<PAGE>
TO SHAREHOLDERS
During the year ended December 31, 1995, the net asset value of Eaton Vance
Short-Term Treasury Fund rose from $57.52 to $61.43. For the 12-month period,
the Fund had a total return of 6.8%.
- --------------------------------------------------------------------------------
"THE CRUCIAL ISSUE DURING THE FIRST HALF OF THE YEAR WAS WHETHER THE FEDERAL
RESERVE'S PREVIOUS TIGHTENING OF THE TARGET FEDERAL FUNDS RATE WOULD CAUSE A
RECESSION OR WOULD MERELY SLOW THE ECONOMY'S GROWTH."
- --------------------------------------------------------------------------------
Economic activity in the United States was balanced during 1995, providing
investors a favorable period of moderate growth and low inflation. The nation's
annualized rate of economic growth was 2.7% in the first quarter and 1.3% in the
second quarter of the year, rising to 4.2% in the third quarter. The fourth
quarter rate is expected to be between 2% and 3%.
The crucial issue during the first half of the year was whether the
Federal Reserve's previous tightening of the target federal funds rate would
cause a recession or would merely slow the economy's growth. As the year
progressed, it became clear that the Fed had successfully engineered a "soft
landing."
In July the Fed lowered the federal funds rate by a quarter of a percentage
point, the first downward change since September 1992. Another quarter-point
decrease was announced in early December. These changes helped the economy
continue to advance at a slow but steady pace.
LONGER WEIGHTED AVERAGE MATURITY RESULTED IN HIGHER YIELDS
In early January 1995, the Fund's weighted average maturity was lengthened, from
approximately one month to nine months, to capture higher yields available from
issues with longer maturities. In addition, the Portfolio's longer weighted
average maturity resulted in some price appreciation as interest rates dropped
during 1995. The Portfolio's average maturity during the year ranged from 7 to
10 months.
While past performance cannot guarantee future returns, this change in the
Portfolio's weighted average maturity is likely to provide continuing returns
higher than that of a money market fund. However, money market funds are
designed to maintain a constant $1 share value and are subject to less price
fluctuation than the Fund's shares. Long-term bonds generally offer higher
yields than do short-term bond funds.
The Fund continues to have a goal of providing a return higher than that of
shorter term money market instruments with less risk than most other
fixed-income funds. Thus, the Fund can be an attractive compromise between
low-risk, low-yield money market funds and longer term bond funds, which have
more credit and/or maturity risk.
- ------------------ Sincerely,
[Photo of /s/ M. Dozier Gardner
M. Dozier Gardner
M. Dozier Gardner] President
February 21, 1996
- ------------------
<PAGE>
- --------------------------------------------------------------------------------
Comparison of Change in Value of a $10,000 Investment in Eaton Vance
Short-Term Treasury Fund and the Merrill Lynch 182-Extended Average Day
Maturity in 1995 Treasury Bill Index
From March 1, 1991, through December 31, 1995
Short-Term 90 ML
date Treasury Treasury Index
- ----- -------------- ----------------
2/91+ 10000 10000
3/91 10044 10140
4/91 10099 10140
5/91 10145 10140
6/91 10183 10290
7/91 10232 10290
8/91 10276 10290
9/91 10322 10420
10/91 10365 10420
11/91 10409 10420
12/91 10451 10520
1/92 10480 10520
2/92 10506 10520
3/92 10536 10620
4/92 10570 10620
5/92 10594 10620
6/92 10627 10720
7/92 10665 10720
8/92 10687 10720
9/92 10713 10790
10/92 10733 10790
11/92 10752 10790
12/92 10780 10880
1/93 10804 10880
2/93 10822 10880
3/93 10844 10960
4/93 10866 10960
5/93 10883 10960
6/93 10909 11040
7/93 10931 11040
8/93 10953 11040
9/93 10977 11120
10/93 10997 11120
11/93 11018 11120
12/93 11034 11210
1/94 11058 11210
2/94 11080 11210
3/94 11106 11310
4/94 11130 11310
5/94 11161 11310
6/94 11191 11420
7/94 11219 11420
8/94 11255 11420
9/94 11290 11560
10/94 11334 11560
11/94 11378 11560
12/94 11419 11720
1/95 11511 11720
2/95 11592 11720
3/95 11648 11890
4/95 11705 11890
5/95 11789 11890
6/95 11848 12050
7/95 11900 12050
8/95 11954 12050
9/95 12001 12200
10/95 12063 12200
11/95 12120 12200
12/95 12196 12350
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
* Investment operations commenced on 2/4/91.
+ Index information is available only at month-end; therefore, the line
comparison begins at the next month-end following the commencement of the
Fund's investment operations.
- --------------------------------------------------------------------------------
FUND PERFORMANCE
In accordance with guidelines issued by the Securities and Exchange Commission,
the chart above compares your Fund's total return with that of a broad-based
securities market index. The lines on the chart represent the total returns of
$10,000 hypothetical investments in the Fund and the unmanaged Merrill Lynch
182-Day Treasury Bill Index.
TOTAL RETURN FIGURES
The solid line on the chart represents the Fund's performance. The Fund's total
return figure reflects Fund expenses and portfolio transaction costs, and
assumes the reinvestment of distributions.
The dotted line represents the performance of the Merrill Lynch 182-Day Treasury
Bill Index, a widely recognized, unmanaged index of U.S. Treasury bills. The
Index's total return does not reflect any commissions or expenses that would be
incurred if an investor individually purchased or sold the securities
represented in the Index.
<PAGE>
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
- -------------------------------------------------------------------------
U.S. TREASURY OBLIGATION -- 101.0%
- -------------------------------------------------------------------------
PRINCIPAL
SECURITY AMOUNT VALUE
- -------------------------------------------------------------------------
U.S. Treasury Bill, 4.257%, 8/22/96 $2,000,000 $1,935,040
(identified cost, $1,923,907)
OTHER ASSETS,
LESS LIABILITIES -- (1.0%) (19,879)
----------
NET ASSETS -- 100% $1,915,161
==========
The accompanying notes are an integral part of
the Financial Statements
<PAGE>
<TABLE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- --------------------------------------------------------------------------------------------------
December 31, 1995
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investments, at value (Note 1A) (identified cost, $1,923,907) $1,935,040
Cash 5,507
Receivable for Fund shares sold 2,500
----------
Total assets $1,943,047
LIABILITIES:
Payable for Fund shares redeemed $10,670
Payable to Affiliates --
Trustees 1,396
Accrued expenses 15,820
-------
Total liabilities 27,886
----------
NET ASSETS for 31,178 shares of beneficial interest outstanding $1,915,161
==========
SOURCES OF NET ASSETS:
Paid-in capital $1,904,028
Unrealized appreciation of investments (identified cost basis) 11,133
----------
Total $1,915,161
==========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($1,915,161 / 31,178 shares of capital stock outstanding) $61.43
======
The accompanying notes are in integral part of the financial statements
</TABLE>
<PAGE>
<TABLE>
STATEMENT OF OPERATIONS
- -------------------------------------------------------------------------------------------------------
For the Year Ended December 31, 1995
- -------------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income $2,638,655
Expenses --
Investment adviser fee (Note 4) $139,640
Compensation of Directors not members of the
Investment Adviser's organization (Note 4) 3,155
Custodian fee (Note 4) 37,301
Distribution costs (Note 5) 112,947
Transfer and dividend disbursing agent fees 15,112
Printing and postage 24,673
Legal and accounting services 33,934
Registration fees 16,600
Amortization of organization expenses (Note 1D) 12,205
Miscellaneous 8,473
--------
Total expenses $404,040
Deduct --
Reduction of investment adviser fee (Note 4) 122,471
Reduction of custodian fee (Note 4) 15,039
--------
Net expenses 266,530
----------
Net investment income $2,372,125
REALIZED AND UNREALIZED GAIN ON INVESTMENTS:
Net realized gain on investment transactions (identified cost basis) $288,778
Change in unrealized appreciation of investments(identified cost basis) 10,340
--------
Net realized and unrealized gain on investments 299,118
----------
Net increase in net assets resulting from operations $2,671,243
==========
The accompanying notes are in integral part of the financial statements
</TABLE>
<PAGE>
FINANCIAL STATEMENTS (Continued)
<TABLE>
STATEMENT OF CHANGES IN NET ASSETS
- --------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------------
1995 1994
----------- -----------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 2,372,125 $ 564,459
Net realized gain on investment transactions 288,778 41,684
Change in unrealized appreciation of investments 10,340 880
----------- -----------
Increase in net assets from operations $ 2,671,243 $ 607,023
----------- -----------
Net decrease in net assets from Fund share transactions
(Note 2) $(1,931,535) $(1,174,981
----------- -----------
Net increase (decrease) in net assets $ 739,708 $ (567,958
NET ASSETS:
At beginning of year 1,175,453 1,743,411
----------- -----------
At end of year $ 1,915,161 $ 1,175,453
=========== ===========
The accompanying notes are in integral part of the financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
- ---------------------------------------------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
---------------------------------------------------------------
1995 1994 1993 1992 1991<F1>
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of year $57.52 $55.58 $54.30 $52.64 $50.18
------ ------ ------ ------ ------
INCOME FROM OPERATIONS:
Net investment income $ 3.47 $ 1.80 $ 1.34 $ 1.61 $ 2.15
Net realized and unrealized gain (loss)
on investments 0.44 0.14 (0.06) 0.05 0.31
------ ------ ------ ------ ------
Total income from operations $ 3.91 $ 1.94 $ 1.28 $ 1.66 $ 2.46
------ ------ ------ ------ ------
NET ASSET VALUE, end of year $61.43 $57.52 $55.58 $54.30 $52.64
====== ====== ====== ====== ======
TOTAL RETURN<F2> 6.80% 3.49% 2.36% 3.15% 4.90%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end of year (000's omitted) $1,915 $1,175 $1,743 $4,917 $100,976
Ratio of net expenses to average net
assets<F4> 0.62% 0.60% 0.60% 0.60% 0.60%<F3>
Ratio of net investment income to average
net assets<F4> 5.25% 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. Total return is
not computed on an annualized basis.
<F3> Computed on an annualized basis.
<F4> The expenses related to the operations of the Fund reflect a reduction of
the investment adviser fee and/or 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 $ 3.29 $ 1.56 $ 1.28 $ 1.56 $ 2.07
====== ====== ====== ====== ======
RATIOS (As a percentage of average net assets):
Expenses 0.89% 1.23% 0.70% 0.70% 0.78%<F3>
====== ====== ====== ====== ======
Net investment income 4.98% 2.58% 2.38% 3.11% 4.49%<F3>
====== ====== ====== ====== ======
Note: Certain of the per share amounts have been computed using the average
shares outstanding.
The accompanying notes are in integral part of the financial statements
</TABLE>
<PAGE>
NOTES TO FINANCIAL STATEMENTS
- -------------------------------------------------------------------------------
(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. The
Fund intends on its tax return to treat as a distribution of net investment
income and realized capital gains the portion of redemption proceeds paid to
redeeming shareholders that represents their share of the Fund's undistributed
income and gains. For the year ended December 31, 1995, 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. For the year
ended December 31, 1995, the Fund reclassified $2,372,125 from undistributed net
investment income to additional paid-in capital in connection with the dividend
paid deduction. 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 relieve the Fund of any liability for 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.
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.
- ------------------------------------------------------------------------------
(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:
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1995 1994
---------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
----------- --------------- ----------- --------------
Sales 2,505,592 $ 149,067,616 4,306,765 $ 242,492,314
Redemptions (2,494,848) (150,999,151) (4,317,699) (243,667,295)
---------- ------------- ---------- -------------
Net increase
(decrease) 10,744 $ (1,931,535) (10,934) $ (1,174,981)
========== ============= ========== =============
- ------------------------------------------------------------------------------
(3) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales (including maturities) of U.S. Government Securities,
aggregrated $177,773,187 and $179,971,360, 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 year ended December 31, 1995, the fee was equivalent to
0.31% (annualized) of the Fund's average net assets and amounted to $139,640. To
enhance the net income of the Fund, EVM made a reduction of its fee in the
amount of $122,471. 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), for its services as custodian of
the Fund. Prior to November 10, 1995, IBT was an affiliate of EVM. 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.
All significant credit balances are reported as a reduction of expenses in the
Statement of Operations. 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 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, 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 year ended December 31,
1995 the Fund paid $112,947 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 year.
- ------------------------------------------------------------------------------
(7) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at December 31, 1995, as computed on a federal income tax basis, are as
follows:
Aggregate cost $1,932,465
==========
Gross unrealized appreciation $ 2,575
Gross unrealized depreciation --
----------
Net unrealized appreciation $ 2,575
==========
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
- --------------------------------------------------------------------------------
TO THE TRUSTEES AND SHAREHOLDERS OF
EATON VANCE SHORT-TERM TREASURY FUND:
We have audited the accompanying statement of assets and liabilities of Eaton
Vance Short-Term Treasury Fund (one of the series constituting Eaton Vance
Mutual Funds Trust), including the investment portfolio, as of December 31,
1995 and the related statement of operations for the year then ended, the
statement of changes in net assets for each of the two years in the period then
ended and the financial highlights for each of the four years in the period
then ended. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits. The financial highlights for the period from January 11, 1991 (start of
business) to December 31, 1991 presented herein, were audited by other auditors
whose report dated January 24, 1992, expressed an unqualified opinion on such
financial highlights.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of
December 31, 1995 by correspondence with the custodian. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of Eaton
Vance Short-Term Treasury Fund (one of the series of Eaton Vance Mutual Funds
Trust) as of December 31, 1995, the results of its operations for the year then
ended and the changes in its net assets for each of the two years in the period
then ended, and the financial highlights for each of the four years in the
period then ended, in conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
BOSTON, MASSACHUSETTS
FEBRUARY 2, 1996
<PAGE>
INVESTMENT MANAGEMENT
EATON VANCE OFFICERS TRUSTEES
SHORT-TERM M. DOZIER GARDNER DONALD R. DWIGHT
TREASURY FUND President, Trustee President, Dwight
24 Federal Street JAMES B. HAWKES Partners, Inc.
Boston, MA 02110 Vice President, Trustee Chairman, Newspapers of
H. DAY BRIGHAM, JR. New England, Inc.
Vice President SAMUEL L. HAYES, III
MICHAEL B. TERRY Jacob H. Schiff Professor
Vice President and of Investment Banking,
Portfolio Manager Harvard University
WILLIAM H. AHERN, JR. Graduate School of Business
Vice President Administration
JAMES L. O'CONNOR NORTON H. REAMER
Treasurer President and Director,
THOMAS OTIS United Asset Management
Secretary Corporation
JOHN L. THORNDIKE
Director, Fiduciary
Company Incorporated
JACK L. TREYNOR
Investment Adviser and
Consultant
<PAGE>
[LOGO]
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
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
TRANSFER AGENT
First Data Investor 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
EATON VANCE
SHORT-TERM
TREASURY FUND
ANNUAL
SHAREHOLDER REPORT
DECEMBER 31, 1995
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-TYSR-2/96
