<PAGE>
Government Obligations Portfolio as of December 31, 1997
PORTFOLIO OF INVESTMENTS
Mortgage Pass-Throughs -- 95.3%
Principal
Amount
(000's
omitted) Value
- --------------------------------------------------------------------------------
Federal Home Loan Mortgage Corp.:
4.50%, with maturity at 2000 $ 2 $ 2,050
4.75%, with various maturities to 2002 8 7,265
5.00%, with various maturities to 2003 338 329,409
5.25%, with various maturities to 2005 164 160,633
5.50%, with various maturities to 2011 652 642,061
6.00%, with various maturities to 2022 2,235 2,218,877
6.25%, with various maturities to 2013 591 589,099
6.50%, with various maturities to 2022 7,184 7,210,595
6.75%, with various maturities to 2011 5,988 6,023,790
7.00%, with various maturities to 2019 9,886 10,017,823
7.25%, with maturity at 2003 1,096 1,110,633
7.50%, with various maturities to 2020 13,867 14,260,442
7.75%, with various maturities to 2018 2,860 2,946,945
8.00%, with various maturities to 2026 25,281 26,325,212
8.25%, with various maturities to 2011 12,326 12,900,308
8.50%, with various maturities to 2018 17,377 18,287,577
8.75%, with various maturities to 2016 14,890 15,690,351
9.00%, with various maturities to 2020 7,947 8,495,295
9.25%, with various maturities to 2010 4,736 5,062,683
9.50%, with various maturities to 2016 922 994,138
10.00%, with various maturities to 2017 227 250,739
11.00%, with various maturities to 2019 1,898 2,150,339
12.00%, with various maturities to 2019 2,103 2,439,355
12.25%, with various maturities to 2019 2,675 3,130,466
12.50%, with various maturities to 2019 8,379 9,864,920
12.75%, with various maturities to 2015 1,036 1,213,165
13.00%, with various maturities to 2019 3,273 3,880,782
13.25%, with various maturities to 2019 363 436,391
13.50%, with various maturities to 2015 4,027 4,775,937
13.75%, with various maturities to 2014 48 57,816
14.00%, with various maturities to 2016 1,989 2,410,748
14.50%, with various maturities to 2014 207 252,048
14.75%, with maturity at 2010 713 864,218
15.00%, with various maturities to 2013 794 991,294
15.25%, with maturity at 2012 144 182,666
15.50%, with various maturities to 2012 166 207,181
16.00%, with various maturities to 2012 74 94,440
16.25%, with various maturities to 2012 212 270,401
- --------------------------------------------------------------------------------
$166,748,092
- --------------------------------------------------------------------------------
Federal National Mortgage Assn.:
0.25%, with maturity at 2014 $ 155 $ 132,730
3.50%, with maturity at 2007 104 97,870
4.50%, with maturity at 1999 3 3,036
5.00%, with various maturities to 2017 595 578,105
5.25%, with various maturities to 2006 136 132,335
5.50%, with various maturities to 2006 284 279,849
5.75%, with maturity at 2003 90 88,678
6.00%, with various maturities to 2010 13,999 13,877,700
6.25%, with various maturities to 2007 382 381,071
6.50%, with various maturities to 2017 1,029 1,033,439
6.75%, with various maturities to 2007 740 742,987
7.00%, with various maturities to 2018 5,260 5,335,888
7.25%, with various maturities to 2017 1,548 1,582,933
7.50%, with various maturities to 2020 9,938 10,228,745
7.75%, with various maturities to 2008 1,110 1,147,700
8.00%, with various maturities to 2019 28,265 29,489,418
8.25%, with various maturities to 2020 13,283 13,896,208
8.50%, with various maturities to 2020 23,375 24,674,966
8.75%, with various maturities to 2017 1,157 1,225,120
9.00%, with various maturities to 2020 9,395 10,108,114
9.25%, with various maturities to 2016 3,686 3,976,373
9.50%, with maturity at 2009 224 243,778
9.75%, with maturity at 2019 349 384,293
11.00%, with various maturities to 2010 477 537,440
11.50%, with various maturities to 2016 5,428 6,265,740
11.75%, with various maturities to 2015 1,689 1,957,170
12.00%, with various maturities to 2020 12,006 14,013,459
12.25%, with various maturities to 2015 2,851 3,359,703
12.50%, with various maturities to 2021 12,992 15,341,311
12.75%, with various maturities to 2014 1,417 1,680,603
13.00%, with various maturities to 2019 10,327 12,424,176
13.25%, with various maturities to 2015 1,811 2,176,457
13.50%, with various maturities to 2015 3,901 4,730,954
13.75%, with various maturities to 2014 140 170,035
14.00%, with various maturities to 2014 672 823,845
14.25%, with various maturities to 2014 157 195,954
14.50%, with various maturities to 2014 219 270,059
14.75%, with various maturities to 2012 3,405 4,248,338
15.00%, with various maturities to 2013 2,748 3,453,791
15.50%, with various maturities to 2012 844 1,069,993
15.75%, with maturity at 2011 23 30,019
16.00%, with various maturities to 2012 286 365,800
- --------------------------------------------------------------------------------
$192,756,183
- --------------------------------------------------------------------------------
Government National Mortgage Assn.:
5.50%, with maturity at 1999 $ 3 $ 2,581
6.50%, with various maturities to 2002 400 400,041
7.25%, with various maturities to 2022 3,703 3,849,766
See notes to financial statements
13
<PAGE>
Government Obligations Portfolio as of December 31, 1997
PORTFOLIO OF INVESTMENTS CONT'D
Principal
Amount
(000's
omitted) Value
- --------------------------------------------------------------------------------
7.50%, with maturity at 2017 $ 945 $ 996,299
8.00%, with various maturities to 2017 17,112 17,955,719
8.25%, with various maturities to 2008 436 460,343
8.50%, with various maturities to 2018 1,408 1,506,323
9.00%, with maturity at 2011 393 424,179
11.50%, with maturity at 2013 241 278,714
12.00%, with various maturities to 2015 3,044 3,570,800
12.50%, with various maturities to 2015 13,385 15,899,295
13.00%, with various maturities to 2014 1,027 1,235,030
13.50%, with various maturities to 2013 257 310,433
14.00%, with various maturities to 2015 116 143,276
14.50%, with various maturities to 2014 407 509,910
15.00%, with various maturities to 2013 509 643,549
16.00%, with various maturities to 2012 300 388,150
- --------------------------------------------------------------------------------
$ 48,574,408
- --------------------------------------------------------------------------------
Collateralized Mortgage Obligations:
Federal Home Loan Mortgage Corp.
Series B Class 3, 12.5%, due 2013
Collateral 100% FHLMC PC $ 152 $ 176,925
Federal National Mortgage Assn.
Series 93-73E, 6.35%, due 2019
Collateral 100% FNMA MBS 3,000 2,979,375
Salomon Brothers Mortgage Securities II, Inc.
11.5%, due 2015 1,240 1,333,920
- --------------------------------------------------------------------------------
$ 4,490,220
- --------------------------------------------------------------------------------
Total Mortgage Pass-Throughs
(identified cost, $404,902,438) $412,568,903
- --------------------------------------------------------------------------------
U.S. Treasury Obligations -- 18.6%
- --------------------------------------------------------------------------------
U.S. Treasury Bond, 7.125%, 2/15/23+ $ 6,000 $ 6,850,314
U.S. Treasury Bond, 12.000%, 8/15/13++ 50,000 73,718,750
- --------------------------------------------------------------------------------
Total U.S. Treasury Obligations
(identified cost, $67,368,569) $ 80,569,064
- --------------------------------------------------------------------------------
Short-Term Investments -- 0.2%
- --------------------------------------------------------------------------------
Banque National de Paris Euro
Time-deposit Cayman Island,
5.750%, 1/02/98 $ 900 $ 900,000
- --------------------------------------------------------------------------------
Total Short-Term Investments
(identified cost, $900,000) $ 900,000
- --------------------------------------------------------------------------------
Total Investments -- 114.1%
(identified cost $473,171,007) $494,037,967
- --------------------------------------------------------------------------------
Other Assets, Less Liabilities -- (14.1)% $(60,930,973)
- --------------------------------------------------------------------------------
Net Assets -- 100% $433,106,994
- --------------------------------------------------------------------------------
+ Security (or a portion thereof) has been pledged as collateral for futures
contracts.
++ A portion of this security is on loan at December 31, 1997 (See Note 5).
See notes to financial statements
14
<PAGE>
Government Obligations Portfolio as of December 31, 1997
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of December 31, 1997
Assets
- ----------------------------------------------------------
Investments, at value (Note 1A)
(identified cost, $473,171,007) $494,037,967
Cash 69,736
Receivable for investments sold 1,187,126
Interest receivable 5,810,946
Deferred organization expenses (Note 1H) 3,141
- ----------------------------------------------------------
Total assets $501,108,916
- ----------------------------------------------------------
Liabilities
- ----------------------------------------------------------
Payable for investments purchased $ 5,908,008
Payable for daily variation margin on
open financial futures contracts
(Note 1G) 199,229
Liability for collateral received for
securities loaned (Note 5) 61,812,000
Payable to affiliate for Trustees'
fees (Note 3) 4,764
Accrued expenses 77,921
- ----------------------------------------------------------
Total liabilities $ 68,001,922
- ----------------------------------------------------------
Net Assets applicable to investors'
interest in Portfolio $433,106,994
- ----------------------------------------------------------
Sources of Net Assets
- ----------------------------------------------------------
Net proceeds from capital
contributions and withdrawals $412,607,422
Net unrealized appreciation of
investments (computed on the basis
of identified cost) 20,499,572
- ----------------------------------------------------------
Total $433,106,994
- ----------------------------------------------------------
Statement of Operations
For the Year Ended
December 31, 1997
Investment Income (Note 1B)
- ----------------------------------------------------------
Interest income $ 38,681,716
- ----------------------------------------------------------
Total income $ 38,681,716
- ----------------------------------------------------------
Expenses
- ----------------------------------------------------------
Investment adviser fee (Note 3) $ 3,305,992
Compensation of Trustees not members
of the Investment Adviser's organization
(Note 3) 19,263
Custodian fee 196,940
Legal and accounting services 45,097
Amortization of organization expenses
(Note 1H) 3,811
Miscellaneous 85,571
- ----------------------------------------------------------
Total expenses $ 3,656,674
- ----------------------------------------------------------
Net investment income $ 35,025,042
- ----------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- ----------------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $ (4,772,453)
Financial futures contracts (2,072,153)
- ----------------------------------------------------------
Net realized loss on investment
transactions $ (6,844,606)
- ----------------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 5,657,614
Financial futures contracts (1,242,597)
- ----------------------------------------------------------
Net change in unrealized appreciation
(depreciation) of investments $ 4,415,017
- ----------------------------------------------------------
Net realized and unrealized loss on
investments $ (2,429,589)
- ----------------------------------------------------------
Net increase in net assets from
operations $ 32,595,453
- ----------------------------------------------------------
See notes to financial statements
15
<PAGE>
Government Obligations Portfolio as of December 31, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
Increase (Decrease) Year Ended Year Ended
in Net Assets December 31, 1997 December 31, 1996
- ---------------------------------------------------------------------------
From operations --
Net investment income $ 35,025,042 $ 37,858,369
Net realized loss on
investment transactions (6,844,606) (5,404,267)
Net change in unrealized
appreciation (depreciation)
of investments 4,415,017 (10,812,405)
- ---------------------------------------------------------------------------
Net increase in net assets
from operations $ 32,595,453 $ 21,641,697
- ---------------------------------------------------------------------------
Capital transactions --
Contributions $ 163,961,740 $ 66,333,513
Withdrawals (218,972,747) (154,241,567)
- ---------------------------------------------------------------------------
Net decrease in net assets from
capital transactions $ (55,011,007) $ (87,908,054)
- ---------------------------------------------------------------------------
Net decrease in net assets $ (22,415,554) $ (66,266,357)
- ---------------------------------------------------------------------------
Net Assets
- ---------------------------------------------------------------------------
At beginning of year $ 455,522,548 $ 521,788,905
- ---------------------------------------------------------------------------
At end of year $ 433,106,994 $ 455,522,548
- ---------------------------------------------------------------------------
See notes to financial statements
16
<PAGE>
Government Obligations Portfolio as of December 31, 1997
FINANCIAL STATEMENTS CONT'D
Supplementary Data
<TABLE>
<CAPTION>
Year Ended December 31,
---------------------------------------------------------------
1997 1996 1995 1994 1993*
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Ratios to average daily net assets
- ----------------------------------------------------------------------------------------------------------------------
Expenses 0.83% 0.82% 0.82% 0.80% 0.86%+
Net investment income 7.95% 7.88% 7.82% 8.03% 8.46%+
Portfolio Turnover 20% 11% 19% 35% 42%
- ----------------------------------------------------------------------------------------------------------------------
Net assets, end of year (000s omitted) $433,107 $455,523 $521,789 $515,670 $537,297
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
* For the period from the start of business, October 28, 1993 to
December 31, 1993.
See notes to financial statements
17
<PAGE>
Government Obligations Portfolio as of December 31, 1997
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. 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 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 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
18
<PAGE>
Government Obligations Portfolio as of December 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
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.
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 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.
H Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization are being amortized on the straight-line
basis over five years.
I Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT receives
a fee reduced by the credits which are determined based on the average cash
balances the Portfolio maintains with IBT. All significant credit balances
used to reduce the Portfolio's custodian fees are reflected as a reduction of
operating expense on the Statement of Operations.
J Other -- Investment transactions are accounted for on the date the
investments are purchased or sold.
K Use of Estimates -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of income and expense during the reporting period. Actual results could
differ from those estimates.
2 Purchases and Sales of Investments
-----------------------------------------------------------------------------
Purchases, sales and paydowns of investments, other than short-term
obligations, aggregated $100,515,430, $32,669,268 and $85,183,347,
respectively.
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, 1997, the
fee was equivalent to 0.75% of the Portfolio's average net assets for such
period and amounted to $3,305,992. Except as to Trustees of the Portfolio who
are not members of EVM's or BMR's organization, officers and Trustees receive
remuneration for their services to the Portfolio out of such investment
adviser fee. Certain of the officers and Trustees of the Portfolio are
officers and directors/trustees of the above organizations. Trustees of the
Portfolio that are not affiliated with the Investment Adviser may elect to
defer receipt of all or a percentage of their annual fees in accordance with
the terms of the Trustees Deferred Compensation Plan. For the year ended
December 31, 1997, no significant amounts have been deferred.
19
<PAGE>
Government Obligations Portfolio as of December 31, 1997
NOTES TO FINANCIAL STATEMENTS CONT'D
4 Line of Credit
-----------------------------------------------------------------------------
The Portfolio participates with other portfolios and funds managed by BMR and
EVM and its affiliates in a committed $100 million unsecured line of credit
agreement with a group of banks. The Portfolio may temporarily borrow from
the line of credit to satisfy redemption requests or settle investment
transactions. Interest is charged to each portfolio or fund based on its
borrowings at an amount above 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 average daily loan balance for the
year ended December 31, 1997 was $2,661,326 and the average interest rate was
6.3%. The maximum borrowing outstanding at any time during the year ended
December 31, 1997 was $8,165,000.
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.
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 Fund offsets a portion of the
interest income received. During the year ended December 31, 1997, the value
of the securities loaned and the value of the collateral typically amounted
to approximately $59,000,000 and $62,000,000, respectively.
6 Federal Income Tax Basis of Investments
-----------------------------------------------------------------------------
The cost and unrealized appreciation/depreciation in value of the investment
securities owned at December 31, 1997, as computed on a federal income tax
basis, were as follows:
Aggregate cost $ 473,171,007
-----------------------------------------------------------------------------
Gross unrealized appreciation $ 22,243,358
Gross unrealized depreciation (1,376,398)
-----------------------------------------------------------------------------
Net unrealized appreciation $ 20,866,960
-----------------------------------------------------------------------------
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 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,
1997 is as follows:
Futures Contracts
-----------------------------------------------------------------------------
Expiration Net Unrealized
Date Contracts Position Depreciation
-----------------------------------------------------------------------------
3/98 850 US Treasury Five Year
Note Futures Short $ (367,388)
-----------------------------------------------------------------------------
At December 31, 1997, the Portfolio had sufficient cash and/or securities to
cover margin requirements on any open futures contracts.
20
<PAGE>
Government Obligations Portfolio as of December 31, 1997
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of 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, 1997, and the related statement of operations for year then ended,
the statements of changes in net assets for each of the two years in the period
then ended, and the supplementary data for each of the four years in the period
then ended and for the period from October 28, 1993 (start of business), 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, 1997 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, 1997, the results of its
operations for the year then ended, the changes in its net assets for each of
the two years in the period then ended and the supplementary data for each of
the four years in the period then ended and for the period from October 28, 1993
(start of business) to December 31, 1993, in conformity with generally accepted
accounting principles.
COOPERS & LYBRAND L.L.P.
Boston, Massachusetts
February 6, 1998
21
<PAGE>
Government Obligations Portfolio as of December 31, 1997
Government Obligations Portfolio
Officers
M. Dozier Gardner
President and Trustee
James B. Hawkes
Vice President and Trustee
Susan Schiff
Vice President and
Portfolio Manager
Mark S. Venezia
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking, Harvard University Graduate School of Business Administration
Norton H. Reamer
President and Director, United Asset
Management Corporation
John L. Thorndike
Formerly Director, Fiduciary Company Incorporated
Jack L. Treynor
Investment Adviser and Consultant
22
