<PAGE>
To Shareholders
EV Classic Government Obligations Fund had a total return of -2.5 percent for
the year ending December 31, 1994. The return included a decline in net asset
value per share from $9.94 on December 31, 1993, to $8.98 on December 31, 1994,
and the reinvestment of $0.714 per share in income dividends.
For comparison, the average intermediate U.S. Government fund had a total return
of -3.7 percent for the same period, according to Lipper Analytical Services,
Inc., an independent mutual fund monitoring service.
Based on the Fund's most recent dividend and its net asset value per share of
$8.98 on December 31, 1994, the Fund's annualized distribution rate was 6.93
percent.
The last year was a period of considerable market volatility, spurred by the
Federal Reserve's decisions to raise short-term interest rates six times. In
response, rates on fixed-income securities of all maturities rose with resulting
price declines and a decrease in the Fund's net asset value.
However, the Fund's price remained relatively stable compared to that of other
similar investments because of the Portfolio's intermediate effective maturity
and its investments in seasoned mortgage-backed securities. As can be seen in
the chart on the next page, the Fund's rate of return was greater than the rates
of return earned by similar and longer maturity investments.
The economy continued to grow vigorously in 1994. Third-quarter gross domestic
product rose 4.1 percent, matching the second quarter gain. The economy was
fueled by an increase in capital spending by business, which was up
significantly during the year, according to the U.S. Department of Commerce. The
nation's improved economic activity was reflected in brisk job growth as well,
with November unemployment down to 5.6 percent.
By most measures, inflation continued to be modest. Core inflation -- which
excludes the volatile energy and food categories -- remained at 2.7 percent
during 1994.
Most economists believe that short-term rates will continue to rise during the
first half of 1995, and, as a result, economic growth will moderate thereafter.
While past performance is no guarantee of future results, if the economy behaves
in this way, intermediate and long-term interest rates, along with the net asset
value of the Fund, are likely to remain relatively stable during the year.
Sincerely,
[Photograph /s/ M. Dozier Gardner
M. Dozier Gardner] M. Dozier Gardner
President
February 21, 1995
<PAGE>
Management Report
An Interview with Susan Schiff, Portfolio Manager of Government Obligations
Portfolio.
Q. SUSAN, HOW WOULD YOU DESCRIBE 1994 IN TERMS OF INVESTMENTS?
A. It was a challenging year, to say the least. Of course, nearly everyone is
aware of the Federal Reserve's actions during the year, raising its Federal
funds target rate, the key benchmark for short-term interest rates, six
times. Yields rose nearly 300 basis points in the intermediate part of the
yield curve. Of course, this did not have a positive effect on the Fund.
Q. CAN YOU COMPARE THE PORTFOLIO'S RESULTS TO THOSE OF OTHER INVESTMENTS DURING
THIS PERIOD OF TIME?
A. The Fund's total rate of return was better than those of a number of similar
and longer maturity investments. The chart on this page provides the details.
Q. WHAT MADE THE FUND'S PRICE MORE STABLE?
A. To a certain extent, it was because the Portfolio's duration, or interest
rate sensitivity, was slightly lower than that of the alternative
investments. But the primary reason is because a majority of the Portfolio is
invested in very seasoned mortgage-backed securities.
Q. WHAT FACTORS MAKE THESE SEASONED MORTGAGES DIFFERENT?
A. The fact that they're seasoned means that their prepayment rates are
relatively stable when compared to most mortgage-backed securities. These
securities exhibit prepayment rates that are typically more predictable than
the prepayment rates on generic mortgage-backed securities. Here's how they
work: When interest rates are rising, the prepayment rates on these seasoned
mortgage pools remain relatively stable. Prepayment rates for generic, or
unseasoned pools of mortgages have a tendency to slow down as interest rates
rise.This results in longer average maturities and increased volatility. The
seasoned mortgage-backed securities have become more attractive to market
participants who now recognize their value and may have been hurt by other
mortgage-backed products, including derivatives.
1994: A DIFFICULT YEAR FOR BONDS
This chart, entitled, "1994, a Difficult Year for Bonds," is a bar chart
comparing the total rates of return in 1994 for the 30-year, 10-year and 5-year
Merrill Lynch taxable bond indices and the Fund. Principal and interest payments
of Treasury securities are guaranteed by the U.S. Government. This guarantee
applies to the underlying securities of the Fund and not the Fund itself. Past
performance is no guarantee of future results. Source: Merrill Lynch Taxable
Bond Indices; Eaton Vance Management data. The data points are: 30-year
Treasuries, -12.0%; 10-year Treasuries, -8.3%; 5-year Treasuries, -4.3%; EV
Classic Government Obligations Fund, -2.5%.
<PAGE>
Q. HOW DOES THE TENDENCY TOWARD LESS VOLATILITY HELP THE FUND IN THE CURRENT
ECONOMIC ENVIRONMENT?
A. The U.S. Federal Reserve already has raised the Federal funds rate once in
early 1995. The Fund is likely to experience less volatility because of the
Portfolio's lower relative interest rate sensitivity.So in a period of rising
rates, its price may fall less than a longer maturity investment would.
Q. WHAT IS THE INVESTMENT PHILOSOPHY OF THE PORTFOLIO?
A. The philosophy of the Portfolio remains unchanged: to provide an attractive
income through a relatively stable investment vehicle. We believe that a
government fund should not make big bets on the direction of interest rates.
No one can consistently make winning bets on interest rates. So we've avoided
some very high-yielding, esoteric mortgage-backed securities because we felt
they weren't worth the risk. We believe our investors are typically
risk-averse. They wouldn't be investing in such vehicles if they were
investing their money themselves, so we try not to expose them to those
risks.
[Photograph Susan Schiff]
RELATIVE SHARE PRICE STABILITY PROVIDES AN ADVANTAGE
This chart, entitled "Relative share price stability provides an
advantage," is a horizontal line chart. Its text reads as follows, "The Fund's
seasoned, mortgage-backed securities have helped contribute to its relative
share price stability. The colored line represents the annualized monthly
principal prepayment rates of the Fund's seasoned, mortgage-backed securities.
The black line represents the annualized monthly principal prepayment rates of
generic mortgage-backed securities." The chart cites Lehman Brothers, Bloomberg,
L.P. and Eaton Vance Management as sources of its data. The plot points for this
chart are attached.
Generic Seasoned
6.6 16.5
6.2 16.1
5.5 15.2
6.3 15.5
7.8 14.1
10.3 15.4
13.2 15.7
19.7 18.1
26.5 22.4
22.8 22.5
18.3 22.2
18.1 19.5
19.2 14.2
31.1 16.5
46.9 14.1
52.4 17.3
50.2 17.8
45.5 18.5
29.5 18.1
25.3 15.3
42.3 17.2
58.3 18.2
61.9 18.7
63 21.4
54.3 22.4
56 21.9
57.2 24.6
58 21.2
62.2 22.6
62.7 27.6
50.9 23.9
43.2 21.1
49.7 23.5
40.7 23.4
32 23.3
25 20.5
19.5 17.2
20.1 15.9
17.5 14.3
14.1 14.5
12.1 11.8
10.8 13.1
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EV CLASSIC GOVERNMENT
OBLIGATIONS FUND AND THE LEHMAN BROTHERS INTERMEDIATE GOVERNMENT BOND INDEX
From November 30, 1993 through December 31, 1994
Average 1 Life of
Annual Returns Year Fund*
- -------------- ---- -------
-2.5% -1.9%
Classic
Government
Obligations
Fund Lehman Lipper
11/93 10000 10000 10000
12/93 10064 10041 10046
1/94 10155 10141 10158
2/94 10060 10001 9983
3/94 9910 9855 9783
4/94 9808 9792 9690
5/94 9798 9799 9674
6/94 9786 9801 9653
7/94 9891 9929 9790
8/94 9924 9958 9803
9/94 9818 9876 9685
10/94 9832 9878 9669
11/94 9775 9834 9630
12/94 9808 9866 9675
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
*Investment operations commenced on 11/1/93.
FUND PERFORMANCE
In accordance with guidelines issued by the Securities and Exchange Commission,
the chart above compares your Fund's total return with that of a broad-based
securities market index. The lines on the chart represent the total returns of
$10,000 hypothetical investments in the Fund and the unmanaged Lehman Brothers
Intermediate Government Bond Index.
TOTAL RETURN FIGURE
The bold solid line on the chart represents the Fund's performance. The Fund's
total return figure reflects Fund expenses and Portfolio transaction costs, and
assumes the reinvestment of income dividends and capital gain distributions.
The dotted line represents the performance of the Lehman Brothers Intermediate
Government Bond Index, a broad-based, widely recognized unmanaged index of
government bonds. The Index's total return does not reflect any commissions or
expenses that would be incurred if an investor individually purchased or sold
the securities represented in the Index.
The dashed line represents the performance of the Lipper Intermediate U.S.
Government Fund average. Its performance is included to indicate how the Fund
has performed relative to its competitive universe. However, the average total
rate of return shown does not include any commissions that would be incurred if
an investor individually purchased or sold the Funds represented in the average.
<PAGE>
------------------------------------------------
EV CLASSIC GOVERNMENT OBLIGATIONS FUND
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------------------------------
December 31, 1994
------------------------------------------------------------------------------
ASSETS:
Investment in Government Obligations Portfolio
(Portfolio), at value (Note 1A) $40,684,398
Receivable for Fund shares sold 218,716
Deferred organization expenses (Note 1D) 17,910
-----------
Total assets $40,921,024
LIABILITIES:
Dividends payable $ 71,205
Payable for Fund shares redeemed 1,227,311
Payable to affiliates -
Custodian fee 848
Trustees' fees 413
Accrued expenses 34,849
---------
Total liabilities 1,334,626
-----------
NET ASSETS for 4,407,276 shares of beneficial
interest outstanding $39,586,398
-----------
-----------
SOURCES OF NET ASSETS:
Paid-in capital $44,379,284
Accumulated net realized loss on investments,
options and financial futures transactions
from Portfolio (computed on the basis of
identified cost) (632,587)
Unrealized depreciation of investments from
Portfolio (computed on the basis of
identified cost) (4,089,094)
Distributions in excess of net investment
income (71,205)
-----------
Total $39,586,398
-----------
-----------
NET ASSET VALUE, OFFERING AND REDEMPTION PRICE
PER SHARE
($39,586,398 / 4,407,276 shares of beneficial
interest) $8.98
----
----
The accompanying Notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
----------------------------------------------------------------
STATEMENT OF OPERATIONS
-----------------------------------------------------------------
For the year ended December 31, 1994
------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME (NOTE 1B):
Interest income allocated from Portfolio $ 4,547,571
Expenses allocated from Portfolio (659,054)
-----------
Total investment income $ 3,888,517
Expenses --
Compensation of Trustees not members of the
Administrator's organization
(Note 5) $ 1,460
Custodian fees (Note 5) 11,984
Distribution fees (Note 6) 486,858
Printing and postage 48,544
Transfer and dividend disbursing agent fees 56,389
Legal and accounting services 18,699
Registration fees 19,091
Amortization of organization expenses (Note 1D) 4,117
Miscellaneous 23,173
-----------
Total expenses 670,315
-----------
Net investment income $ 3,218,202
REALIZED AND UNREALIZED GAIN (LOSS) FROM PORTFOLIO:
Net realized gain (loss) (identified cost basis) --
Investment transactions $(1,119,808)
Financial futures contracts 389,433
-----------
Net realized loss on investments $ (730,375)
Change in unrealized depreciation of investments (4,054,551)
-----------
Net realized and unrealized loss on investments (4,784,926)
-----------
Net decrease in net assets from operations $(1,566,724)
-----------
-----------
</TABLE>
The accompanying Notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31
--------------------------------
1994 1993*
-------------- -------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 3,218,202 $ 78,385
Net realized loss from Portfolio (730,375) (18,933)
Change in unrealized depreciation from
Portfolio (4,054,551) (34,543)
----------- -----------
Net increase (decrease) in net assets
from operations $(1,566,724) $ 24,909
----------- -----------
Distributions to shareholders --
From net investment income $ (3,218,202) $ (78,385)
In excess of net investment income (430,267) (15,118)
----------- -----------
Total distributions to shareholders $ (3,648,469) $ (93,503)
----------- -----------
Net increase in net assets from Fund share
transactions (Note 3) $27,360,876 $17,509,299
----------- -----------
Net increase in net assets $22,145,683 $17,440,705
NET ASSETS:
At beginning of period 17,440,715 10
----------- -----------
At end of period $39,586,398 $17,440,715
----------- -----------
----------- -----------
*For the period from the start of business, November 1, 1993, to December 31,
1993.
The accompanying Notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
-----------------------------------------------------------------
FINANCIAL HIGHLIGHTS
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------------------
1994 1993*
--------- ------------
NET ASSET VALUE --
Beginning of period $ 9.9400 $10.0000
-------- ------------
INCOME FROM OPERATIONS:
Net investment
income $ 0.6264 $ 0.1067
Net realized and
unrealized loss
on investments (0.8763) (0.0514)
-------- ------------
Total income
(loss) from 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(1) (2.54)% 0.34%
RATIOS/SUPPLEMENTAL DATA:
Ratio of interest expense to
average net assets(2) 0.57% 0.54%+
Ratio of other expenses to
average net assets(2) 2.15% 2.31%+
Ratio of net investment income to
average net assets 6.60% 5.45%+
Net Assets end of period
(000 omitted) $ 39,586 $ 17,441
+Computed on an annualized basis.
(1)Total investment 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.
(2)Includes the Fund's share of Government Obligations Portfolio's allocated
expenses.
*For the period from the start of business, November 1, 1993, to December 31,
1993.
The accompanying Notes are an integral part of the financial statements
<PAGE>
------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
----------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
EV Classic Government Obligations Fund (the Fund) is a diversified entity of the
type commonly known as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund is a series of Eaton Vance Government Obligations
Trust. The Fund invests all of its investable assets in interests in the
Government Obligations Portfolio (the Portfolio), a New York Trust, having the
same investment objective as the Fund. The value of the Fund's investment in the
Portfolio reflects the Fund's proportionate interest in the net assets of the
Portfolio (7.9% at December 31, 1994). The performance of the Fund is directly
affected by the performance of the Portfolio. The financial statements of the
Portfolio, including the portfolio of investments, are included elsewhere in
this report and should be read in conjunction with the Fund's financial
statements. The following is a summary of significant accounting policies
consistently followed by the Fund in the preparation of its financial
statements. The policies are in conformity with generally accepted accounting
principles.
A. INVESTMENT VALUATIONS -- Valuations of securities by the Portfolio is
discussed in Note 1 of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B. INCOME -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and accrued
expenses of the Fund.
C. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments, option and financial futures transactions.
Accordingly, no provision for federal income or excise tax is necessary. At
December 31, 1994, the Fund, for federal income tax purposes, had a capital loss
carryover of $1,854,964, which will reduce the Fund's taxable income arising
from future net realized gain on investment transactions, if any, to the extent
permitted by the Internal Revenue Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve the
Fund of any liability for federal income or excise tax. Such capital loss
carryovers will expire on December 31, 2001 ($32,316) and December 31, 2002
($1,822,648).
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund in connection
with its organization are being amortized on the straight-line basis over five
years.
E. DISTRIBUTION COSTS -- For book purposes, commissions paid on the sale of Fund
shares and other distribution costs are charged to operations. For tax purposes,
commissions paid are charged to paid-in capital. (Note 6).
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------------------------------
(2) DISTRIBUTIONS TO SHAREHOLDERS
The net income of the Fund is determined daily and substantially all of the net
income so determined is declared as a dividend to shareholders of record at the
time of declaration. In addition, the Fund declares each day an amount equal to
the excess of tax basis net income over book net income, which amount is charged
to distributions in excess of net investment income. Distributions are paid
monthly. Distributions of allocated realized capital gains, if any, are made at
least annually. Shareholders may reinvest capital gain distributions in
additional shares of the Fund at the net asset value as of the ex-dividend date.
Distributions are paid in the form of additional shares or, at the election of
the shareholder, in cash. The Fund distinguishes between distributions on a tax
basis and a financial reporting basis. Generally accepted accounting principles
require that only distributions in excess of tax basis earnings and profits be
reported in the financial statements as a return of capital. Differences in the
recognition or classification of income between the financial statements and tax
earnings and profits which result in over-distributions for financial statement
purposes only are classified as distributions in excess of net investment income
or accumulated net realized gains. Permanent differences between book and tax
accounting relating to distributions are reclassified to paid-in capital. During
the year ended December 31, 1994, $365,704 was reclassified from distributions
in excess of net investment income to paid-in capital, due to the differences
between book and tax accounting for distribution fees being considered as
permanent differences. Net investment income, net realized gains and net assets
were not affected by this reclassification.
-----------------------------------------------------------------
(3) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1994 1993<F1>
------------------------------- ------------------------------
SHARES AMOUNT SHARES AMOUNT
------------- -------------- ------------ --------------
<S> <C> <C> <C> <C>
Sales 8,155,362 $79,148,122 1,865,690 $18,608,309
Issued to shareholders electing to receive payments of
distributions in Fund shares 248,209 2,325,806 4,776 47,613
Redemptions (5,751,695) (54,113,052) (115,067) (1,146,623)
------------- -------------- ------------ --------------
Net increase 2,651,876 $27,360,876 1,755,399 $17,509,299
------------- -------------- ------------ --------------
------------- -------------- ------------ --------------
<FN>
<F1>For the period from the start of business November 1, 1993, to December 31, 1993.
</FN>
</TABLE>
------------------------------------------------------------------------------
(4) INVESTMENT TRANSACTIONS
Increases and decreases in the Fund's investment in the Portfolio aggregated
$82,630,154 and $56,216,905, respectively.
------------------------------------------------------------------------------
(5) TRANSACTIONS WITH AFFILIATES
Eaton Vance Management (EVM) serves as the administrator of the Fund, but
receives no compensation. The Portfolio has engaged Boston Management and
Research (BMR), a subsidiary of EVM, to render investment advisory services. See
Note 3 of the Portfolio's Notes to Financial Statements which are included
elsewhere in this report. Except as to Trustees of the Fund and the Portfolio
who are not members of EVM's organization, officers and Trustees receive
remuneration for their services to the Fund out of such investment adviser fee.
Investors Bank & Trust Company (IBT), an affiliate of EVM, serves as custodian
of the Fund and the Portfolio. Pursuant to the respective custodian agreements,
IBT receives a fee reduced by credits which are determined based on the average
cash balances the Fund or the Portfolio maintains with IBT. Certain of the
officers and Trustees of the Fund and Portfolio are officers and
directors/trustees of the above organizations (Note 6).
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
-----------------------------------------------------------------
(6) DISTRIBUTION PLAN
The Fund has adopted a distribution plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan requires the Fund to pay the
principal underwriter, Eaton Vance Distributors, Inc. (EVD) amounts equal to
1/365 of 0.75% of the Fund's daily net assets, for providing ongoing
distribution services and facilities to the Fund. The Fund will automatically
discontinue payments to EVD during any period in which there are no outstanding
Uncovered Distribution Charges, which are equivalent to the sum of (i) 6.25% of
the aggregate amount received by the Fund for shares sold plus, (ii)
distribution fees calculated by applying the rate of 1% over the prevailing
prime rate to the outstanding balance of Uncovered Distribution Charges of EVD,
reduced by amounts theretofore paid to EVD. The amount payable to EVD with
respect to each day is accrued on such day as a liability of the Fund and,
accordingly, reduces the Fund's net assets. The Fund paid or accrued $365,704 to
or payable to EVD for the year ended December 31, 1994, representing 0.75%
(annualized) of average daily net assets. At December 31, 1994, the amount of
Uncovered Distribution Charges of EVD calculated under the Plan was
approximately $5,572,000. In addition, the Plan permits the Fund to make monthly
payments of service fees to the Principal Underwriter in amounts not expected to
exceed 0.25% of the Fund's average daily net assets for any fiscal year. The
Trustees 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 0.25% of the Fund's average daily net assets for any fiscal
year. The Fund paid or accrued service fees to or payable to EVD for the year
ended December 31, 1994, in the amount of $121,154. EVD makes monthly service
fee payments to Authorized Firms in amounts anticipated to be equivalent to
0.25%, annualized, of the assets maintained in the Fund by their customers.
Service fee payments are made for personal services and/or the maintenance of
shareholder accounts. Service fees paid to EVD and Authorized Firms are separate
and distinct from the sales commissions and distribution fees payable by the
Fund to EVD, and as such are not subject to automatic discontinuance when there
are no outstanding Uncovered Distribution Charges of EVD.
Certain officers and Trustees of the Fund are officers or directors of EVD.
------------------------------------------------------------------------------
(7) SUBSEQUENT EVENT
Shares purchased on or after January 30, 1995 and redeemed during the first year
after purchase (except shares acquired through the reinvestment of
distributions) generally will be subject to a contingent deferred sales charge
at a rate of one percent of redemption proceeds, exclusive of all reinvestments
and capital appreciation in the account. No contingent deferred sales charge is
imposed on exchanges for shares of other funds in the Eaton Vance Classic Group
of Funds or Eaton Vance Money Market Fund which are distributed with a
contingent deferred sales charge.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
-----------------------------------------------------------------
To the Shareholders and Trustees of
EV Classic Government Obligations Fund,
a series of Eaton Vance Government Obligations Trust:
We have audited the accompanying statement of assets and liabilities of EV
Classic Government Obligations Fund, a series of Eaton Vance Government
Obligations Trust, as of December 31, 1994, the related statements of
operations, the statement of changes in net assets and financial highlights for
the year ended December 31, 1994, and for the period from November 1, 1993
(start of business) to December 31, 1993. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of EV
Classic Government Obligations Fund, a series of Eaton Vance Government
Obligations Trust, as of December 31, 1994, the results of its operations, the
changes in its net assets and financial highlights for the year ended December
31, 1994, and for the period from November 1, 1993 (start of business) to
December 31, 1993, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 3, 1995
<PAGE>
- -----------------------------------------------------------------------------
GOVERNMENT OBLIGATIONS PORTFOLIO
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
-------------------------------------
<TABLE>
<CAPTION>
MORTGAGE PASS-THROUGHS -- 97.2%
------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
------------------------------------------------------------------------------------------------
<S> <C> <C>
FEDERAL HOME LOAN MORTGAGE
CORP. PARTICIPATION CERTIFICATES:
4.5s, with maturity at 2000 $ 240,219 $ 229,101
4.75s, with various maturities to 2002 206,727 195,974
5s, with various maturities to 2003 1,300,504 1,205,867
5.25s, with various maturities to 2005 667,506 615,665
5.5s, with various maturities to 2011 3,010,723 2,834,321
5.75s, with maturity at 1998 115,147 110,648
6s, with various maturities to 2022 5,627,750 5,247,829
6.25s, with various maturities to 2013 1,321,202 1,237,615
6.5s, with various maturities to 2022 24,401,448 23,016,740
6.75s, with various maturities to 2011 13,633,734 12,983,353
7s, with various maturities to 2019 26,491,954 25,308,818
7.25s, with maturity at 2003 2,473,141 2,385,734
7.5s, with various maturities to 2019 24,461,688 23,676,671
7.75s, with maturity at 2009 3,348,693 3,260,655
8s, with various maturities to 2022 26,257,789 25,674,594
8.25s, with various maturities to 2011 18,633,555 18,426,861
8.5s, with various maturities to 2018 13,453,143 13,379,525
8.75s, with various maturities to 2014 3,140,574 3,150,951
9s, with various maturities to 2010 2,979,510 2,991,355
9.25s, with various maturities to 2010 822,705 835,950
9.5s, with maturity at 2010 280,362 286,939
10s, with various maturities to 2017 535,632 555,280
11s, with various maturities to 2019 3,667,268 3,962,193
12s, with various maturities to 2019 2,728,755 2,981,340
12.25s, with various maturities to 2019 3,608,325 3,978,585
12.5, with various maturities to 2016 13,244,447 14,603,582
12.75s, with various maturities to 2015 2,457,385 2,715,910
13s, with various maturities to 2019 6,730,062 7,582,463
13.25s, with various maturities to 2019 1,129,939 1,287,560
13.5s, with various maturities to 2015 7,720,572 8,728,208
13.75s, with various maturities to 2014 294,492 337,099
14s, with various maturities to 2016 4,327,115 4,977,561
14.5s, with various maturities to 2014 289,865 337,741
14.75s, with maturity at 2010 828,325 962,052
15s, with various maturities to 2013 1,542,065 1,835,086
15.25s, with maturity at 2012 204,045 244,767
15.5s, with various maturities to 2012 390,931 467,077
16s, with maturity at 2012 298,107 361,263
16.25s, with various maturities to 2012 330,812 403,471
------------
$223,376,404
------------
</TABLE>
The accompanying Notes are an integral part of the financial statements
<PAGE>
-------------------------------------
<TABLE>
<CAPTION>
MORTGAGE PASS-THROUGHS (Continued)
------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
------------------------------------------------------------------------------------------------
<S> <C> <C>
FEDERAL NATIONAL MORTGAGE
ASSOCIATION MORTGAGE BACKED
SECURITIES:
0.25s, with maturity at 2014 $ 379,604 $ 302,794
3.5s, with maturity at 2007 218,750 190,791
4.5s, with maturity at 1999 40,474 38,633
5s, with various maturities to 2017 1,640,137 1,481,633
5.25s, with various maturities to 2006 626,291 583,331
5.5s, with various maturities to 2008 3,275,525 3,090,994
5.75s, with maturity at 2003 271,089 252,491
6s, with various maturities to 2010 39,326,506 36,561,425
6.25s, with various maturities to 2007 4,725,720 4,428,261
6.5s, with various maturities to 2017 18,701,565 17,613,630
6.75s, with various maturities to 2008 3,921,678 3,712,706
7s, with various maturities to 2018 10,825,566 10,290,685
7.25s, with various maturities to 2017 2,739,981 2,620,041
7.5s, with various maturities to 2020 12,903,012 12,454,035
7.75s, with various maturities to 2008 2,149,109 2,089,113
8s, with various maturities to 2017 22,256,614 21,832,845
8.25s, with various maturities to 2020 10,144,642 10,011,029
8.50s, with various maturities to 2015 17,916,262 17,840,698
8.75s, with various maturities to 2017 1,942,088 1,949,261
9s, with various maturities to 2020 6,064,056 6,166,350
9.5s, with maturity at 2009 397,260 408,547
11s, with maturity at 2010 39,757 42,719
11.75s, with various maturities to 2015 3,305,012 3,635,995
12s, with various maturities to 2020 7,477,216 8,217,928
12.25s, with maturity at 2011 264,226 290,401
12.5s, with various maturities to 2021 5,741,960 6,356,727
12.75s, with various maturities to 2014 2,638,498 2,922,291
13s, with various maturities to 2019 7,397,063 8,336,923
13.25s, with various maturities to 2015 3,291,652 3,710,791
13.5s, with various maturities to 2015 5,769,470 6,598,626
13.75s, with various maturities to 2014 269,683 305,773
14s, with various maturities to 2014 1,115,075 1,294,225
14.25s, with maturity at 2014 421,265 492,120
14.5s, with various maturities to 2014 363,544 426,347
14.75s, with maturity at 2012 6,151,440 7,253,214
15s, with various maturities to 2013 591,668 703,302
15.5s, with maturity at 2012 1,540,725 1,859,316
15.75s, with maturity at 2011 44,585 53,984
16s, with maturity at 2012 535,081 654,264
------------
$207,074,239
------------
</TABLE>
The accompanying Notes are an integral part of the financial statements
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
-------------------------------------
<TABLE>
<CAPTION>
MORTGAGE PASS-THROUGHS (Continued)
------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
------------------------------------------------------------------------------------------------
<S> <C> <C>
GOVERNMENT NATIONAL MORTGAGE
ASSOCIATION MORTGAGE BACKED
SECURITIES:
5.5s, with maturity at 1999 $ 131,522 $ 124,796
6.5s, with maturity at 2002 798,219 755,132
7.25s, with various maturities to 2022 9,043,487 8,494,528
8s, with various maturities to 2017 16,117,456 15,767,047
8.25s, with maturity at 2008 831,562 823,580
8.5s, with maturity at 2017 1,547,158 1,547,862
12s, with various maturities to 2015 5,777,410 6,301,565
12.5s, with various maturities to 2015 2,708,366 2,994,111
13s, with various maturities to 2013 1,221,409 1,381,720
13.5s, with various maturities to 2013 566,966 637,991
14s, with maturity at 2015 347,626 404,867
14.5s, with maturity at 2014 272,411 321,977
15s, with various maturities to 2013 1,202,104 1,436,571
16s, with various maturities to 2012 457,811 561,592
------------
$ 41,553,339
------------
COLLATERALIZED MORTGAGE
OBLIGATIONS:
Federal Home Loan Mtg. Corp.
Series 1983-B3, 12.5%, due 2013,
Collateral 100% FHLMC PC $ 328,663 $ 363,121
Federal Home Loan Mtg. Corp. Series 1327-F, 7.5%, due 2003,
Collateral 100% FHLMC PC 5,027,000 4,681,394
Federal Home Loan Mtg. Corp. Series 1058-F, 8.0%, due 2004,
Collateral 100% FHLMC PC 8,300,000 8,274,063
Federal Home Loan Mtg. Corp. Series 1188-GC, 7.5%, due
2019, Collateral 100% FHLMC PC 10,000,000 9,150,000
Federal National Mtg. Association Series 93-73E, 6.35%, due
2019 Collateral 100% FNMA MBS 3,000,000 2,568,750
</TABLE>
The accompanying Notes are an integral part of the financial statements
<PAGE>
-------------------------------------
<TABLE>
<CAPTION>
MORTGAGE PASS-THROUGHS (Continued)
------------------------------------------------------------------------------------------------
PRINCIPAL AMOUNT VALUE
------------------------------------------------------------------------------------------------
<S> <C> <C>
COLLATERALIZED MORTGAGE
OBLIGATIONS (Continued)
Guaranteed Mtg. Corp. III Series H2, 9% due 2015,
Collateral 100% FNMA MBS 1,293,209 1,297,857
Salomon Brothers Mortgage Securities II, Inc. Series III,
Class Z, 11.50%, due 2015 Collateral 100% GNMA/FNMA MBS 2,496,441 2,761,688
------------
$ 29,096,873
------------
TOTAL MORTGAGE PASS-THROUGHS
(identified cost, $522,323,986) $501,100,855
------------
------------------------------------------------------------------------------------------------
UNITED STATES TREASURY BONDS -- 15.7%
------------------------------------------------------------------------------------------------
U.S. Treasury Bond, 12s, 8/15/13<F2> $50,000,000 $ 66,484,400
U.S. Treasury Bond, 7.125s, 2/15/23<F1> 16,000,000 14,557,504
------------
TOTAL UNITED STATES TREASURY BONDS
(identified cost, $77,988,881) $ 81,041,904
------------
TOTAL INVESTMENTS -- 112.9%
(identified cost, $600,316,020) $582,142,759
OTHER ASSETS, LESS LIABILITIES -- (12.9%) (66,473,246)
------------
NET ASSETS -- 100% $515,669,513
------------
------------
<FN>
<F1>Collateral for financial futures contracts held at December 31, 1994 (See Note 7).
<F2>This security is on loan at December 31, 1994 (See Note 5).
</FN>
</TABLE>
The accompanying Notes are an integral part of the financial statements
<PAGE>
<TABLE>
------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
-----------------------------------------------------------------
December 31, 1994
--------------------------------------------------------------------------------------------------
<CAPTION>
<S> <C> <C>
ASSETS:
Investments, at value (Note 1A) (identified cost, $600,316,020) $582,142,759
Cash 967
Receivable for investments sold 924,415
Interest receivable 6,785,757
Deferred organization expenses (Note 1H) 14,583
------------
Total assets $589,868,481
LIABILITIES:
Liability for collateral received for securities loaned
(Note 5) $70,162,000
Demand note payable (Note 4) 3,924,000
Payable for daily variation margin on financial futures
contracts (Note 1G) 28,125
Payable to affiliates --
Trustees' fees 5,196
Custodian fee 9,429
Accrued expenses 70,218
-----------
Total liabilities 74,198,968
------------
NET ASSETS applicable to investors' interest in Portfolio $515,669,513
------------
------------
SOURCES OF NET ASSETS:
Net proceeds from capital contributions and withdrawals $533,640,352
Unrealized depreciation of investments and financial
futures contracts (computed on the basis of identified
cost) (17,970,839)
------------
Total $515,669,513
------------
------------
</TABLE>
The accompanying Notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
-----------------------------------------------------------------
For the year ended December 31, 1994
-----------------------------------------------------------------
<TABLE>
<S> <C> <C>
INVESTMENT INCOME:
Interest income -- $ 53,735,067
Expenses --
Investment adviser fee (Note 3) $ 4,259,500
Compensation of Trustees not members of the
Administrator's organization (Note 3) 20,725
Custodian fee (Note 3) 181,138
Interest (Note 5) 3,220,825
Legal and accounting services 32,833
Amortization of organization expenses (Note 1H) 3,789
Miscellaneous 48,242
----------
Total expenses 7,767,052
------------
Net investment income $ 45,968,015
------------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS:
Net realized gain (loss) (identified cost basis) --
Investment transactions $ (8,711,023)
Financial futures contracts 4,494,315
------------
Net realized loss on investments $ (4,216,708)
Change in unrealized appreciation of investments (50,227,104)
------------
Net realized and unrealized loss on investments $(54,443,812)
------------
Net decrease in net assets from operations $ (8,475,797)
------------
------------
</TABLE>
The accompanying Notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS (Continued)
----------------------------------------------------------------
STATEMENT OF CHANGES IN NET ASSETS
-----------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------
1994 1993<F1>
------------ ------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 45,968,015 $ 7,856,183
Net realized loss on investments (4,216,708) (861,136)
Change in unrealized appreciation of investments (50,227,104) (7,359,654)
------------ ------------
Net decrease in net assets from operations $ (8,475,797) $ (364,607)
------------ ------------
Capital transactions --
Contributions $272,129,376 $621,258,936
Withdrawals (285,281,160) (83,697,255)
------------ ------------
Increase (decrease) in net assets resulting from
capital transactions $(13,151,784) $537,561,681
------------ ------------
Total increase (decrease) in net assets $(21,627,581) $537,197,074
NET ASSETS:
At beginning of period 537,297,094 100,020
------------ ------------
At end of period $515,669,513 $537,297,094
------------ ------------
------------ ------------
<FN>
<F1>For the period from the start of business, October 28, 1993, to December 31, 1993.
</FN>
</TABLE>
The accompanying Notes are an integral part of the financial statements
<PAGE>
SUPPLEMENTARY DATA
-----------------------------------------------------------------
YEAR ENDED DECEMBER 31,
------------------------
1994 1993*
------- -------
RATIOS (As a percentage of average net assets):
Interest expense 0.56% 0.63%+
Other expenses 0.80% 0.86%+
Net investment income 8.03% 8.46%+
PORTFOLIO TURNOVER 35% 42%
LEVERAGE ANALYSIS:
Amount of debt outstanding at end of period
(000 omitted) $3,924 --
Average daily balance of debt outstanding during
period (000 omitted) $ 982 $1,660
*For the period from the start of business, October 28, 1993, to December 31,
1993.
+Computed on an annualized basis.
The accompanying Notes are an integral part of the financial statements
<PAGE>
------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
----------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Government Obligations Portfolio (the Portfolio) is registered under the
Investment Company Act of 1940 as a diversified open-end investment company
which was organized as a trust under the laws of the State of New York in 1992.
The Declaration of Trust permits the Trustees to issue beneficial interests in
the Portfolio. Investment operations began on October 28, 1993, with the
acquisition of net assets of $564,244,545 in exchange for an interest in the
Portfolio by one of the Portfolio's investors. The following is a summary of
significant accounting policies of the Portfolio. The policies are in conformity
with generally accepted accounting principles.
A. INVESTMENT VALUATIONS -- Mortgage backed, "pass-through" securities are
valued using a matrix pricing system which takes into account closing bond
valuations, yield differentials, anticipated prepayments, and interest rates.
Debt securities (other than mortgage backed, "pass-through" securities) are
normally valued at the mean between the latest available bid and asked prices
for securities for which the over-the-counter market is the primary market. Debt
securities may also be valued on the basis of valuations furnished by a pricing
service. Options are valued at last sale price on a U.S. exchange or board of
trade or, in the absence of a sale, at the mean between the last bid and asked
price. Financial futures contracts listed on commodity exchanges are valued at
closing settlement prices. Securities for which there is no such quotation or
valuation are valued at fair value using methods determined in good faith by or
at the direction of the Trustees. Short-term obligations having remaining
maturities of less than 60 days are valued at amortized cost, which approximates
value.
B. INCOME -- Interest income is determined on the basis of interest accrued and
discount earned, adjusted for amortization of discount when required for federal
income tax purposes.
C. GAINS AND LOSSES FROM SECURITY TRANSACTIONS -- For book purposes, gains or
losses are not recognized until disposition. For federal tax purposes, the
Portfolio has elected, under Section 1092 of the Internal Revenue Code, to
utilize mixed straddle accounting for certain designated classes of activities
involving options and financial futures contracts in determining recognized
gains or losses. Under this method, Section 1256 positions (financial futures
contracts and options on investments or financial futures contracts) and non-
Section 1256 positions (bonds, etc.) are marked-to- market on a daily basis
resulting in the recognition of taxable gains or losses on a daily basis. Such
gains or losses are categorized as short-term or long-term based on aggregation
rules provided in the Code.
D. INCOME TAXES -- The Portfolio is treated as a partnership for federal tax
purposes. No provision is made by the Portfolio for federal or state taxes on
any taxable income of the Portfolio because each investor in the Portfolio is
ultimately responsible for the payment of any taxes. Since some of the
Portfolio's investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio normally must
satisfy the applicable source of income and diversification requirements (under
the Code) in order for its investors to satisfy them. The Portfolio will
allocate at least annually among its investors each investors' distributive
share of the Portfolio's net investment income, net realized capital gains, and
any other items of income, gain, loss, deduction or credit.
-----------------------------------------------------------------
E. WRITTEN OPTIONS -- Upon the writing of a call or a put option, an amount
equal to the premium received by the Portfolio is included in the Statement of
Assets and Liabilities as a liability. The amount of the liability is
subsequently marked-to-market to reflect the current market value of the option
written in accordance with the Portfolio's policies on investment valuations
discussed above. Premiums received from writing options which expire are treated
as realized gains. Premiums received from writing options which are exercised or
are closed are added to or offset against the proceeds or amount paid on the
transaction to determine the realized gain or loss. If a put option is
exercised, the premium reduces the cost basis of the securities purchased by the
Portfolio. The Portfolio, as writer of an option, may have no control over
whether the underlying securities may be sold (call) or purchased (put) and, as
a result, bears the market risk of an unfavorable change in the price of the
securities underlying the written option.
F. PURCHASED OPTIONS -- Upon the purchase of a call or put option, the premium
paid by the Portfolio is included in the Statement of Assets and Liabilities as
an investment. The amount of the investment is subsequently marked-to-market to
reflect the current market value of the option purchased, in accordance with the
Portfolio's policies on investment valuations discussed above. If an option
which the Portfolio has purchased expires on the stipulated expiration date, the
Portfolio will realize a loss in the amount of the cost of the option. If the
Portfolio enters into a closing sale transaction, the Portfolio will realize a
gain or loss, depending on whether the sales proceeds from the closing sale
transaction are greater or less than the cost of the option. If the Portfolio
exercises a put option, it will realize a gain or loss from the sale of the
underlying security, and the proceeds from such sale will be decreased by the
premium originally paid. If the Portfolio exercises a call option, the cost of
the security which the Portfolio purchases upon exercise will be increased by
the premium originally paid. For tax purposes, the Portfolio's options are
generally subject to the mixed straddle rules described in Note 1C, and
unrealized gains or losses are recognized on a daily basis.
G. FINANCIAL FUTURES CONTRACTS -- Upon entering into a financial futures
contract, the Portfolio is required to deposit an amount ("initial margin")
either in cash or securities equal to a certain percentage of the purchase price
indicated in the financial futures contract. Subsequent payments are made or
received by the Portfolio ("margin maintenance") each day, dependent on the
daily fluctuations in the value of the underlying securities, and are recorded
for book purposes as unrealized gains or losses by the Portfolio.
If the Portfolio enters into a closing transaction, the Portfolio will
realize, for book purposes, a gain or loss equal to the difference between the
value of the financial futures contract to sell and the financial futures
contract to buy. The Portfolio's investment in financial futures contracts is
designed only to hedge against anticipated future changes in interest or
currency exchange rates. Should interest or currency exchange rates move
unexpectedly, the Portfolio may not achieve the anticipated benefits of the
financial futures contracts and may realize a loss. For tax purposes, such
futures contracts are generally subject to the mixed straddle rules described in
Note 1C, and unrealized gains or losses are recognized on a daily basis.
H. DEFERRED ORGANIZATION EXPENSE -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line basis
over five years.
I. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold.
------------------------------------------------------------------------------
(2) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales of investments, other than short-term obligations,
aggregated $271,104,426 and $225,418,353, respectively.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
(3) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee, computed at the monthly rate of 0.0625% (0.75% per
annum) of the Portfolio's average daily net assets up to $500 million and at
reduced rates as daily net assets exceed that level, is earned by Boston
Management and Research (BMR), a wholly-owned subsidiary of Eaton Vance
Management (EVM), as compensation for management and investment advisory
services rendered to the Portfolio. For the year ended December 31, 1994, the
fee was equivalent to .74% (annualized) of the Portfolio's average net assets
for such period and amounted to $4,259,500. Except as to Trustees of the
Portfolio who are not members of EVM's or BMR's organization, officers and
Trustees receive remuneration for their service to the Portfolio out of such
investment adviser fee. Investors Bank & Trust Company (IBT), an affiliate of
EVM and BMR, serves as custodian of the Portfolio. Pursuant to the custodian
agreement, IBT receives a fee reduced by credits which are determined based on
the average daily cash balances the Portfolio maintains with IBT. Certain of the
officers and Trustees of the Portfolio are officers and directors/trustees of
the above organizations.
- --------------------------------------------------------------------------------
(4) LINE OF CREDIT
The Portfolio participates with other portfolios and funds managed by BMR or EVM
in a $120 million unsecured line of credit agreement with a bank. The line of
credit consists of a $20 million committed facility and an $100 million
discretionary facility. Interest is charged to each portfolio or fund based on
its borrowings at an amount above either the bank's adjusted certificate of
deposit rate, a variable adjusted certificate of deposit rate, or a federal
funds effective rate. In addition, a fee computed at an annual rate of 1/4 of 1%
on the $20 million committed facility and on the daily unused portion of the
$100 million discretionary facility is allocated among the participating
portfolios and funds at the end of each quarter. The average daily loan balance
for the year ended December 31, 1994, was $981,635 and the average interest rate
was 5.87%. The maximum borrowings outstanding at any month end during the year
ended December 31, 1994 was $11,823,000.
-----------------------------------------------------------------------------
(5) SECURITIES LENDING AGREEMENT
The Portfolio has established a securities lending agreement with a broker in
which the Portfolio lends portfolio securities to the broker in exchange for
collateral consisting of either cash or U.S. government securities. Under the
agreement, the Portfolio continues to earn interest on the securities loaned. If
the collateral received is U.S. government securities, the Portfolio will also
receive from the broker an additional loan premium fee computed as a varying
percentage of the market value of the securities loaned. If the collateral
received is cash, the Portfolio may invest the cash and receive any interest on
the amount invested but it must also pay the broker a loan rebate fee computed
as a varying percentage of the collateral received. The Portfolio did not
receive any loan premium fee during the year ended December 31, 1994, but did
incur $3,159,903 of loan rebate fees which have been included in interest
expense. The maximum liability for cash collateral received for securities
loaned at any month end during the period ended December 31, 1994, was
$79,592,900.
------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENT SECURITIES
The cost and unrealized appreciation/depreciation in the value of investment
securities owned at December 31, 1994, as computed on a federal income tax
basis, were as follows:
Aggregate cost $604,168,776
-------------
-------------
Gross unrealized depreciation $(29,362,529)
Gross unrealized appreciation 7,336,512
-------------
Net unrealized depreciation $(22,026,017)
-------------
-------------
------------------------------------------------------------------------------
(7) FINANCIAL INSTRUMENTS
The Portfolio regularly trades in financial instruments with off-balance sheet
risk in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include written
options, forward foreign currency exchange contracts, and financial futures
contracts and may involve, to a varying degree, elements of risk in excess of
the amounts recognized for financial statement purposes.
The notional or contractual amounts of these instruments represent the
investment the Fund has in particular classes of financial instruments and does
not necessarily represent the amounts potentially subject to risk. The
measurement of the risks associated with these instruments is meaningful only
when all related and offsetting transactions are considered.
A summary of obligations under these financial instruments at December 31, 1994
is as follows:
<TABLE>
<CAPTION>
FUTURES CONTRACT NET UNREALIZED
EXPIRATION DATE CONTRACTS POSITION APPRECIATION
- --------------- --------- -------- --------------
<S> <C> <C> <C> <C>
3/95 900 U.S. Treasury Five Year Note Futures Short $202,422
--------
--------
</TABLE>
At December 31, 1994, the Fund had sufficient cash and/or securities to cover
margin requirements on any open futures contracts.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
-----------------------------------------------------------------
To the Trustees and Investors of
Government Obligations Portfolio:
We have audited the accompanying statement of assets and liabilities of
Government Obligations Portfolio, including the portfolio of investments, as of
December 31, 1994, and the related statement of operations for the year then
ended, the statement of changes in net assets and supplementary data for the
year ended December 31, 1994, and for the period from the start of business,
October 28, 1993, to December 31, 1993. These financial statements and
supplementary data are the responsibility of the Portfolio's management. Our
responsibility is to express an opinion on these financial statements and
supplementary data based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and supplementary
data are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1994 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and supplementary data referred to
above present fairly, in all material respects, the financial position of
Government Obligations Portfolio as of December 31, 1994, the results of its
operations for the year then ended, the changes in its net assets and
supplementary data for the year ended December 31, 1994, and for the period from
the start of business, October 28, 1993, to December 31, 1993, in conformity
with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 3, 1995
<PAGE>
INVESTMENT MANAGEMENT
EV CLASSIC OFFICERS TRUSTEES
GOVERNMENT M. DOZIER GARDNER DONALD R. DWIGHT
OBLIGATIONS FUND President, Trustee President, Dwight
24 Federal Street JAMES B. HAWKES Partners, Inc.
Boston, MA 02110 Vice President, Chairman,
Trustee Newspapers of
SUSAN M. SCHIFF New England, Inc.
Vice President SAMUEL L. HAYES, III
MICHAEL B. TERRY Jacob H. Schiff
Vice President Professor of
MARK S. VENEZIA Investment Banking,
Vice President Harvard University Graduate
JAMES L. O'CONNOR School of Business
Treasurer Administration
THOMAS OTIS NORTON H. REAMER
Secretary President and Director,
JAMES F. ALBAN United Asset Management
Assistant Treasurer Corporation
JANET E. SANDERS JOHN L. THORNDIKE
Assistant Treasurer Director, Fiduciary
and Assistant Secretary Trust Company
JACK L. TREYNOR
Investment Adviser
and Consultant
-----------------------------------------
GOVERNMENT OFFICERS TRUSTEES
OBLIGATIONS M. DOZIER GARDNER DONALD R. DWIGHT
PORTFOLIO President, Trustee President, Dwight
24 Federal Street JAMES B. HAWKES Partners, Inc.
Boston, MA 02110 Vice President, Chairman,
Trustee Newspapers of
SUSAN M. SCHIFF New England, Inc.
Vice President and SAMUEL L. HAYES, III
Portfolio Manager Jacob H. Schiff
MARK S. VENEZIA Professor of
Vice President Investment Banking,
JAMES L. O'CONNOR Harvard University Graduate
Treasurer School of Business
THOMAS OTIS Administration
Secretary NORTON H. REAMER
JAMES F. ALBAN President and Director,
Assistant Treasurer United Asset Management
JANET E. SANDERS Corporation
Assistant Treasurer JOHN L. THORNDIKE
and Assistant Secretary Director, Fiduciary
Trust Company
JACK L. TREYNOR
Investment Adviser
and Consultant
<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
(617) 482-8260
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
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
This report must be preceded or accompanied by a
current prospectus which contains more complete
information on the Fund, including its
distribution plan, sales charges and expenses.
Please read the prospectus carefully before you
invest or send money.
EV CLASSIC GOVERNMENT OBLIGATIONS FUND
24 FEDERAL STREET
BOSTON, MA 02110 C-GOSRC
[PHOTOGRAPH]
EV CLASSIC
GOVERNMENT OBLIGATIONS
FUND
Annual Shareholder Report
December 31, 1994
