<PAGE>
[EATON VANCE
LOGO]
[STATUE OF LIBERTY]
SEMIANNUAL REPORT JUNE 30, 2000
EATON VANCE
GOVERNMENT
[THE WHITE HOUSE] OBLIGATIONS
FUND
[75th ANNIVERSARY LOGO]
[FLAG]
<PAGE>
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EATON VANCE GOVERNMENT OBLIGATIONS FUND AS OF JUNE 30, 2000
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INVESTMENT UPDATE
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INVESTMENT ENVIRONMENT
----------------------
THE ECONOMY
- The U.S. expansion continued in the first half
of 2000, although amid signs of moderation, as
[PHOTO] leading economic indicators signalled slower demand.
Susan Schiff Gross domestic product rose 5.4% in the second
Portfolio Manager quarter of 2000, a solid performance, but below the
fast pace set in the fourth quarter of 1999.
- Consistent with its aggressive anti-inflation stance, the Federal
Reserve raised the Federal Funds rate in May, the sixth such increase in
a year. However, while rates rose significantly for short-maturity
bonds, rates in the intermediate range remained fairly stable and
actually fell at the longer end.
- As mortgage rates rose in the first half of the year, prepayment rates
for generic mortgage-backed securities (MBS) slowed. With the resulting
increase in duration, those bonds have become more vulnerable to the
rising rate environment. Seasoned MBS, on the other hand, maintained
relatively stable prepayment rates and, therefore, displayed less price
sensitivity.
THE FUND
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Performance for the Past Six Months
- The Fund's Class A shares had a total return of 2.87% during the six
months ended June 30, 2000.(1) This return resulted from a decrease in
net asset value per share (NAV) to $9.60 on June 30, 2000 from $9.70 on
December 31, 1999, and the reinvestment of $0.373 in dividends.
- The Fund's Class B shares had a total return of 2.41% during the six
months ended June 30, 2000.(1) This return resulted from a decrease in
NAV to $8.26 on June 30, 2000 from $8.35 on December 31, 1999, and the
reinvestment of $0.288 in dividends.
- The Fund's Class C shares had a total return of 2.29% during the six
months ended June 30, 2000.(1) This return resulted from a decrease in
NAV to $8.26 on June 30, 2000 from $8.36 on December 31, 1999, and the
reinvestment of $0.288 in dividends.
Management Discussion
- With relatively little or no movement in short-intermediate rates, MBS
modestly outperformed the Treasury market during the six-month period.
The 92 funds in the Lipper Short/Intermediate Government Bond Fund
Classification, the Fund's peer Classification, had an average
total return of 2.74%.(2)
- The Government Obligations Portfolio retained its exposure to
government agency debentures. After narrowing somewhat in 1999 from
historically high levels, quality spreads -- the yield differential over
similar maturity Treasuries -- widened quite significantly in the first
six months of 2000. Spreads remain unusually wide by historical
standards, making the agency bonds still relatively attractive
investments.
- When making purchases of mortgage-backed securities, the Portfolio has
increasingly favored Government National Mortgage Association (Ginnie
Mae) mortgage securities for their high ratings quality and stricter
government backing. In addition, among the Portfolio's Federal National
Mortgage Association (Fannie Mae) holdings include some repackaged
Ginnie Mae mortgages, which provided quality, compelling yields and
exceptional value.
- Countering the robust economy was a steadily diminishing supply of
long-term bonds. Amid these conflicting market factors, management
maintained a neutral duration of 3.2 years at June 30, 2000, roughly at
the midpoint of the Portfolio's duration range. The duration measure
takes into consideration average maturity and future cash flows and is
used to indicate the Portfolio's sensitivity to changes in interest
rates.
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MUTUAL FUND SHARES ARE NOT INSURED BY THE FDIC AND ARE NOT DEPOSITS OR
OTHER OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION.
SHARES ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF
PRINCIPAL INVESTED.
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FUND INFORMATION
AS OF JUNE 30, 2000
Performance(3) Class A Class B Class C
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Average Annual Total Returns (at net asset value)
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One Year 4.09% 3.26% 3.14%
Five Years 5.13 4.37 4.22
Ten Years 6.68 N.A. N.A.
Life of Fund+ 8.14 4.20 4.02
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
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One Year -0.89% -1.56% 2.17%
Five Years 4.12 4.07 4.22
Ten Years 6.16 N.A. N.A.
Life of Fund+ 7.81 4.20 4.02
+Inception dates: Class A: 8/24/84; Class B: 11/1/93; Class C: 11/1/93
(1) These returns do not include the 4.75% maximum sales charge for the
Fund's Class A shares or the applicable contingent deferred sales
charges (CDSC) for the Fund's Class B and Class C shares.
(2) The Lipper Short/Intermediate Government Bond Fund Classification
includes funds that invest in securities issued or guaranteed by the
U.S. Government or its agencies with maturities from 1 to 5 years. It is
not possible to invest directly in an Index.
(3) Returns are historical and are calculated by determining the
percentage change in net asset value with all distributions reinvested.
SEC average annual returns for Class A reflect a 4.75% sales charge; for
Class B, returns reflect applicable CDSC based on the following
schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year; 2% - 5th
year; 1% - 6th year; for Class C, the one-year return reflects a 1% CDSC.
Past performance is no guarantee of future results. Investment return
and principal value will fluctuate so that shares, when redeemed, may be
worth more or less than their original cost. Portfolio holdings will
vary.
2
<PAGE>
EATON VANCE GOVERNMENT OBLIGATIONS FUND AS OF JUNE 30, 2000
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF JUNE 30, 2000
<S> <C>
Assets
------------------------------------------------------
Investment in Government Obligations
Portfolio, at value
(identified cost, $323,456,613) $314,062,737
Receivable for Fund shares sold 217,856
------------------------------------------------------
TOTAL ASSETS $314,280,593
------------------------------------------------------
Liabilities
------------------------------------------------------
Payable for Fund shares redeemed $ 961,701
Dividends payable 904,128
Payable to affiliate for service fees 4,327
Payable to affiliate for Trustees' fees 1,496
Accrued expenses 282,898
------------------------------------------------------
TOTAL LIABILITIES $ 2,154,550
------------------------------------------------------
NET ASSETS $312,126,043
------------------------------------------------------
Sources of Net Assets
------------------------------------------------------
Paid-in capital $388,437,818
Accumulated net realized loss from
Portfolio
(computed on the basis of
identified cost) (65,793,432)
Accumulated distributions in excess of
net investment income (1,124,467)
Net unrealized depreciation from
Portfolio
(computed on the basis of
identified cost) (9,393,876)
------------------------------------------------------
TOTAL $312,126,043
------------------------------------------------------
Class A Shares
------------------------------------------------------
NET ASSETS $182,363,579
SHARES OUTSTANDING 18,997,664
NET ASSET VALUE AND REDEMPTION PRICE
PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 9.60
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 95.25 of $9.60) $ 10.08
------------------------------------------------------
Class B Shares
------------------------------------------------------
NET ASSETS $102,339,202
SHARES OUTSTANDING 12,383,026
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE (NOTE 7)
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 8.26
------------------------------------------------------
Class C Shares
------------------------------------------------------
NET ASSETS $ 27,423,262
SHARES OUTSTANDING 3,318,367
NET ASSET VALUE, OFFERING PRICE AND REDEMPTION PRICE
PER SHARE (NOTE 7)
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 8.26
------------------------------------------------------
</TABLE>
On sales of $25,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, 2000
<S> <C>
Investment Income
-----------------------------------------------------
Interest allocated from Portfolio $13,512,787
Security lending income allocated
from Portfolio 634,127
Expenses allocated from Portfolio (1,354,010)
-----------------------------------------------------
NET INVESTMENT INCOME FROM PORTFOLIO $12,792,904
-----------------------------------------------------
Expenses
-----------------------------------------------------
Trustees fees and expenses $ 2,222
Distribution and service fees
Class A 103,189
Class B 454,136
Class C 139,560
Transfer and dividend disbursing
agent fees 170,141
Printing and postage 29,635
Registration fees 27,185
Custodian fee 16,479
Legal and accounting services 8,184
Miscellaneous 23,359
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TOTAL EXPENSES $ 974,090
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NET INVESTMENT INCOME $11,818,814
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Realized and Unrealized
Gain (Loss) from Portfolio
-----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $(2,610,726)
Financial futures contracts 499,634
-----------------------------------------------------
NET REALIZED LOSS $(2,111,092)
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Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 264,176
Financial futures contracts (1,638,222)
-----------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $(1,374,046)
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NET REALIZED AND UNREALIZED LOSS $(3,485,138)
-----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 8,333,676
-----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
EATON VANCE GOVERNMENT OBLIGATIONS FUND AS OF JUNE 30, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
INCREASE (DECREASE) JUNE 30, 2000 YEAR ENDED
IN NET ASSETS (UNAUDITED) DECEMBER 31, 1999
<S> <C> <C>
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From operations --
Net investment income $11,818,814 $27,587,946
Net realized loss (2,111,092) (11,191,123)
Net change in unrealized
appreciation (depreciation) (1,374,046) (15,566,780)
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NET INCREASE IN NET ASSETS
FROM OPERATIONS $8,333,676 $830,043
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Distributions to shareholders --
From net investment income
Class A $(7,129,926) $(16,879,457)
Class B (3,732,193) (8,336,774)
Class C (948,748) (2,183,160)
In excess of net investment income
Class A (54,333) --
Class C (22,991) --
Return of capital
Class A -- (296,539)
Class B -- (191,103)
Class C -- (50,103)
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TOTAL DISTRIBUTIONS TO SHAREHOLDERS $(11,888,191) $(27,937,136)
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Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $9,498,476 $54,672,404
Class B 6,525,309 29,129,217
Class C 5,520,924 11,327,693
Net asset value of shares issued to
shareholders in payment of
distributions declared
Class A 2,985,527 7,817,802
Class B 1,400,838 3,536,778
Class C 478,215 1,371,336
Cost of shares redeemed
Class A (23,236,547) (103,010,118)
Class B (21,325,111) (38,992,175)
Class C (9,074,899) (14,297,440)
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NET DECREASE IN NET ASSETS FROM FUND
SHARE TRANSACTIONS $(27,227,268) $(48,444,503)
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NET DECREASE IN NET ASSETS $(30,781,783) $(75,551,596)
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<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
NET ASSETS (UNAUDITED) DECEMBER 31, 1999
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<S> <C> <C>
At beginning of period $342,907,826 $418,459,422
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AT END OF PERIOD $312,126,043 $342,907,826
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Accumulated distributions in
excess of net investment
income included in net assets
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AT END OF PERIOD $(1,124,467) $(1,055,090)
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</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
EATON VANCE GOVERNMENT OBLIGATIONS FUND AS OF JUNE 30, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 --------------------------------------------------------
(UNAUDITED)(1) 1999(1) 1998(1) 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning
of period $ 9.700 $10.400 $10.620 $10.680 $11.020 $ 10.420
--------------------------------------------------------------------------------------------------------------
Income (loss) from operations
--------------------------------------------------------------------------------------------------------------
Net investment income $ 0.368 $0.745 $0.783 $0.799 $0.810 $ 0.807
Net realized and unrealized
gain (loss) (0.098) (0.689) (0.215) (0.051) (0.340) 0.603
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TOTAL INCOME FROM OPERATIONS $ 0.270 $0.056 $0.568 $0.748 $0.470 $ 1.410
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Less distributions
--------------------------------------------------------------------------------------------------------------
From net investment income $ (0.368) $(0.743 ) $(0.781 ) $(0.801 ) $(0.810 ) $ (0.810)
In excess of net investment
income (0.002) -- -- -- -- --
From tax return of capital -- (0.013) (0.007) (0.007) -- --
--------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.370) $(0.756 ) $(0.788 ) $(0.808 ) $(0.810 ) $ (0.810)
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF
PERIOD $ 9.600 $9.700 $10.400 $10.620 $10.680 $ 11.020
--------------------------------------------------------------------------------------------------------------
TOTAL RETURN(2) 2.87% 0.56% 5.56% 7.26% 4.52% 13.97%
--------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
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Net assets, end of period
(000's omitted) $182,364 $195,162 $251,727 $276,781 $302,963 $359,738
Ratios (As a percentage of
average daily net assets):
Operating expenses(3) 1.12%(4) 1.23% 1.25% 1.24% 1.16% 1.16%
Interest expense 0.01%(4) 0.02% 0.07% -- -- --
Net investment income 7.70%(4) 7.43% 7.46% 7.57% 7.59% 7.53%
Portfolio Turnover of the
Portfolio 4% 18% 48% 20% 11% 19%
--------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(2) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(3) Includes the Fund's share of the Portfolio's allocated expenses.
(4) Annualized
Certain prior year ratios have been restated to conform to the current
year presentation.
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
EATON VANCE GOVERNMENT OBLIGATIONS FUND AS OF JUNE 30, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 ------------------------
(UNAUDITED)(1) 1999(1) 1998(1)
<S> <C> <C> <C>
------------------------------------------------------------------------------
Net asset value -- Beginning
of period $ 8.350 $ 8.950 $ 9.140
------------------------------------------------------------------------------
Income (loss) from operations
------------------------------------------------------------------------------
Net investment income $ 0.287 $ 0.576 $ 0.602
Net realized and unrealized
loss (0.091) (0.594) (0.182)
------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 0.196 $ (0.018) $ 0.420
------------------------------------------------------------------------------
Less distributions
------------------------------------------------------------------------------
From net investment income $ (0.286) $ (0.569) $ (0.603)
From tax return of capital -- (0.013) (0.007)
------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $ (0.286) $ (0.582) $ (0.610)
------------------------------------------------------------------------------
NET ASSET VALUE -- END OF
PERIOD $ 8.260 $ 8.350 $ 8.950
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TOTAL RETURN(2) 2.41% (0.20)% 4.76%
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Ratios/Supplemental Data
------------------------------------------------------------------------------
Net assets, end of period
(000's omitted) $102,339 $116,913 $132,013
Ratios (As a percentage of
average daily net assets):
Operating expenses(3) 1.85%(4) 1.98% 2.00%
Interest expense 0.01%(4) 0.02% 0.07%
Net investment income 6.98%(4) 6.68% 6.66%
Portfolio Turnover of the
Portfolio 4% 18% 48%
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</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(2) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(3) Includes the Fund's share of the Portfolio's allocated expenses.
(4) Annualized
Certain prior year ratios have been restated to conform to the current
year presentation.
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
EATON VANCE GOVERNMENT OBLIGATIONS FUND AS OF JUNE 30, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS C
--------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 ------------------------
(UNAUDITED)(1) 1999(1) 1998(1)
<S> <C> <C> <C>
------------------------------------------------------------------------------
Net asset value -- Beginning
of period $ 8.360 $ 8.960 $ 9.130
------------------------------------------------------------------------------
Income (loss) from operations
------------------------------------------------------------------------------
Net investment income $ 0.280 $ 0.576 $ 0.607
Net realized and unrealized
loss (0.094) (0.594) (0.172)
------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 0.186 $(0.018) $ 0.435
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Less distributions
------------------------------------------------------------------------------
From net investment income $(0.280) $(0.569) $(0.599)
In excess of net investment
income (0.006) -- --
From tax return of capital -- (0.013) (0.006)
------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.286) $(0.582) $(0.605)
------------------------------------------------------------------------------
NET ASSET VALUE -- END OF
PERIOD $ 8.260 $ 8.360 $ 8.960
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TOTAL RETURN(2) 2.29% (0.20)% 4.92%
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Ratios/Supplemental Data
------------------------------------------------------------------------------
Net assets, end of period
(000's omitted) $27,423 $30,833 $34,719
Ratios (As a percentage of
average daily net assets):
Operating expenses(3) 2.01%(4) 1.98% 2.00%
Interest expense 0.01%(4) 0.02% 0.07%
Net investment income 6.80%(4) 6.67% 6.71%
Portfolio Turnover of the
Portfolio 4% 18% 48%
------------------------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(2) Total return is calculated assuming a purchase at the net asset value on
the first day and a sale at the net asset value on the last day of each
period reported. Dividends and distributions, if any, are assumed
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(3) Includes the Fund's share of the Portfolio's allocated expenses.
(4) Annualized
Certain prior year ratios have been restated to conform to the current
year presentation.
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE GOVERNMENT OBLIGATIONS FUND AS OF JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1 Significant Accounting Policies
-------------------------------------------
Eaton Vance 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 Mutual
Funds Trust. The Fund offers three classes of shares. Class A shares are
generally sold subject to a sales charge imposed at time of purchase.
Class B and Class C shares are sold at net asset value and are subject to a
contingent deferred sale charge (see Note 7). Each class represents a pro
rata interest in the Fund, but votes separately on class-specific matters and
(as noted below) is subject to different expenses. Realized and unrealized
gains and losses are allocated daily to each class of shares based on the
relative net assets of each class to the total net assets of the Fund. Net
investment income, other than class-specific expenses, is allocated daily to
each class based upon the ratio of the value of each class' paid shares to
the total value of all paid shares. Each class of shares differs in its
distribution plan and certain other class-specific expenses. The Fund invests
all of its investable assets in interests in the 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
(99.9% at June 30, 2000). 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 Valuation -- Valuation of securities by the Portfolio is discussed
in Note 1A of the Portfolio's Notes to Financial Statements which are
included elsewhere in this report.
B Income -- The Fund's net investment income consists of the Fund's pro rata
share of the net investment income of the Portfolio, less all actual and
accrued expenses of the Fund.
C Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable income, including any
net realized gain on investments. Accordingly, no provision for federal
income or excise tax is necessary. At December 31, 1999, the Fund, for
federal income tax purposes, had a capital loss carryover of $61,586,366
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 distributions to
shareholders which would otherwise be necessary to relieve the Fund of any
liability for federal income tax. The capital loss carryovers will expire on
December 31, 2000 ($5,952,987), December 31, 2001 ($70,869), December 31,
2002 ($17,954,518), December 31, 2003 ($2,688,390), December 31, 2004
($10,207,058), December 31, 2005 ($4,786,337), December 31, 2006 ($3,525,680)
and December 31, 2007 ($16,400,527). At December 31, 1999, net capital losses
of $2,090,740 attributable to security transactions incurred after
October 31, 1999, are treated as arising on the first day of the Fund's
current taxable year.
D Use of Estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
E Interim Financial Statements -- The interim financial statements relating to
June 30, 2000 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the Fund's
management reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
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. 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
8
<PAGE>
EATON VANCE GOVERNMENT OBLIGATIONS FUND AS OF JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
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 gain on investments. Permanent differences
between book and tax accounting relating to distributions are reclassified to
paid-in capital.
3 Shares of Beneficial Interest
-------------------------------------------
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Such shares may be issued in a number of different series (such as
the Fund) and classes. Transactions in Fund shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
CLASS A (UNAUDITED) DECEMBER 31, 1999
<S> <C> <C>
-----------------------------------------------------------------------------
Sales 988,216 5,429,779
Issued to shareholders electing to
receive payments of distributions in
Fund shares 311,037 779,309
Redemptions (2,417,258) (10,290,836)
-----------------------------------------------------------------------------
NET DECREASE (1,118,005) (4,081,748)
-----------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
CLASS B (UNAUDITED) DECEMBER 31, 1999
<S> <C> <C>
-----------------------------------------------------------------------------
Sales 790,501 3,376,989
Issued to shareholders electing to
receive payments of distributions in
Fund shares 169,545 409,850
Redemptions (2,579,076) (4,535,401)
-----------------------------------------------------------------------------
NET DECREASE (1,619,030) (748,562)
-----------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
CLASS C (UNAUDITED) DECEMBER 31, 1999
<S> <C> <C>
-----------------------------------------------------------------------------
Sales 667,719 1,324,515
Issued to shareholders electing to
receive payments of distributions in
Fund shares 57,828 158,824
Redemptions (1,097,381) (1,669,751)
-----------------------------------------------------------------------------
NET DECREASE (371,834) (186,412)
-----------------------------------------------------------------------------
</TABLE>
4 Investment Transactions
-------------------------------------------
Increases and decreases in the Fund's investment in the Portfolio for the six
months ended June 30, 2000, aggregated $21,776,149 and $62,221,106,
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. Certain officers and Trustees of the Fund
and Portfolio are officers of the above organizations. Except as to Trustees
of the Fund and the Portfolio who are not members of EVM's or BMR's
organization, officers and Trustees receive remuneration for their services
to the Fund out of the investment adviser fee earned by BMR. The Fund was
informed that Eaton Vance Distributors, Inc. (EVD), a subsidiary of EVM and
the Fund's principal underwriter, received $3,452 as its portion of the sales
charge on sales of Class A for the six months ended June 30, 2000.
6 Distribution and Service Plans
-------------------------------------------
The Fund has in effect distribution plans for Class B shares (Class B Plan)
and Class C shares (Class C Plan) pursuant to Rule 12b-1 under the Investment
Company Act of 1940 and a service plan for Class A shares (Class A Plan)
(collectively, the Plans). The Class B and Class C Plans require the Fund to
pay EVD amounts equal to 1/365 of 0.75% (annualized) of the Fund's average
daily net assets attributable to Class B and Class C shares for providing
ongoing distribution services and facilities to the Fund. The Fund will
automatically discontinue payments to EVD during any period in which there
are no outstanding Uncovered Distribution Charges, which are equivalent to
the sum of (i) 5% and 6.25% of the aggregate amount received by the Fund for
the Class B and Class C shares sold, respectively, plus (ii) interest
calculated by applying the rate of 1% over the prevailing prime rate to the
outstanding balance of Uncovered Distribution Charges of EVD of each
respective class, reduced by the aggregate amount of contingent deferred
sales charges (see Note 7) and daily amounts theretofore paid to EVD by each
respective class. The Fund paid or accrued $401,931 and $104,670 for Class B
and Class C shares, respectively, to or payable to EVD for the six months
ended June 30, 2000, representing 0.75% (annualized) of the average daily net
assets for Class B and Class C shares, respectively. At
9
<PAGE>
EATON VANCE GOVERNMENT OBLIGATIONS FUND AS OF JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
June 30, 2000, the amount of Uncovered Distribution Charges of EVD calculated
under the Plans was approximately $4,104,000 and $11,417,000 for Class B and
Class C shares, respectively.
The Plans authorize the Fund to make payments of service fees to EVD,
investment dealers and other persons in amounts not exceeding 0.25% of the
Fund's average daily net assets attributable to Class A, Class B, and
Class C shares for each fiscal year. The Trustees initially implemented the
Plans by authorizing the Fund to make quarterly payments of service fees to
EVD and investment dealers in amounts equal to 0.25% per annum of the Fund's
average daily net assets attributable to Class A and Class B shares based on
the value of Fund shares sold by such persons and remaining outstanding for
at least one year. On October 4, 1999, the Trustees approved service fee
payments equal to 0.25% per annum of the Fund's average daily net assets
attributable to Class A and Class B shares for any fiscal year on shares of
the Fund sold on or after October 12, 1999. The Class C Plan permits the Fund
to make monthly payments of service fees in amounts not expected to exceed
0.25% of the Fund's average daily net assets attributable to Class C shares
for any fiscal year. Service fee payments will be made for personal services
and/or the maintenance of shareholder accounts. Service fees are separate and
distinct from the sales commissions and distributions 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. Service fee
payments for the six months ended June 30, 2000 amounted to $103,189, $52,205
and $34,890 for Class A, Class B, and Class C shares, respectively.
7 Contingent Deferred Sales Charge
-------------------------------------------
A contingent deferred sales charge (CDSC) generally is imposed on redemptions
of Class B shares made within six years of purchase and on redemptions of
Class C shares made within one year of purchase. Generally, the CDSC is based
upon the lower of the net asset value at date of redemption or date of
purchase. No charge is levied on shares acquired by reinvestment of dividends
or capital gain distributions. The Class B CDSC is imposed at declining rates
that begin at 5% in the first and second year of redemption after purchase,
declining one percentage point in each subsequent year. Class C shares will
be subject to a 1% CDSC if redeemed within one year of purchase. No CDSC is
levied on shares which have been sold to EVM or its affiliates or to their
respective employees or clients and may be waived under certain other limited
conditions. CDSC charges are paid to EVD to reduce the amount of Uncovered
Distribution Charges calculated under the Fund's Distribution Plans (see
Note 6). CDSC charges received when no Uncovered Distribution Charges exist
will be credited to the Fund. EVD received approximately $215,000 and $7,000
of CDSC paid by shareholders for Class B shares and Class C shares,
respectively for the six months ended June 30, 2000.
10
<PAGE>
GOVERNMENT OBLIGATIONS PORTFOLIO AS OF JUNE 30, 2000
PORTFOLIO OF INVESTMENTS (UNAUDITED)
U.S. GOVERNMENT AGENCY DEBENTURES -- 23.2%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
-----------------------------------------------------------------------
Federal Home Loan Mortgage Corp.,
6.45%, 4/29/09 $ 2,000 $ 1,863,740
Federal Home Loan Mortgage Corp.,
6.625%, 9/15/09(1) 69,000 66,638,820
Federal National Mortgage Assn.,
6.25%, 5/15/29 5,000 4,496,100
-----------------------------------------------------------------------
Total U.S. Government Agency Debentures
(identified cost, $75,002,800) $ 72,998,660
-----------------------------------------------------------------------
</TABLE>
MORTGAGE PASS-THROUGHS -- 89.6%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
-----------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
5.00%, with various maturities to
2003 $ 83 $ 81,478
5.25%, with various maturities to
2005 43 41,734
5.50%, with various maturities to
2011 161 156,458
6.00%, with various maturities to
2022 718 703,877
6.25%, with various maturities to
2013 185 181,977
6.50%, with various maturities to
2022 8,337 8,169,892
6.75%, with various maturities to
2008 185 183,070
7.00%, with various maturities to
2019 4,075 4,043,387
7.25%, with maturity at 2003 335 334,973
7.50%, with various maturities to
2020 7,007 7,019,420
7.75%, with various maturities to
2018 1,416 1,416,024
8.00%, with various maturities to
2026 31,488 31,806,839
8.15%, with maturity at 2019 1,000 1,007,939
8.25%, with various maturities to
2017 10,869 11,023,151
8.50%, with various maturities to
2018 13,582 13,878,539
8.75%, with various maturities to
2016 8,218 8,395,905
9.00%, with various maturities to
2020 12,733 13,081,244
9.25%, with various maturities to
2010 3,877 4,017,718
9.50%, with various maturities to
2016 4,830 5,031,211
9.75%, with maturity at 2011 566 585,808
10.00%, with various maturities to
2017 96 101,468
11.00%, with various maturities to
2019 3,573 3,856,122
11.50%, with maturity at 2015 337 368,657
12.00%, with various maturities to
2019 1,057 1,169,090
12.25%, with various maturities to
2019 1,098 1,218,686
12.50%, with various maturities to
2019 7,724 8,647,550
12.75%, with various maturities to
2015 403 450,896
13.00%, with various maturities to
2019 2,302 2,615,098
13.25%, with various maturities to
2019 184 210,054
13.50%, with various maturities to
2015 1,999 2,257,947
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
-----------------------------------------------------------------------
14.00%, with various maturities to
2016 $ 961 $ 1,102,878
14.50%, with various maturities to
2014 122 140,231
14.75%, with maturity at 2010 342 391,602
15.00%, with various maturities to
2013 447 524,424
15.25%, with maturity at 2012 38 44,725
15.50%, with various maturities to
2012 51 59,237
16.00%, with maturity at 2012 53 63,103
16.25%, with various maturities to
2012 101 120,939
-----------------------------------------------------------------------
$134,503,351
-----------------------------------------------------------------------
Federal National Mortgage Assn.:
0.25%, with maturity at 2014 41 33,035
3.50%, with maturity at 2007 40 37,281
5.00%, with various maturities to
2017 139 130,875
5.25%, with maturity at 2006 87 82,741
5.50%, with various maturities to
2006 70 67,981
5.75%, with maturity at 2003 10 10,387
6.00%, with various maturities to
2010 576 557,008
6.25%, with various maturities to
2007 135 133,749
6.50%, with various maturities to
2017 356 348,307
6.75%, with various maturities to
2007 168 167,110
7.00%, with various maturities to
2018 1,264 1,252,771
7.25%, with various maturities to
2017 1,630 1,623,608
7.50%, with various maturities to
2020 5,054 5,062,984
7.75%, with various maturities to
2008 530 532,119
8.00%, with various maturities to
2022 25,615 25,875,979
8.25%, with various maturities to
2025 10,440 10,608,101
8.50%, with various maturities to
2020 8,391 8,571,290
8.75%, with various maturities to
2017 601 615,851
9.00%, with various maturities to
2022 16,571 17,186,651
9.25%, with various maturities to
2016 1,938 2,016,617
9.50%, with various maturities to
2016 3,735 3,916,674
9.75%, with maturity at 2019 215 227,738
10.00%, with maturity at 2025 2,968 3,173,098
11.00%, with various maturities to
2020 1,721 1,871,783
11.50%, with various maturities to
2016 2,345 2,577,046
11.75%, with various maturities to
2017 1,535 1,695,856
12.00%, with various maturities to
2020 8,007 8,907,718
12.25%, with various maturities to
2015 1,344 1,499,043
12.50%, with various maturities to
2021 5,538 6,191,756
12.75%, with various maturities to
2014 715 798,059
13.00%, with various maturities to
2027 6,259 7,043,117
13.25%, with various maturities to
2015 965 1,097,330
13.50%, with various maturities to
2015 3,367 3,865,411
13.75%, with various maturities to
2014 75 86,314
14.00%, with various maturities to
2014 181 210,093
14.25%, with maturity at 2014 34 40,020
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
GOVERNMENT OBLIGATIONS PORTFOLIO AS OF JUNE 30, 2000
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
-----------------------------------------------------------------------
14.50%, with various maturities to
2014 $ 105 $ 122,189
14.75%, with maturity at 2012 2,039 2,389,642
15.00%, with various maturities to
2013 2,159 2,551,878
15.50%, with maturity at 2012 372 442,903
15.75%, with maturity at 2011 13 15,160
16.00%, with maturity at 2012 132 158,972
-----------------------------------------------------------------------
$123,796,245
-----------------------------------------------------------------------
Government National Mortgage Assn.:
7.25%, with various maturities to
2022 2,160 2,171,329
7.50%, with maturity at 2017 472 479,770
8.00%, with various maturities to
2017 6,142 6,218,909
8.25%, with maturity at 2008 215 219,251
8.50%, with various maturities to
2018 1,056 1,083,060
9.00%, with maturity at 2011 234 244,540
11.50%, with maturity at 2013 105 115,087
12.00%, with various maturities to
2015 1,631 1,817,212
12.50%, with various maturities to
2019 7,502 8,419,906
13.00%, with various maturities to
2014 539 610,411
13.50%, with various maturities to
2012 137 156,192
14.00%, with maturity at 2015 33 38,900
14.50%, with various maturities to
2014 115 135,231
15.00%, with various maturities to
2013 391 464,853
16.00%, with various maturities to
2012 175 211,865
-----------------------------------------------------------------------
$ 22,386,516
-----------------------------------------------------------------------
Collateralized Mortgage Obligations:
Federal Home Loan Mortgage Corp.
Series B Class 3 100% FHLMC PC
Collateral, 12.50%, due 2013 65 69,613
Salomon Brothers Mortgage Securities
II, Inc., Series 1984-3, Class Z,
11.50%, due 2015 556 569,323
-----------------------------------------------------------------------
$ 638,936
-----------------------------------------------------------------------
Total Mortgage Pass-Throughs
(identified cost $287,701,712) $281,325,048
-----------------------------------------------------------------------
</TABLE>
U.S. TREASURY OBLIGATIONS -- 2.1%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
-----------------------------------------------------------------------
U.S. Treasury Bond, 7.125%, 2/15/23(2) $ 6,000 $ 6,668,460
-----------------------------------------------------------------------
Total U.S. Treasury Obligations
(identified cost, $6,328,094) $ 6,668,460
-----------------------------------------------------------------------
</TABLE>
SHORT-TERM INVESTMENTS -- 1.0%
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT
SECURITY (000'S OMITTED) VALUE
<S> <C> <C>
-----------------------------------------------------------------------
Banque National De Paris Euro
Time-Deposit Cayman Island, 6.75%,
7/3/00 $ 3,200 $ 3,200,000
-----------------------------------------------------------------------
Total Short-Term Investments
(at amortized cost, $3,200,000) $ 3,200,000
-----------------------------------------------------------------------
Total Investments -- 115.9%
(identified cost $372,232,606) $364,192,168
-----------------------------------------------------------------------
Other Assets, Less Liabilities -- (15.9)% $(49,978,646)
-----------------------------------------------------------------------
Net Assets -- 100.0% $314,213,522
-----------------------------------------------------------------------
</TABLE>
(1) A portion of this security is on loan at June 30, 2000.
(2) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
SEE NOTES TO FINANCIAL STATEMENTS
12
<PAGE>
GOVERNMENT OBLIGATIONS PORTFOLIO AS OF JUNE 30, 2000
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF JUNE 30, 2000
<S> <C>
Assets
------------------------------------------------------
Investments, at value
(identified cost, $372,232,606) $364,192,168
Cash 65,824
Receivable for investments sold 930,641
Interest receivable 4,068,557
------------------------------------------------------
TOTAL ASSETS $369,257,190
------------------------------------------------------
Liabilities
------------------------------------------------------
Collateral for securities loaned $ 54,908,151
Payable for daily variation margin on
open financial futures contracts 61,262
Payable to affiliate for Trustees' fees 11,681
Accrued expenses 62,574
------------------------------------------------------
TOTAL LIABILITIES $ 55,043,668
------------------------------------------------------
NET ASSETS APPLICABLE TO INVESTORS'
INTEREST IN PORTFOLIO $314,213,522
------------------------------------------------------
Sources of Net Assets
------------------------------------------------------
Net proceeds from capital contributions
and withdrawals $323,600,305
Net unrealized depreciation (computed on
the basis of identified cost) (9,386,783)
------------------------------------------------------
TOTAL $314,213,522
------------------------------------------------------
</TABLE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, 2000
<S> <C>
Investment Income
-----------------------------------------------------
Interest $13,513,991
Security lending income 634,127
-----------------------------------------------------
TOTAL INVESTMENT INCOME $14,148,118
-----------------------------------------------------
Expenses
-----------------------------------------------------
Investment adviser fee $ 1,207,923
Trustees fees and expenses 16,258
Custodian fee 78,311
Legal and accounting services 23,830
Interest expense 20,575
Miscellaneous 7,222
-----------------------------------------------------
TOTAL EXPENSES $ 1,354,119
-----------------------------------------------------
NET INVESTMENT INCOME $12,793,999
-----------------------------------------------------
Realized and Unrealized Gain (Loss)
-----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $(2,610,882)
Financial futures contracts 499,620
-----------------------------------------------------
NET REALIZED LOSS $(2,111,262)
-----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 264,365
Financial futures contracts (1,638,354)
-----------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $(1,373,989)
-----------------------------------------------------
NET REALIZED AND UNREALIZED LOSS $(3,485,251)
-----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 9,308,748
-----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
13
<PAGE>
GOVERNMENT OBLIGATIONS PORTFOLIO AS OF JUNE 30, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
INCREASE (DECREASE) JUNE 30, 2000 YEAR ENDED
IN NET ASSETS (UNAUDITED) DECEMBER 31, 1999
<S> <C> <C>
-----------------------------------------------------------------------------
From operations --
Net investment income $ 12,793,999 $ 30,329,400
Net realized loss (2,111,262) (11,191,123)
Net change in unrealized
appreciation (depreciation) (1,373,989) (15,566,780)
-----------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $ 9,308,748 $ 3,571,497
-----------------------------------------------------------------------------
Capital transactions --
Contributions $ 21,926,011 $ 96,382,421
Withdrawals (62,221,185) (175,764,765)
-----------------------------------------------------------------------------
NET DECREASE IN NET ASSETS FROM
CAPITAL TRANSACTIONS $ (40,295,174) $ (79,382,344)
-----------------------------------------------------------------------------
NET DECREASE IN NET ASSETS $ (30,986,426) $ (75,810,847)
-----------------------------------------------------------------------------
Net Assets
-----------------------------------------------------------------------------
At beginning of period $ 345,199,948 $ 421,010,795
-----------------------------------------------------------------------------
AT END OF PERIOD $ 314,213,522 $ 345,199,948
-----------------------------------------------------------------------------
</TABLE>
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000
INCREASE (DECREASE) IN CASH (UNAUDITED)
<S> <C>
----------------------------------------------------------
Cash Flows From (Used For) Operating
Activities --
Purchase of investments $ (13,493,333)
Proceeds from sales of investments
and principal repayments 42,463,628
Interest received, including net
securities lending income 14,354,537
Interest paid (20,575)
Operating expenses paid (1,350,081)
Net increase in short-term
investments (3,200,000)
Financial futures contracts
transactions 663,999
Net repayments for securities lending 3,408,350
Increase in unrealized gain/loss from
futures transactions (1,638,354)
----------------------------------------------------------
NET CASH FROM OPERATING ACTIVITIES $ 41,188,171
----------------------------------------------------------
Cash Flows From (Used For) Financing
Activities --
Proceeds from capital contributions $ 21,926,011
Payments for capital withdrawals (62,221,185)
Demand note payable (800,000)
----------------------------------------------------------
NET CASH USED FOR FINANCING ACTIVITIES $ (41,095,174)
----------------------------------------------------------
NET DECREASE IN CASH $ 92,997
----------------------------------------------------------
CASH AT BEGINNING OF YEAR $ (27,173)
----------------------------------------------------------
CASH AT END OF YEAR $ 65,824
----------------------------------------------------------
Reconciliation of Net Increase in Net Assets
From Operations to Net Cash From
Operating Activities
----------------------------------------------------------
Net increase in net assets from
operations $ 9,308,748
Decrease in receivable for investments
sold 278,047
Decrease in interest receivable 248,837
Decrease in variation margin 164,379
Increase in payable to affiliate 4,576
Decrease in accrued expenses (21,113)
Increase in collateral securities loaned 3,408,350
Net decrease in investments 27,796,347
----------------------------------------------------------
NET CASH FROM OPERATING ACTIVITIES $ 41,188,171
----------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
14
<PAGE>
GOVERNMENT OBLIGATIONS PORTFOLIO AS OF JUNE 30, 2000
FINANCIAL STATEMENTS CONT'D
SUPPLEMENTARY DATA
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 --------------------------------------------------------
(UNAUDITED) 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
--------------------------------------------------------------------------------------------------------------
Ratios (As a percentage of
average daily net assets):
Operating expenses 0.83%(1) 0.83% 0.82% 0.83% 0.82% 0.82%
Interest expense 0.01%(1) 0.02% 0.07% -- -- --
Net investment income 7.95%(1) 7.79% 7.85% 7.95% 7.88% 7.82%
Portfolio Turnover 4% 18% 48% 20% 11% 19%
--------------------------------------------------------------------------------------------------------------
NET ASSETS, END OF PERIOD
(000'S OMITTED) $314,214 $345,200 $421,011 $433,107 $455,523 $521,789
--------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Annualized.
Certain prior year ratios have been restated to conform to current year
presentation.
SEE NOTES TO FINANCIAL STATEMENTS
15
<PAGE>
GOVERNMENT OBLIGATIONS PORTFOLIO AS OF JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
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.
The Portfolio which was organized as a trust under the laws of the State of
New York in 1992, seeks to achieve a high current return by investing
primarily in mortgaged-backed securities (MBS) issued, backed or otherwise
guaranteed by the U.S. government or its agencies or instrumentalities. The
Declaration of Trust permits the Trustees to issue beneficial interests in
the Portfolio. The following is a summary of significant accounting policies
of the Portfolio. The policies are in conformity with generally accepted
accounting principles.
A Investment Valuation -- Mortgage backed, pass-through securities are valued
using an independent matrix pricing system applied by the adviser which takes
into account closing bond valuations, yield differentials, anticipated
prepayments and interest rates provided by dealers. 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 premium or accretion 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 at least one of
the Portfolio's investors is a regulated investment company that invests all
or substantially all of its assets in the Portfolio, the Portfolio normally
must satisfy the applicable source of income and diversification requirements
(under the Internal Revenue Code) in order for its investors to satisfy them.
The Portfolio will allocate at least annually among its investors each
investor's distributive share of the Portfolio's net investment income, net
realized capital gains, and any other items of income, gain, loss, deduction
or credit.
E Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
to the Trust. Pursuant to the respective custodian agreements, IBT receives a
fee reduced by credits which are determined based on the average daily cash
balances the Trust maintains with IBT. All significant credit balances used
to reduce the Trust's custodian fees are reported as a reduction of expenses
on the Statement of Operations. For the six months ended June 30, 2000, $59
credit balances were used to reduce the Portfolio's custodian fee.
F 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 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.
16
<PAGE>
GOVERNMENT OBLIGATIONS PORTFOLIO AS OF JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
G 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 a 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.
H 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 rates.
Should interest 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.
I Other -- Investment transactions are accounted for on the date the securities
are purchased or sold. Realized gains and losses are computed based on the
specific identification of securities sold.
J Use of Estimates -- The preparation of the financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
K Interim Financial Statements -- The interim financial statements relating to
June 30, 2000 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the
Portfolio's management reflect all adjustments, consisting only of normal
recurring adjustments, necessary for the fair presentation of the financial
statements.
2 Purchases and Sales of Investments
-------------------------------------------
Purchases, sales and paydowns of investments, other than short-term
obligations, aggregated $13,493,333, $6,411,666 and $36,051,962,
respectively.
3 Investment Adviser Fee and Other Transactions with Affiliates
-------------------------------------------
The investment adviser fee is earned by Boston Management and Research (BMR),
a wholly-owned subsidiary of Eaton Vance Management (EVM), as compensation
for management and investment advisory services rendered to the Portfolio.
The fee is 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. For the six months ended June 30,
2000, the fee was equivalent to 0.75% (annualized) of the Portfolio's average
net assets for such period and amounted to $1,207,923. Except as to Trustees
of the Portfolio who are not members of EVM's or BMR's organization, officers
and Trustees receive remuneration for their services to the Portfolio out of
such investment adviser fee. Trustees of the Portfolio that 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 the Trustees
Deferred Compensation Plan. For the six months ended June 30, 2000, no
significant amounts have been deferred.
Certain officers and Trustees of the Portfolio are officers of the above
organizations.
17
<PAGE>
GOVERNMENT OBLIGATIONS PORTFOLIO AS OF JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
4 Line of Credit
-------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a $150 million unsecured line of credit agreement
with a group of banks. Borrowing will be made by the Portfolio solely to
facilitate the handling of unusual and/or unanticipated short term cash
requirements. Interest is charged to each participating portfolio or fund
based on its borrowings at an amount above either the Eurodollar rate or
federal funds rate. In addition, a fee computed at an annual rate of 0.10% on
the daily unused portion of the line of credit is allocated among the
participating portfolios and funds at the end of each quarter. The Portfolio
did not have any significant borrowings or allocated fees during the six
months ended June 30, 2000. The average daily loan balance for the six months
ended June 30, 2000 was $625,824 and the average interest rate was 6.61%.
5 Securities Lending Agreement
-------------------------------------------
The Portfolio has established a securities lending agreement with brokers in
which the Portfolio lends portfolio securities to a broker in exchange for
collateral consisting of either cash or U.S. government securities in an
amount at least equal to the market value of the securities on loan. Under
the agreement, the Portfolio continues to earn interest on the securities
loaned. Collateral received is generally cash, and the Portfolio invests the
cash and receives 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 loan rebate fee paid by the Portfolio offsets a
portion of the interest income received and amounted to $1,617,632 for the
six months ended June 30, 2000. At June 30, 2000, the value of the securities
loaned and the value of the collateral amounted to approximately $55,000,000
and $54,908,000, respectively. In the event of counterparty default, the
Portfolio is subject to potential loss if it is delayed or prevented from
exercising its right to dispose of the collateral. The Portfolio bears risk
in the event that invested collateral is not sufficient to meet obligations
due on the loans.
6 Federal Income Tax Basis of Investments
-------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at June 30, 2000 as computed on a federal income tax basis,
were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $371,991,413
------------------------------------------------------
Gross unrealized appreciation $ 1,053,772
Gross unrealized depreciation (8,853,017)
------------------------------------------------------
NET UNREALIZED DEPRECIATION $ (7,799,245)
------------------------------------------------------
</TABLE>
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 and financial futures contracts, and may involve, to
a varying degree, elements of risk in excess of the amounts recognized for
financial statement purposes. The notional or contractual amounts of these
instruments represent the investment the Portfolio has in particular classes
of financial instruments and does not necessarily represent the amounts
potentially subject to risk. The measurement of the risks associated with
these instruments is meaningful only when all related and offsetting
transactions are considered. A summary of obligations under these financial
instruments at June 30, 2000 is as follows:
<TABLE>
<CAPTION>
FUTURES CONTRACTS
-------------------------------------------------------------------------------------
EXPIRATION NET UNREALIZED
DATE(S) CONTRACTS POSITION DEPRECIATION
<S> <C> <C> <C>
-------------------------------------------------------------------------------------
9/00 560 US Treasury Five Year Note Futures Short (1,346,345)
</TABLE>
At June 30, 2000, the Portfolio had sufficient cash and/or securities to
cover margin requirements on any open futures contracts.
18
<PAGE>
EATON VANCE GOVERNMENT OBLIGATIONS FUND AS OF JUNE 30, 2000
INVESTMENT MANAGEMENT
EATON VANCE GOVERNMENT OBLIGATIONS FUND
Officers
James B. Hawkes
President and Trustee
William H. Ahern, Jr.
Vice President and
Portfolio Manager
Thomas J. Fetter
Vice President
Armin J. Lang
Vice President
Michael R. Mach
Vice President
Robert B. MacIntosh
Vice President
Edward E. Smiley, Jr.
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
Chairman of the Board,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
GOVERNMENT OBLIGATIONS PORTFOLIO
Officers
James B. Hawkes
President and Trustee
Susan Schiff
Vice President and
Portfolio Manager
Mark S. Venezia
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
Chairman of the Board,
United Asset Management Corporation
Lynn A. Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
19
<PAGE>
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<PAGE>
INVESTMENT ADVISER OF GOVERNMENT OBLIGATIONS PORTFOLIO
BOSTON MANAGEMENT AND RESEARCH
The Eaton Vance Building
255 State Street
Boston, MA 02109
ADMINISTRATOR OF EATON VANCE GOVERNMENT OBLIGATIONS FUND
EATON VANCE MANAGEMENT
The Eaton Vance Building
255 State Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
EATON VANCE DISTRIBUTORS, INC.
The Eaton Vance Building
255 State Street
Boston, MA 02109
(617) 482-8260
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
PFPC, INC.
Attention: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02904-9653
(800) 262-1122
EATON VANCE GOVERNMENT OBLIGATIONS FUND
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus
which contains more complete information on the Fund, including its
sales charges and expenses. Please read the prospectus carefully before
you invest or send money.
------------------------------------------------------------------------------
140-8/00 GOSRC
