<PAGE>
TO SHAREHOLDERS
During the six-month period ending June 30, 1995, the net asset value of the
Eaton Vance Short-Term Treasury Fund rose from $57.52 to $59.68.
The increase in net asset value resulted primarily from the income accrued from
the Fund's portfolio of short-term U.S. Treasury securities but also from
security price appreciation as interest rates declined. For the six-month
period, the Fund's total return was 3.8 percent.
The Federal Reserve, anticipating inflationary pressures, raised the federal
funds rate seven times between February 1994 and February 1995. In response, the
nation's rate of economic growth slowed considerably, with the Gross Domestic
Product growing at a moderate 2.7 percent during the first quarter of 1995,
compared with 4.1 and 5.0 percent in the third and fourth quarters of 1994,
respectively.
In early July the Fed, concerned that the economy was slowing too rapidly,
reversed itself, lowering the target federal funds rate by a quarter of a
percentage point.
The key question now is whether slow growth will be sustained or whether the
economy will slide into recession. If the economy weakens more than the Fed
anticipated, short-term rates are likely to be lowered further. However, if the
economy starts to pick up once again, further rate reductions may not be needed.
The Fund's performance reflects these changes in Fed policy and the associated
changes in short-term liquid investments.
WEIGHTED AVERAGE MATURITY LENGTHENED
In early January 1995, the Fund's weighted average maturity was lengthened from
approximately one month to nine months to capture the higher yields available
from issues with longer maturities. As can be seen in the chart above, this move
was made at a fortuitous time.
The Fund's goal remains to provide a return that is higher than that of shorter
term money market instruments with less risk than most other fixed-income funds.
Because its dividends are state tax-exempt, the Fund remains a compromise
between money market funds and longer term bond funds which have more credit
and/or maturity risk.
[Photo of M. Dozier Gardner] Sincerely,
/s/ M. Dozier Gardner
M. Dozier Gardner
President
August 4, 1995
<PAGE>
A chart is entitled, "One-year Treasury bill yields." The left-hand vertical
axis describes interest rates and moves upward from 5% to 7.5% in half-percent
intervals. The bottom horizontal axis marks the passage of time from 6/94 to
6/95 and is labeled, "6/94;" "9/94;" "12/94;" "3/95;" and "6/95."
A vertical line extends from the horizontal axis to the point where the charted
line extends as of just after 12/94. This intersection is circled and is
described on the chart as follows: "Early January, 1995: Fund's average weighted
maturity is lengthened."
The date that describe the "short-term rates line" on the chart may be found on
the following table. Each datum is an end-of-month percentage rate for each
month from June, 1993 to June 1995.
A footnote cites sources for the data: Bloomberg, L.P., Eaton Vance
A
Label
1 5.49
2 5.54
3 5.34
4 5.54
5 5.36
6 5.58
7 5.57
8 5.65
9 5.56
10 5.52
11 5.65
12 5.79
13 5.89
14 5.94
15 6
16 6.01
17 6.17
18 6.14
19 6.34
20 6.51
21 6.63
22 6.57
23 6.98
24 7.15
25 7.12
26 7.17
27 7.17
28 7.25
29 6.88
30 7.02
31 6.77
32 6.77
33 6.83
34 6.6
35 6.47
36 6.53
37 6.46
38 6.36
39 6.28
40 6.49
41 6.32
42 6.18
43 6.13
44 6.31
45 5.99
46 6.02
47 6.01
48 5.86
49 5.51
50 5.88
51 5.66
52 5.54
53 5.63
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1995
(UNAUDITED)
-------------------------------------------------------------------------------
U.S. TREASURY OBLIGATIONS - 99.7%
-------------------------------------------------------------------------------
PRINCIPAL
SECURITY AMOUNT VALUE
-------------------------------------------------------------------------------
U.S. Treasury Bill, 6.007%, 1/11/96 $ 8,700,000 $ 8,447,091
U.S. Treasury Bill, 5.855%, 3/7/96 7,700,000 7,414,715
U.S. Treasury Bill, 5.722%, 4/4/96 35,500,000 34,021,070
-----------
TOTAL U.S. TREASURY OBLIGATIONS,
AND TOTAL INVESTMENTS
(Identified cost, $49,766,420) $49,882,876
OTHER ASSETS,
LESS LIABILITIES - 0.3% 135,022
-----------
NET ASSETS - 100% $50,017,898
===========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
------------------------------------------------------------------------------
June 30, 1995 (Unaudited)
------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$49,766,420) $49,882,876
Cash 183,849
Receivable from Investment Adviser 24,886
Deferred organization expenses (Note 1D) 3,507
-----------
Total assets $50,095,118
LIABILITIES:
Payable for Fund shares redeemed $63,382
Payable to Affiliate - Custodian 7,533
Accrued expenses 6,305
-------
Total liabilities 77,220
-----------
NET ASSETS for 838,131 shares of beneficial interest
outstanding $50,017,898
===========
SOURCES OF NET ASSETS:
Paid-in capital $48,998,089
Accumulated net realized gain on investment
transactions (identified cost basis) 63,839
Accumulated undistributed net investment income 839,514
Net unrealized appreciation of investments
(identified cost basis) 116,456
-----------
Total $50,017,898
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($50,017,898 / 838,131 shares of capital stock
outstanding) $59.68
======
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
--------------------------------------------------------------------------------
For the Six Months Ended June 30, 1995 (Unaudited)
--------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income $ 927,636
Expenses --
Investment adviser fee (Note 4) $ 44,001
Custodian fee (Note 4) 7,533
Distribution costs (Note 5) 36,759
Legal and accounting fees 22,471
Printing and postage 17,878
Registration costs 10,204
Amortization of organization expenses
(Note 1D) 8,698
Transfer and dividend disbursing agent
fees 6,889
Miscellaneous 2,576
--------
Total expenses $157,009
Deduct --
Preliminary reduction of investment
adviser fee (Note 4) $ 44,001
Preliminary allocation of expenses to
Investment Adviser (Note 4) 24,886 68,887
-------- --------
Net expenses 88,122
----------
Net investment income $ 839,514
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investment
transactions (identified cost basis) $ 67,655
Change in unrealized appreciation of
investments 115,663
--------
Net realized and unrealized gain on
investments 183,318
----------
Net increase in net assets
resulting from operations $1,022,832
==========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------
SIX MONTHS
ENDED YEAR ENDED
JUNE 30, 1995 DECEMBER 31,
(UNAUDITED) 1994
----------- ----------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 839,514 $ 564,459
Net realized gain on investment transactions 67,655 41,684
Change in unrealized appreciation of
investments 115,663 880
----------- ----------
Increase in net assets from operations $ 1,022,832 $ 607,023
Net increase (decrease) in net assets from Fund
share transactions (Note 2) 47,819,613 (1,174,981)
----------- ----------
Net increase (decrease) in net assets $48,842,445 $ (567,958)
NET ASSETS:
At beginning of period 1,175,453 1,743,411
At end of period (including undistributed net
investment income of $839,514
and $0, respectively) $50,017,898 $1,175,453
=========== ==========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1995 -----------------------------------
(UNAUDITED) 1994 1993 1992 1991<F1>
---------- ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of period $57.52 $55.58 $54.30 $52.64 $50.18
------ ------ ------ ------ ------
INCOME FROM OPERATIONS:
Net investment income $ 1.77 $ 1.80 $ 1.34 $ 1.61 $ 2.15
Net realized and unrealized gain
(loss) on investments 0.39 0.14 (0.06) 0.05 0.31
------ ------ ------ ------ ------
Total income from operations $ 2.16 $ 1.94 $ 1.28 $ 1.66 $ 2.46
------ ------ ------ ------ ------
NET ASSET VALUE, end of period $59.68 $57.52 $55.58 $54.30 $52.64
====== ====== ====== ====== ======
TOTAL RETURN<F2> 3.75% 3.49% 2.36% 3.15% 4.90%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's omitted) 50,018 $1,175 $1,743 $4,917 $100,976
Ratio of expenses to average net assets<F4> 0.60%<F3> 0.84% 0.60% 0.60% 0.60%<F3>
Ratio of net investment income to
average net assets<F4> 5.66%<F3> 2.97% 2.48% 3.01% 4.66%<F3>
<FN>
<F1> Period from the date of initial public offering, February 4, 1991, to December 31, 1991.
For the period from the start of business, January 11, 1991, to February 3, 1991, net
investment income aggregating $0.18 per share ($367) was earned by the Fund. The financial
highlights for the period were audited by the Fund's previous auditors.
<F2> Total investment return is calculated assuming a purchase at the net asset value on the
first day and a sale at the net asset value on the last day of each period reported.
Dividends and distributions, if any, are assumed to be reinvested at the net asset value
on the payable date.
<F3> Computed on an annualized basis.
<F4> The expenses related to the operations of the Fund reflect a preliminary reduction of the
investment adviser fee and an allocation of expenses to the Investment Adviser. Had such
action not been taken, net investment income per share and the ratios would have been as
follows:
NET INVESTMENT INCOME PER SHARE $ 1.62 $ 1.56 $ 1.28 $ 1.56 $ 2.07
====== ====== ====== ====== ======
RATIOS (As a percentage of average net assets):
Expenses 1.06%<F3> 1.23% 0.70% 0.70% 0.78%<F3>
Net investment income 5.20%<F3> 2.58% 2.38% 2.91% 4.49%<F3>
Note: Certain of the per share amounts have been computed using average shares outstanding.
</TABLE>
The accompanying notes are an integral part of the financial statements
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
Eaton Vance Short-Term Treasury Fund (the Fund) is a series of Eaton Vance
Mutual Funds Trust (formerly Eaton Vance Government Obligations Trust) (the
Trust). The Trust is an entity of the type commonly known as a Massachusetts
business trust and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end management investment company. The following
is a summary of significant accounting policies consistently followed by the
Fund in the preparation of its financial statements. The policies are in
conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS -- Debt securities, including listed securities and
securities for which price quotations are available, will normally be valued on
the basis of market valuations furnished by a pricing service. Short-term
obligations and money market securities maturing in 60 days or less are valued
at amortization cost, which approximates value. Other assets are valued at fair
value using methods determined in good faith by the Trustees.
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. FEDERAL TAXES -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies. The Fund is
not subject to Federal income or excise tax to the extent it distributes to
shareholders each year its taxable net income, including any net realized gain
on investments in accordance with the timing requirements imposed by the Code.
Accordingly, no provision for federal income or excise tax is necessary. At
December 31, 1994, the Fund, for federal income tax purposes, had a capital loss
carryover of $3,816, which will reduce the Fund's taxable income arising from
future net realized gain on investment transactions, if any, to the extent
permitted by the Internal Revenue Code, and thus will reduce the amount of the
distributions to shareholders which would otherwise be necessary to relieve the
Fund of any liability for federal income or excise tax. Such capital loss
carryover will expire on December 31, 2001. The Fund intends on its tax return
to treat as a distribution of net investment income and realize capital gains
the portion of redemption proceeds paid to redeeming shareholders that
represents their share of the Fund's undistributed income and gains. At fiscal
year-end, the Fund utilizes earnings and profits distributed to shareholders on
redemptions of Fund shares as a part of the dividends paid deduction for income
tax purposes. This practice, which involves the use of equalization accounting,
will have the effect of reducing the amount of income and gains that the Fund is
required to distribute as a dividend to shareholders each year in order to avoid
federal income and excise tax.
D. DEFERRED ORGANIZATION EXPENSES -- Costs incurred by the Fund in connection
with its organization, including registration costs, are being amortized on the
straight-line basis through February 1996.
E. OTHER -- Investment transactions are accounted for on the date the
investments are purchased or sold. Dividends to shareholders are recorded on
the ex-dividend date.
F. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating to
June 30, 1995 and for the period then ended have not been audited by independent
certified public accountants, but in the opinion of the Fund's management,
reflect all adjustments, consisting of normal recurring adjustments, necessary
for the fair presentation of the financial statements.
------------------------------------------------------------------------------
(2) SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).
Transactions in Fund shares were as follows:
SIX MONTHS ENDED
JUNE 30, 1995 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1994
----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ----------- --------------
Sales 1,365,311 $ 80,308,007 4,306,765 $ 242,492,314
Redemptions (547,614) (32,488,394) (4,317,699) (243,667,295)
----------- -------------- ---------- -------------
Net increase
(decrease) 817,697 $ 47,819,613 (10,934) $ (1,174,981)
=========== ============== ========== =============
--------------------------------------------------------------------------------
(3) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales (including maturities) of U.S. Government Securities,
aggregrated $75,209,499 and $27,633,016, respectively.
--------------------------------------------------------------------------------
(4) INVESTMENT ADVISER FEE AND OTHER TRANSACTION WITH AFFILIATES
The investment adviser fee is earned by Eaton Vance Management (EVM) as
compensation for management and investment advisory services rendered to the
Fund. The fee is based upon a percentage of average daily net assets plus a
percentage of gross income (i.e., income other than gains from the sales of
securities). For the six months ended June 30, 1995, the fee was equivalent to
0.30% (annualized) of the Fund's average net assets and amounted to $44,001. To
enhance the net income of the Fund, EVM made a preliminary reduction of its fee
in the amount of $44,001 and $24,886 of the expenses related to the operation of
the Fund were allocated, on a preliminary basis, to EVM. Except as to Trustees
of the Fund who are not members of EVM's organization, officers and Trustees
receive remuneration for their services to the Fund out of such investment
adviser fee. The custodian fee is paid to Investors Bank & Trust Company (IBT),
an affiliate of EVM, for its services as custodian of the Fund. Pursuant to the
custodian agreement, IBT receives a fee reduced by credits which are determined
based on the average daily cash balances the Fund maintains with IBT. Certain of
the officers and Trustees of the Fund are officers and directors/trustees of the
above organizations. Trustees of the Fund that are not affiliated with the
Investment Advisor 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, 1995, no significant amounts have been
deferred.
------------------------------------------------------------------------------
(5) DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan (the "Plan") pursuant to Rule 12b-1
under the Investment Company Act of 1940. The Plan provides that the Fund will
pay the Principal Underwriter, Eaton Vance Distributors, Inc. (EVD), a
subsidiary of EVM, a quarterly distribution fee equal to 0.25% on an annual
basis of the Fund's average daily net assets. EVD may pay up to the entire
amount of the distibution fee to Authorized Firms for providing services to
shareholders. The Plan is designed to compensate EVD and the Authorized Firms
through which the Fund's shares are distributed. For the six months ended June
30, 1995 the Fund paid $36,759 in distribution fees to EVD, and EVD in turn paid
a substantial portion of this amount to Authorized Firms.
------------------------------------------------------------------------------
(6) LINE OF CREDIT
The Fund participates with other funds managed by EVM in a $120 million
unsecured line of credit agreement with a bank. The line of credit consists of a
$20 million committed facility and a $100 million discretionary facility.
Borrowings will be made by the Fund solely to facilitate the handling of unusual
and/or unanticipated short-term cash requirements. Interest is charged to each
fund based on its borrowings at an amount above either the bank's adjusted
certificate of deposit rate, a variable adjusted certificate of deposit rate, or
a federal funds effective rate. In addition, a fee computed at an annual rate of
1/4 of 1% on the $20 million committed facility and on the daily unused portion
of the $100 million discretionary facility is allocated among the participating
funds at the end of each quarter. The Fund did not have any significant
borrowings or allocated fees during the period.
------------------------------------------------------------------------------
(7) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at June 30, 1995, as computed on a federal income tax basis, are as
follows:
Aggregate cost $49,766,420
===========
Gross unrealized appreciation $ 116,456
Gross unrealized depreciation --
-----------
Net unrealized appreciation $ 116,456
===========
<PAGE>
<TABLE>
<CAPTION>
INVESTMENT MANAGEMENT
<S> <C> <C>
EATON VANCE OFFICERS TRUSTEES
SHORT-TERM M. DOZIER GARDNER DONALD R. DWIGHT
TREASURY FUND President, Trustee President, Dwight Partners, Inc.
24 Federal Street JAMES B. HAWKES Chairman, Newspapers of
Boston, MA 02110 Vice President, Trustee New England, Inc.
H. DAY BRIGHAM SAMUEL L. HAYES, III
Vice President Jacob H. Schiff Professor of
MICHAEL B. TERRY Investment Banking,
Vice President and Harvard University Graduate
Portfolio Manager School of Business Administration
WILLIAM H. AHERN NORTON H. REAMER
Vice President President and Director, United
JAMES L. O'CONNOR Asset Management Corporation
Treasurer JOHN L. THORNDIKE
THOMAS OTIS Director, Fiduciary Company
Secretary Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
</TABLE>
<PAGE>
INVESTMENT ADVISER
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
INDEPENDENT ACCOUNTANTS
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its distribution plan,
sales charges and expenses. Please read the prospectus carefully before you
invest or send money.
EATON VANCE SHORT-TERM TREASURY FUND
24 FEDERAL STREET
BOSTON, MA 02110 T-TYSRC
[LOGO]
EATON VANCE
SHORT-TERM TREASURY FUND
SEMI-ANNUAL
SHAREHOLDER REPORT
JUNE 30, 1995
