<PAGE>
[EATON VANCE LOGO APPEARS HERE]
[PHOTO OF WALL WITH THE WORD
"EDUCATION" ON IT APPEARS HERE]
Semiannual Report June 30, 1997
EATON VANCE
TAX FREE
RESERVES
[PHOTO OF HIGHWAY APPEARS HERE]
Eaton Vance
Global Management:Global Distribution
[PHOTO OF BRIDGE APPEARS HERE]
<PAGE>
Eaton Vance Tax Free Reserves as of June 30, 1997
INVESTMENT UPDATE
[PHOTO OF DOZIER GARDNER APPEARS HERE]
M.Dozier Gardner,
President
Investment Environment
- -------------------------------------------------------------------------------
The Economy
. During the first half of 1997,economic conditions in the U.S. were very
favorable as the economy's expansion continued into its seventh year. Gross
Domestic Product (GDP), the primary benchmark for measuring economic growth,
increased at an annualized rate of 4.9% during the first quarter. In the
second quarter, the economy slowed somewhat, with advance estimates showing
an annualized GDP increase of 2.2%.
. Unemployment remained low throughout the period. It ranged from 5.4% in
January, 1997 to 5.0% in June, and hit a 24-year low of 4.8% in May.
. The continued growth of the economy, combined with a tight labor market, has
caused concern that inflation may increase. Thus far this has not occurred.
During the first half of 1997, the Consumer Price Index (CPI) rose at an
annual rate of only 1.4%, the slowest rate of increase since 1986.
The Market
. The six-month period was a fairly quiet and stable one for short-term bonds.
The exception was an increase in the Federal Funds target rate by 0.25% to
5.50% on March 25.
. The Fed Funds rate is the rate for interbank overnight loans and serves as a
key interest rate barometer.
The Fund
- -------------------------------------------------------------------------------
The Past Six Months
. During the six months ended June 30, 1997, shareholders of Eaton Vance Tax
Free Reserves received $0.0153 in income dividends, all free from federal
income tax./1/
. Based on the last monthly dividend paid and the Fund's $1.00 share price, its
distribution rate was 3.2% on June 30, 1997.
. To equal that rate, a shareholder in the 36% federal income tax bracket would
need a yield of 5.0% from a taxable investment.
About Eaton Vance Tax Free Reserves
. Eaton Vance Tax Free Reserves invests only in dollar-denominated, high-
quality securities which present minimal credit risk./2/
. To attain this goal, the Fund seeks to invest in short-term obligations which
are rated in one of the two highest short-term ratings categories.
. Tax rates continue to burden investors who seek to maximize their after-tax
investment dollars. A money market mutual fund that invests in high-quality
investments, free of federal taxation, can be a sensible way to earn income
while preserving capital and maintaining liquidity.
- --------------------------------------------------------------------------------
/1/ A portion of the Fund's income could be subject to federal alternative
minimum tax.
/2/ 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 be able to
maintain a stable net asset value of $1.00 per share. The Fund has no sales
charge.
- --------------------------------------------------------------------------------
Mutual fund shares are not insured by the FDIC and are not deposits or other
obligations of, or guaranteed by, any depository institution. Shares are subject
to investment risks, including possible loss of principal invested.
- --------------------------------------------------------------------------------
2
<PAGE>
Eaton Vance Tax Free Reserves as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited)
<TABLE>
<CAPTION>
Tax-Exempt Investments -- 97.1%
Ratings (Unaudited)
- ------------------------------ Principal
Amount
Moody's/S&P Moody's/S&P (000
Short-Term Long-Term omitted) Security Value
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Commercial Paper -- 11.4%
- -----------------------------------------------------------------------------------------
VMIG1/A-1+ Aa2/AA- $3,500 CT HEFA Yale University
Municipal Parking, 3.55%,
7/9/97 $3,500,000
P-1/A-1+ Aa1/AA 1,000 Jacksonville Electric
Authority, 3.65%, 9/2/97 1,000,000
P-1/A-1+ Aa1/AA 1,400 Jacksonville Electric
Authority, 3.75%, 9/8/97 1,400,000
NR/A-1+ NR/AA 1,500 Lincoln, NE Electric, 3.70%,
8/7/97 1,500,000
- -----------------------------------------------------------------------------------------
$7,400,000
- -----------------------------------------------------------------------------------------
General Obligation Notes/Bonds -- 13.4%
- -----------------------------------------------------------------------------------------
MIGI/SP1+ Aaa/AAA $1,000 Iowa State School District
Cash Anticipation Program,
Series 1997, 4.25%, 1/30/98 $1,003,372
MIG1/SP1+ Aaa/AAA 2,000 Iowa State School District
Cash Anticipation Program,
Series 1997, 4.50%, 6/26/98 2,013,295
NR/NR Aaa/AAA 2,000 Lewisville, TX Independent
School District, Series 1996,
3.75%, 8/15/97 1,999,592
NR/NR Aa1/AA+ 2,325 Seattle, WA, Series 1996E,
3.60%, 10/1/97 2,325,830
NR/NR Aaa/AAA 300 Spring Grove, PA Area School
District, Series 1996, 3.75%,
11/15/97 300,105
NR/NR Aaa/AAA 1,000 Washington Suburban
Sanitation District, Series
1987, 7.50%, 12/1/97 1,036,076
- -----------------------------------------------------------------------------------------
$8,678,270
- -----------------------------------------------------------------------------------------
Revenue Notes/Bonds -- 9.5%
- -----------------------------------------------------------------------------------------
NR/NR Aaa/AAA $300 Bucks County, PA Technical
School, 3.90%, 8/15/97 $300,070
NR/NR Aa/AA- 1,000 Indianapolis Industry Local
Public Improvement, Series
1992, 4.75%, 7/1/97 1,000,000
NR/NR Aaa/AAA 1,250 Metropolitan Transport
Authority, Series 1987, 1,275,000
8.50%, 7/1/17
NR/NR Aaa/AAA 500 North Wales, PA Water
Authority, Series 1995,
4.00%, 11/1/97 500,565
NR/NR Aaa/NR 550 Ohio State Higher Educational
Facility Commission, Series
1987, 9.25%, 10/1/97 568,283
MIG1/NR A1/AA- 2,500 Pennsylvania State
University, Series 1996,
4.50%, 11/25/97 2,510,093
- -----------------------------------------------------------------------------------------
$6,154,011
- -----------------------------------------------------------------------------------------
Variable Rate Demand Obligations -- 62.8%
- -----------------------------------------------------------------------------------------
VMIG1/A-1+ Aa3/AA $2,600 Albuquerque, NM Gross
Receipts, Series 1991, 4.20%, $2,600,000
7/1/22
VMIG1/A-1+ Aaa/AAA 1,000 Burke County Development
Authority Pollution, Series
1994, 4.15%, 1/1/19 1,000,000
VMIG1/A-1+ Aa3/AA- 2,000 Chicago, IL Obligation Hare
International Airport, Series
1994, 4.10%, 1/1/18 2,000,000
VMIG1/A-1+ Aaa/AAA 1,000 Colorado Health Facilities
Authority, Series 1989,
4.15%, 10/1/14 1,000,000
VMIG1/A-1+ Aa1/AAA 2,800 Connecticut State Development
Authority, Series 1993,
4.05%, 9/1/28 2,800,000
VMIG1/A-1+ Aa2/AA- 2,200 Connecticut State Special Tax
Revenue Obligation, Series
1990, 4.10%, 12/1/10 2,200,000
VMIG1/A-1+ Aaa/AAA 2,500 Eddy County, NM Pollution,
Series 1993, 4.15%, 2/1/03 2,500,000
VMIG1/A-1+ Aa2/AA- 1,300 Fort Wayne, IN Hospital
Authority, Series 1985,
4.15%, 1/1/16 1,300,000
VMIG1/A-1+ Aa2/AA+ 900 Fulton County, GA Development
Authority, Series 1990,
4.20%, 8/1/05 900,000
VMIG1/A-1+ Aa3/AA- 845 Fulton County, GA Residential
Care, Series 1989, 4.20%,
10/1/99 845,000
VMIG1/A-1+ Aaa/AAA 1,000 Illinois State Bridge & Toll
Road Highway Authority,
Series 1993, 4.15%, 1/1/10 1,000,000
P-1/A-1+ NR/AAA 2,600 Kansas City, MO Industrial
Development Authority, Series
1995, 4.15%, 9/1/25 2,600,000
VMIG1/A-1+ Aa1/AA+ 3,700 Memphis, TN, Series 1995A,
4.15%, 8/1/07 3,700,001
</TABLE>
See notes to financial statements
3
<PAGE>
Eaton Vance Tax Free Reserves as of June 30, 1997
PORTFOLIO OF INVESTMENTS (Unaudited) CONT'D
<TABLE>
<CAPTION>
Ratings (Unaudited)
- ------------------------------ Principal
Amount
Moody's/S&P Moody's/S&P (000
Short-Term Long-Term omitted) Security Value
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Variable Rate Demand Obligations (continued)
- --------------------------------------------------------------------------------------------
VMIG1/A-1+ Aa3/AA- $ 1,360 Metro Government Nashville
and Davidson County, TN,
Series 1989, 4.20%, 5/1/09 $ 1,360,000
VMIG1/A-1+ Aa2/AA 1,015 Minnesota State Higher
Education, Series 1994,
4.15%, 12/1/00 1,015,000
VMIG1/A-1+ Aaa/AAA 800 Montgomery County, PA Higher
Education and Health, Series
1988, 4.15%, 9/1/18 800,000
VMIG1/A-1+ Aa2/AA 1,100 North Carolina Medical Care,
Series 1992, 4.15%, 6/1/22 1,100,000
VMIG1/A-1+ Aa2/AA+ 1,700 North Carolina Medical Care,
Series 1995, 4.15%, 9/1/02 1,700,000
VMIG1/A-1+ Aa3/AA- 3,500 Port Corpus Christi, TX
Industrial, Series 1997, 3,500,000
4.15%, 4/1/18
VMIG1/A-1+ Aa3/AA- 1,400 Port Development Corp., Texas
Marine Terminal, Series 1989,
4.20%, 1/15/14 1,400,000
MIG1/A-1+ NR/AA- 2,270 Putnam County, FL Development
Authority, Series 1984,
4.20%, 3/15/14 2,270,000
VMIG1/A-1+ Aaa/AAA 1,000 Rock Hill, SC Utility System
Revenue, Series 1994, 4.15%,
1/1/22 1,000,000
VMIG1/A-1+ Aa1/AA+ 2,200 South Carolina Jobs Economic
Development, Series 1995,
4.15%, 8/1/17 2,200,000
- --------------------------------------------------------------------------------------------
$ 40,790,001
- --------------------------------------------------------------------------------------------
Total Tax-Exempt Investments -- 100%
(identified cost $63,022,282) $ 63,022,282/(1)/
- --------------------------------------------------------------------------------------------
Other Assets, Less Liabilities -- 2.9% $ 1,854,851
- --------------------------------------------------------------------------------------------
Net Assets -- 100% $ 64,877,133
- --------------------------------------------------------------------------------------------
</TABLE>
At June 30, 1997, the concentration of the Fund's investments in various states,
determined as a percentage of total investments, is as follows:
<TABLE>
<S> <C>
Texas 11.4%
Colorado 10.4
Others (less than 10% individually) 78.2
</TABLE>
/(1)/ Cost for Federal income tax purposes is the same.
See notes to financial statements
4
<PAGE>
Eaton Vance Tax Free Reserves as of June 30, 1997
FINANCIAL STATEMENTS (Unaudited)
Statement of Assets and Liabilities
<TABLE>
<CAPTION>
As of June 30, 1997
Assets
- -------------------------------------------------------------------------
<S> <C>
Investments, at value (Note 1A) $63,022,282
Cash 1,635,213
Interest receivable 409,130
- -------------------------------------------------------------------------
Total assets $65,066,625
- -------------------------------------------------------------------------
Liabilities
- -------------------------------------------------------------------------
Payable for Fund shares redeemed $ 7,118
Distributions payable 177,474
Payable to affiliate for Trustees' fees (Note 3) 42
Accrued expenses 4,858
- -------------------------------------------------------------------------
Total liabilities $ 189,492
- -------------------------------------------------------------------------
Net Assets for 64,895,141 shares of beneficial
interest outstanding $64,877,133
- -------------------------------------------------------------------------
Sources of Net Assets
- -------------------------------------------------------------------------
Paid-in capital $64,895,141
Accumulated net realized loss on investment
transactions (computed on the basis of identified
cost) (18,008)
- -------------------------------------------------------------------------
Total $64,877,133
- -------------------------------------------------------------------------
Net Asset Value, Offering Price and
Redemption Price Per Share
- -------------------------------------------------------------------------
($64,877,133 / 64,895,141 shares of
beneficial interest outstanding) $ 1.00
- -------------------------------------------------------------------------
</TABLE>
Statement of Operations
<TABLE>
<CAPTION>
For the Six Months Ended
June 30, 1997
Investment Income (Note 1B)
- -------------------------------------------------------------------------
<S> <C>
Interest $ 1,184,810
- -------------------------------------------------------------------------
Total investment income $ 1,184,810
- -------------------------------------------------------------------------
Expenses
- -------------------------------------------------------------------------
Investment adviser fee (Note 3) $ 168,528
Custodian fee (Note 1E) 17,540
Compensation of Trustees not members of the
Investment Adviser's organization (Note 3) 13
Legal and accounting services 7,988
Transfer and dividend disbursing agent fees 7,197
Interest expense 7,079
Printing and postage 7,042
Registration fees 7,034
Miscellaneous 2,321
- -------------------------------------------------------------------------
Total expenses $ 224,742
- -------------------------------------------------------------------------
Deduct --
- -------------------------------------------------------------------------
Preliminary reduction of investment adviser fee
(Note 3) $ 57,528
Reduction of custodian fee (Note 1E) 17,540
- -------------------------------------------------------------------------
Total expense reductions $ 75,068
- -------------------------------------------------------------------------
Net expenses $ 149,674
- -------------------------------------------------------------------------
Net investment income $ 1,035,136
- -------------------------------------------------------------------------
Realized and Unrealized
Gain (Loss) on Investments
- -------------------------------------------------------------------------
Net realized gain (loss) on investment transactions
(identified cost basis) $ (1,479)
- -------------------------------------------------------------------------
Net realized loss on investment transactions $ (1,479)
- -------------------------------------------------------------------------
Net increase in net assets from operations $ 1,033,657
- -------------------------------------------------------------------------
</TABLE>
See notes to financial statements
5
<PAGE>
Eaton Vance Tax Free Reserves as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Statements of Changes in Net Assets
<TABLE>
<CAPTION>
Six Months Ended
Increase (Decrease) June 30, 1997 Year Ended
in Net Assets (Unaudited) December 31, 1996
- ----------------------------------------------------------------------------------------
<S> <C> <C>
From operations --
Net investment income $ 1,035,136 $ 1,873,534
Net realized gain (loss) on
investment transactions (1,479) 3,779
Distributions to shareholders (Note 2)--
From net investment income (1,035,136) (1,873,534)
- ----------------------------------------------------------------------------------------
Net increase (decrease) in net assets
from operations $ (1,479) $ 3,779
- ----------------------------------------------------------------------------------------
Transactions in shares of beneficial
interest at Net Asset Value of
$1.00 per share (Note 4) --
Proceeds from sale of shares $ 113,753,634 $ 164,099,713
Net asset value of shares issued
to shareholders in payment of
distributions declared 544,484 1,236,374
Cost of shares redeemed (72,774,242) (165,897,527)
- ----------------------------------------------------------------------------------------
Net increase (decrease) in net
assets from Fund share transactions $ 41,523,876 $ (561,440)
- ----------------------------------------------------------------------------------------
Net increase (decrease) in net assets $ 41,522,397 $ (557,661)
- ----------------------------------------------------------------------------------------
Net Assets
- ----------------------------------------------------------------------------------------
At beginning of period $ 23,354,736 $ 23,912,397
- ----------------------------------------------------------------------------------------
At end of period $ 64,877,133 $ 23,354,736
- ----------------------------------------------------------------------------------------
</TABLE>
See notes to financial statements
6
<PAGE>
Eaton Vance Tax Free Reserves as of June 30, 1997
FINANCIAL STATEMENTS CONT'D
Financial Highlights
<TABLE>
<CAPTION>
Six Months
Ended Year Ended December 31,
June 30, 1997 -----------------------------------------------------------------
(Unaudited) 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 0.015021 $ 0.030316 $ 0.034693 $ 0.023548 $ 0.018399 $ 0.023468
- ------------------------------------------------------------------------------------------------------------------------------
Total income from operations $ 0.015021 $ 0.030316 $ 0.034693 $ 0.023548 $ 0.018399 $ 0.023468
- ------------------------------------------------------------------------------------------------------------------------------
Less distributions
- ------------------------------------------------------------------------------------------------------------------------------
From net investment income $(0.015021) $(0.030316) $(0.034693) $(0.023548) $(0.018399) $(0.023468)
- ------------------------------------------------------------------------------------------------------------------------------
Total distributions $(0.015021) $(0.030316) $(0.034693) $(0.023548) $(0.018399) $(0.023468)
- ------------------------------------------------------------------------------------------------------------------------------
Net asset value, end of period $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
- ------------------------------------------------------------------------------------------------------------------------------
Total Return /(1)/ 1.54% 3.08% 3.53% 2.36% 1.86% 2.36%
- ------------------------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data+
- ------------------------------------------------------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $ 64,877 $ 23,355 $ 23,912 $ 29,021 $ 60,247 $ 44,337
Ratio of interest expense to average
daily net assets 0.02%* 0.02% 0.05% 0.07% 0.03% 0.06%
Ratio of other expenses to average
daily net assets /(2)/ 0.48%* 0.33% 0.34% 0.47% 0.62% 0.53%
Ratio of other expenses to average
net assets after custodian fee
reduction 0.45%* 0.27% -- -- -- --
Ratio of net investment income to
average daily net assets 3.10%* 3.04% 3.47% 2.27% 1.82% 2.34%
* The operating expenses of the Fund may reflect a reduction of the Investment Adviser fee, an allocation of expenses to the
Investment Adviser, or both. Had such actions not been taken, the ratios and net investment income per share would have been as
follows:
Ratios (as a percentage of average daily net assets):
Other expenses /(2)/ 0.65%+ 0.69% 0.73% 0.87% 0.82% 0.92%
Other expenses after custodian
fee reduction 0.60%+ 0.63% -- -- -- --
Net investment income 2.92%+ 2.66% 3.02% 1.88% 1.65% 2.01%
Net investment income per share $ 0.014148 $ 0.026626 $ 0.030291 $0.018948 $0.016668 $0.020133
<CAPTION>
Leverage Analysis
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Amount of debt outstanding at end of
year $ -- $ -- $1,266,000 $6,117,000 $2,428,000 $ --
Average daily balance of debt
outstanding during year $ 152,928 $ 116,757 $ 279,586 $ 440,145 $ 285,000 $ 367,000
Average weekly balance of shares
outstanding during year 67,429,454 61,730,866 51,107,215 40,463,382 48,697,998 38,904,763
Average amount of debt per share
during year $ 0.002 $ 0.002 $ 0.005 $ 0.011 $ 0.006 $ 0.009
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
+ Annualized.
/(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 record date. Total return
is computed on a non-annualized basis.
/(2)/ The expense ratios for the years ended December 31, 1995 and periods
thereafter 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 ratios for the periods ended on or
before December 31, 1994 have not been adjusted to reflect this change.
See notes to financial statements
7
<PAGE>
Eaton Vance Tax Free Reserves as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited)
1 Significant Accounting Policies
----------------------------------------------------------------------------
Eaton Vance Mutual Funds Trust (the Trust) is a entity of the type known as a
Massachusetts business trust and is registered under the Investment Company
Act of 1940 (1940 Act), as amended, as an open-end management investment
company. The Trust presently consist of fifteen Funds, of which Eaton Vance
Tax Free Reserves (the Fund) is one. The Fund is registered under the 1940
Act, as amended, as an open-end management investment company. The Fund seeks
to earn as high a rate of income exempt from regular federal income tax while
preserving capital and maintaining liquidity. 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 -- The Trustees have determined that the best method
currently available for valuing portfolio investments is amortized cost. The
Fund's use of the amortized cost method to value its portfolio investments is
subject to the Fund's compliance with certain conditions as specified under
Rule 2a-7 of the Investment Company Act of 1940.
B Interest Income -- Interest income consists of interest accrued, adjusted
for amortization of any discount or premium, on the investments of the Fund,
accrued ratably to the date of maturity or call.
C Federal Taxes -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code available to regulated investment companies and to
distribute to shareholders each year all of its net investment income,
including any net realized gain on investment transactions. Accordingly, no
provision for federal income or excise tax is necessary. At December 31,
1996, the Fund, for federal income tax purposes, had a capital loss carryover
of $16,529, 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 tax. Such capital loss
carryover will expire on December 31, 2002. Dividends paid by the Fund from
net interest earned on tax-exempt municipal bonds are not includable by
shareholders as gross income for federal tax purposes because the Fund
intends to meet certain requirements of the Internal Revenue Code
applicable to regulated investment companies which will enable the Fund to
pay exempt-interest dividends. The portion of such interest, if any, earned
on private activity bonds issued after August 7, 1986, may be considered a
tax preference item for shareholders.
D Other -- Investment transactions are accounted for on the date the
investments are purchased or sold, or the date that they mature.
E Expense Reduction -- Investors Bank and 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
balance the Fund maintains with IBT. Any significant credit balances used to
reduce the Fund's custodian fee 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 income 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, 1997 and for the six month 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 only of normal
recurring adjustments, necessary for the fair presentation of the financial
statements.
2 Distribution to Shareholders
----------------------------------------------------------------------------
The net investment income of the Fund is determined daily, and all of the net
investment income so determined is declared as a dividend to shareholders of
record at the time of declaration. Such dividends are paid monthly. Dividends
are distributed in the forms of additional shares of the Fund, or, at the
election of the shareholder, in cash.
3 Investment Adviser Fee and Other Transactions with Affiliates
----------------------------------------------------------------------------
The investment adviser fee was earned by Eaton Vance Management (EVM) as
compensation for management, investment advisory, and other services rendered
to the
8
<PAGE>
Eaton Vance Tax Free Reserves as of June 30, 1997
NOTES TO FINANCIAL STATEMENTS (Unaudited) CONT'D
Fund and is computed at the monthly rate of 1/24 of 1% (1/2 of 1% per annum)
of the Fund's average monthly net assets. To enhance the net investment
income of the Fund, EVM made a reduction of its fee in the amount of $57,528
for the six months ended June 30, 1997. 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 Trust are officers and
directors/trustees of the above organizations.
4 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).
5 Line of Credit
----------------------------------------------------------------------------
The Fund participates with other portfolios and funds managed by EVM and
affiliates in a committed $120 million unsecured line of credit agreement
with a group of banks. 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 participating portfolio or fund
based on its borrowings at the bank's base rate or at an amount above either
the bank's adjusted certificate of deposit rate, Eurodollar rate or federal
funds rate. In addition, a fee computed at an annual rate of 0.15% 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 six months ended June 30, 1997 was $152,928, and
the average interest rate was 4.6%.
6 Purchases and Sales of Investments
----------------------------------------------------------------------------
The Fund invests primarily in state and municipal debt securities. The
ability of the issuers of the debt securities held by the Fund to meet their
obligations may be affected by economic developments in a specific industry
or municipality. Purchases and sales (including maturities) of investments
aggregated $96,052,856 and $56,186,057, respectively.
9
<PAGE>
Eaton Vance Tax Free Reserves as of June 30, 1997
INVESTMENT MANAGEMENT
Eaton Vance Tax Free Reserves
Officers
M. Dozier Gardner
President and Trustee
James B. Hawkes
Vice President and Trustee
William H. Ahern, Jr.
Vice President and
Portfolio Manager
Michael B. Terry
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Independent Trustees
Donald R. Dwight
President, Dwight Partners, Inc.
Chairman, Newspapers of New England, 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
10
<PAGE>
[THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE>
Investment Advisor
Eaton Vance Management
24 Federal Street
Boston, MA 02110
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
Custodian
Investors Bank & Trust Company
200 Clarendon Street, 16th Floor
Boston, MA 02116
Transfer Agent
First Data Investor Services Group
Attention: Eaton Vance Funds
P.O. Box 5123
Westborough, MA 01581-5123
Independent Accountants
Coopers & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
Eaton Vance Tax Free Reserves
24 Federal Street
Boston, MA 02110
- --------------------------------------------------------------------------------
This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its sales charges and
expenses. Please read the prospectus carefully before you invest or send money.
- --------------------------------------------------------------------------------
T-RSRC-8/97
