Form N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-04015
Eaton Vance Mutual Funds Trust
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(Exact Name of Registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
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(Address of principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
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(Name and Address of Agent for Services)
(617) 482-8260
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(Registrant's Telephone Number)
October 31
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Date of Fiscal Year End
October 31, 2003
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Date of Reporting Period
Item 1. Reports to Stockholders
[EATON VANCE LOGO]
EATON VANCE
EQUITY
RESEARCH
FUND
Annual Report October 31, 2003
EATON VANCE FUNDS
EATON VANCE MANAGEMENT
BOSTON MANAGEMENT AND RESEARCH
EATON VANCE DISTRIBUTORS, INC.
PRIVACY NOTICE
The Eaton Vance organization is committed to ensuring your financial
privacy. This notice is being sent to comply with privacy regulations of
the Securities and Exchange Commission. Each of the above financial
institutions has in effect the following policy with respect to nonpublic
personal information about its customers:
* Only such information received from you, through application forms or
otherwise, and information about your Eaton Vance fund transactions
will be collected.
* None of such information about you (or former customers) will be
disclosed to anyone, except as permitted by law (which includes
disclosure to employees necessary to service your account).
* Policies and procedures (including physical, electronic and procedural
safeguards) are in place that are designed to protect the
confidentiality of such information.
For more information about Eaton Vance's privacy policies, call:
1-800-262-1122.
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IMPORTANT NOTICE
REGARDING DELIVERY OF
SHAREHOLDER DOCUMENTS
The Securities and Exchange Commission permits funds to deliver only one
copy of shareholder documents, including prospectuses, proxy statements
and shareholder reports, to fund investors with multiple accounts at the
same residential or post office box address. This practice is often
called "householding" and it helps eliminate duplicate mailings to
shareholders.
Eaton Vance, or your financial adviser, may household the mailing of
your documents indefinitely unless you instruct Eaton Vance, or your
financial adviser, otherwise.
If you would prefer that your Eaton Vance documents not be householded,
please contact Eaton Vance at 1-800-262-1122, or contact your financial
adviser.
Your instructions that householding not apply to delivery of your Eaton
Vance documents will be effective within 30 days of receipt by Eaton
Vance or your financial adviser.
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From time to time, funds are required to vote proxies related to the
securities held by the funds. The Eaton Vance Funds or their underlying
Portfolios vote proxies according to a set of policies and procedures
approved by the Funds' and Portfolios' Boards. You may obtain a
description of these policies and procedures without charge, upon
request, by calling 1-800-262-1122. This description is also available on
the Securities and Exchange Commission's website at http://www.sec.gov.
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Eaton Vance Equity Research Fund as of October 31, 2003
INVESTMENT UPDATE
[PHOTO WITH CAPTION "Walter Row, Investment Team Leader"]
An interview with Walter Row, Investment Team Leader, Equity Research
Fund
Q: Walter, can you share some thoughts on what happened in the stock
markets over the last 12 months?
A: Equity markets have enjoyed positive returns for the 12 months ending
October 31, 2003. After several years of disappointing returns, several
factors have combined to help drive stocks higher over the past year.
A strengthening U.S. economy and an improved outlook for corporate
earnings were the key drivers of equity market performance. Also, the
fact that interest rates and inflation remained low by historical
standards also supported higher equity prices.
Five Largest Sector Positions +
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By total net assets
Financial services -- 9.5%
Electronics/Semiconductors -- 7.7%
Banks -- 7.1%
Pharmaceuticals -- 6.0%
Oil and Gas -- 5.5%
+ Sector positions are subject to change due to active management.
* It is not possible to invest directly in an Index.
Q: While the Fund posted a solid double-digit return over the past
year, its rate of increase lagged its benchmark, the S&P 500.* Can you
comment on this?
A: We are pleased with the Fund's performance over the past year. By
staying focused on stock selection we were able to deliver strong
returns for our shareholders. Our commitment to stock selection also
contributed to our underperformance relative to our benchmark. In the
early phases of an equity market recovery, it is not uncommon for many
of the best performing stocks to be found among lower-priced,
lower-quality issues. Quite often, many of the stocks enjoying the
strongest rebounds are the same stocks that suffered the sharpest losses
during the market's decline. That has been very much the case over the
past year. Because the stock selection for the Fund is based on
fundamental research, the Fund has generally avoided owning many of
these stocks.
Q: Have there been any changes in the way the Fund is managed?
A: No, we still seek to achieve long-term capital appreciation by
investing in a diversified portfolio of equity securities. Securities
held in the Fund are selected by a team of investment analysts that make
up the Eaton Vance equity research group. Each analyst is responsible
for stock selection within his or her area of expertise and allocation
for the Fund intends to maintain investments in all or substantially all
of the market sectors represented in the S&P 500.*
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The views expressed in this report are those of the investment team
leader and are current only through the end of the period of the report
as stated on the cover. These views are subject to change at any time
based upon market or other conditions, and Eaton Vance disclaims any
responsibility to update such views. These views may not be relied on as
investment advice and, because investment decisions for an Eaton Vance
fund are based on many factors, may not be relied on as an indication of
trading intent on behalf of any Eaton Vance fund.
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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.
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Eaton Vance Equity Research Fund as of October 31, 2003
INVESTMENT UPDATE Cont'd
Fundamental research remained the cornerstone of our Fund. Our analyst
team conducts extensive research into a company's financials while
additionally considering broad, macro-economic trends that may influence
a company's growth. We believe this approach allows our analysts to see
the big picture before committing to buy any security.
Q: What positively benefited the Fund over the past year?
A: The Fund was successful in its allocations in the financial services
and banking sectors, which saw improving earnings based on the overall
economic recovery and the continuing low interest rate environment.
Technology related stocks in general have enjoyed some of the strongest
gains over the past year. Our careful selections in electronics -
semiconductors helped add to our Fund's overall performance for the
year. Consumer related stocks (consumer non-durables and retail) also
performed well as consumer confidence rose on the back of an improving
economy.
Q: What negatively impacted Fund performance over the past year?
A: If measured against our benchmark, the Fund was impacted more by what
securities it did not hold over the time period, than securities held by
the Fund. Our strict research requirements eliminated many stocks from
the start. Most of the more spectacular gains in the market over the
past year came from lower quality issues. These are stocks that would be
filtered out of the Fund's investment pool based on our commitment to
disciplined fundamental research.
Q: What is your outlook for the Fund?
A: We believe the companies now held in the Fund are attractively valued
and hold positions of strength in their prospective industries. Our
analyst team is a highly disciplined group who bring an average of 15
years investment experience to the task of selecting stocks. Regardless
of short-term market fluctuations, our analysts focus on rigorous
fundamental research which we feel is the true driver of long-term
performance.
Eaton Vance Equity Research Fund as of October 31, 2003
INVESTMENT UPDATE Cont'd
Comparison of Change in Value of a $10,000 Investment
in Eaton Vance Equity Research Fund, vs. the S&P 500
Composite Index* November 1, 2001 -- October 31, 2003
Eaton Vance Equity Research Fund -- Class A
Inception: 11/1/01
Fund Fund S&P
Value at Value With 500
Date NAV Sales Charge Index
- -------- -------- ------------ -------
11/1/01 $10,000 $9,425 $10,000
11/30/01 10,430 9,830 10,525
12/31/01 10,530 9,925 10,618
1/31/02 10,330 9,736 10,463
2/28/02 10,130 9,548 10,261
3/31/02 10,570 9,962 10,647
4/30/02 10,120 9,538 10,002
5/31/02 10,040 9,463 9,928
6/30/02 9,330 8,794 9,221
7/31/02 8,580 8,087 8,503
8/31/02 8,620 8,124 8,558
9/30/02 7,810 7,361 7,629
10/31/02 8,400 7,917 8,300
11/30/02 8,800 8,294 8,788
12/31/02 8,340 7,861 8,272
1/31/03 8,130 7,663 8,056
2/28/03 8,010 7,549 7,935
3/31/03 8,090 7,625 8,011
4/30/03 8,660 8,162 8,671
5/31/03 9,130 8,605 9,127
6/30/03 9,270 8,737 9,244
7/31/03 9,330 8,794 9,407
8/31/03 9,570 9,020 9,590
9/30/03 9,330 8,794 9,489
10/31/03 9,860 9,293 10,025
* Investment operations commenced at the beginning of
the day on 11/1/01. Therefore, the index is calculated
from 10/31/01 to coincide with the fund's commencement.
Performance 1
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Average Annual Total Returns (at net asset value)
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1 Year 17.38%
Life of Fund+ -0.70%
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
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1 Year 10.66%
Life of Fund+ -3.60%
+ Inception Date -- 11/01/01
* Source: Thomson Financial. Investment operations commenced 11/01/01.
The chart compares the Fund's total return with that of the S&P 500
Composite Index, a broad-based, unmanaged market index of common
stocks commonly used as a measure of U.S. stock market performance.
Returns are calculated by determining the percentage change in net
asset value (NAV) with all distributions reinvested. The graph and
performance table do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares. The Index's return uses net dividends, which reflect the
deduction of withholding taxes. The lines on the chart represent the
total returns of $10,000 hypothetical investments in the Fund and the
Index. The Index's total return does not reflect any commissions or
expenses that would have been incurred if an investor individually
purchased or sold the securities represented in the Index. It is not
possible to invest directly in an Index.
1 Returns are historical and are calculated by determining the
percentage change in net asset value with all distributions
reinvested. SEC returns reflect the maximum 5.75% sales charge. 2Ten
largest holdings accounted for 19.4% of the Fund's net assets.
Holdings are subject to change.
Past performance is no guarantee of future results. Investment return
and principal value will fluctuate so that shares, when redeemed, may
be worth more or less than their original cost.
Ten Largest Holdings 2 By total net assets
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Citigroup, Inc. 2.7%
General Electric Co. 2.6
Microsoft Corp. 2.4
Wal-Mart Stores, Inc. 2.3
General Dynamics Corp. 1.8
Exxon Mobil Corp. 1.7
Caremark Rx, Inc. 1.5
Wells Fargo & Co. 1.5
American International Group, Inc. 1.5
Procter & Gamble Co. 1.4
Eaton Vance Equity Research Fund as of October 31, 2003
PORTFOLIO OF INVESTMENTS
Common Stocks -- 101.2%
Security Shares Value
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Aerospace and Defense -- 3.4%
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General Dynamics Corp. 209 $ 17,493
Lockheed Martin Corp. 160 7,418
Northrop Grumman Corp. 80 7,152
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$ 32,063
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Auto Components -- 1.0%
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Borg Warner, Inc. 120 $ 9,551
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Banks -- 7.1%
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Bank of America Corp. 158 $ 11,965
Charter One Financial 219 6,999
National City Corp. 155 5,062
National Commerce Financial Corp. 119 3,269
North Fork Bancorp. 130 5,067
SouthTrust Corp. 150 4,778
TCF Financial Corp. 110 5,740
Wachovia Corp. 133 6,101
Washington Mutual, Inc. 85 3,719
Wells Fargo & Co. 255 14,362
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$ 67,062
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Beverages -- 2.4%
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Anheuser-Busch Cos., Inc. 134 $ 6,601
Coca Cola Co. (The) 102 4,733
PepsiCo, Inc. 243 11,620
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$ 22,954
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Biotechnology -- 1.2%
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Amgen, Inc.(1) 181 $ 11,179
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Chemicals -- 0.8%
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Dow Chemical Co. (The) 113 $ 4,259
E.I. du Pont de Nemours & Co. 75 3,030
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$ 7,289
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Commercial Services & Supplies -- 0.4%
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First Data Corp. 102 $ 3,641
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Communications Equipment -- 2.2%
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Cisco Systems, Inc.(1) 499 $ 10,469
Motorola, Inc. 335 4,533
Nokia Corp., ADR 373 6,337
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$ 21,339
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Communications Services -- 3.2%
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BellSouth Corp. 178 $ 4,683
SBC Communications, Inc. 411 9,856
Telefonos De Mexico-SP, ADR 141 4,533
Verizon Communications, Inc. 343 11,525
$ 30,597
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Computers and Business Equipment -- 2.2%
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Dell Computer Corp.(1) 153 $ 5,526
Hewlett-Packard Co. 172 3,837
International Business Machines Corp. 126 11,274
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$ 20,637
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Consumer Non-Durables -- 1.9%
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Gillette Co. (The) 160 $ 5,104
Procter & Gamble Co. 134 13,171
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$ 18,275
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Containers & Packaging -- 0.4%
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Smurfit-Stone Container Corp.(1) 225 $ 3,488
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Diversified Manufacturing and Services -- 3.3%
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3M Co. 92 $ 7,256
General Electric Co. 837 24,281
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$ 31,537
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Electrical Equipment -- 0.7%
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Emerson Electric Co. 124 $ 7,037
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See notes to financial statements
Eaton Vance Equity Research Fund as of October 31, 2003
PORTFOLIO OF INVESTMENTS Cont'd
Security Shares Value
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Electronics - Instruments -- 0.2%
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Thermo Electron Corp.(1) 78 $ 1,714
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Electronics - Semiconductors -- 7.7%
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Altera Corp.(1) 250 $ 5,057
Analog Devices, Inc.(1) 174 7,713
Applied Materials, Inc.(1) 225 5,258
Broadcom Corp., Class A(1) 71 2,268
Cymer, Inc.(1) 150 6,849
Intel Corp. 299 9,882
KLA-Tencor Corp.(1) 60 3,440
Linear Technology Corp. 135 5,752
Maxim Integrated Products, Inc. 161 8,003
Microchip Technology 262 8,570
STMicroelectronics NV, NY shares 265 7,060
Xilinx Inc.(1) 116 3,677
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$ 73,529
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Financial Services -- 9.5%
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Affiliated Managers Group(1) 55 $ 3,988
American Express Co. 90 4,224
Citigroup, Inc. 547 25,928
Countrywide Financial Corp. 50 5,256
Fannie Mae 60 4,301
Freddie Mac 65 3,648
Goldman Sachs Group, Inc. 53 4,977
J.P. Morgan Chase & Co. 136 4,882
Legg Mason, Inc. 61 5,078
Merrill Lynch & Co., Inc. 118 6,986
Moody's Corp. 102 5,899
PFF Bancorp, Inc. 77 2,872
Student Loan Corp. 34 4,404
W Holding Co., Inc. 330 7,686
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$ 90,129
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Foods -- 2.0%
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Nestle SA, ADR 209 $ 11,504
Sara Lee Corp. 352 7,015
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$ 18,519
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Health Care Equipment & Supplies -- 2.1%
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Boston Scientific Corp.(1) 90 $ 6,095
Medtronic, Inc. 83 3,782
St. Jude Medical, Inc.(1) 90 5,234
Zimmer Holdings, Inc.(1) 80 5,105
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$ 20,216
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Health Care Services -- 3.6%
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Aetna, Inc. 67 $ 3,846
Cardinal Health, Inc. 183 10,859
Caremark Rx, Inc.(1) 574 14,379
Health Management Associates, Class A 226 5,006
Medco Health Solutions, Inc.(1) 7 232
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$ 34,322
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Household Durables -- 0.5%
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Lennar Corp., Class A 51 $ 4,684
Lennar Corp., Class B 5 434
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$ 5,118
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Household Products -- 0.5%
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Colgate-Palmolive Co. 83 $ 4,415
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Insurance -- 4.9%
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AFLAC Inc. 112 $ 4,086
Allstate Corp. 107 4,226
American International Group, Inc. 233 14,173
Berkshire Hathaway, Class B(1) 3 7,794
Marsh & McLennan Cos. 82 3,506
MetLife, Inc. 150 4,710
Progressive Corp. 72 5,314
XL Capital Ltd., Class A 45 3,128
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$ 46,937
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See notes to financial statements
Eaton Vance Equity Research Fund as of October 31, 2003
PORTFOLIO OF INVESTMENTS Cont'd
Security Shares Value
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IT Consulting & Services -- 1.3%
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Accenture Ltd., Class A(1) 198 $ 4,633
Fiserv Inc.(1) 111 3,921
SunGuard Data Systems, Inc.(1) 146 4,095
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$ 12,649
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Machinery -- 2.1%
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Danaher Corp. 56 $ 4,640
Deere and Co. 145 8,790
Illinois Tool Works, Inc. 85 6,252
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$ 19,682
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Media -- 4.8%
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Clear Channel Communications, Inc. 97 $ 3,960
Comcast Corp., Class A(1) 366 12,415
Getty Images, Inc.(1) 200 8,940
Omnicom Group, Inc. 36 2,873
Univision Communications, Inc., Class A(1) 117 3,972
Viacom, Inc., Class B 215 8,572
Walt Disney Co. (The) 193 4,370
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$ 45,102
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Metals & Mining -- 1.5%
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Alcan Ltd. 76 $ 3,035
Barrick Gold Corp. 164 3,193
GrafTech International, Ltd.(1) 330 3,429
Peabody Energy Corp. 128 4,266
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$ 13,923
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Oil and Gas -- 5.5%
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BP PLC, ADR 100 $ 4,238
ChevronTexaco Corp. 54 4,012
ConocoPhillips 143 8,172
ENI S.P.A., ADR 60 4,770
EOG Resources, Inc. 137 5,773
Exxon Mobil Corp. 441 16,132
Total SA, ADR 121 9,446
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$ 52,543
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Paper and Forest Products -- 0.3%
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Weyerhaeuser Co. 52 $ 3,132
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Pharmaceuticals -- 6.0%
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Biovail Corp.(1) 389 $ 9,355
Forest Laboratories, Inc.(1) 144 7,201
Impax Laboratories, Inc.(1) 340 4,032
Johnson & Johnson Co. 68 3,422
Lilly (Eli) & Co. 115 7,661
Merck & Co., Inc. 66 2,921
Pfizer, Inc. 398 12,577
Teva Pharmaceutical Industries, Ltd., ADR 84 4,779
Wyeth 105 4,635
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$ 56,583
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Printing and Business Products -- 0.7%
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Lexmark International, Inc.(1) 92 $ 6,772
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Retail - Food and Drug -- 0.6%
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Walgreen Co. 151 $ 5,258
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Retail - Multiline -- 3.9%
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Costco Wholesale Corp.(1) 245 $ 8,666
Target Corp. 172 6,835
Wal-Mart Stores, Inc. 365 21,517
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$ 37,018
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Retail - Specialty -- 4.9%
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Abercrombie & Fitch Co., Class A(1) 296 $ 8,436
Best Buy Co., Inc.(1) 180 10,496
Linens 'N Things, Inc.(1) 370 10,922
Staples, Inc.(1) 383 10,272
TJX Companies, Inc. 320 6,717
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$ 46,843
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See notes to financial statements
Eaton Vance Equity Research Fund as of October 31, 2003
PORTFOLIO OF INVESTMENTS Cont'd
Security Shares Value
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Software Services -- 4.3%
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Intuit, Inc.(1) 95 $ 4,748
Microsoft Corp. 888 23,221
Oracle Corp.(1) 598 7,152
Symantec Corp.(1) 92 6,132
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$ 41,253
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Tobacco -- 1.0%
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Altria Group, Inc. 195 $ 9,068
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Utilities - Electric -- 3.1%
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Allete, Inc. 155 $ 4,683
Entergy Corp. 71 3,827
Exelon Corp. 110 6,979
FPL Group, Inc. 71 4,526
PG&E Corp.(1) 161 3,936
Scottish Power PLC, ADR 214 5,166
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$ 29,117
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Total Common Stocks
(identified cost $877,749) $960,491
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Total Investments -- 101.2%
(identified cost $877,749) $960,491
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Other Assets, Less Liabilities -- (1.2)% $(11,512)
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Net Assets -- 100.0% $948,979
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(1) Non-income producing security.
See notes to financial statements
Eaton Vance Equity Research Fund as of October 31, 2003
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
As of October 31, 2003
Assets
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Investments, at value
(identified cost, $877,749) $ 960,491
Receivable for investments sold 3,214
Dividends receivable 1,258
Receivable from the Adviser 36,359
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Total assets $1,001,322
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Liabilities
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Due to Bank $ 30,765
Payable for investments purchased 3,511
Payable to affiliate for service fees 201
Accrued expenses 17,866
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Total liabilities $ 52,343
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Net Assets for 96,247 shares of beneficial interest outstanding $ 948,979
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Sources of Net Assets
- ----------------------------------------------------------------------------
Paid-in capital $ 936,855
Accumulated net realized loss
(computed on the basis of identified cost) (71,259)
Accumulated net investment income 641
Net unrealized appreciation
(computed on the basis of identified cost) 82,742
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Total $ 948,979
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Net Asset Value and
Redemption Price Per Share
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($948,979 [DIV] 96,247 shares of beneficial interest outstanding) $ 9.86
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Maximum Offering Price Per Share
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(100 [DIV] 94.25 of $9.86) $ 10.46
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Statement of Operations
For the Year Ended
October 31, 2003
Investment Income
- ----------------------------------------------------------------------------
Dividends (net of foreign taxes, $111) $ 11,968
Interest 85
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Total investment income $ 12,053
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Expenses--
Investment adviser fee $ 5,348
Administration fee 1,217
Service fees 2,034
Custodian fee 7,436
Legal and accounting services 29,673
Printing and postage 4,580
Registration fees 1,020
Transfer and dividend disbursing agent fees 657
Miscellaneous 2,371
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Total expenses $ 54,336
- ----------------------------------------------------------------------------
Deduct--
Waiver and reimbursement of expenses by the Adviser
and/or Administrator $ 42,924
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Total expense reductions $ 42,924
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Net expenses $ 11,412
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Net investment income $ 641
- ----------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
- ----------------------------------------------------------------------------
Net realized gain (loss)--
Investment transactions (identified cost basis) $ (10,504)
- ----------------------------------------------------------------------------
Net realized loss $ (10,504)
- ----------------------------------------------------------------------------
Change in unrealized appreciation (depreciation)--
Investments (identified cost basis) $ 149,518
- ----------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) $ 149,518
- ----------------------------------------------------------------------------
Net realized and unrealized gain $ 139,014
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Net increase in net assets from operations $ 139,655
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See notes to financial statements
Eaton Vance Equity Research Fund as of October 31, 2003
FINANCIAL STATEMENTS Cont'd
Statements of Changes in Net Assets
Increase (Decrease) Year Ended Year Ended
in Net Assets October 31, 2003 October 31, 2002
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From operations--
Net investment income (loss) $ 641 $ (81)
Net realized loss (10,504) (60,755)
Net change in unrealized appreciation (depreciation) 149,518 (66,776)
- ------------------------------------------------------------------------------------------------------------
Net increase in net assets from operations $139,655 $(127,612)
- ------------------------------------------------------------------------------------------------------------
Transactions in shares of beneficial interest--
Proceeds from sale of shares $189,379 $ 825,552
Cost of shares redeemed (66,202) (11,793)
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Net increase in net assets from Fund share transactions $123,177 $ 813,759
- ------------------------------------------------------------------------------------------------------------
Net increase in net assets $262,832 $ 686,147
- ------------------------------------------------------------------------------------------------------------
Net Assets
- ------------------------------------------------------------------------------------------------------------
At beginning of year $686,147 $ --
- ------------------------------------------------------------------------------------------------------------
At end of year $948,979 $ 686,147
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Accumulated undistributed net investment income included in net assets
- ------------------------------------------------------------------------------------------------------------
At end of year $ 641 $ --
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See notes to financial statements
Eaton Vance Equity Research Fund as of October 31, 2003
FINANCIAL STATEMENTS Cont'd
Financial Highlights
Year Ended Year Ended
October 31, 2003(1) October 31, 2002(1)
- ------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year $ 8.400 $10.000
- ------------------------------------------------------------------------------------------------------------
Income (loss) from operations
- ------------------------------------------------------------------------------------------------------------
Net investment income (loss) $ 0.007 $(0.001)
- ------------------------------------------------------------------------------------------------------------
Net realized and unrealized gain (loss) 1.453 (1.599)
- ------------------------------------------------------------------------------------------------------------
Total income (loss) from operations $ 1.460 $(1.600)
- ------------------------------------------------------------------------------------------------------------
Net asset value -- End of year $ 9.860 $8.400
- ------------------------------------------------------------------------------------------------------------
Total Return(2) 17.38% (16.00)%
- ------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data *
- ------------------------------------------------------------------------------------------------------------
Net assets, end of period (000's omitted) $ 949 $ 686
Ratios (As a percentage of average daily net assets):
Net expenses 1.40% 1.45%
Net expenses after custodian fee reduction 1.40% 1.40%
Net investment income (loss) 0.08% (0.01)%
Portfolio Turnover 64% 90%
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* The operating expenses of the Fund reflect a waiver of the investment
adviser fee, a waiver of the administration fee, and an allocation of
expenses to the Adviser. Had such actions not been taken, the ratios and
the net investment loss per share would have been as follows:
Ratios (As a percentage of average daily net assets):
Expenses 6.67% 7.22%
Expenses after custodian fee reduction 6.67% 7.17%
Net investment loss (5.19)% (5.78)%
Net investment loss per share $(0.461) $(0.552)
- ------------------------------------------------------------------------------------------------------------
(1) Net investment loss per share was computed using average shares
outstanding.
(2) Returns are historical and are calculated by determining the percentage
change in net asset value with all distributions reinvested. Total return
is not computed on an annualized basis.
See notes to financial statements
Eaton Vance Equity Research Fund as of October 31, 2003
NOTES TO FINANCIAL STATEMENTS
1 Significant Accounting Policies
- --------------------------------------------------------------------------
Eaton Vance Equity Research Fund (the Fund) is a diversified series of
Eaton Vance Mutual Funds Trust (the Trust) and commenced operations on
November 1, 2001. 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 (the 1940 Act), as amended, as an open-end management
investment company. The Fund's investment objective is to achieve long-term
capital appreciation by investing in a diversified portfolio of equity
securities. 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 accounting principles
generally accepted in the United States of America.
A Investment Valuations -- Securities listed on foreign or U.S. securities
exchanges are valued at closing sales 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 or on such National Market System.
Marketable securities listed in the NASDAQ National Market System are
valued at the NASDAQ official closing price. Unlisted or listed securities
for which closing sales prices are not available are valued at the mean
between the latest bid and asked prices. Futures positions on securities or
currencies are generally valued at closing settlement prices. Short-term
debt securities with a remaining maturity of 60 days or less are valued at
amortized cost. If securities were acquired with a remaining maturity of
more than 60 days, their amortized cost value will be based on their value
on the sixty-first day prior to maturity. 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. Securities for which market
quotations are unavailable are valued at fair value as determined in good
faith by or at the direction of the Trustees.
B Income -- Interest income is determined on the basis of interest
accrued, adjusted for amortization of premium or accretion of discount.
Dividend income is recorded on the ex-dividend date for dividends received
in cash and/or securities. However, if the ex-dividend date has passed,
certain dividends from foreign securities are recorded as the Fund is
informed of the ex-dividend date.
C Federal Taxes -- The Fund's policy is to comply with the provisions of
the Internal Revenue Code applicable to regulated investment companies and
to distribute to shareholders each year all of its taxable income,
including any net realized gain on investments. Accordingly, no provision
for federal income or excise tax is necessary. At October 31, 2003, the
Fund, for Federal income tax purposes, had a capital loss carryover of
$67,674, which will reduce the Fund's taxable income arising from future
net realized gains on investments, if any, to the extent permitted by the
Internal Revenue Code, and thus will reduce the amount of the distributions
to shareholders which would otherwise be necessary to relieve the Fund of
any liability for federal income or excise tax. Such capital loss carryover
will expire on October 31, 2010 ($57,732) and October 31, 2011 ($9,942). At
October 31, 2003, the Fund's undistributed ordinary income on a tax basis
was $641.
D Expenses -- The majority of expenses of the Trust are directly
identifiable to an individual fund. Expenses which are not readily
identifiable to a specific fund are allocated taking into consideration,
among other things, the nature and type of expense and the relative size of
the funds.
E Expense Reduction -- Investors Bank & Trust Company (IBT) serves as
custodian to 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. All significant credit balances used
to reduce the Fund's custodian fees are reported as a reduction of total
expenses in the Statement of Operations. For the year ended October 31,
2003, no credit balances were used to reduce the Fund's custodian fee.
F Use of Estimates -- The preparation of financial statements in
conformity with accounting principles generally accepted in the United
States of America 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 Other -- Investment transactions are accounted for on a trade date
basis. Realized gains and losses are computed on the specific
identification of the securities sold.
2 Distributions to Shareholders
- --------------------------------------------------------------------------
It is the present policy of the Fund to distribute semi-annually
substantially all of the net investment income of the Fund and to
distribute, at least annually, substantially all of its net realized
capital gains, if any. Distributions are paid in the form of additional
shares of the Fund or, at the election of the shareholder, in cash.
Shareholders may reinvest capital gain distributions in additional shares
of the Fund at the net asset value as of the ex-dividend date. The Fund
distinguishes between distributions on a tax basis and a financial
reporting basis. Permanent differences between book and tax accounting
relating to distributions are reclassified to paid-in capital.
Eaton Vance Equity Research Fund as of October 31, 2003
NOTES TO FINANCIAL STATEMENTS cont'd
3 Shares of Beneficial Interest
- --------------------------------------------------------------------------
The Fund's Declaration of Trust permits the Trustees to issue an unlimited
number of full and fractional shares of beneficial interest (without par
value). Transactions in shares of beneficial interest were as follows:
Year Ended Year Ended
October 31, 2003 October 31, 2002
- --------------------------------------------------------------------------
Sales 21,741 82,934
- --------------------------------------------------------------------------
Redemptions (7,169) (1,259)
- --------------------------------------------------------------------------
Net increase 14,572 81,675
- --------------------------------------------------------------------------
At October 31, 2003, Eaton Vance Management (EVM) and an EVM retirement
plan owned 52% and 29%, respectively, of the outstanding shares of the
Fund.
4 Investment Adviser Fee and
Other Transactions with Affiliates
- --------------------------------------------------------------------------
The investment adviser fee is earned by EVM as compensation for management
and investment advisory services rendered to the Fund. EVM receives a
monthly advisory fee equal to 0.65% of the average daily net assets of the
Fund up to $500 million and at reduced rates as daily net assets exceed
that level. For the year ended October 31, 2003, the fee amounted to
$5,348, all of which was waived. An administrative fee is earned by EVM as
compensation for administering certain business affairs of the Fund. The
fee is equal to 0.15% of the average daily net assets of the Fund. For year
ended October 31, 2003, the fee amounted to $1,217, all of which was
waived. To enhance the net investment income of the Fund, EVM was allocated
$36,359 of the Fund's operating expenses. EVM serves as the sub-transfer
agent of the Fund and receives an aggregate fee based on the actual
expenses incurred by EVM in the performance of those services. For the year
ended October 31, 2003, EVM earned $66 in sub-transfer agent fees from the
Fund.
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. Trustees of the Fund who
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 October 31,
2003, no significant amounts have been deferred. Certain officers and
Trustees of the Fund are officers of the above organization.
5 Service Plan
- --------------------------------------------------------------------------
The Trust has in effect a Service Plan (the Plan) for the Fund. The Plan
authorizes the Fund to make payments of service fees to EVD, investment
dealers and other persons in amounts equal to 0.25% of the Fund's average
daily net assets. Service fee payments are made for personal services
and/or the maintenance of shareholder accounts. Service fees for the year
ended October 31, 2003 amounted to $2,034.
6 Investment Transactions
- --------------------------------------------------------------------------
Purchases and sales of investments, other than short-term obligations,
aggregated $712,915 and $511,466, respectively for the year ended October
31, 2003.
7 Federal Income Tax Basis of Unrealized
Appreciation (Depreciation)
- --------------------------------------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned at October 31, 2003, as computed on a federal income tax
basis, were as follows:
Aggregate cost $881,335
- --------------------------------------------------------------------------
Gross unrealized appreciation $110,157
Gross unrealized depreciation (31,001)
- --------------------------------------------------------------------------
Net unrealized appreciation $ 79,156
- --------------------------------------------------------------------------
8 Shareholder Meeting (Unaudited)
- --------------------------------------------------------------------------
The Fund held a Special Meeting of Shareholders on
June 6, 2003 to elect Trustees. The results of the vote
were as follows:
Number of
Shares
- --------------------------------------------------------------------------
Nominee for Trustee Affirmative Withheld
- --------------------------------------------------------------------------
Jessica M. Bibliowicz 8,445 69,886
Donald R. Dwight 8,445 69,886
James B. Hawkes 8,445 69,886
Samuel L. Hayes, III 8,445 69,886
William H. Park 8,445 69,886
Norton H. Reamer 8,445 69,886
Lynn A. Stout 8,445 69,886
- --------------------------------------------------------------------------
Each nominee was elected a Trustee of the Trust by a plurality of the
shares of the entire Trust. Donald R. Dwight retired as a Trustee effective
July 1, 2003 pursuant to the mandatory retirement policy of the Trust.
Eaton Vance Equity Research Fund as of October 31, 2003
INDEPENDENT AUDITORS' REPORT
To the Trustees and Shareholders of
Eaton Vance Equity Research Fund:
- --------------------------------------------------------------------------
In our opinion, the accompanying statement of assets and liabilities,
including the portfolio of investments, and the related statements of
operations and of changes in net assets and the financial highlights
present fairly, in all material respects, the financial position of Eaton
Vance Equity Research Fund (the "Fund") at October 31, 2003, and the
results of its operations, the changes in its net assets, and the financial
highlights for the periods indicated, in conformity with accounting
principles generally accepted in the United States of America. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management;
our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these financial statements
in accordance with auditing standards generally accepted in the United
States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial
statement presentation. We believe that our audits, which included
confirmation of securities at October 31, 2003 by correspondence with the
custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
Boston, Massachusetts
December 16, 2003
Eaton Vance Equity Research Fund as of October 31, 2003
MANAGEMENT AND ORGANIZATION
Fund Management
The Trustees of Eaton Vance Mutual Funds Trust (the Trust), are responsible
for the overall management and supervision of the Trust's affairs. The
Trustees and officers of the Trust are listed below. Except as indicated,
each individual has held the office shown or other offices in the same
company for the last five years. Trustees and officers of the Trust hold
indefinite terms of office. The "noninterested Trustees" consist of those
Trustees who are not "interested persons" of the Trust, as that term is
defined under the 1940 Act. The business address of each Trustee and
officer is The Eaton Vance Building, 255 State Street, Boston,
Massachusetts, 02109. As used below, "EVC" means Eaton Vance Corporation,
"EV" means Eaton Vance, Inc., "EVM" means Eaton Vance Management, "BMR"
means Boston Management and Research and "EVD" means Eaton Vance
Distributors, Inc. EVC and EV are the corporate parent and trustee,
respectively, of EVM and BMR. EVD is the Fund's principal underwriter and a
wholly-owned subsidiary of EVM.
Number of
Term of Portfolios in
Position(s) Office and Fund Complex Other
Name and with the Length of Principal Occupation(s) Overseen Directorships
Date of Birth Trust Service During Past Five Years By Trustee(1) Held
- ----------------------------------------------------------------------------------------------------------------------------------
Interested Trustee(s)
- ----------------------------------------------------------------------------------------------------------------------------------
Jessica M. Bibliowicz Trustee Since 1998 Chairman, President and Chief 192 Director of
11/28/59 Executive Officer of National National Financial
Financial Partners (financial Partners
services company) (since April
1999). President and Chief
Operating Officer of John A.
Levin & Co. (registered
investment adviser) (July 1997
to April 1999) and a Director
of Baker, Fentress & Company,
which owns John A. Levin &
Co. (July 1997 to April 1999).
Ms. Bibliowicz is an interested
person because of her affiliation
with a brokerage firm.
James B. Hawkes Trustee Since 1991 Chairman, President and Chief 194 Director of EVC
11/9/41 Executive Officer of BMR, EVC,
EVM and EV; Director of EV;
Vice President and Director of
EVD. Trustee and/or officer of
194 registered investment
companies in the Eaton Vance
Fund Complex. Mr. Hawkes is
an interested person because of
his positions with BMR, EVM,
EVC and EV, which are affiliates
of the Trust.
Eaton Vance Equity Research Fund as of October 31, 2003
MANAGEMENT AND ORGANIZATION cont'd
Number of
Term of Portfolios in
Position(s) Office and Fund Complex Other
Name and with the Length of Principal Occupation(s) Overseen Directorships
Date of Birth Trust Service During Past Five Years By Trustee(1) Held
- ----------------------------------------------------------------------------------------------------------------------------------
Noninterested Trustees
- ----------------------------------------------------------------------------------------------------------------------------------
Samuel L. Hayes, III Trustee Since 1986 Jacob H. Schiff Professor of 194 Director of Tiffany
2/23/35 Investment Banking Emeritus, & Co. (specialty
Harvard University Graduate retailer) and
School of Business Administration. Director of
Telect, Inc.
(telecommunica-
tion services
company)
William H. Park Trustee Since 2003 President and Chief Executive 191 None
9/19/47 Officer, Prizm Capital Management,
LLC (investment management
firm) (since 2002). Executive Vice
President and Chief Financial
Officer, United Asset Management
Corporation (a holding company
owning institutional investment
management firms) (1982-2001).
Ronald A. Pearlman Trustee Since 2003 Professor of Law, Georgetown 191 None
7/10/40 University Law Center (since
1999). Tax Partner, Covington &
Burling, Washington, DC
(1991-2000).
Eaton Vance Equity Research Fund as of October 31, 2003
MANAGEMENT AND ORGANIZATION cont'd
Number of
Term of Portfolios in
Position(s) Office and Fund Complex Other
Name and with the Length of Principal Occupation(s) Overseen Directorships
Date of Birth Trust Service During Past Five Years By Trustee(1) Held
- ----------------------------------------------------------------------------------------------------------------------------------
Noninterested Trustees (continued)
- ----------------------------------------------------------------------------------------------------------------------------------
Norton H. Reamer Trustee Since 1986 President and Chief Executive 194 None
9/21/35 Officer of Asset Management
Finance Corp. (a specialty finance
company serving the investment
management industry) (since
October 2003). President, Unicorn
Corporation (an investment and
financial advisory services
company) (since September 2000).
Formerly, Chairman, Hellman,
Jordan Management Co., Inc. (an
investment management company)
(2000-2003). Formerly, Advisory
Director of Berkshire Capital
Corporation (investment banking
firm) (2000-2003). Formerly,
Chairman of the Board, United
Asset Management Corporation
(a holding company owning
institutional investment
management firms) and Chairman,
President and Director, UAM Funds
(mutual funds) (1980-2000).
Lynn A. Stout Trustee Since 1998 Professor of Law, University of 194 None
9/14/57 California at Los Angeles School
of Law (since July 2001).
Formerly, Professor of Law,
Georgetown University Law
Center.
Eaton Vance Equity Research Fund as of October 31, 2003
MANAGEMENT AND ORGANIZATION cont'd
Term of
Position(s) Office and
Name and with the Length of Principal Occupation(s)
Date of Birth Trust Service During Past Five Years
- ----------------------------------------------------------------------------------------------------------------------------------
Principal Officers Who Are Not Trustees
- ----------------------------------------------------------------------------------------------------------------------------------
Thomas E. Faust Jr. President Since 2002 Executive Vice President of BMR,
5/31/58 EVM, EVC and EV; Chief Investment
Officer of EVM and BMR and
Director of EVC. Chief Executive
Officer of Belair Capital Fund LLC,
Belcrest Capital Fund LLC, Belmar
Capital Fund LLC, Belport Capital
Fund LLC and Belrose Capital Fund
LLC (private investment companies
sponsored by EVM). Officer of 53
registered investment companies
managed by EVM or BMR.
William H. Ahern, Jr. Vice President Since 1995 Vice President of EVM and BMR.
7/28/59 Officer of 35 registered investment
companies managed by EVM or BMR.
Thomas J. Fetter Vice President Since 1997 Vice President of EVM and BMR.
8/20/43 Trustee and President of The
Massachusetts Health & Education
Tax-Exempt Trust. Officer of 127
registered investment companies
managed by EVM or BMR.
Michael R. Mach Vice President Since 1999 Vice President of EVM and BMR.
7/15/47 Previously, Managing Director and
Senior Analyst for Robertson Stephens
(1998-1999). Officer of 25
registered investment companies
managed by EVM or BMR.
Robert B. MacIntosh Vice President Since 1998 Vice President of EVM and BMR.
1/22/57 Officer of 127 registered investment
companies managed by EVM or BMR.
Duncan W. Richardson Vice President Since 2001 Senior Vice President and Chief
10/26/57 Equity Investment Officer of EVM
and BMR. Officer of 41 registered
investment companies managed
by EVM or BMR.
Eaton Vance Equity Research Fund as of October 31, 2003
MANAGEMENT AND ORGANIZATION cont'd
Term of
Position(s) Office and
Name and with the Length of Principal Occupation(s)
Date of Birth Trust Service During Past Five Years
- ----------------------------------------------------------------------------------------------------------------------------------
Principal Officers Who Are Not Trustees (continued)
- ----------------------------------------------------------------------------------------------------------------------------------
Walter A. Row, III Vice President Since 2001 Director of Equity Research and a
7/20/57 Vice President of EVM and BMR.
Officer of 22 registered investment
companies managed by EVM or BMR.
Judith A. Saryan Vice President Since 2003 Vice President of EVM and BMR.
8/21/54 Previously, Portfolio Manager and
Equity Analyst for State Street Global
Advisors (1980-1999). Officer of 24
investment companies managed by
EVM or BMR.
Susan Schiff Vice President Since 2002 Vice President of EVM and BMR.
3/31/61 Officer of 26 registered investment
companies managed by EVM or BMR.
Alan R. Dynner Secretary Since 1997 Vice President, Secretary and Chief
10/10/40 Legal Officer of BMR, EVM, EVD, EV
and EVC. Officer of 194 registered
investment companies managed by
EVM or BMR.
James L. O'Connor Treasurer Since 1989 Vice President of BMR, EVM and EVD.
4/1/45 Officer of 115 registered investment
companies managed by EVM or BMR.
(1) Includes both master and feeder funds in a master feeder structure.
The SAI for the Fund includes additional information about the Trustees and
officers of the Fund and can be obtained without charge by calling
1-800-225-6265.
THIS PAGE INTENTIONALLY LEFT BLANK.
THIS PAGE INTENTIONALLY LEFT BLANK.
Investment Adviser and Administrator of Eaton Vance Equity Research Fund
Eaton Vance Management
The Eaton Vance Building
255 State Street
Boston, MA 02109
Principal Underwriter
Eaton Vance Distributors, Inc.
The Eaton Vance Building
255 State Street
Boston, MA 02109
Custodian
Investors Bank & Trust Company
200 Clarendon Street
Boston, MA 02116
Transfer Agent
PFPC Inc.
Attn: Eaton Vance Funds
P.O. Box 9653
Providence, RI 02940-9653
(800) 262-1122
Independent Accountants
PricewaterhouseCoopers LLP
125 High Street
Boston, MA 02110
Eaton Vance Equity Research Fund
The Eaton Vance Building
255 State Street
Boston, MA 02109
- -----------------------------------------------------------------------
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.
- -----------------------------------------------------------------------
1325-12/03 ERSRC
Item 2. Code of Ethics
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting
Officer. The registrant undertakes to provide a copy of such code of
ethics to any person upon request, without charge, by calling
1-800-262-1122.
Item 3. Audit Committee Financial Expert
The registrant's Board has designated William H. Park, Samuel L. Hayes,
III and Norton H. Reamer, each an independent trustee, as its audit
committee financial experts. Mr. Park is a certified public accountant
who is the President and Chief Executive Officer of Prizm Capital
Management, LLC (a fixed income investment management firm).
Previously, he served as Executive Vice President and Chief Financial
Officer of United Asset Management Corporation ("UAM") (a holding
company owning institutional investment management firms). Mr. Hayes is
the Jacob H. Schiff Professor of Investment Banking Emeritus of the
Harvard University Graduate School of Business Administration. Mr.
Reamer is the President of Unicorn Capital (an investment and financial
advisory services company), Chairman of Hellman, Jordan Management Co.,
Inc. (an investment management company) and Advisory Director of
Berkshire Capital Corporation (an investment banking firm). Previously,
Mr. Reamer was Chairman of the Board of UAM and Chairman, President and
Director of the UAM Funds (mutual funds).
Item 4. Principal Accountant Fees and Services.
Not Required in Filing.
Item 5. Audit Committee of Listed Registrants
Not Required in Filing.
Item 6. [Reserved]
Item 7. Disclosure of Proxy Voting Policies and Procedures for
Closed-End Management Investment Companies
Not required in this filing.
Item 8. [Reserved]
Item 9. Controls and Procedures
(a) It is the conclusion of the registrant's principal executive officer
and principal financial officer that the effectiveness of the
registrant's current disclosure controls and procedures (such disclosure
controls and procedures having been evaluated within 90 days of the date
of this filing) provide reasonable assurance that the information
required to be disclosed by the registrant has been recorded, processed,
summarized and reported within the time period specified in the
Commission's rules and forms and that the information required to be
disclosed by the registrant has been accumulated and communicated to the
registrant's principal executive officer and principal financial officer
in order to allow timely decisions regarding required disclosure.
(b) There have been no significant changes in the registrant's internal
controls or in other factors that could significantly affect these
controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
Item 10. Exhibits
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Eaton Vance Mutual Funds Trust (On behalf of Equity Research Fund)
By: /s/ Thomas E. Faust Jr.
---------------------------
Thomas E. Faust Jr.
President
Date: December 19, 2003
Pursuant to the requirements of the Securities Exchange Act of 1934 and
the Investment Company Act of 1940, this report has been signed below by
the following persons on behalf of the registrant and in the capacities
and on the dates indicated.
By: /s/ James L. O'Connor
---------------------------
James L. O'Connor
Treasurer
Date: December 19, 2003
By: /s/ Thomas E. Faust Jr.
---------------------------
Thomas E. Faust Jr.
President
Date: December 19, 2003