PRINCIPAL HOLDERS OF SECURITIES
As at March 31, 1995, the Trustees and officers of the Trust, as a group,
owned in the aggregate less than 1% of the outstanding shares of the Fund. As at
March 31, 1995, Merrill Lynch, Pierce, Fenner & Smith, Inc., New Brunswick, NJ
was the record owner of approximately 18.2% of the outstanding shares, which it
held on behalf of its customers who are the beneficial owners of such shares,
and as to which it had voting power under certain limited circumstances. To the
Trust's knowledge, no other person owned of record or beneficially 5% or more of
the Fund's outstanding shares on such date.
<PAGE>
FINANCIAL STATEMENTS
Registrant incorporates by reference the audited financial information for
the Fund and the Portfolio contained in the Fund's shareholder report for the
fiscal year ended December 31, 1994 as previously filed electronically with the
Securities and Exchange Commission (Accession Number 0000950156-95-000105).
<PAGE>
INVESTMENT ADVISER OF
GOVERNMENT OBLIGATIONS PORTFOLIO
Boston Management and Research
24 Federal Street
Boston, MA 02110
ADMINISTRATOR OF EV TRADITIONAL
GOVERNMENT OBLIGATIONS FUND
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
EV TRADITIONAL
GOVERNMENT OBLIGATIONS FUND
24 FEDERAL STREET
BOSTON, MA 02110
[LOGO]
EV Traditional
Government
Obligations
Fund
Statement of
Additional
Information
May 1, 1995
<PAGE>
PART C
OTHER INFORMATION
ITEM 24: FINANCIAL STATEMENTS AND EXHIBITS
(A) FINANCIAL STATEMENTS
INCLUDED IN PART A:
Financial Highlights for EV Classic Government Obligations Fund
for the period from the start of business, November 1, 1993,
to December 31, 1993 and for the one year ended December 31,
1994.
Financial Highlights for EV Marathon Government Obligations
Fund for the period from the start of business, November 1,
1993, to December 31, 1993 and for the one year ended
December 31, 1994.
Financial Highlights for EV Traditional Government Obligations
Fund for the ten years ended December 31, 1994
INCLUDED IN PART B:
INCORPORATED BY REFERENCE TO THE ANNUAL REPORTS FOR THE FUNDS,
EACH DATED DECEMBER 31, 1994, FILED ELECTRONICALLY PURSUANT
TO SECTION 30(B)(2) OF THE INVESTMENT COMPANY ACT OF 1940
FOR EV CLASSIC GOVERNMENT OBLIGATIONS FUND (ACCESSION NO.
0000950156-95-000085)
EV MARATHON GOVERNMENT OBLIGATIONS FUND (ACCESSION NO.
0000950156-95-000118)
EV TRADITIONAL GOVERNMENT OBLIGATIONS FUND (ACCESSION NO.
0000950156-95-000105)
Financial Statements for the above-referenced Funds for the
time periods set forth in each Fund's Report are as follows:
Statement of Assets and Liabilities as of December 31, 1994
Statement of Operations
Statement of Changes in Net Assets
Financial Highlights
Notes to Financial Statements
Report of Independent Accountants
Financial Statements for GOVERNMENT OBLIGATIONS PORTFOLIO are
as follows:
Portfolio of Investments as of December 31, 1994
Statement of Assets and Liabilities as of December 31, 1994
Statement of Operations for the year ended December 31, 1994
Statement of Changes in Net Assets for the period from the
start of business, October 28, 1993, to December 31, 1993 and
for the year ended December 31, 1994.
Supplementary Data for the period from the start of business,
October 28, 1993, to December 31, 1993 and for the year ended
December 31, 1994. Notes to Financial Statements
Report of Independent Accountants
(B) EXHIBITS:
(1)(a) Amended and Restated Declaration of Trust dated August 17,
1993 filed as Exhibit (1)(a) to Post-Effective Amendment No.
17 and incorporated herein by reference.
(b) Establishment and Designation of Series dated February 1,
1991 filed as Exhibit 1 (b) to Post-Effective Amendment No.
11 and incorporated herein by reference.
(c) Amendment and Restatement of Establishment and Designation
of Series dated July 21, 1992 filed as Exhibit 1(c) to
Post-Effective Amendment No. 16 and incorporated herein by
reference.
(d) Amendment and Restatement of Establishment and Designation
of Series dated September 27, 1993 filed as Exhibit (1)(d)
to Post-Effective Amendment No. 18 and incorporated herein
by reference.
(2)(a) By-Laws (As Amended November 31, 1986) filed as Exhibit (2)
to Post-Effective Amendment No. 9 and incorporated herein by
reference.
(b) Amendment to By-Laws of Eaton Vance Government Obligations
Trust dated December 13, 1993 filed as Exhibit (2)(b) to
Post-Effective Amendment No. 19 and incorporated herein by
reference.
(3) Not applicable
(4) Not applicable
(5) Investment Advisory Agreement with Eaton Vance Management
for Eaton Vance Short-Term Treasury Fund dated February 4,
1991 filed as Exhibit (5)(b) to Post-Effective Amendment No.
11 and incorporated herein by reference.
(6)(a)(1) Distribution Agreement with Eaton Vance Distributors, Inc.
dated July 9, 1984 filed as Exhibit (6) to Post-Effective
Amendment No. 6 and incorporated herein by reference.
(a)(2) Distribution Agreement with Eaton Vance Distributors, Inc.
for Eaton Vance Short-Term Treasury Fund dated February 4,
1991 as Amended and Restated February 25, 1991 filed as
Exhibit (6)(a)(2) to Post-Effective Amendment No. 12 and
incorporated herein by reference.
(a)(3) Amended Distribution Agreement with Eaton Vance
Distributors, Inc. for EV Classic Government Obligations
Fund dated January 27, 1995 filed herewith.
(a)(4) Distribution Agreement with Eaton Vance Distributors, Inc.
for EV Marathon Government Obligations Fund dated October
28, 1993 filed as Exhibit (6)(a)(4) to Post-Effective
Amendment No. 19 and incorporated herein by reference.
(b) Selling Group Agreement between Eaton Vance Distributors,
Inc. and Authorized Dealers filed as Exhibit (6)(b) to
Post-Effective Amendment No. 19 and incorporated herein by
reference.
(c) Schedule of Dealer Discounts and Sales Charges filed as
Exhibit (6)(c) to Post-Effective Amendment No. 19 and
incorporated by reference.
(7) Not applicable
(8) Custodian Agreement with Investors Bank & Trust Company
dated December 17, 1990 filed as Exhibit (8) to
Post-Effective Amendment No. 11 and incorporated herein by
reference.
(9)(a) Administrative Services Agreement with Eaton Vance
Management for EV Traditional Government Obligations Fund
dated October 28, 1993 filed as Exhibit (9)(a) to Post-
Effective Amendment No. 19 and incorporated herein by
reference.
(b) Administrative Services Agreement with Eaton Vance
Management for EV Classic Government Obligations Fund dated
October 28, 1993 filed as Exhibit (9)(b) to Post-Effective
Amendment No. 19 and incorporated herein by reference.
(c) Administrative Services Agreement with Eaton Vance
Management for EV Marathon Government Obligations Fund dated
October 28, 1993 filed as Exhibit (9)(c) to Post-Effective
Amendment No. 19 and incorporated herein by reference.
(10) Not applicable
(11)(a) Consent of Independent Accountants for EV Classic Government
Obligations Fund filed herewith.
(b) Consent of Independent Accountants for EV Marathon
Government Obligations Fund filed herewith.
(c) Consent of Independent Accountants for EV Traditional
Government Obligations Fund filed herewith.
(12) Not applicable
(13) Agreement with Eaton Vance Management, Inc. in consideration
of providing initial capital, dated July 5, 1984 filed as
Exhibit (13) to Post-Effective Amendment No. 6 and
incorporated herein by reference.
(14)(a) Vance, Sanders Profit Sharing Retirement Plan for
Self-Employed Persons with Adoption Agreement and
instructions filed as Exhibit #14(1) to Post-Effective
Amendment #22 on Form N-1 under the Securities Act of 1933
(File No. 2-28471) and incorporated herein by reference.
(b) Eaton & Howard, Vance Sanders Defined Contribution Prototype
Plan and Trust with Adoption Agreements (1) Basic
Profit-Sharing Retirement Plan, (2) Basic Money Purchase
Pension Plan, (3) Thrift Plan Qualifying as Profit Sharing
Plan, (4) Thrift Plan Qualifying as Money Purchase Plan, (5)
Integrated Profit Sharing Retirement Plan, (6) Integrated
Money Purchase Pension Plan filed as Exhibit 14(2) to
Post-Effective Amendment #22 on Form N-1 under the
Securities Act of 1933 (File No. 2-28471) and incorporated
herein by reference.
(c) Individual Retirement Custodial Account (Form 5305-A) and
Investment Instruction Form filed as Exhibit 14(3) to
Post-Effective Amendment #22 on Form N-1 under the
Securities Act of 1933 (File No. 2-28471) and incorporated
herein by reference.
(d) Eaton & Howard, Vance Sanders Variable Pension Prototype
Plan and Trust with Adoption Agreement filed as Exhibit
14(b) to Post-Effective Amendment #22 on Form N-1 under the
Securities Act of 1933 (File No. 2-28471) and incorporated
herein by reference.
(15)(a) Service Plan for Eaton Vance Government Obligations Fund
dated July 7, 1993 pursuant to Rule 12b-1 under the
Investment Company Act of 1940 filed as Exhibit (15)(a) to
Post-Effective Amendment No. 17 and incorporated herein by
reference.
(b) Distribution Plan pursuant to Rule 12b-1 under the
Investment Company Act of 1940 for Eaton Vance Short-Term
Treasury Fund dated February 4, 1991 as Amended and Restated
February 25, 1991 filed as Exhibit (15)(b) to Post-Effective
Amendment No.
12 and incorporated herein by reference.
(c) Amended Distribution Plan for EV Classic Government
Obligations Fund pursuant to Rule 12b-1 under the Investment
Company Act of 1940 dated January 27, 1995 filed herewith.
(d) Distribution Plan for EV Marathon Government Obligations
Fund pursuant to Rule 12b-1 under the Investment Company
Act of 1940 dated October 28, 1993 filed as Exhibit (15)(d)
to Post-Effective Amendment No. 19 and incorporated herein
by reference.
(16) Schedules for Computation of Performance Quotations filed
herewith.
(17)(a) Power of Attorney for Eaton Vance Government Obligations
Trust dated February 25, 1994 filed as Exhibit (17)(a) to
Post-Effective Amendment No. 19 and incorporated herein by
reference.
(b) Power of Attorney for Government Obligations Portfolio dated
February 25, 1994 filed as Exhibit (17)(b) to Post-Effective
Amendment No. 19 and incorporated herein by reference.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT
Not applicable
ITEM 26. NUMBER OF HOLDERS OF SECURITIES
(1) (2)
TITLE OF CLASS NUMBER OF RECORD HOLDERS
Shares of beneficial interest without par value as of March 31, 1995
Eaton Vance Short-Term Treasury Fund 65
EV Classic Government Obligations Fund 1,164
EV Marathon Government Obligations Fund 3,041
EV Traditional Government Obligations Fund 11,931
ITEM 27. INDEMNIFICATION
No change from the information set forth in Item 4 of Form N-1A filed as
Pre-Effective Amendment No. 1 which information is incorporated herein by
reference.
Registrant's Trustees and officers are insured under a standard mutual fund
errors and omissions insurance policy covering loss incurred by reason of
negligent errors and omissions committed in their capacities as such.
<PAGE>
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER Reference is made
to the information set forth under the caption "Investment Adviser and
Administrator" in the Statement of Additional Information which information is
incorporated herein by reference.
ITEM 29. PRINCIPAL UNDERWRITERS
(A) Registrant's principal underwriter, Eaton Vance Distributors, Inc., a
wholly-owned subsidiary of Eaton Vance Management, is the principal
underwriter for each of the investment companies named below:
<TABLE>
<CAPTION>
<S> <C>
EV Classic Alabama Tax Free Fund EV Classic New Jersey Tax Free Fund
EV Classic Arizona Tax Free Fund EV Classic New York Limited Maturity
EV Classic Arkansas Tax Free Fund Tax Free Fund
EV Classic California Limited Maturity EV Classic New York Tax Free Fund
Tax Free Fund EV Classic North Carolina Tax Free Fund
EV Classic California Municipals Fund EV Classic Ohio Limited Maturity Tax Free Fund
EV Classic Colorado Tax Free Fund EV Classic Ohio Tax Free Fund
EV Classic Connecticut Limited Maturity EV Classic Oregon Tax Free Fund
Tax Free Fund EV Classic Pennsylvania Limited Maturity
EV Classic Connecticut Tax Free Fund Tax Free Fund
EV Classic Florida Insured Tax Free Fund EV Classic Pennsylvania Tax Free Fund
EV Classic Florida Limited Maturity EV Classic Rhode Island Tax Free Fund
Tax Free Fund EV Classic Strategic Income Fund
EV Classic Florida Tax Free Fund EV Classic South Carolina Tax Free Fund
EV Classic Georgia Tax Free Fund EV Classic Special Equities Fund
EV Classic Government Obligations Fund EV Classic Stock Fund
EV Classic Greater China Growth Fund EV Classic Tennessee Tax Free Fund
EV Classic Growth Fund EV Classic Texas Tax Free Fund
EV Classic Hawaii Tax Free Fund EV Classic Total Return Fund
EV Classic High Income Fund EV Classic Virginia Tax Free Fund
EV Classic Investors Fund EV Classic West Virginia Tax Free Fund
EV Classic Kansas Tax Free Fund EV Marathon Alabama Tax Free Fund
EV Classic Kentucky Tax Free Fund EV Marathon Arizona Limited Maturity
EV Classic Louisiana Tax Free Fund Tax Free Fund
EV Classic Maryland Tax Free Fund EV Marathon Arizona Tax Free Fund
EV Classic Massachusetts Limited Maturity EV Marathon Arkansas Tax Free Fund
Tax Free Fund EV Marathon California Limited Maturity
EV Classic Massachusetts Tax Free Fund Tax Free Fund
EV Classic Michigan Limited Maturity EV Marathon California Municipals Fund
Tax Free Fund EV Marathon Colorado Tax Free Fund
EV Classic Michigan Tax Free Fund EV Marathon Connecticut Limited Maturity
EV Classic Minnesota Tax Free Fund Tax Free Fund
EV Classic Mississippi Tax Free Fund EV Marathon Connecticut Tax Free Fund
EV Classic Missouri Tax Free Fund EV Marathon Emerging Markets Fund
EV Classic National Limited Maturity Eaton Vance Equity - Income Trust
Tax Free Fund EV Marathon Florida Insured Tax Free Fund
EV Classic National Municipals Fund V Marathon Florida Limited Maturity
EV Classic New Jersey Limited Maturity Tax Free Fund
Tax Free Fund EV Marathon Florida Tax Free Fund
<PAGE>
EV Marathon Georgia Tax Free Fund EV Marathon South Carolina Tax Free Fund
EV Marathon Gold & Natural Resources Fund EV Marathon Special Equities Fund
EV Marathon Government Obligations Fund EV Marathon Stock Fund
EV Marathon Greater China Growth Fund EV Marathon Tennessee Tax Free Fund
EV Marathon Greater India Fund EV Marathon Texas Tax Free Fund
EV Marathon Growth Fund EV Marathon Total Return Fund
EV Marathon Hawaii Tax Free Fund EV Marathon Virginia Limited Maturity
EV Marathon High Income Fund Tax Free Fund
EV Marathon Investors Fund EV Marathon Virginia Tax Free Fund
EV Marathon Kansas Tax Free Fund EV Marathon West Virginia Tax Free Fund
EV Marathon Kentucky Tax Free Fund EV Traditional California Municipals Fund
EV Marathon Louisiana Tax Free Fund EV Traditional Connecticut Tax Free Fund
EV Marathon Maryland Tax Free Fund EV Traditional Emerging Markets Fund
EV Marathon Massachusetts Limited Maturity EV Traditional Florida Insured Tax Free Fund
Tax Free Fund EV Traditional Florida Limited Maturity
EV Marathon Massachusetts Tax Free Fund Tax Free Fund
EV Marathon Michigan Limited Maturity EV Traditional Florida Tax Free Fund
Tax Free Fund EV Traditional Government Obligations Fund
EV Marathon Michigan Tax Free Fund EV Traditional Greater China Growth Fund
EV Marathon Minnesota Tax Free Fund EV Traditional Greater India Fund
EV Marathon Mississippi Tax Free Fund EV Traditional Growth Fund
EV Marathon Missouri Tax Free Fund Eaton Vance Income Fund of Boston
EV Marathon National Limited Maturity EV Traditional Investors Fund
Tax Free Fund Eaton Vance Municipal Bond Fund L.P.
EV Marathon National Municipals Fund EV Traditional National Limited Maturity
EV Marathon New Jersey Limited Maturity Tax Free Fund
Tax Free Fund EV Traditional National Municipals Fund
EV Marathon New Jersey Tax Free Fund EV Traditional New Jersey Tax Free Fund
EV Marathon New York Limited Maturity EV Traditional New York Limited Maturity
Tax Free Fund Tax Free Fund
EV Marathon New York Tax Free Fund EV Traditional New York Tax Free Fund
EV Marathon North Carolina Limited Maturity EV Traditional Pennsylvania Tax Free Fund
Tax Free Fund EV Traditional Special Equities Fund
EV Marathon North Carolina Tax Free Fund EV Traditional Stock Fund
EV Marathon Ohio Limited Maturity EV Traditional Total Return Fund
Tax Free Fund Eaton Vance Cash Management Fund
EV Marathon Ohio Tax Free Fund Eaton Vance Liquid Assets Fund
EV Marathon Oregon Tax Free Fund Eaton Vance Money Market Fund
EV Marathon Pennsylvania Limited Maturity Eaton Vance Prime Rate Reserves
Tax Free Fund Eaton Vance Short-Term Treasury Fund
EV Marathon Pennsylvania Tax Free Fund Eaton Vance Tax Free Reserves
EV Marathon Rhode Island Tax Free Fund Massachusetts Municipal Bond Portfolio
EV Marathon Strategic Income Fund
(b)
</TABLE>
<TABLE>
<CAPTION>
(1) (2) (3)
NAME AND PRINCIPAL POSITIONS AND OFFICES POSITIONS AND OFFICE
BUSINESS ADDRESS WITH PRINCIPAL UNDERWRITER WITH REGISTRANT
------------------ -------------------------- --------------------
<S> <C> <C>
James B. Hawkes* Vice President and Director Vice President and
Trustee
William M. Steul* Vice President and Director None
Wharton P. Whitaker* President and Director None
Howard D. Barr Vice President None
2750 Royal View Court
Oakland, Michigan
Nancy E. Belza Vice President None
463-1 Buena Vista East
San Francisco, California
Chris Berg Vice President None
45 Windsor Lane
Palm Beach Gardens, Florida
H. Day Brigham, Jr.* Vice President None
Susan W. Bukima Vice President None
106 Princess Street
Alexandria, Virginia
Jeffrey W. Butterfield Vice President None
9378 Mirror Road
Columbus, Indiana
Mark A. Carlson* Vice President None
Jeffrey Chernoff Vice President None
115 Concourse West
Bright Waters, New York
William A. Clemmer* Vice President None
James S. Comforti Vice President None
1859 Crest Drive
Encinitas, California
Mark P. Doman Vice President None
107 Pine Street
Philadelphia, Pennsylvania
Michael A. Foster Vice President None
850 Kelsey Court
Centerville, Ohio
William M. Gillen Vice President None
280 Rea Street
North Andover, Massachusetts
Hugh S. Gilmartin Vice President None
1531-184th Avenue, NE
Bellevue, Washington
Richard E. Houghton* Vice President None
Brian Jacobs* Senior Vice President None
Stephen D. Johnson Vice President None
13340 Providence Lake Drive
Alpharetta, Georgia
Thomas J. Marcello Vice President None
553 Belleville Avenue
Glen Ridge, New Jersey
Timothy D. McCarthy Vice President None
9801 Germantown Pike
Lincoln Woods Apt. 416
Lafayette Hill, Pennsylvania
Morgan C. Mohrman* Senior Vice President None
Gregory B. Norris Vice President None
6 Halidon Court
Palm Beach Gardens, Florida
Thomas Otis* Secretary and Clerk Secretary
George D. Owen Vice President None
1911 Wildwood Court
Blue Springs, Missouri
F. Anthony Robinson Vice President None
510 Gravely Hill Road
Wakefield, Rhode Island
Benjamin A. Rowland, Jr.* Vice President, None
Treasurer and Director
John P. Rynne* Vice President None
George V.F. Schwab, Jr. Vice President None
9501 Hampton Oaks Lane
Charlotte, North Carolina
Cornelius J. Sullivan* Vice President None
Maureen C. Tallon Vice President None
518 Armistead Drive
Nashville, Tennessee
David M. Thill Vice President None
126 Albert Drive
Lancaster, New York
William T. Toner Vice President None
747 Lilac Drive
Santa Barbara, California
Chris Volf Vice President None
6517 Thoroughbred Loop
Odessa, Florida
Donald E. Webber* Senior Vice President None
Sue Wilder Vice President None
141 East 89th Street
New York, New York
</TABLE>
- ---------
*Address is 24 Federal Street, Boston, MA 02110
(c) Not applicable
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS
All applicable accounts, books and documents required to be maintained by
the Registrant by Section 31(a) of the Investment Company Act of 1940 and the
Rules promulgated thereunder are in the possession and custody of the
Registrant's custodian, Investors Bank & Trust Company, 24 Federal Street,
Boston, MA 02110 and 89 South Street, Boston, MA 02111 and its transfer agent,
The Shareholder Services Group, Inc., 53 State Street, Boston, MA 02104, with
the exception of certain corporate documents and portfolio trading documents
which are in the possession and custody of Eaton Vance Management, 24 Federal
Street, Boston, MA 02110. Certain corporate documents of Government Obligations
Portfolio (the "Portfolio") are also maintained by The Bank of Nova Scotia Trust
Company (Cayman) Ltd., The Bank of Nova Scotia Building, P.O. Box 501, George
Town, Grand Cayman, Cayman Islands, British West Indies, and certain investor
account, Portfolio and the Registrant's accounting records are held by IBT Fund
Services (Canada) Inc., 1 First Canadian Place, King Street West, Suite 2800,
P.O. Box 231, Toronto, Ontario, Canada M5X 1C8. Registrant is informed that all
applicable accounts, books and documents required to be maintained by registered
investment advisers are in the custody and possession of Eaton Vance Management.
ITEM 31. MANAGEMENT SERVICES
Not applicable
ITEM 32. UNDERTAKINGS
The Registrant undertakes to furnish to each person to whom a prospectus is
delivered a copy of the latest annual report to shareholders, upon request and
without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the
Investment Company Act of 1940, the Registrant certifies that it meets all of
the requirements for effectiveness of this Post-Effective Amendment to the
Registration Statement pursuant to Rule 485(b) under the Securities Act of 1933
and has duly caused this Post-Effective Amendment to its Registration Statement
to be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Boston, and the Commonwealth of Massachusetts, on the 24th day of April,
1995.
EATON VANCE GOVERNMENT OBLIGATIONS TRUST
By: /s/ M. DOZIER GARDNER
----------------------------------
M. DOZIER GARDNER, President
Pursuant to the requirements of the Securities Act of 1933, this Post-
Effective Amendment to the Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
President, Principal
Executive Officer and
/s/ M. DOZIER GARDNER Trustee April 24, 1995
- ------------------------------
M. DOZIER GARDNER
Treasurer and Principal
Financial and Accounting
/s/ JAMES L. O'CONNOR Officer April 24, 1995
- ------------------------------
JAMES L. O'CONNOR
JAMES B. HAWKES* Trustee April 24, 1995
- ------------------------------
JAMES B. HAWKES
DONALD R. DWIGHT* Trustee April 24, 1995
- ------------------------------
DONALD R. DWIGHT
SAMUEL L. HAYES, III* Trustee April 24, 1995
- ------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee April 24, 1995
- ------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee April 24, 1995
- ------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee April 24, 1995
- ------------------------------
JACK L. TREYNOR
*By: /s/ H. DAY BRIGHAM, JR.
-------------------------
H. DAY BRIGHAM, JR.
As Attorney-in-fact
</TABLE>
<PAGE>
SIGNATURES
Government Obligations Portfolio has duly caused this Amendment to the
Registration Statement on Form N-1A of Eaton Vance Government Obligations Trust
(File No. 2-90946) to be signed on its behalf by the undersigned, thereunto duly
authorized, in Toronto, Ontario, Canada, on the 22nd day of February, 1995.
GOVERNMENT OBLIGATIONS PORTFOLIO
By: /s/ M. DOZIER GARDNER
----------------------------------
M. DOZIER GARDNER, President
This Amendment to the Registration Statement on Form N-1A of Eaton Vance
Government Obligations Trust (File No. 2-90946) has been signed below by the
following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
Trustee, President and
Principal Executive
/s/ M. DOZIER GARDNER Officer February 22, 1995
- ------------------------------
M. DOZIER GARDNER
Treasurer and Principal
Financial and Accounting
JAMES L. O'CONNOR* Officer February 22, 1995
- ------------------------------
JAMES L. O'CONNOR
DONALD R. DWIGHT* Trustee February 22, 1995
- ------------------------------
DONALD R. DWIGHT
JAMES B. HAWKES* Trustee February 22, 1995
- ------------------------------
JAMES B. HAWKES
SAMUEL L. HAYES, III* Trustee February 22, 1995
- ------------------------------
SAMUEL L. HAYES, III
NORTON H. REAMER* Trustee February 22, 1995
- ------------------------------
NORTON H. REAMER
JOHN L. THORNDIKE* Trustee February 22, 1995
- ------------------------------
JOHN L. THORNDIKE
JACK L. TREYNOR* Trustee February 22, 1995
- ------------------------------
JACK L. TREYNOR
*By: /s/ M. DOZIER GARDNER
-------------------------
M. DOZIER GARDNER
As Attorney-in-fact
</TABLE>
<PAGE>
EXHIBIT INDEX
PAGE IN SEQUENTIAL
EXHIBIT NO. DESCRIPTION NUMBERING SYSTEM
- ----------- ----------- ----------------
6(a)(3) Amended Distribution Agreement with Eaton
Vance Distributors, Inc. and EV Classic
Government Obligations Fund dated January 27,
1995
11(a) Consent of Independent Accountants for EV
Classic Government Obligations Fund
11(b) Consent of Independent Accountants for EV
Marathon Government Obligations Fund
11(c) Consent of Independent Accountants for EV
Traditional Government Obligations Fund
15(c) Amended Distribution Plan for EV Classic
Government Obligations Fund pursuant to Rule
12b-1 under the Investment Company Act of
1940 dated January 27, 1995
16 Schedules for Computation of Performance
Quotations
EATON VANCE GOVERNMENT OBLIGATIONS TRUST
AMENDED DISTRIBUTION AGREEMENT
ON BEHALF OF EV CLASSIC GOVERNMENT OBLIGATIONS FUND
AGREEMENT effective as of January 27, 1995 between EATON VANCE
GOVERNMENT OBLIGATIONS TRUST, a Massachusetts business trust having its
principal place of business in Boston in the Commonwealth of Massachusetts,
hereinafter called the "Trust", on behalf of EV Classic Government Obligations
Fund (the "Fund"), and EATON VANCE DISTRIBUTORS, INC., a Massachusetts
corporation having its principal place of business in said Boston, hereinafter
sometimes called the "Principal Underwriter".
IN CONSIDERATION of the mutual promises and undertakings herein
contained, the parties hereto agree:
1. The Trust grants to the Principal Underwriter the right to purchase
shares of the Fund upon the terms hereinbelow set forth during the term of this
Agreement. While this Agreement is in force, the Principal Underwriter agrees to
use its best efforts to find purchasers for shares of the Fund.
The Principal Underwriter shall have the right to buy from the Fund the
shares needed, but not more than the shares needed (except for clerical errors
and errors of transmission) to fill unconditional orders for shares of the Fund
placed with the Principal Underwriter by financial service firms or investors as
set forth in the current Prospectus relating to shares of the Fund. The price
which the Principal Underwriter shall pay for the shares so purchased shall be
equal to the price paid by investors upon purchasing such shares. The Principal
Underwriter shall notify Investors Bank & Trust Company, Custodian of the Fund
("IBT"), and The Shareholder Services Group, Inc., Transfer Agent of the Fund
("TSSG"), or a successor transfer agent, at the end of each business day, or as
soon thereafter as the orders placed with it have been compiled, of the number
of shares and the prices thereof which the Principal Underwriter is to purchase
as principal for resale. The Principal Underwriter shall take down and pay for
shares ordered from the Fund on or before the eleventh business day (excluding
Saturdays) after the shares have been so ordered.
The right granted to the Principal Underwriter to buy shares from the
Fund shall be exclusive, except that said exclusive right shall not apply to
shares issued in connection with the merger or consolidation of any other
investment company or personal holding company with the Fund or the acquisition
by purchase or otherwise of all (or substantially all) the assets or the
outstanding shares of any such company, by the Fund; nor shall it apply to
shares, if any, issued by the Fund in distribution of income or realized capital
gains of the Fund payable in shares or in cash at the option of the shareholder.
2. The shares may be resold by the Principal Underwriter to or through
financial service firms having agreements with the Principal Underwriter, and to
investors, upon the following terms and conditions.
The public offering price, i.e., the price per share at which the
Principal Underwriter or financial service firm purchasing shares from the
Principal Underwriter may sell shares to the public, shall be equal to the net
asset value at which the Principal Underwriter is to purchase the shares.
The net asset value of shares of the Fund shall be determined by the
Trust or IBT, as the agent of the Fund, as of the close of regular trading on
the New York Stock Exchange on each business day on which said Exchange is open,
or as of such other time on each such business day as may be determined by the
Trustees of the Trust, in accordance with the methodology and procedures for
calculating such net asset value authorized by the Trustees. The Trust may also
cause the net asset value to be determined in substantially the same manner or
estimated in such manner and as of such other time or times as may from time to
time be agreed upon by the Trust and Principal Underwriter. The Trust will
notify the Principal Underwriter each time the net asset value of the Fund's
shares is determined and when such value is so determined it shall be applicable
to transactions as set forth in the current Prospectus and Statement of
Additional Information (hereafter the "Prospectus") relating to the Fund's
shares.
No shares of the Fund shall be sold by the Fund during any period when
the determination of net asset value is suspended pursuant to the Declaration of
Trust, except to the Principal Underwriter, in the manner and upon the terms
above set forth to cover contracts of sale made by the Principal Underwriter
with its customers prior to any such suspension, and except as provided in the
last paragraph of paragraph 1 hereof. The Trust shall also have the right to
suspend the sale of the Fund's shares if in the judgment of the Trust conditions
obtaining at any time render such action advisable. The Principal Underwriter
shall have the right to suspend sales at any time, to refuse to accept or
confirm any order from an investor or financial service firm, or to accept or
confirm any such order in part only, if in the judgment of the Principal
Underwriter such action is in the best interests of the Fund.
3. The Trust agrees that it will, from time to time, but subject to the
necessary approval of the Fund's shareholders, take such steps as may be
necessary to register the Fund's shares under the federal Securities Act of
1933, as amended from time to time, (the "1933 Act"), to the end that there will
be available for sale such number of shares as the Principal Underwriter may
reasonably be expected to sell. The Trust agrees to indemnify and hold harmless
the Principal Underwriter and each person, if any, who controls the Principal
Underwriter within the meaning of Section 15 of the 1933 Act against any loss,
liability, claim, damages or expense (including the reasonable cost of
investigating or defending any alleged loss, liability, claim, damages or
expense and reasonable counsel fees incurred in connection therewith), arising
by reason of any person acquiring any shares of the Fund, which may be based
upon the 1933 Act or on any other statute or at common law, on the ground that
the Registration Statement or Prospectus, as from time to time amended and
supplemented, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, information furnished in writing to the
Trust in connection therewith by or on behalf of the Principal Underwriter;
provided, however, that in no case (i) is the indemnity of the Trust in favor of
the Principal Underwriter and any such controlling person to be deemed to
protect such Principal Underwriter or any such controlling person against any
liability to the Trust or the Fund or its security holders to which such
Principal Underwriter or any such controlling person would otherwise be subject
by reason of willful misfeasance, bad faith, or gross negligence in the
performance of its duties or by reason of its reckless disregard of its
obligations and duties under this Agreement, or (ii) is the Trust or the Fund to
be liable under its indemnity agreement contained in this paragraph with respect
to any claim made against the Principal Underwriter or any such controlling
person unless the Principal Underwriter or any such controlling person, as the
case may be, shall have notified the Trust in writing within a reasonable time
after the summons or other first legal process giving information of the nature
of the claim shall have been served upon the Principal Underwriter or such
controlling person (or after such Principal Underwriter or such controlling
person shall have received notice of such service on any designated agent), but
failure to notify the Trust of any such claim shall not relieve it from any
liability which the Fund may have to the person against whom such action is
brought otherwise than on account of its indemnity agreement contained in this
paragraph. The Trust shall be entitled to participate, at the expense of the
Fund, in the defense, or, if the Trust so elects, to assume the defense of any
suit brought to enforce any such liability, but if the Trust elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Principal Underwriter or controlling person or persons,
defendant or defendants in the suit. In the event the Trust elects to assume the
defense of any such suit and retains such counsel, the Principal Underwriter or
controlling person or persons, defendant or defendants in the suit, shall bear
the fees and expenses of any additional counsel retained by them, but, in case
the Trust does not elect to assume the defense of any such suit, the Fund shall
reimburse the Principal Underwriter or controlling person or persons, defendant
or defendants in the suit, for the reasonable fees and expenses of any counsel
retained by them. The Trust agrees promptly to notify the Principal Underwriter
of the commencement of any litigation or proceedings against it or any of its
officers or Trustees in connection with the issuance or sale of any of the
Fund's shares.
4. The Principal Underwriter covenants and agrees that, in selling the
shares of the Fund, it will use its best efforts in all respects duly to conform
with the requirements of all state and federal laws relating to the sale of such
shares, and will indemnify and hold harmless the Trust and each of its Trustees
and officers and each person, if any, who controls the Trust within the meaning
of Section 15 of the 1933 Act, against any loss, liability, damages, claim or
expense (including the reasonable cost of investigating or defending any alleged
loss, liability, damages, claim or expense and reasonable counsel fees incurred
in connection therewith), arising by reason of any person acquiring any shares
of the Fund, which may be based upon the 1933 Act or any other statute or at
common law, on account of any wrongful act of the Principal Underwriter or any
of its employees (including any failure to conform with any requirement of any
state or federal law relating to the sale of such shares) or on the ground that
the Registration Statement or Prospectus, as from time to time amended and
supplemented, includes an untrue statement of a material fact or omits to state
a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, insofar as any such statement or omission was
made in reliance upon, and in conformity with information furnished in writing
to the Fund in connection therewith by or on behalf of the Principal
Underwriter, provided, however, that in no case (i) is the indemnity of the
Principal Underwriter in favor of any person indemnified to be deemed to protect
the Fund or any such person against any liability to which the Fund or any such
person would otherwise be subject by reason of willful misfeasance, bad faith,
or gross negligence in the performance of its or his duties or by reason of its
or his reckless disregard of its obligations and duties under this Agreement, or
(ii) is the Principal Underwriter to be liable under its indemnity agreement
contained in this paragraph with respect to any claim made against the Fund or
any person indemnified unless the Trust or such person, as the case may be,
shall have notified the Principal Underwriter in writing within a reasonable
time after the summons or other first legal process giving information of the
nature of the claim shall have been served upon the Trust, the Fund or upon such
person (or after the Trust or such person shall have received notice of such
service on any designated agent), but failure to notify the Principal
Underwriter of any such claim shall not relieve it from any liability which it
may have to the Fund or any person against whom such action is brought otherwise
than on account of its indemnity agreement contained in this paragraph. The
Principal Underwriter shall be entitled to participate, at its own expense, in
the defense, or, if it so elects, to assume the defense of any suit brought to
enforce any such liability, but if the Principal Underwriter elects to assume
the defense, such defense shall be conducted by counsel chosen by it and
satisfactory to the Trust, or to its officers or Trustees, or to any controlling
person or persons, defendant or defendants in the suit. In the event that the
Principal Underwriter elects to assume the defense of any such suit and retains
such counsel, the Fund or such officers or Trustees or controlling person or
persons, defendant or defendants in the suit, shall bear the fees and expenses
of any additional counsel retained by them or the Trust, but, in case the
Principal Underwriter does not elect to assume the defense of any such suit, it
shall reimburse the Fund, any such officers and Trustees or controlling person
or persons, defendant or defendants in such suit, for the reasonable fees and
expenses of any counsel retained by them or the Trust. The Principal Underwriter
agrees promptly to notify the Trust of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any of the
Fund's shares.
Neither the Principal Underwriter nor any financial service firm nor
any other person is authorized by the Trust to give any information or to make
any representations, other than those contained in the Registration Statement or
Prospectus filed with the Securities and Exchange Commission (the "Commission")
under the 1933 Act, (as said Registration Statement and Prospectus may be
amended or supplemented from time to time), covering the shares of the Fund.
Neither the Principal Underwriter nor any financial service firm nor any other
person is authorized to act as agent for the Trust or the Fund in connection
with the offering or sale of shares of the Fund to the public or otherwise. All
such sales made by the Principal Underwriter shall be made by it as principal,
for its own account. The Principal Underwriter may, however, act as agent in
connection with the repurchase of shares as provided in paragraph 6 below, or in
connection with "exchanges" between investment companies for which the Principal
Underwriter acts as Principal Underwriter or for which an affiliate of the
Principal Underwriter acts as investment adviser.
5(a). The Fund will pay, or cause to be paid -
(i) all the costs and expenses of the Fund, including fees and
disbursements of its counsel, in connection with the preparation and filing of
any required Registration Statement and/or Prospectus under the 1933 Act, or the
Investment Company Act of 1940, as amended from time to time, (the "1940 Act")
covering its shares and all amendments and supplements thereto, and preparing
and mailing periodic reports to shareholders (including the expense of setting
up in type any such Registration Statement, Prospectus or periodic report);
(ii) the cost of preparing temporary and permanent share
certificates (if any) for shares of the Fund;
(iii) the cost and expenses of delivering to the Principal
Underwriter at its office in Boston, Massachusetts, all shares of the Fund
purchased by it as principal hereunder; and
(iv) all the federal and state (if any) issue and/or transfer
taxes payable upon the issue by or (in the case of treasury shares) transfer
from the Fund to the Principal Underwriter of any and all shares of the Fund
purchased by the Principal Underwriter hereunder.
(b) The Principal Underwriter agrees that, after the Prospectus and
periodic reports have been set up in type, it will bear the expense of printing
and distributing any copies thereof which are to be used in connection with the
offering of shares of the Fund to financial service firms or investors. The
Principal Underwriter further agrees that it will bear the expenses of
preparing, printing and distributing any other literature used by the Principal
Underwriter or furnished by it for use by financial service firms in connection
with the offering of the shares of the Fund for sale to the public and any
expenses of advertising in connection with such offering. The Fund agrees to pay
the expenses of registration and maintaining registration of its shares for sale
under federal and state securities laws, and, if necessary or advisable in
connection therewith, of qualifying the Trust or the Fund as a dealer or broker,
in such states as shall be selected by the Principal Underwriter and the fees
payable to each such state for continuing the qualification therein until the
Principal Underwriter notifies the Trust that it does not wish such
qualification continued.
(c) In addition, the Trust agrees, in accordance with the Fund's
Amended Distribution Plan (the "Plan"), adopted pursuant to Rule 12b-1 under the
1940 Act with respect to shares, to make certain payments as follows. The
Principal Underwriter shall be entitled to be paid by the Fund a sales
commission equal to an amount not exceeding 6.25% of the price received by the
Fund for each sale of shares (excluding reinvestment of dividends and
distributions), such payment to be made in the manner set forth in this
paragraph 5. The Principal Underwriter shall also be entitled to be paid by the
Fund a separate distribution fee (calculated in accordance with paragraph 5(d)),
such payment to be made in the manner set forth and subject to the terms of this
paragraph 5.
(d) The sales commissions and distribution fees referred to in
paragraph 5(c) shall be accrued and paid by the Fund in the following manner.
The Fund shall accrue daily an amount calculated at the rate of .75% per annum
of the daily net assets of the Fund, which net assets shall be computed as
described in paragraph 2. The daily amounts so accrued throughout the month
shall be paid to the Principal Underwriter on the last day of each month. The
amount of such daily accrual, as so calculated, shall first be applied and
charged to all unpaid sales commissions, and the balance, if any, shall then be
applied and charged to all unpaid distribution fees. No amount shall be accrued
with respect to any day on which there exist no outstanding uncovered
distribution charges of the Principal Underwriter. The amount of such uncovered
distribution charges shall be calculated daily. For purposes of this
calculation, distribution charges of the Principal Underwriter shall include (a)
the aggregate of all sales commissions which the Principal Underwriter has been
paid pursuant to this paragraph (d) (and pursuant to paragraph (d) of the
Original Agreement) plus all sales commissions which it is entitled to be paid
pursuant to paragraph 5(c) (and pursuant to paragraph 5(c) of the Original
Agreement) since inception of the Original Agreement through and including the
day next preceding the date of calculation, and (b) an amount equal to the
aggregate of all distribution fees referred to below which the Principal
Underwriter has been paid pursuant to this paragraph (d) (and pursuant to
paragraph (d) of the Original Agreement) plus all such fees which it is entitled
to be paid pursuant to paragraph 5(c) (and pursuant to paragraph 5(c) of the
Original Agreement) since inception of the Original Agreement through and
including the day next preceding the date of calculation. From this sum
(distribution charges) there shall be subtracted (i) the aggregate amount paid
or payable to the Principal Underwriter pursuant to this paragraph (d) (and
pursuant to paragraph (d) of the Original Agreement) since inception of the
Original Agreement through and including the day next preceding the date of
calculation and (ii) the aggregate amount of all contingent deferred sales
charges paid or payable to the Principal Underwriter since inception of the
Original Agreement through and including the day next preceding the date of
calculation. If the result of such subtraction is a positive amount, a
distribution fee [computed at the rate of 1% per annum above the prime rate
(being the base rate on corporate loans posted by at least 75% of the nation's
30 largest banks) then being reported in the Eastern Edition of The Wall Street
Journal or if such prime rate is not so reported such other rate as may be
designated from time to time by vote or other action of a majority of (i) those
Trustees of the Trust who are not "interested persons" of the Trust (as defined
in the 1940 Act) and have no direct or indirect financial interest in the
operation of the Plan or any agreements related to it (the "Rule 12b-1
Trustees") and (ii) all of the Trustees then in office] shall be computed on
such amount and added to such amount, with the resulting sum constituting the
amount of outstanding uncovered distribution charges of the Principal
Underwriter with respect to such day for all purposes of this Agreement. If the
result of such subtraction is a negative amount, there shall exist no
outstanding uncovered distribution charges of the Principal Underwriter with
respect to such day and no amount shall be accrued or paid to the Principal
Underwriter with respect to such day. The aggregate amounts accrued and paid
pursuant to this paragraph (d) during any fiscal year of the Fund shall not
exceed .75% of the average daily net assets of the Fund for such year.
(e) The Principal Underwriter shall be entitled to receive all
contingent deferred sales charges paid or payable with respect to any day on
which there exist outstanding uncovered distribution charges of the Principal
Underwriter. The Fund shall be entitled to receive all remaining contingent
deferred sales charges paid or payable by shareholders with respect to any day
on which there exist no outstanding uncovered distribution charges of the
Principal Underwriter, provided that no such sales charge which would cause the
Fund to exceed the maximum applicable cap imposed thereon by paragraph (2) of
subsection (d) of Section 26 of Article III of the Rules of Fair Practice of the
National Association of Securities Dealers, Inc. shall be imposed.
(f) The persons authorized to direct the disposition of monies paid or
payable by the Fund pursuant to the Plan or this Agreement shall be the
President or any Vice President of the Trust. Such persons shall provide to the
Trust's Trustees and the Trustees shall review, at least quarterly, a written
report of the amounts so expended and the purposes for which such expenditures
were made.
(g) In addition to the payments to the Principal Underwriter provided
for in paragraph 5(d), the Fund may make payments of service fees to the
Principal Underwriter, Authorized Firms and other persons. The aggregate of such
payments during any fiscal year of the Fund shall not exceed .25% of the Fund's
average daily net assets for such year.
6. The Trust hereby authorizes the Principal Underwriter to repurchase,
upon the terms and conditions set forth in written instructions given by the
Trust to the Principal Underwriter from time to time, as agent of the Fund and
for its account, such shares of the Fund as may be offered for sale to the Fund
from time to time.
(a) The Principal Underwriter shall notify in writing IBT and TSSG at
the end of each business day, or as soon thereafter as the repurchases in each
pricing period have been compiled, of the number of shares repurchased for the
account of the Fund since the last previous report, together with the prices at
which such repurchases were made, and upon the request of any officer or Trustee
of the Trust shall furnish similar information with respect to all repurchases
made up to the time of the request on any day.
(b) The Trust reserves the right to suspend or revoke the foregoing
authorization at any time; unless otherwise stated, any such suspension or
revocation shall be effective forthwith upon receipt of notice thereof by an
officer of the Principal Underwriter, by telegraph or by written instrument from
an officer of the Trust duly authorized by its Trustees. In the event that the
authorization of the Principal Underwriter is, by the terms of such notice,
suspended for more than twenty-four hours or until further notice, the
authorization given by this paragraph 6 shall not be revived except by action of
a majority of the Trustees of the Trust.
(c) The Principal Underwriter shall have the right to terminate the
operation of this paragraph 6 upon giving to the Trust thirty (30) days' written
notice thereof.
(d) The Trust agrees to authorize and direct IBT to pay, for the
account of the Fund, the purchase price of any shares so repurchased against
delivery of the certificates in proper form for transfer to the Fund or for
cancellation by the Fund.
(e) The Principal Underwriter shall receive no commission in respect of
any repurchase of shares under the foregoing authorization and appointment as
agent, except for any sales commission, distribution fee or contingent deferred
sales charges payable under paragraph 5.
(f) The Trust agrees that the Fund will reimburse the Principal
Underwriter, from time to time on demand, for any reasonable expenses incurred
in connection with the repurchase of shares of the Fund pursuant to this
paragraph 6.
7. If, at any time during the existence of this Agreement, the Trust
shall deem it necessary or advisable in the best interests of the Fund that any
amendment of this Agreement be made in order to comply with the recommendations
or requirements of the Commission or other governmental authority or to obtain
any advantage under Massachusetts or Federal tax laws, and shall notify the
Principal Underwriter of the form of amendment which it deems necessary or
advisable and the reasons therefor, and, if the Principal Underwriter declines
to assent to such amendment, the Trust may terminate this Agreement forthwith by
written notice to the Principal Underwriter. If, at any time during the
existence of its agreement upon request by the Principal Underwriter, the Trust
fails (after a reasonable time) to make any changes in its Declaration of Trust,
as amended, or in its methods of doing business which are necessary in order to
comply with any requirement of Federal law or regulations of the Commission or
of a national securities association of which the Principal Underwriter is or
may be a member, relating to the sale of the shares of the Fund, the Principal
Underwriter may terminate this Agreement forthwith by written notice to the
Trust.
8. The term "net asset value" as used in this Agreement with reference
to the shares of the Fund shall have the same meaning as used in the Declaration
of Trust, as amended, and calculated in the manner referred to in paragraph 2
above.
9(a). The Principal Underwriter is a corporation in the United States
organized under the laws of Massachusetts and holding membership in the National
Association of Securities Dealers, Inc., a securities association registered
under Section 15A of the Securities Exchange Act of 1934, as amended from time
to time, and during the life of this Agreement will continue to be so resident
in the United States, so organized and a member in good standing of said
Association. The Principal Underwriter will comply with the Trust's Declaration
of Trust and By-Laws, and the 1940 Act and the rules promulgated thereunder,
insofar as they are applicable to the Principal Underwriter.
(b) The Principal Underwriter shall maintain in the United States and
preserve therein for such period or periods as the Commission shall prescribe by
rules and regulations applicable to it as Principal Underwriter of an open-end
investment company registered under the 1940 Act such accounts, books and other
documents as are necessary or appropriate to record its transactions with the
Fund. Such accounts, books and other documents shall be subject at any time and
from time to time to such reasonable periodic, special and other examinations by
the Commission or any member or representative thereof as the Commission may
prescribe. The Principal Underwriter shall furnish to the Commission within such
reasonable time as the Commission may prescribe copies of or extracts from such
records which may be prepared without effort, expense or delay as the Commission
may by order require.
10. This Agreement shall continue in force indefinitely until
terminated as in this Agreement above provided, except that:
(a) this Agreement shall remain in effect through and including April
28, 1995, and shall continue in full force and effect indefinitely thereafter,
but only so long as such continuance is specifically approved at least annually
(i) by the vote of a majority of the Rule 12b-1 Trustees cast in person at a
meeting called for the purpose of voting on such approval, and (ii) by the
Trustees of the Trust or by vote of a majority of the outstanding voting
securities of the Fund;
(b) this Agreement may be terminated at any time by vote of a majority
of the Rule 12b-1 Trustees or by vote of a majority of the outstanding voting
securities of the Fund on not more than sixty (60) days' notice to the Principal
Underwriter. The Principal Underwriter shall be entitled to receive all
contingent deferred sales charges paid or payable with respect to any day
subsequent to the termination of this Agreement;
(c) the Principal Underwriter shall have the right to terminate this
Agreement on six (6) months' written notice thereof given in writing to the
Fund; and
(d) the Trust shall have the right to terminate this Agreement
forthwith in the event that it shall have been established by a court of
competent jurisdiction that the Principal Underwriter or any director or officer
of the Principal Underwriter has taken any action which results in a breach of
the covenants set out in paragraph 9 hereof.
11. In the event of the assignment of this Agreement by the Principal
Underwriter, this Agreement shall automatically terminate.
12. Any notice under this Agreement shall be in writing, addressed and
delivered, or mailed postage paid, to the other party, at such address as such
other party may designate for the receipt of such notices. Until further notice
to the other party, it is agreed that the record address of the Trust and that
of the Principal Underwriter, shall be 24 Federal Street, Boston, Massachusetts
02110.
13. The services of the Principal Underwriter to the Fund hereunder are
not to be deemed to be exclusive, the Principal Underwriter being free to (a)
render similar service to, and to act as principal underwriter in connection
with the distribution of shares of, other series of the Trust or other
investment companies, and (b) engage in other business and activities from time
to time.
14. The terms "vote of a majority of the outstanding voting
securities," "assignment" and "interested persons," when used herein, shall have
the respective meanings specified in the 1940 Act, subject, however, to such
exemptions as may be granted by the Commission by any rule, regulation or order.
15. The Principal Underwriter expressly acknowledges the provision in
the Trust's Declaration of Trust limiting the personal liability of the
shareholders of the Fund or the Trustees of the Trust. The Principal Underwriter
hereby agrees that it shall have recourse to the Trust or the Fund for payment
of claims or obligations as between the Trust or the Fund and the Principal
Underwriter arising out of this Agreement and shall not seek satisfaction from
the shareholders or any shareholder of the Trust or from the Trustees or any
Trustee of the Trust. The Fund shall not be responsible for obligations of any
other series of the Trust.
16. All references in this Agreement to the "Original Agreement" shall
mean the Distribution Agreement dated October 28, 1993 between the Trust on
behalf of the Fund and the Principal Underwriter.
17. This Agreement shall amend, replace and be substituted for the
Original Agreement as of the opening of business on January 30, 1995, and this
Agreement shall be effective as of such time. The outstanding uncovered
distribution charges of the Principal Underwriter calculated under the Original
Agreement as of the close of business on January 29, 1995 shall be the
outstanding uncovered distribution charges of the Principal Underwriter
calculated under this Agreement as of the opening of business on January 30,
1995.
IN WITNESS WHEREOF, the parties hereto have entered into this Agreement
on the 27th day of January, 1995.
EATON VANCE GOVERNMENT OBLIGATIONS TRUST
(on behalf of EV CLASSIC GOVERNMENT
OBLIGATIONS FUND)
By /s/M. Dozier Gardner
----------------------------------------
President
EATON VANCE DISTRIBUTORS INC.
By /s/Wharton P. Whitaker
----------------------------------------
President
EXHIBIT 11(A)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 22 to the
Registration Statement on Form N-1A (1933 Act File Number 2-90946) of Eaton
Vance Government Obligations Trust: EV Classic Government Obligations Fund (the
"Fund") of our report dated February 3, 1995 on our audit of the financial
statements and financial highlights of the Fund and of our report dated February
3, 1995 on our audit of the financial statements and supplementary data of
Government Obligations Portfolio which reports are included in the Annual Report
to Shareholders for the year ended December 31, 1994, which is incorporated by
reference in this Registration Statement.
We also consent to the reference to our Firm under the caption "The Fund's
Financial Highlights" in the Prospectus and under the caption "Independent
Accountants" in the Statement of Additional Information of the Registration
Statement.
/s/ COOPERS & LYBRAND L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 24, 1995
EXHIBIT 11(B)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 22 to the
Registration Statement on Form N-1A (1933 Act File Number 2-90946) of Eaton
Vance Government Obligations Trust: EV Marathon Government Obligations Fund (the
"Fund") of our report dated February 3, 1995 on our audit of the financial
statements and financial highlights of the Fund and of our report dated February
3, 1995 on our audit of the financial statements and supplementary data of
Government Obligations Portfolio which reports are included in the Annual Report
to Shareholders for the year ended December 31, 1994, which is incorporated by
reference in this Registration Statement.
We also consent to the reference to our Firm under the caption "The Fund's
Financial Highlights" in the Prospectus and under the caption "Independent
Accountants" in the Statement of Additional Information of the Registration
Statement.
/s/ COOPERS & LYBRAND L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 24, 1995
EXHIBIT 11(C)
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the inclusion in Post-Effective Amendment No. 22 to the
Registration Statement on Form N-1A (1933 Act File Number 2-90946) of Eaton
Vance Government Obligations Trust: EV Traditional Government Obligations Fund
(the "Fund") of our report dated February 3, 1995 on our audit of the financial
statements and financial highlights of the Fund and our report dated February 3,
1995 on our audit of the financial statements and supplementary data of
Government Obligations Portfolio which reports are included in the Annual Report
to Shareholders for the year ended December 31, 1994, which is incorporated by
reference in this Registration Statement.
We also consent to the reference to our Firm under the caption "The Fund's
Financial Highlights" in the Prospectus and under the caption "Independent
Accountants" in the Statement of Additional Information of the Registration
Statement.
/s/ COOPERS & LYBRAND L.L.P.
-----------------------------
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
April 24, 1995
EATON VANCE GOVERNMENT OBLIGATIONS TRUST
AMENDED DISTRIBUTION PLAN
ON BEHALF OF
EV CLASSIC GOVERNMENT OBLIGATIONS FUND
WHEREAS, Eaton Vance Government Obligations Trust (the "Trust") engages
in business as an open-end investment company with multiple series and is
registered as such under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Trust adopted a separate Distribution Plan (the "Original
Plan") on behalf of its series, EV Classic Government Obligations Fund (the
"Fund"), pursuant to which the Fund has made payments in connection with the
distribution of shares of the Fund;
WHEREAS, the Trust employs Eaton Vance Distributors, Inc. to act as
Principal Underwriter (as defined in the Act) of shares of the Fund, but does
not intend to remunerate the Principal Underwriter unless and until the
Principal Underwriter sells shares of the Fund;
WHEREAS, the Fund will pay the Principal Underwriter sales commissions
and distribution fees only in connection with the sale of shares of the Fund;
WHEREAS, the Fund intends to pay service fees as contemplated in
subsections (b) and (d) of Section 26 of Article III of the Rules of Fair
Practice of the National Association of Securities Dealers, Inc. (the "NASD
Rules");
WHEREAS, the Trustees of the Trust have determined that it is desirable
to amend and replace the Original Plan with this Amended Distribution Plan; and
WHEREAS, the Trustees of the Trust have determined that there is a
reasonable likelihood that adoption of this Amended Distribution Plan will
benefit the Fund and its shareholders.
NOW, THEREFORE, the Trust hereby adopts this Amended Distribution Plan
(this "Plan") on behalf of the Fund in accordance with Rule 12b-1 under the Act
and containing the following terms and conditions:
1. The Fund will pay sales commissions and distribution fees to the
Principal Underwriter only after and as a result of the sales of shares of the
Fund. The Principal Underwriter will provide the Fund with such distribution
services and facilities as the Trust may from time to time consider necessary to
accomplish the sale of shares of the Fund. It is understood that the Principal
Underwriter may pay such sales commissions and make such other payments to
Authorized Firms and other persons as it considers appropriate to encourage
distribution of such shares.
2. On each sale of Fund shares (excluding reinvestment of dividends and
distributions), the Fund shall pay the Principal Underwriter a sales commission
in an amount not exceeding 6.25% of the price received by the Fund therefor,
such payment to be made in the manner set forth and subject to the terms of this
Plan. The amount of the sales commission shall be established from time to time
by vote or other action of a majority of (i) those Trustees of the Trust who are
not "interested persons" (as defined in the Act) of the Trust and have no direct
or indirect financial interest in the operation of this Plan or any agreements
related to it (the "Rule 12b-1 Trustees") and (ii) all of the Trustees then in
office. The Fund shall also pay the Principal Underwriter a separate
distribution fee (calculated in accordance with Section 3), such payment to be
made in the manner set forth and subject to the terms of this Plan.
3. The sales commissions and distribution fees referred to in Section 2
shall be accrued and paid by the Fund in the following manner. The Fund shall
accrue daily an amount calculated at the rate of .75% per annum of the daily net
assets of the Fund, which net assets shall be computed in accordance with the
governing documents of the Trust and applicable votes and determinations of the
Trustees of the Trust. The daily amounts so accrued throughout the month shall
be paid to the Principal Underwriter on the last day of each month. The amount
of such daily accrual, as so calculated, shall first be applied and charged to
all unpaid sales commissions, and the balance, if any, shall then be applied and
charged to all unpaid distribution fees. No amount shall be accrued with respect
to any day on which there exist no outstanding uncovered distribution charges of
the Principal Underwriter. The amount of such uncovered distribution charges
shall be calculated daily. For purposes of this calculation, distribution
charges of the Principal Underwriter shall include (a) the aggregate of all
sales commissions which the Principal Underwriter has been paid pursuant to this
Section 3 (and pursuant to Section 3 of the Original Plan) plus all sales
commissions which it is entitled to be paid pursuant to Section 2 (and pursuant
to Section 2 of the Original Plan) since inception of the Original Plan through
and including the day next preceding the date of calculation, and (b) an amount
equal to the aggregate of all distribution fees referred to below which the
Principal Underwriter has been paid pursuant to this Section 3 (and pursuant to
Section 3 of the Original Plan) plus all such fees which it is entitled to be
paid pursuant to Section 2 (and pursuant to Section 2 of the Original Plan)
since inception of the Original Plan through and including the day next
preceding the date of calculation. From this sum (distribution charges) there
shall be subtracted (i) the aggregate amount paid or payable to the Principal
Underwriter pursuant to this Section 3 (and pursuant to Section 3 of the
Original Plan) since inception of the Original Plan through and including the
day next preceding the date of calculation and (ii) the aggregate amount of all
contingent deferred sales charges paid or payable to the Principal Underwriter
since inception of the Original Plan through and including the day next
preceding the date of calculation. If the result of such subtraction is a
positive amount, a distribution fee [computed at the rate of 1% per annum above
the prime rate (being the base rate on corporate loans posted by at least 75% of
the nation's 30 largest banks) then being reported in the Eastern Edition of The
Wall Street Journal or if such prime rate is not so reported such other rate as
may be designated from time to time by vote or other action of a majority of (i)
the Rule 12b-1 Trustees and (ii) all of the Trustees then in office] shall be
computed on such amount and added to such amount, with the resulting sum
constituting the amount of outstanding uncovered distribution charges of the
Principal Underwriter with respect to such day for all purposes of this Plan. If
the result of such subtraction is a negative amount, there shall exist no
outstanding uncovered distribution charges of the Principal Underwriter with
respect to such day and no amount shall be accrued or paid to the Principal
Underwriter with respect to such day. The aggregate amounts accrued and paid
pursuant to this Section 3 during any fiscal year of the Fund shall not exceed
.75% of the average daily net assets of the Fund for such year.
4. The Principal Underwriter shall be entitled to receive all
contingent deferred sales charges paid or payable with respect to any day on
which there exist outstanding uncovered distribution charges of the Principal
Underwriter. The Fund shall be entitled to receive all remaining contingent
deferred sales charges paid or payable by shareholders with respect to any day
on which there exist no outstanding uncovered distribution charges of the
Principal Underwriter, provided that no such sales charge which would cause the
Fund to exceed the maximum applicable cap imposed thereon by paragraph (2) of
subsection (d) of Section 26 of Article III of the NASD Rules shall be imposed.
5. The Fund may make payments of service fees to the Principal
Underwriter, Authorized Firms and other persons. The aggregate of such payments
during any fiscal year of the Fund shall not exceed .25% of the Fund's average
daily net assets for such year. Appropriate adjustment of service fee payments
shall be made whenever necessary to ensure that no such payment shall cause the
Fund to exceed the applicable maximum cap imposed thereon by paragraph (5) of
subsection (d) of Section 26 of Article III of the NASD Rules.
6. This Plan shall not take effect until after it has been approved by
both a majority of (i) the Rule 12b-1 Trustees and (ii) all of the Trustees then
in office, cast in person at a meeting (or meetings) called for the purpose of
voting on this Plan.
7. Any agreements between the Trust on behalf of the Fund and any
person relating to this Plan shall be in writing and shall not take effect until
approved in the manner provided for Trustee approval of this Plan in Section 6.
8. This Plan shall continue in effect through and including April 28,
1995, and shall continue in effect indefinitely thereafter, but only for so long
as such continuance after April 28, 1995 is specifically approved at least
annually in the manner provided for Trustee approval of this Plan in Section 6.
9. The persons authorized to direct the disposition of monies paid or
payable by the Fund pursuant to this Plan or any related agreement made on
behalf of the Fund shall be the President or any Vice President of the Trust.
Such persons shall provide to the Trustees of the Trust and the Trustees shall
review, at least quarterly, a written report of the amounts so expended and the
purposes for which such expenditures were made.
10. This Plan may be terminated at any time by vote of a majority of
the Rule 12b-1 Trustees, or by vote of a majority of the outstanding voting
securities of the Fund. The Principal Underwriter shall also be entitled to
receive all contingent deferred sales charges paid or payable with respect to
any day subsequent to termination of this Plan on which there exist outstanding
uncovered distribution charges of the Principal Underwriter.
11. This Plan may not be amended to increase materially the payments to
be made by the Fund as provided in Sections 2, 3 and 5 unless such amendment is
approved by a vote of at least a majority of the outstanding voting securities
of the Fund. In addition, all material amendments to this Plan shall be approved
in the manner provided for Trustee approval of this Plan in Section 6.
12. While this Plan is in effect, the selection and nomination of the
Rule 12b-1 Trustees shall be committed to the discretion of the Rule 12b-1
Trustees.
13. The Trust shall preserve copies of this Plan and any related
agreements made by the Trust on behalf of the Fund and all reports made pursuant
to Section 9, for a period of not less than six years from the date of this
Plan, or of the agreements or of such report, as the case may be, the first two
years in an easily accessible place.
14. Consistent with the limitation of shareholder, officer and Trustee
liability as set forth in the Trust's Declaration of Trust, any obligations
assumed by the Fund pursuant to this Plan shall be limited in all cases to the
assets of the Fund and no person shall seek satisfaction thereof from the
shareholders of the Trust, officers or Trustees of the Trust or any other series
of the Trust.
15. When used in this Plan, the term "service fees" shall have the same
meaning as such term has in subsections (b) and (d) of Section 26 of Article III
of the NASD Rules. When used in this Plan, the term "vote of a majority of the
outstanding voting securities of the Fund" shall mean the vote of the lesser of
(a) 67 per centum or more of the shares of the Fund present or represented by
proxy at the meeting if the holders of more than 50 per centum of the
outstanding shares of the Fund are present or represented by proxy at the
meeting, or (b) more than 50 per centum of the outstanding shares of the Fund.
16. If any provision of this Plan shall be held or made invalid by a
court decision, statute, rule or regulation of the Securities and Exchange
Commission or otherwise, the remainder of this Plan shall not be affected
thereby.
17. This Plan shall amend, replace and be substituted for the Original
Plan as of the opening of business on January 30, 1995 and this Plan shall be
effective as of such time. The outstanding uncovered distribution charges of the
Principal Underwriter calculated under the Original Plan as of the close of
business on January 29, 1995 shall be the outstanding uncovered distribution
charges of the Principal Underwriter calculated under this Plan as of the
opening of business on January 30, 1995.
IN WITNESS WHEREOF, the Trust has executed this Plan on behalf of the
Fund on the 27th day of January, 1995.
EATON VANCE GOVERNMENT OBLIGATIONS TRUST
(on behalf of EV CLASSIC GOVERNMENT
OBLIGATIONS FUND)
BY /s/M. Dozier Gardner
----------------------------------
President
Attest:
/s/Thomas Otis
- ----------------------------
Secretary
<PAGE>
Exhibit 16
EV CLASSIC GOVERNMENT OBLIGATIONS FUND
CALCULATION OF YIELD
For the 30 days ended 12/31/94:
Interest Income Earned: $266,499
Plus Dividend Income Earned:
----------
Equal Gross Income: $266,499
Minus Expenses: $105,316
----------
Equal Net Investment Income: $161,183
Divided by Average daily number of shares
outstanding that were entitled
to receive dividends: 4,629,583
----------
Equal Net Investment Income Earned Per Share: $0.0348
Maximum Offering Price Per Share 12/31/94: $8.98
30 Day Yield*: 4.70%
* Yield is calculated on a bond equivalent rate as follows:
6
2[(($0.0348/$8.98)+1) -1]
<PAGE>
<TABLE>
EXHIBIT 16
EV CLASSIC GOVERNMENT OBLIGATIONS FUND
INVESTMENT PERFORMANCE
The table below indicates the total return (capital changes plus reinvestment of
all distributions) on a hypothetical investment of $1,000 in the Fund covering
the life of the fund ending December 31, 1994. Past performance is not
indicative of future results. Investment return and principal value will
fluctuate and shares, when redeemed, may be worth more or less than their
original cost.
<CAPTION>
NUMBER OF
SHARES GAINED TOTAL
NAV THROUGH TOTAL RETURN
INVEST- INVEST- AMT OF NUMBER DATE OF REINVESTMENT OF NUMBER OF 12/31/94 12/31/94 THROUGH
MENT MENT INVEST- OF SHARES INVEST- ALL DISTRIBUTIONS SHARES AS NET ASSET VALUE OF 12/31/94
PERIOD DATE MENT PURCHASED MENT THROUGH 12/31/94 OF 12/31/94 VALUE + INVESTMENT CUMULATIVE^ ANNUALIZED ++
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIFE OF 11/01/93 $1,000 100.000 $10.00 8.898 108.898 $8.98 $977.90 -2.21% -1.90%
THE FUND
(1.16 YR)
1 YEAR
ENDING 12/31/93 $1,000 100.604 $9.94 7.922 108.526 $8.98 $974.56 -2.54% -2.54%
12/31/94
^ Cumulative total return (net asset value to net asset value) is calculated
by dividing the cumulative net asset value on 12/31/94 by the initial net
asset value.
+ 12/31/94 Net Asset Value is an unaudited figure.
++ Average annual total return is the average annual compounded rate of return
based on the cumulative value for each period. It is calculated by taking
the nth root of 1 + the cumulative total return, where n = the number of
years invested.
</TABLE>
<PAGE>
EV CLASSIC GOVERNMENT OBLIGATIONS FUND
CALCULATION OF DISTRIBUTION RATE
AND EFFECTIVE DISTRIBUTION RATE
AS OF 12/31/94
DISTRIBUTION RATE
Annualize
Most Recent
Monthly : ( $0.051164400 / 30) x 365
Distribution
Divide by
Current Maximum : $8.98
Offering Price
Distribution
Rate Equals : 0.0693 ( or 6.93% )
EFFECTIVE DISTRIBUTION RATE
Divide
Distribution : 0.0693
Rate by 365/30 ------ + 1
( or 12.167 ) 12.167
and Add1.
The Resulting
Number Equals : 1.0057
Take this
Number to the 12.167
365/30th ( or : ( 1.0026 ) - 1
12.167 ) power
and Subtract 1.
Effective
Distribution : 0.0716 ( or 7.16% )
Rate Equals
<PAGE>
Exhibit 16
EV MARATHON GOVERNMENT OBLIGATIONS FUND
CALCULATION OF YIELD
For the 30 days ended 12/31/94:
Interest Income Earned: $552,671
Plus Dividend Income Earned:
----------
Equal Gross Income: $552,671
Minus Expenses: $186,738
----------
Equal Net Investment Income: $365,933
Divided by Average daily number of shares
outstanding that were entitled
to receive dividends: 9,606,293
----------
Equal Net Investment Income Earned Per Share: $0.0381
Maximum Offering Price Per Share 12/31/94: $8.99
30 Day Yield*: 5.14%
* Yield is calculated on a bond equivalent rate as follows:
6
2[(($0.0381/$8.99)+1) -1]
<PAGE>
<TABLE>
EV MARATHON GOVERNMENT OBLIGATIONS FUND
INVESTMENT PERFORMANCE
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the life of the Fund ending December 31, 1994. Past performance is not indicative of future results.
Investment return and principal value will fluctuate and shares, when redeemed, may be worth more or less than their original cost.
<CAPTION>
TOTAL TOTAL
RETURN RETURN
NO. OF SHARES 12/31/94 12/31/94 THROUGH THOUGH
GAINED THROUGH VALUE OF VALUE OF 12/31/94 12/31/94
REINVESTMENT TOTAL INVEST- INVEST- BEFORE AFTER
NO. OF NAV ON OF ALL NO. OF MENT MENT DEDUCTING DEDUCTING
INVEST- INVEST- AMT OF SHARES DATE OF DISTRIBUTIONS SHARES BEFORE AFTER THE CDSC THE CDSC *
MENT MENT INVEST- PUR- INVEST- THROUGH AS OF 12/31/94 DEDUCTING DEDUCTING
PERIOD DATE MENT CHASED MENT 12/31/94 12/31/94 NAV+ THE CDSC THE CDSC* CUMUL^ ANN++ CUMUL^^ ANN++
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
LIFE OF 11/01/93 $1,000 100.000 $10.00 9.184 109.184 $8.99 $981.56 $936.61 -1.84% -1.59% -6.34% -5.47%
THE FUND
(1.16 YRS)
1 YEAR
ENDING 12/31/93 $1,000 100.705 $9.93 8.205 108.910 $8.99 $979.10 $933.83 -2.09% -2.09% -6.62% -6.62%
12/31/94
* No contingent deferred sales charge (CDSC) is imposed on shares purchased more than six years prior to the redemption,
shares acquired through the reinvestment of dividends and distributions and any appreciation in value of other shares in
the account, and no such charge is imposed on exchanges of fund shares for shares of one or more other funds in the Eaton
Vance Marathon Group of Funds.
^ Cumulative total return (net asset value to net asset value) is calculated by dividing the cumulative net asset value on
12/31/94 by the initial net asset value.
^^ Cumulative total return (net asset value to net asset value) is calculated by dividing the cumulative net asset value on
12/31/94 by the initial net asset value and subtracting the CDSC.
+ 12/31/94 Net Asset Value is an unaudited figure
++ Average annual total return is the average annual compounded rate of return based on the cumulative value for each period.
It is calculated by taking the nth root of 1 + the cumulative total return, where n = the number of years invested.
</TABLE>
<PAGE>
EV MARATHON GOVERNMENT OBLIGATIONS FUND
CALCULATION OF DISTRIBUTION RATE
AND EFFECTIVE DISTRIBUTION RATE
AS OF 12/31/94
DISTRIBUTION RATE
Annualize
Most Recent
Monthly : ( $0.053424660 / 30) x 365
Distribution
Divide by
Current Maximum : $8.99
Offering Price
Distribution
Rate Equals : 0.0723 ( or 7.23% )
EFFECTIVE DISTRIBUTION RATE
Divide
Distribution : 0.0723
Rate by 365/30 ------ + 1
( or 12.167 ) 12.167
and Add 1.
The Resulting
Number Equals : 1.0059
Take this
Number to the 12.167
365/30th ( or : ( 1.0059 ) - 1
12.167 ) power
and Subtract 1.
Effective
Distribution : 0.0748 ( or 7.48% )
Rate Equals
<PAGE>
Exhibit 16
EV TRADITIONAL GOVERNMENT OBLIGATIONS FUND
CALCULATION OF YIELD
For the 30 days ended 12/31/94:
Interest Income Earned: $2,526,653
Plus Dividend Income Earned:
----------
Equal Gross Income: $2,526,653
Minus Expenses: $631,128
----------
Equal Net Investment Income: $1,895,525
Divided by Average daily number of shares
outstanding that were entitled
to receive dividends: 37,833,260
----------
Equal Net Investment Income Earned Per Share: $0.0501
Maximum Offering Price Per Share 12/31/94: $10.94
30 Day Yield*: 5.56%
* Yield is calculated on a bond equivalent rate as follows:
6
2[(($0.0501/$10.94)+1) -1]
<PAGE>
<TABLE>
EV TRADITIONAL GOVERNMENT OBLIGATIONS FUND
INVESTMENT PERFORMANCE
The table below indicates the total return (capital changes plus reinvestment of all distributions) on a hypothetical investment of
$1,000 in the Fund covering the ten, five, and one year periods ending December 31, 1994. Past performance is not indicative of
future results. Investment return and principal value will fluctuate and shares, when redeemed, may be worth more or less than
their original cost.
<CAPTION>
DOLLAR
VALUE ON NUMBER
DATE OF OF SHARES TOTAL
INVEST- GAINED ENDING TOTAL RETURN
OFFER MENT THROUGH REDEEMABLE RETURN THROUGH
PRICE (INITIAL REINVESTMENT TOTAL DOLLAR THROUGH 12/31/94
ON NO. OF NAV ON INVEST- OF ALL DIS- NO. OF VALUE 12/31/94 (MAX OFFERING
INVEST- INVEST- AMT OF DAY OF SHARES DATE OF MENT LESS TRIBUTIONS SHARES OF INVEST- (NAV TO NAV) PRICE TO NAV)
MENT MENT INVEST- INVEST- PUR- INVEST- THE SALES THROUGH AS OF 12/31/94 MENT ON
PERIOD DATE MENT MENT CHASED MENT CHARGE*) 12/31/94 12/31/94 NAV+ 12/31/94 CUMUL^ ANN++ CUMUL^^ ANN++
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
10 YRS
ENDING 12/31/84 $1,000 $12.83 77.942 $12.22 $952.45 130.961 208.903 $10.42 $2,176.77 128.54% 8.62% 117.69% 8.09%
12/31/94
5 YRS
ENDING 12/31/89 $1,000 $12.09 82.713 $11.52 $952.85 45.784 128.497 $10.42 $1,338.94 40.52% 7.04% 33.84% 6.00%
12/31/94
1 YR
ENDING 12/31/93 $1,000 $12.05 82.988 $11.48 $952.70 6.587 89.575 $10.42 $933.37 -2.03% -2.03% -6.68% -6.68%
12/31/94
* Reflects the current maximum sales charge of 4.75%.
^ Cumulative total return (offering price to net asset value) is calculated by dividing the ending dollar amount on
12/31/94 by the initial net asset value.
^^ Cumulative total return (net asset value to net asset value) is calculated by dividing the ending dollar amount on
12/31/94 by the initial investment less the sales charge.
+ 12/31/94 Net Asset Value is an unaudited figure
++ Average annual total return is the average annual compounded rate of return based on the cumulative value for each period.
It is calculated by taking the nth root of 1 + the cumulative total return, where n = the number of years invested.
</TABLE>
<PAGE>
EV TRADITIONAL GOVERNMENT OBLIGATIONS FUND
CALCULATION OF DISTRIBUTION RATE
AND EFFECTIVE DISTRIBUTION RATE
AS OF 12/31/94
DISTRIBUTION RATE
Annualize
Most Recent
Monthly : ( $0.066575370 / 30) x 365
Distribution
Divide by
Current Maximum : $10.94
Offering Price
Distribution
Rate Equals : 0.0740 ( or 7.40% )
EFFECTIVE DISTRIBUTION RATE
Divide
Distribution : 0.0740
Rate by 365/30 ------ + 1
( or 12.167 ) 12.167
and Add 1.
The Resulting
Number Equals : 1.0061
Take this
Number to the 12.167
365/30th ( or : ( 1.0061 ) - 1
12.167 ) power
and Subtract 1.
Effective
Distribution : 0.0766 ( or 7.66% )
Rate Equals
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000745463
<NAME> EATON VANCE GOVERNMENT OBLIGATIONS TRUST
<SERIES>
<NUMBER> 3
<NAME> EV CLASSIC GOVERNMENT OBLIGATIONS FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 44773
<INVESTMENTS-AT-VALUE> 40684
<RECEIVABLES> 218
<ASSETS-OTHER> 18
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 40920
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1334
<TOTAL-LIABILITIES> 1334
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 44379
<SHARES-COMMON-STOCK> 4407
<SHARES-COMMON-PRIOR> 3000
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (72)
<ACCUMULATED-NET-GAINS> (632)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4089)
<NET-ASSETS> 39586
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 3888
<EXPENSES-NET> 670
<NET-INVESTMENT-INCOME> 3218
<REALIZED-GAINS-CURRENT> (730)
<APPREC-INCREASE-CURRENT> (4055)
<NET-CHANGE-FROM-OPS> (1567)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 3218
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 430
<NUMBER-OF-SHARES-SOLD> 8155
<NUMBER-OF-SHARES-REDEEMED> 5751
<SHARES-REINVESTED> 248
<NET-CHANGE-IN-ASSETS> 27360
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 670
<AVERAGE-NET-ASSETS> 47787
<PER-SHARE-NAV-BEGIN> 9.94
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.63
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.98
<EXPENSE-RATIO> 2.15
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000745463
<NAME> EATON VANCE GOVERNMENT OBLIGATIONS TRUST
<SERIES>
<NUMBER> 2
<NAME> EV MARATHON GOVERNMENT OBLIGATIONS FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 91123
<INVESTMENTS-AT-VALUE> 86291
<RECEIVABLES> 708
<ASSETS-OTHER> 19
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 87018
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1083
<TOTAL-LIABILITIES> 1083
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 91513
<SHARES-COMMON-STOCK> 9555
<SHARES-COMMON-PRIOR> 2110
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (119)
<ACCUMULATED-NET-GAINS> (627)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (4832)
<NET-ASSETS> 85935
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 5023
<EXPENSES-NET> 663
<NET-INVESTMENT-INCOME> 4360
<REALIZED-GAINS-CURRENT> (698)
<APPREC-INCREASE-CURRENT> (4789)
<NET-CHANGE-FROM-OPS> (1127)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 4360
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 493
<NUMBER-OF-SHARES-SOLD> 9308
<NUMBER-OF-SHARES-REDEEMED> 2056
<SHARES-REINVESTED> 192
<NET-CHANGE-IN-ASSETS> 64984
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 663
<AVERAGE-NET-ASSETS> 63077
<PER-SHARE-NAV-BEGIN> 9.93
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.66
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 8.99
<EXPENSE-RATIO> 1.83
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000745463
<NAME> EATON VANCE GOVERNMENT OBLIGATIONS TRUST
<SERIES>
<NUMBER> 1
<NAME> EV TRADITIONAL GOVERNMENT OBLIGATIONS FUND
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 397744
<INVESTMENTS-AT-VALUE> 388695
<RECEIVABLES> 172
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 388867
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 2681
<TOTAL-LIABILITIES> 2681
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 457654
<SHARES-COMMON-STOCK> 37058
<SHARES-COMMON-PRIOR> 43838
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> (1325)
<ACCUMULATED-NET-GAINS> (61094)
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (9049)
<NET-ASSETS> 386186
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 0
<OTHER-INCOME> 37056
<EXPENSES-NET> 1688
<NET-INVESTMENT-INCOME> 35368
<REALIZED-GAINS-CURRENT> (2788)
<APPREC-INCREASE-CURRENT> (41383)
<NET-CHANGE-FROM-OPS> (8803)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 35368
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 1359
<NUMBER-OF-SHARES-SOLD> 8690
<NUMBER-OF-SHARES-REDEEMED> 17019
<SHARES-REINVESTED> 1549
<NET-CHANGE-IN-ASSETS> 71433
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 0
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1688
<AVERAGE-NET-ASSETS> 459230
<PER-SHARE-NAV-BEGIN> 11.48
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0.84
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 10.42
<EXPENSE-RATIO> 1.17
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 6
<CIK> 0000912747
<NAME> GOVERNMENT OBLIGATIONS PORTFOLIO
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> DEC-31-1994
<INVESTMENTS-AT-COST> 600316
<INVESTMENTS-AT-VALUE> 582142
<RECEIVABLES> 7710
<ASSETS-OTHER> 16
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 589868
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 74199
<TOTAL-LIABILITIES> 74199
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 533640
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (17971)
<NET-ASSETS> 515669
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 53735
<OTHER-INCOME> 0
<EXPENSES-NET> 7767
<NET-INVESTMENT-INCOME> 45968
<REALIZED-GAINS-CURRENT> (4217)
<APPREC-INCREASE-CURRENT> (50227)
<NET-CHANGE-FROM-OPS> (8476)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (13151)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 4260
<INTEREST-EXPENSE> 3221
<GROSS-EXPENSE> 7767
<AVERAGE-NET-ASSETS> 572314
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0.80
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
