<PAGE>
TO SHAREHOLDERS
During the six months ended June 30, 1996, the net asset value of the Eaton
Vance Short-Term Treasury Fund rose from $61.43 to $62.74, a total return of
2.1%.
In the first half of 1996, the U.S. economy continued an expansion that is now
in its sixth year. The period was characterized by a healthy mix of growth with
low inflation. Surprising signs of strength in the second quarter, however, have
caused concern that inflation may begin to increase. This concern was reflected
in the negative bond market reaction to employment reports in March and June,
which indicated significant gains in new jobs.
On January 31, 1996, the Federal Reserve lowered the Fed Funds rate for the
third time in six months to 5.25%, where it remains. The Fed Funds rate is the
rate at which large U.S. banks lend money to each other. It is significant
because it affects all other interest rates. While some economists are looking
for an increase in the Fed Funds rate this summer, Federal Reserve officials
have indicated that an increase may not be necessary, noting that further
evidence of inflation would be needed to warrant an increase.
LENGTHENING MATURITY HAS RESULTED IN HIGHER RETURNS
Since lengthening the average maturity in January, 1995, from approximately one
month to nine months, the Fund's total return has shown a noticeable increase
(as shown in the chart).
LENGTHENING MATURITIES HAS PAID OFF FOR
SHORT-TERM TREASURY FUND INVESTORS
Short-Term Treasury
Date Net Asset Value
- ---- -------------------
50.37
50.59
50.87
51.1
6/91 51.29
51.54
51.76
51.99
52.21
52.43
12/91 52.64
52.79
52.92
53.07
53.24
53.36
53.53
53.72
53.83
53.96
54.06
54.16
12/92 54.3
54.42
54.51
54.62
54.73
54.82
54.95
55.06
55.17
55.29
55.39
55.5
12/93 55.58
55.7
55.81
55.94
56.06
56.22
56.37
56.51
56.69
56.87
57.09
57.31
12/94 57.52
57.98
58.39
58.67
58.96
59.38
59.68
59.94
60.21
60.45
60.76
61.05
12/95 61.43
61.77
61.87
62.03
62.26
62.51
January, 1995: weighted
average maturity is lengthened
Short-Term Treasury Net Asset Values:
June, 1991 - June, 1996
Source: Eaton Vance
The Fund's goal remains to provide a return that is higher than that of
shorter-term money market instruments, with less risk than longer maturity
fixed-income funds. Of course, an investment in the Fund is neither insured nor
guaranteed by the U.S. Government, and there can be no assurance that the Fund
will achieve its investment objective.
- --------------------------- Sincerely,
/s/ M. Dozier Gardner
M. Dozier Gardner
[Photo of M. Dozier Gardner President
August 5, 1996
- ---------------------------
- --------------------------------------------------------------------------------
Fund shares are not guaranteed 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.
- --------------------------------------------------------------------------------
<PAGE>
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
(UNAUDITED)
- --------------------------------------------------------------------------------
U.S. TREASURY OBLIGATION - 99.9%
- --------------------------------------------------------------------------------
PRINCIPAL
SECURITY AMOUNT VALUE
- --------------------------------------------------------------------------------
U.S. Treasury Bill, 5.157%, 11/14/96
(identified cost, $50,488,312) $51,475,000 $50,459,913
OTHER ASSETS,
LESS LIABILITIES - 0.1% 6,281
-----------
NET ASSETS - 100% $50,466,194
===========
<PAGE>
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$50,488,312) $50,459,913
Cash 19,594
Receivable for Fund shares sold 4,000
-----------
Total assets $50,483,507
LIABILITIES:
Payable to Affiliate --
Trustees fees $ 1,680
Accrued expenses 15,633
-------
Total liabilities 17,313
-----------
NET ASSETS for 804,348 shares of beneficial
interest outstanding $50,466,194
===========
SOURCES OF NET ASSETS:
Paid-in capital $50,494,593
Unrealized depreciation of investments (identified
cost basis) (28,399)
-----------
Total $50,466,194
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE
($50,466,194 / 804,348 shares of capital stock
outstanding) $62.74
======
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the Six Months Ended June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income $1,396,788
Expenses --
Investment adviser fee (Note 4) $ 80,128
Compensation of Directors not members of the
Investment Adviser's organization (Note 4) 1,841
Custodian fee 16,382
Distribution costs (Note 5) 67,346
Printing and postage 10,459
Legal and accounting services 14,538
Registration fees 9,670
Transfer and dividend disbursing agent fees 4,194
Miscellaneous 7,997
--------
Total expenses $212,555
Deduct --
Preliminary reduction of investment adviser
fee (Note 4) 73,558
Reduction of custodian fee 5,011
--------
Net expenses 133,986
----------
Net investment income $1,262,802
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investment transactions
(identified cost basis) $(66,567)
Decrease in unrealized appreciation of investments
(identified cost basis) (39,532)
--------
Net realized and unrealized loss on
investments (103,099)
----------
Net increase in net assets resulting from
operations $1,159,703
==========
The accompanying notes are an integral part of the financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED
1996 DECEMBER 31,
(UNAUDITED) 1995
------- -------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 1,262,802 $ 2,372,125
Net realized gain (loss) on investment
transactions (63,567) 288,778
Change in unrealized appreciation
(depreciation) of investments (39,532) 10,340
----------- -----------
Increase in net assets from operations $ 1,159,703 $ 2,671,243
Net increase (decrease) in net assets from Fund
share transactions (Note 2) 47,391,330 (1,931,535)
----------- -----------
Net increase in net assets $48,551,033 $ 739,708
NET ASSETS:
At beginning of period 1,915,161 1,175,453
----------- -----------
At end of period $50,466,194 $ 1,915,161
=========== ===========
The accompanying notes are an integral part of the financial statements
<PAGE>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1996 --------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991++
---------- ---- ---- ---- ---- -----
NET ASSET VALUE,
beginning of period $61.43 $57.52 $55.58 $54.30 $52.64 $50.18
------ ------ ------ ------ ------ ------
INCOME FROM OPERATIONS:
Net investment
income $ 1.41 $ 3.47 $ 1.80 $ 1.34 $ 1.61 $ 2.15
Net realized and
unrealized
gain (loss) on
investments (0.10) 0.44 0.14 (0.06) 0.05 0.31
------ ------ ------ ------ ------ ------
Total income
(loss) from
operations $ 1.31 $ 3.91 $ 1.94 $ 1.28 $ 1.66 $ 2.46
------ ------ ------ ------ ------ ------
NET ASSET VALUE,
end of period $62.74 $61.43 $57.52 $55.58 $54.30 $52.64
====== ====== ====== ====== ====== ======
TOTAL RETURN(1) 2.13% 6.80% 3.49% 2.36% 3.15% 4.90%
RATIOS/SUPPLEMENTAL DATA:
Net assets at end
of period
(000's omitted) $50,466 $1,915 $1,175 $1,743 $4,917 $100,976
Ratio of net
expenses to
average net
assets**(2) 0.51%+ 0.62% 0.60% 0.60% 0.60% 0.60%+
Ratio of net
investment
income to
average net
assets** 4.67%+ 5.25% 2.97% 2.48% 3.01% 4.66%+
++ 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.
(1) Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
each period reported. Dividends and distributions, if any, are assumed to
be reinvested at the net asset value on the payable date. Total return is
not computed on an annualized basis.
(2) The annualized expense ratios for the six months ended June 30, 1996 and
year ended December 31, 1995 have been adjusted to reflect a change in
reporting requirements. The new reporting guidelines require the Fund to
increase its expense ratio by the effect of any expense offset arrangements
with its service providers. The expense ratio for the periods ending on or
before December 31, 1994 have not been adjusted to reflect this change.
+ Computed on an annualized basis.
** 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 $ 1.32 $ 3.29 $ 1.56 $ 1.28 $ 1.56 $ 2.07
====== ====== ====== ====== ====== ======
RATIOS (As a
percentage of
average net
assets):
Expenses(2) 0.80%+ 0.89% 0.84% 0.70% 0.70% 0.78%+
===== ===== ===== ===== ===== =====
Net investment
income 4.38%+ 4.98% 2.58% 2.38% 3.11% 4.49%+
===== ===== ===== ===== ===== =====
Note: Certain of the per share amounts have been computed using average shares
outstanding.
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 amortized 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. At fiscal year-end, the Fund utilizes earnings and profits
distributed to shareholders on redemptions of Fund shares as 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 relieve the Fund of any
liability for federal income and excise tax.
D. 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.
E. EXPENSE REDUCTION -- Investors Bank & Trust Company (IBT) serves 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. All significant credit balances used to
reduce the Fund's custodian fees are reported as a reduction of expenses in
the statement of operations.
F. 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 revenue and expense during the reporting period. Actual results could
differ from those estimates.
G. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating
to June 30, 1996 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) 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, 1996 YEAR ENDED DECEMBER 31,
(UNAUDITED) 1995
----------------------------- ---------------------------
SHARES AMOUNT SHARES AMOUNT
------------ --------------- ----------- --------------
Sales 2,033,867 $ 125,606,869 2,505,592 $ 149,067,616
Redemptions (1,260,697) (78,215,539) (2,494,848) (150,999,151)
----------- -------------- ---------- -------------
Net increase
(decrease) 773,170 $ 47,391,330 10,744 $ (1,931,535)
=========== ============== ========== =============
- ------------------------------------------------------------------------------
(3) PURCHASES AND SALES OF INVESTMENTS
Purchases and sales (including maturities) of U.S. Government Securities,
aggregrated $191,343,003 and $144,111,818, 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, 1996, the fee was equivalent to
0.30% (annualized) of the Fund's average net assets and amounted to $80,128.
To enhance the net income of the Fund, EVM made a preliminary reduction of its
fee in the amount of $73,558. 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. 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 six months ended June 30, 1996, 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, 1996 the Fund paid $67,346 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.
<PAGE>
- ------------------------------------------------------------------------------
(7) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at June 30, 1996, as computed on a federal income tax basis, are as
follows:
Aggregate cost $50,488,312
===========
Gross unrealized appreciation $ --
Gross unrealized depreciation (28,399)
-----------
Net unrealized depreciation $ (28,399)
===========
<PAGE>
INVESTMENT MANAGEMENT
EATON VANCE OFFICERS TRUSTEES
SHORT-TERM
TREASURY FUND M. DOZIER GARDNER DONALD R. DWIGHT
24 Federal Street President, Trustee President, Dwight Partners, Inc.
Boston, MA 02110 Chairman, Newspapers of
JAMES B. HAWKES New England, Inc.
Vice President, Trustee
SAMUEL L. HAYES, III
H. DAY BRIGHAM, JR. Jacob H. Schiff Professor of
Vice President Investment Banking,
Harvard University Graduate
MICHAEL B. TERRY School of Business
Vice President and Administration
Portfolio Manager
NORTON H. REAMER
WILLIAM H. AHERN President and Director,
Vice President United Asset Management
Corporation
JAMES L. O'CONNOR
Treasurer JOHN L. THORNDIKE
Director, Fiduciary Company
THOMAS OTIS Incorporated
Secretary
JACK L. TREYNOR
Investment Adviser and Consultant
<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
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
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-8/96
EATON VANCE
SHORT-TERM
TREASURY FUND
SEMI-ANNUAL
SHAREHOLDER REPORT
JUNE 30, 1996
