Mulch A Tree the Correct Way

When you mulch a tree using proper techniques, you increase the moisture retention of the soil, decrease the amount of weeds that will emerge and make the area look finished.

Mulch for Moisture Retention

Mulch that is applied correctly will help the soil retain heat and water for a longer period of time. Water will still evaporate, just at a slower rate.
Mulch should be applied in a layer that is 2-3" deep.
If you apply the mulch much deeper than three inches you will create an environment that is warm and wet and perfect for growing mold and fungi.

Weed Control

Mulch can be used for aiding in weed control, but it needs help from you. Knock down or completely remove the actively growing weeds before applying your mulch.
Weed seeds can still be deposited into the bumpy blanket of mulch and grow. Hand picking them as soon as you notice them growing is the best removal method.

Mulch a Tree

I cringe when I see someone has planted a beautiful tree and then piled mulch in a hill around it. Mulch applied thicker than a few inches is bad, don't do it.
You need to keep mulch 2-3" away from the trunk. Again, keep the mulch away from the trunk. This is so important I'll repeat it again, do not put mulch against the trunk.

Piling mulch against the trunk is an invitation for your tree bark to rot. You don't want the base of your tree rotting.
Mulch also is a great habitat for insects and diseases to hide in. Insects are hard enough to see out in the open. Give them a layer of mulch to hide in and they throw a huge block party invite all their friends and feast on your tree. You won't even know they've been there until the damage is done.

First Time Mulch

Before you mulch a tree, water the tree properly.
You can water after mulching, but you'd have to water longer because the water gets trapped in the mulch before finally getting to the soil.