The Eaton Vance Mutual Funds Trust
For the South Asia Portfolio
[LOGO]
Semi-Annual
Shareholder Report
June 30, 1996
Investment Adviser of Portfolio
Boston Management and Research
24 Federal Street
Boston, MA 02110
Administrator
Eaton Vance Management
24 Federal Street
Boston, MA 02110
(617) 482-8260
Principal Underwriter
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(617) 482-8260
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
Cooper & Lybrand L.L.P.
One Post Office Square
Boston, MA 02109
<TABLE>
<CAPTION>
South Asia Portfolio
Portfolio of Investments
June 30, 1996
(Unaudited)
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Common Stocks -- 94.5%
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Shares Value
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<S> <C> <C> <C>
Bangladesh -- 1.2%
Apex Spinning & Knitting 40,000 $186,826
Apex Tannery Ltd 40,000 572,905
Eastern Housing Ltd. (1) 90,300 199,590
Monno Fabrics Ltd. (2)(3) 133,000 354,369
Square Pharmaceuticals Ltd. 16,000 255,605
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$1,569,295
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India -- 81.4%
Alacrity Housing Ltd. 321,000 $145,784
Asian Paints (India) Ltd. (2) 116,800 1,446,324
Associated Cement Cos. Ltd. (2) 84,936 5,820,515
Bajaj Auto Ltd. (2) 162,400 4,562,460
Bellary Steels & Alloys (2) 310,000 166,747
Enkay Synthetics Ltd. (2) 51,750 58,022
Essar Gujarat (2) 2,105 1,673
Flex Industries 400 1,657
Flex Industries (wts) (1)(3) 4,274 16,499
GE Shipping (2) 1,457,700 2,089,523
Gujarat Ambuja Cements GDR (1) 250,000 3,187,500
Himachal Futuristic Communications (2) 800 692
Himachal Telematics Ltd (2) 39,100 21,087
Hindalco Industries Ltd. GDR (1) 122,500 4,655,000
Hindustan Lever Ltd. (2) 260,350 6,070,891
Hindustan Petroleum Corp. (2) 100,000 1,114,107
Hoechst India Ltd. (2) 378,500 3,760,290
Hoechst Schering Agrevo Ltd. 20,000 272,495
Hotel Leela Venture Ltd. (2) 750 3,384
Hotel Leela Venture (wts) (1) 340 887
IFB Industries Ltd. (2) 107,800 321,288
Indian Hotels Co. Ltd. (2) 111,250 2,608,360
Indian Hotels Co. Ltd. GDR (1)(2) 35,850 1,030,687
Indian Petrochemicals Corp. (2) 615,000 2,718,883
Indian Rayon & Industries Ltd. (2) 153,300 2,145,242
Indian Rayon & Industries GDR 225,000 3,318,750
Indus Credit & Invest. Corp. (2) 629,250 1,607,507
Infosys Technologies Ltd. 85,500 1,735,240
Innovation Medi Equipment Ltd. (1) 150,000 13,837
Karur Vysya Bank (2) 146,800 1,150,066
KEC International Ltd. 165,200 616,627
Kotak Mahindra Finance Ltd (2) 372,400 935,493
Larsen & Toubro (2) 200,850 1,650,470
Larsen & Toubro Ltd. GDR 183,700 3,490,300
Madras Refinery Ltd. (2) 15,300 23,017
Mahindra & Mahindra (2) 370,653 3,792,935
Mahindra & Mahindra GDR 221,667 2,439,456
Motor Industries (2) 6,150 1,335,265
Murudeshwar Ceramics Ltd. (2) 318,240 519,409
Nagarjuna Construction (2) 112,500 253,159
Orchid Chemicals & Pharmaceuticals (2) 409,600 1,342,856
Oriental Bank of Commerce (2) 700,000 1,947,204
Paper Products (rts) (1) 12,500 49,673
Paper Products Ltd. Primary 50,000 198,695
Punjab Wireless Systems 100,000 434,998
Ranbaxy Laboratories Ltd. GDR 35,000 717,500
Ranco Industries Ltd. 12,000 429,180
Rubber Products (2) 132,000 62,760
S & S Industries & Enterprise (2) 138,000 38,386
Sakthi Sugars 400 590
Shaan Interwell (India) 112,700 107,485
State Bank of India-New (2) 777,800 6,628,851
Sterlite Industries (2) 217,800 1,904,127
Tanil Nadu Newsprint and Paper 231,500 939,667
Tata Chemicals (2) 17,099 125,221
Tata Engineering & Locomotive (2) 58,650 865,682
Tata Engineering & Locomotive GDR 210,261 3,705,868
Tata Iron & Steel (2) 655,000 4,503,938
Thermax Limited (2) 552,200 6,273,577
Thiru Arooran Sugars (2) 50,500 186,346
Triveni Engineering (2) 190,850 257,319
TTG Industries Ltd. (2) 142,600 331,910
T.V.S. Suzuki 228,550 2,338,698
Usha Beltron Ltd. GDR 108,450 257,569
Videsh Sanchar Nigam Ltd. (2) 202,000 7,740,565
VST Tillers 94,200 248,133
W.S. Industries Ltd. 102,500 72,736
Zuari Agrochemicals (2) 126,000 1,394,835
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$108,205,897
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Pakistan -- 10.2%
Adamjee Insurance Co. (2) 293,750 1,166,440
Engro Chemical Pakistan Ltd. (2) 60,000 277,675
Fauji Fertilizer (2) 500,000 1,285,530
Hub Power Company Ltd. GDR (1) 50,000 $1,243,750
Karachi Electric Supply Co. (1)(2) 1,030,040 1,081,390
Nishat Chunian Ltd. (1)(2) 306,000 50,265
Pakistan State Oil Co. Ltd. (2) 183,679 2,167,104
Pakistan Telecommunications GDR (1) 52,250 6,165,500
Searle Pakistan 137,459 146,275
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$13,583,929
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Sri Lanka -- 1.7%
Dev Fin Corp Of Ceylon 55,731 $302,237
Hayleys Ltd. 150,930 511,223
John Keells Holdings 86,852 226,904
John Keells Holdings GDR 118,856 624,000
Kelani Tyres (1) 480 82
National Development Bank 78,900 277,191
Royal Ceramic Lanka Ltd. (1) 394,900 156,523
Sampath Bank 186,000 164,201
Vanik Incorporation Ltd. 180,050 38,115
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$2,300,476
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Total Common Stocks (identified cost, $117,595,457) $125,659,597
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Bonds -- 0.1%
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Principal
Amount
(000 omitted) Value
- --------------------------------------------------------------------------------------------
Flex Industries, 13.5%, 12/31/99 (3) US $836 $23,729
Hotel Leela Venture Ltd. NCD 14%, 4/8/03 27 660
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Total Bonds (at identified cost, $27,767) $24,389
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Total Investments -- 94.5% (identified cost, $117,623,224) $125,683,986
Other assets, less liabilities -- 5.5% 7,346,815
------------
Net Assets -- 100% $133,030,801
============
GDR-Global depository receipt
(1) Non-income producing security
(2) The above securities held by the Portfolio on June 30, 1996 are unrestricted securities
valued at market prices. Because of the length of the registration process, the Portfolio
would temporarily be unable to sell certain of these securities. At June 30, 1996, the
aggregate value of these securities amounted to $45,323,904, representing 34.1% of the
Portfolio's net assets (Note 5)
(3) Security valued using methods determined in good faith by or at the direction of
the Trustees.
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
Financial Statements
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Statement of Assets and Liabilities
June 30, 1996 (Unaudited)
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<S> <C> <C>
Assets:
Investments, at value (Note 1A) (identified cost, $117,623,224) $125,683,986
Cash 8,520,460
Foreign currency, at value (identified cost, $1,169,779) 1,159,951
Receivable for investments sold 1,576,780
Dividends and interest receivable 228,976
Deferred organization expenses (Note 1C) 49,215
------------
Total assets $137,219,368
Liabilities:
Payable for investments purchased $3,864,544
Payable to affiliates: Trustees fees 3,333
Accrued expenses and other liabilities 320,690
------------
Total liabilities 4,188,567
------------
Net Assets applicable to investors' interest in Portfolio $133,030,801
============
Sources of Net Assets:
Net proceeds from capital contributions and withdrawals $124,975,570
Net unrealized appreciation of investments and foreign currency
(computed on the basis of identified cost) 8,055,231
------------
Total $133,030,801
============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
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Statement of Operations
For the Six Months Ended June 30, 1996 (Unaudited)
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<S> <C> <C>
Investment Income:
Income --
Dividends (net of foreign taxes, $49,867) $229,986
Interest 1,740
------------
Total income 231,726
Expenses --
Investment adviser fee (Note 2) $393,999
Administration fee (Note 2) 131,099
Compensation of Trustees not members of the
Investment Adviser's or Administrator's organization 4,418
Custodian fee 325,761
Legal and accounting services 33,794
Amortization of organization expenses (Note 1C) 8,678
Miscellaneous 9,276
------------
Total expenses $907,025
Deduct-reduction of custodian fee 194,531
------------
Net expenses 712,494
------------
Net investment loss $(480,768)
------------
Realized and Unrealized Gain (Loss) on Investments:
Net realized gain (loss) --
Investment transactions (identified cost basis) $700,026
Foreign currency transactions (1,743,367)
------------
Net realized loss on investments $(1,043,341)
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $21,642,017
Foreign currency 36,366
------------
Net unrealized appreciation 21,678,383
------------
Net realized and unrealized gain on investments $20,635,042
------------
Net increase in net assets from operations $20,154,274
============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
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Statement of Cash Flows
For the Six Months Ended June 30, 1996 (Unaudited)
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<S> <C>
Increase (Decrease) in Cash:
Cash Flows From (For) Operating Activities --
Purchase of investments $(87,931,297)
Proceeds from sale of investments 19,757,241
Dividends and interest received 151,008
Operating expenses paid (449,354)
Foreign currency transactions (1,236,092)
------------
Net cash used for operating activities $(69,708,494)
------------
Cash Flows From (For) Financing Activities --
Proceeds from capital contributions $101,370,713
Payments for capital withdrawals (25,929,523)
------------
Net cash provided from financing activities $75,441,190
------------
Net increase in cash $5,732,696
Cash at Beginning of Period 2,787,764
------------
Cash at End of Period $8,520,460
============
Reconciliation of Net Increase in Net Assets From
Operations to Net Cash From Operating Activities:
Net increase in net assets from operations $20,154,274
Increase in receivable for investments sold (1,082,048)
Decrease in foreign currency 470,909
Increase in dividends and interest receivable (80,718)
Decrease in deferred organization expenses 8,678
Increase in payable to affiliates: Trustees fees 3,333
Increase in accrued expenses and other liablilities 251,128
Increase in payable for investments purchased 2,619,395
Net increase in investments (92,053,445)
------------
Net cash used for operating activities $(69,708,494)
============
See notes to financial statements
</TABLE>
<TABLE>
<CAPTION>
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Statements of Changes in Net Assets
- --------------------------------------------------------------------------------------------------------------
Six Months Ended
June 30,1996 Year Ended
(Unaudited) December 31, 1995
-------------- ------------------
<S> <C> <C>
Increase (Decrease) in Net Assets:
From operations --
Net investment loss $(480,768) $(78,834)
Net realized loss on investments and foreign currency transactions (1,043,341) (7,522,747)
Change in unrealized appreciation (depreciation) of investments 21,678,383 (9,895,389)
------------ ------------
Increase (decrease) in net assets from operations $20,154,274 $(17,496,970)
------------ ------------
Capital transactions --
Contributions $101,370,713 $22,408,418
Withdrawals (25,929,523) (24,329,701)
------------ ------------
Increase (Decrease) in net assets resulting from capital transactions $75,441,190 $(1,921,283)
------------ ------------
Net increase (decrease) in net assets $95,595,464 $(19,418,253)
Net Assets:
At beginning of period 37,435,337 56,853,590
------------ ------------
At end of period $133,030,801 $37,435,337
============ ============
</TABLE>
<TABLE>
<CAPTION>
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Supplementary Data
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Six Months Ended Year Ended December 31,
June 30, 1996 ----------------------------
(Unaudited) 1995 1994*
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<S> <C> <C> <C>
Ratios (to average daily net assets):
Expenses (1) 1.72%+ 1.76% 1.16%+
Net expenses, after custodian fee reduction (1) 1.35%+ 1.35% --
Net investment income (loss) (0.91%)+ (0.18%) 0.01%+
Portfolio Turnover 21% 38% 1%
Average commission rate (per share) (2) $0.05 -- --
Annualized.
+ Annualized.
* For the period from the start of business, May 2, 1994, to December 31, 1994.
(1) 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 Portfolio to increase its expense ratio by the effect of any expense offset arrangements with its
service providers. The expense ratio for the period ended December 31, 1994 has not been adjusted to
reflect this change.
(2) Average commission rate paid is computed by dividing the total amount of commissions paid during
the period by the total number of shares purchased and sold during the period.
See notes to financial statements
</TABLE>
Notes to Financial Statements (Unaudited)
(1) Significant Accounting Policies
South Asia Portfolio (the "Portfolio") is registered under the
Investment Company Act of 1940 as a diversified, open-end management
investment company which was organized as a trust under the laws of the
State of New York on January 18, 1994. The Declaration of Trust permits
the Trustees to issue interests in the Portfolio. The following is a
summary of the significant accounting policies of the Portfolio. The
policies are in conformity with generally accepted accounting
principles.
A. Investment Valuations -- Marketable securities, including options,
that are listed on foreign or U.S. securities exchanges or in the NASDAQ
National Market System are valued at closing sale prices or, if there
were no sales, at the mean between the closing bid and asked prices on
the exchange where such securities are principally traded. Futures
positions on securities or currencies are generally valued at closing
settlement prices. Unlisted or listed securities for which closing sale
prices are not available are valued at the mean between the latest bid
and asked prices. Short term debt securities with a remaining maturity
of 60 days or less are valued at amortized cost. Other fixed income and
debt securities, including listed securities and securities for which
price quotations are available, will normally be valued on the basis of
valuations furnished by a pricing service. Investments for which
valuations or market quotations are unavailable are valued at fair value
using methods determined in good faith by or at the direction of the
Trustees.
B. Federal Taxes -- The Portfolio is treated as a partnership for U.S.
Federal tax purposes. No provision is made by the Portfolio for federal
or state taxes on any taxable income of the Portfolio because each
investor in the Portfolio is individually responsible for the payment of
any taxes on its share of such income. Since some of the Portfolio's
investors are regulated investment companies that invest all or
substantially all of their assets in the Portfolio, the Portfolio
normally must satisfy the applicable source of income and
diversification requirements, (under the U.S. Internal Revenue Code), in
order for its investors to satisfy them. The Portfolio will allocate, at
least annually among its investors, each investor's distributive share
of the Portfolio's net investment income, net realized capital gains,
and any other items of income, gain, loss, deduction or credit.
C. Deferred Organization Expenses -- Costs incurred by the Portfolio in
connection with its organization, including registration costs, are
being amortized on the straight-line basis over five years.
D. Financial Futures Contracts -- Upon the entering of a financial
futures contract, the Portfolio is required to deposit ("initial
margin") either of cash or securities an amount equal to a certain
percentage of the purchase price indicated in the financial futures
contract. Subsequent payments are made or received by the Portfolio
("margin maintenance") each day, dependent on daily fluctuations in the
value of the underlying security, and are recorded for book purposes as
unrealized gains or losses by the Portfolio. Should interest or currency
exchange rates move unexpectedly, the Portfolio may not achieve the
anticipated benefits of the financial futures contracts and may realize
a loss. If the Portfolio enters into a closing transaction, the
Portfolio will realize, for book purposes, a gain or loss equal to the
difference between the value of the financial futures contract to sell
and financial futures contract to buy.
E. Foreign Currency Translation -- Investment valuations, other assets,
and liabilities initially expressed in foreign currencies are converted
each business day into U.S. dollars based upon current exchange rates.
Purchases and sales of foreign investment securities and income and
expenses are converted into U.S. dollars based upon currency exchange
rates prevailing on the respective dates of such transactions.
Recognized gains or losses on investment transactions attributable to
foreign currency rates are recorded for financial statement purposes as
net realized gains and losses on investments. That portion of unrealized
gains and losses on investments that result from fluctuations in foreign
currency exchange rates are not separately disclosed.
F. Forward Foreign Currency Exchange Contracts -- The Portfolio may
enter into forward foreign currency exchange contracts for the purchase
or sale of a specific foreign currency at a fixed price on a future
date. Risks may arise upon entering these contracts from the potential
inability of counterparties to meet the terms of their contracts and
from movements in the value of a foreign currency relative to the U.S.
dollar. The Portfolio will enter into forward contracts for hedging
purposes as well as non-hedging purposes. The forward foreign currency
exchange contracts are adjusted by the daily exchange rate of the
underlying currency and any gains or losses are recorded for financial
statement purposes as unrealized until such time as the contracts have
been closed or offset.
G. Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian of the Portfolio. Pursuant to the custodian agreement, IBT
receives a fee reduced by credits which are determined based on the
average daily cash balances the Portfolio maintains with IBT. All
significant credit balances used to reduce the Portfolio's custodian
fees are reported as a reduction of expenses in the statement of
operations.
H. 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.
I. Other -- Investment transactions are accounted for on the date the
securities are purchased or sold. Dividend income is recorded on the ex-
dividend date. However, if the ex-dividend date has passed, certain
dividends from foreign securities are recorded as the Portfolio is
informed of the ex-dividend date. Interest income is recorded on the
accrual basis.
J. Interim Financial Information -- The interim financial statements
relating to June 30, 1996 and for the six month period then ended have
not been audited by independent certified public accountants, but in the
opinion of the Portfolio's management, reflect all adjustments,
consisting of normal recurring adjustments, necessary for the fair
presentation of the financial statements.
(2) Investment Adviser Fee and Other
Transactions with Affiliates
The investment adviser fee is earned by Lloyd George Investment
Management (Bermuda) Limited (the Adviser) as compensation for
management and investment advisory services rendered to the Portfolio.
Under the advisory agreement, the Adviser receives a monthly fee of
0.0625% (0.75% annually) of the average daily net assets of the
Portfolio up to $500,000,000, and at reduced rates as daily net assets
exceed that level. For the six months ended June 30, 1996, the
annualized adviser fee was 0.75% of average net assets and amounted to
$393,999. In addition, an administrative fee is earned by Eaton Vance
Management (EVM) for managing and administering the business affairs of
the Portfolio. Under the administration agreement, EVM earns a monthly
fee in the amount of 1/48th of 1% (equal to 0.25% annually) of the
average daily net assets of the Portfolio up to $500,000,000, and at
reduced rates as daily net assets exceed that level. For the six months
ended June 30, 1996, the administration fee was 0.25% (annualized) of
average net assets and amounted to $131,099. Except as to Trustees of
the Portfolio who are not members of the Adviser or EVM's organization,
officers and Trustees receive remuneration for their services to the
Portfolio out of such investment adviser and administrative fees.
Certain of the officers and Trustees of the Portfolio are officers or
trustees of the above organizations.
(3) Investment Transactions
For the six months ended June 30, 1996, purchases and sales of
investments, other than short-term obligations, aggregated $90,550,692
and $20,839,289 respectively.
(4) 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 $117,691,790
============
Gross unrealized appreciation $ 20,339,136
Gross unrealized depreciation 12,346,940
------------
Net unrealized appreciation $ 7,992,196
============
(5) Risks Associated with Foreign Investments
Investing in securities issued by companies whose principal business
activities are outside the United States may involve significant risks
not present in domestic investments. For example, there is generally
less publicly available information about foreign companies,
particularly those not subject to the disclosure and reporting
requirements of the U.S. securities laws. Foreign issuers are generally
not bound by uniform accounting, auditing, and financial reporting
requirements and standards of practice comparable to those applicable to
domestic issuers. Investments in foreign securities also involve the
risk of possible adverse changes in investment or exchange control
regulations, expropriation or confiscatory taxation, limitation on the
removal of funds or other assets of the Portfolio, political or
financial instability or diplomatic and other developments which could
affect such investments. Foreign stock markets, while growing in volume
and sophistication, are generally not as developed as those in the
United States, and securities of some foreign issuers (particularly
those located in developing countries) may be less liquid and more
volatile than securities of comparable U.S. companies. In general, there
is less overall governmental supervision and regulation of foreign
securities markets, broker-dealers, and issuers than in the United
States.
Settlement of securities transactions in the Indian subcontinent may be
delayed and is generally less frequent than in the United States, which
could affect the liquidity of the Portfolio's assets. The Portfolio may
be unable to sell securities where the registration process is
incomplete and may experience delays in receipt of dividends.
(6) Line of Credit
The Portfolio participates with other portfolios and funds managed by
EVM and its affiliates 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 Portfolio solely to facilitate the handling of
unusual and/or unanticipated short-term cash requirements. Interest is
charged to each portfolio or 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
portfolios and funds at the end of each quarter. The Portfolio did not
have any significant borrowings or allocated fees during
the period.
INVESTMENT MANAGEMENT FOR GOVERNMENT OBLIGATIONS PORTFOLIO
OFFICERS
JAMES B. HAWKES
President, Director
MARK S. VENEZIA
Vice President
JAMES L. O'CONNOR
Treasurer
THOMAS OTIS
Secretary
DIRECTORS
LANDON T. CLAY
Chairman, Eaton Vance Corp.
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
Director,
Fidurciary Company Incorporated
JACK L. TREYNOR
Investment Adviser and Consultant
