<PAGE>
TO SHAREHOLDERS
Eaton Vance Municipal Bond Fund L.P. had a total return of -7.3 percent during
the year ended December 31, 1994, based on a decline in net asset value per
share from $10.63 on December 31, 1993 to $9.26 on December 31, 1994, and the
reinvest-ment of $0.612 in monthly income dividends. Based on the m st recent
dividend paid, and the Fund's net asset value per share of $9.26 on December 31,
1994, the Fund's annualized distribution rate was 6.61 percent. To equal that
rate, a couple in the 36 percent Federal tax bracket would have to receive 10.33
percent from a taxable investment.
With interest rates rising sharply throughout the year, 1994 was an especially
troublesome period for municipal bond investors, even though rising rates
created a challenging climate for all fixed income markets. The Federal Reserve
was very aggressive in fighting any signs of inflation, with inflation rising a
mere 2.7 percent for all of 1994.
Following a difficult year in 1994, investors clearly face a number of
uncertainties in 1995. It remains to be seen whether the economy will maintain
its current robust pace or slow under the weight of higher interest rates. And
on the fiscal front, the tug-of-war will likely continue between advoc ates of
the recent tax-and-spend policies and those urging a more prudent fiscal path.
Nonetheless, looking ahead to 1995, we believe there is reason for optimism. The
market has seen the Federal Reserve put a good faith effort into the fight to
cut short inflation. In addition, the results of the 1994 elections appear to be
a strong mandate for spending cuts and less pervasive government.
PORTFOLIO OVERVIEW
Percentage of total investments
as of December 31, 1994
Number of issues .................................................... 78
Average quality ..................................................... A+
Investment grade .................................................... 85.8%
Effective maturity (years) .......................................... 17.4
Largest sectors:
Escrowed .......................................................... 21.3%
Hospitals revenue ................................................. 0.9
Insured hospital .................................................. 10.6*
Lease revenues .................................................... 8.5
Housing ........................................................... 7.6
*Private insurance does not remove the market risks associated with this
investment.
Whatever the outcome of these political debates, the municipal bond market will
continue to play its unique role. Through their purchases of municipal bonds,
investors provide funding for a wide range of projects, including airport
construction, road-building, and industrial development. Municipal Bond Fund
L.P. will continue to participate in these worthy efforts and pursue its
traditional goal: maintaining a portfolio of high-quality bonds with competitive
levels of tax-exempt income. While past performance is no guarantee of future
results, we believe that this has historically constituted a sound investment
formula. More importantly, the Fund will continue to provide relief to investors
seeking an answer to today's heavy tax burden.
Sincerely,
/s/ Landon T. Clay
[Photograph of Landon T. Clay
Landon T. Clay] Chairman
February 21, 1995
<PAGE>
MANAGEMENT DISCUSSION
An interview with Thomas J.Fetter, Vice President and Portfolio Manager of the
Eaton Vance Municipal Bond Fund L.P.
Q. TOM, 1994 WAS A DIFFICULT YEAR FOR THE MUNICIPAL MARKET AND FOR THE FUND.
WHAT ARE YOUR THOUGHTS ON THE YEAR?
A. 1994 proved to be one of the worst years on record for the fixed income
markets. In February 1994, the Federal Reserve embarked on a series of rate
hikes that lasted throughout the year. The Fed was concerned about a
possible overheating of the economy and a resulting resurgence of inflation.
W hile inflation has remained relatively tame by historical standards,
higher interest rates have taken a heavy toll on the fixed income markets,
including the muni market.
Q. THE ORANGE COUNTY CRISIS PROVIDED AN ADDITIONAL SHOCK FOR THE TAX-EXEMPT
MARKET. WHAT WAS THE CAUSE OF THE ORANGE COUNTY PROBLEM?
A. The Orange County crisis was the result of some highly speculative trading
practices by a few large investors managing over-leveraged investment pools.
While the crisis caused a brief reaction in the broader market, the market
soon realized that the crisis was largely isolated to Orange County and
generally did not affect other municipalities. The market quickly moved
beyond the Orange County matter and resumed its focus on market
fundamentals.
Q. WAS THE FUND EXPOSED AT ALL TO THE ORANGE COUNTY AFFAIR?
A. No. The Fund had no investments in Orange County bonds whatsoever.
[Photograph of Thomas J. Fetter]
Q. WAS THE MARKET DECLINE UNUSUAL?
A. After the massive rally in the bond market in 1992-1993, a market correction
was not unexpected. The dimension of the decline, while unpleasant for
investors, is not terribly unusual when considered from a long-term,
historical perspective. In fact, there have been a number of significant
market corrections in this century, including those associated with the
post-World War II boom, the Vietnam War guns-and-butter policies, the oil
embargoes of the 1970s, and the hyperinflation of the early 1980s.
Interestingly, the market has recovered from each of those major downturns.
Q. IN A MARKET LIKE 1994, SOME INVESTORS MAY BE MORE RISK-AVERSE. WHAT CAN YOU
SAY TO THOSE INVESTORS?
A. Its perfectly understandable for investors to feel nervous in the face of a
declining market. I think its important, however, for investors to remember
why they invested in a tax-free fund in the first place. For the overwelming
majority of investors, it was to receive the advantages of tax-free income.
While interest rates may fluctuate over time and market conditions may
change, the attractiveness of tax-free income essentially remains the same.
Especially in a high tax climate such as the one we face today.
Q. YOU'VE SPOKEN ON PAST OCCASIONS ABOUT THE IMPACT OF SUPPLY AND DEMAND. WHAT
DOES THE SUPPLY SITUATION LOOK LIKE NOW?
A. The supply-and-demand story remains a very positive one. We are in the early
stages of the first-ever net decline in municipal bond supply, and that
bodes well for the supply/demand relationship for 1995. Primary supply
billion in 1993 to about $160 billion in 1994. New issue volume, bloated in
recent years by a large number of refundings, has declined sharply. In
addition, the secondary market is shrinking significantly as previously
refunded bonds are called by their issuers. Redemptions by issuers and other
maturities could reach $190 billion in 1995. The net effect of a decline in
supply accompanied by a pick-up in investor demand is a much-improved market
outlook.
<PAGE>
THE RESILIENT BOND MARKET!
A HISTORY OF RECOVERING FROM MAJOR DECLINES.
Label A B C D E
Label Lehman Bros. Muni Bond Index
1 12/80 -8.9
2 12/81 -10.2
3 12/82 40.9
4 12/83 8.1
5 12/84 10.6
6 12/85 20
7 12/86 19.3
8 12/87 1.5
9 12/88 10.2
10 12/89 10.8
11 12/90 7.3
12 12/91 12.1
13 12/92 8.8
14 12/93 12.3
15 12/94 -5.2
16
17
18 This chart shows the annual total returns of the Lehman Muni
19 Bond Index from 1980 through 1994, and highlights years of
20 major declines.
Source: Lehman Brothers Inc.; Chart measures annual total returns of the Lehman
Brothers Municipal Bond Index, a broad-based, widely recognized, unmanaged index
of municipal bonds. Past performance is no guarantee of future results.
Q. IN YOUR VIEW, DOES THE MUNICIPAL MARKET OFFER VALUE TODAY?
A. Absolutely. According to Bloomberg Financial, 30-year AA general obligations
had a yield of 6.7 percent at December 31. Meanwhile, 30-year U.S. Treasury
yields had a yield of 7.8 percent. Someone paying a tax rate of 36 percent
would need a yield as high as 10.5 percent to equal the after-tax yield of
muni bonds. Of course, U.S. Treasury bonds are guaranteed by the U.S.
government as to principal and interest payments. While past performance is
no guarantee of future results, municipal bonds continue to offer value to
tax-conscious investors who want to save on taxes today while building for
tomorrow.
<PAGE>
COMPARISON OF CHANGE IN VALUE OF A $10,000 INVESTMENT IN EATON VANCE
MUNICIPAL BOND FUND L.P. AND THE LEHMAN BROTHERS MUNICIPAL BOND INDEX
From January 1, 1985, through December 31, 1994
1 5 10
Average Annual Returns Year Years Years
- ---------------------- ---- ----- -----
Incl. Max. Sales Charge -11.7% 5.8% 9.1%
Excl. Max. Sales Charge - 7.3% 6.8% 9.6%
Muni L.P. Lehman Bros.
12/84 9519 10000
1/85 9985 10577
2/85 9765 10313
3/85 9904 10402
4/85 10135 10783
5/85 10549 11158
6/85 10691 11275
7/85 10755 11297
8/85 10792 11218
9/85 10682 11105
10/85 11007 11486
11/85 11290 11898
12/85 11549 12002
1/86 12086 12709
2/86 12571 13213
3/86 12682 13218
4/86 12610 13228
5/86 12453 13012
6/86 12617 13136
7/86 12667 13216
8/86 13252 13808
9/86 13129 13842
10/86 13429 14082
11/86 13686 14360
12/86 13708 14321
1/87 14029 14752
2/87 14201 14825
3/87 14103 14668
4/87 13338 13931
5/87 13269 13862
6/87 13491 14269
7/87 13530 14415
8/87 13569 14447
9/87 12982 13915
10/87 13116 13964
11/87 13425 14329
12/87 13704 14536
1/88 14274 15054
2/88 14427 15213
3/88 14143 15036
4/88 14216 15150
5/88 14258 15107
6/88 14514 15328
7/88 14639 15428
8/88 14681 15441
9/88 14993 15721
10/88 15358 15998
11/88 15162 15852
12/88 15463 16014
1/89 15662 16345
2/89 15549 16159
3/89 15523 16120
4/89 15989 16503
5/89 16318 16845
6/89 16559 17074
7/89 16693 17306
8/89 16503 17137
9/89 16440 17086
10/89 16705 17295
11/89 16990 17598
12/89 17110 17741
1/90 16896 17658
2/90 17092 17816
3/90 17120 17821
4/90 16827 17692
5/90 17351 18078
6/90 17533 18237
7/90 17851 18506
8/90 17375 18237
9/90 17424 18247
10/90 17669 18578
11/90 18193 18952
12/90 18302 19035
1/91 18552 19290
2/91 18683 19458
3/91 18693 19465
4/91 18968 19725
5/91 19158 19900
6/91 19101 19880
7/91 19417 20123
8/91 19735 20388
9/91 20012 20653
10/91 20207 20839
11/91 20275 20897
12/91 20771 21346
1/92 20733 21934
2/92 20739 21401
3/92 20766 21409
4/92 20945 21600
5/92 21302 21854
6/92 21705 22221
7/92 22398 22887
8/92 22027 22664
9/92 22123 22812
10/92 21657 22587
11/92 22297 22992
12/92 22622 23227
1/93 22880 23497
2/93 23737 24347
3/93 23513 24090
4/93 23799 24332
5/93 23992 24469
6/93 24442 24878
7/93 24446 24910
8/93 24947 25429
9/93 24356 25719
10/93 25408 25769
11/93 25122 25541
12/93 25680 26080
1/94 25974 26378
2/94 25245 25695
3/94 23949 24649
4/94 24028 24858
5/94 24328 25073
6/94 24156 24927
7/94 24584 25377
8/94 24738 25465
9/94 24285 25091
10/94 23805 24646
11/94 23194 24199
12/94 23814 24732
Past performance is not indicative of future results. Investment returns and
principal will fluctuate so that an investor's shares, when redeemed, may be
worth more or less than their original cost. Source: Towers Data Systems,
Bethesda, MD.
*Investment operations commenced on 3/16/78.
<PAGE>
FUND PERFORMANCE
In accordance with Securities and Exchange Commission guidelines, we are
including a performance chart that compares your Funds total return with that of
a broad-based securities market index. The lines on the chart represent the
total returns of $10,000 hypothetical investments in the Fund and the unmanaged
Lehman Brothers Municipal Bond Index.
TOTAL RETURN FIGURES
The solid line on the chart represents the Funds performance, and includes the
Funds maximum current sales charge of 4.75%. The Funds total return figure also
reflects fund expenses and portfolio transaction costs, and assumes the
reinvestment of income dividends and capital gain distributions.
The dotted line represents the performance of the Lehman Brothers Municipal Bond
Index, a broad based, widely recognized, unmanaged index of municipal bonds.
The Indexs total return does not reflect any commissions or expenses that would
be incurred if an investor individually purchased or sold securities represented
in the Index.
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1994
- ----------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS -- 100%
---------------------------------------------------------------------------------------------------------------------
<CAPTION>
RATINGS (UNAUDITED) PRINCIPAL
----------------------------- AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
---------------------------------------------------------------------------------------------------------------------
EDUCATION - 4.9%
<S> <C> <C> <C> <C>
Baa1 NR $ 400 New Hampshire Higher Educational & Health Facilities
Authority, Saint Anselm College, 6.20%, 7/1/13 $ 368,000
Baa1 BBB+ 5,000 New York State Dorm Authority, State University
Educational Facilities, 5.25%, 5/15/15 4,043,750
-----------
$ 4,411,750
-----------
ESCROWED - 21.3%
Aaa AAA $ 1,000 Austin, Texas Combined Utility System, 11.125%, 11/15/09 $ 1,231,250
Aaa NR 2,500 Boston City Hospital, FHA Insured, 7.625%, 2/15/21 2,778,125
Aaa AAA 8,000 Colorado Health Facilities Authority, Liberty Heights,
FSA Insured, 0%, 7/15/24 960,000
Aa AA 1,110 Colorado Springs Utility System, 6.75%, 11/15/21 1,187,700
Aaa AAA 500 Maine Health & Higher Education, Cove Edge,
10.00%, 8/1/20 611,875
Baa NR 715 Massachusetts State Health & Education, St. Johns
Hospital, 8.375%, 12/1/20 818,675
Aaa NR 750 Massachusetts IFA, Cape Cod Hospital, 8.40%, 11/15/08 863,438
NR NR 500 Massachusetts IFA, Brookhaven, 10.25%, 1/1/18 576,875
Aaa NR 6,200 Mesa County, Colorado, 12/1/11 1,891,000
A NR 600 Mississippi Hospital Authority , Methodist Hospital,
9.375%, 5/1/12 684,000
A NR 5,000 Mississippi Housing Finance Corp., SFMR, 0%, 6/1/15 1,181,250
Baa1 BBB+ 1,100 New York Medical Care, Mental Health Services,
7.875%, 8/15/20 1,234,750
Aaa NR 1,000 New York State Urban Development Corp Correctional
Facilities, 6.50%, 1/1/21 1,040,000
Aaa A- 665 North Carolina Eastern Municipal Power, 6.50%, 1/1/18 669,156
NR A 2,400 Pheonix, Arizona Civic Improvement Corp.,
6.125%, 7/1/23 2,457,000
Aaa NR 6,000 Savannah, Georgia Economic Development Authority,
0%, 12/1/21 892,500
-----------
$19,077,594
-----------
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
- -----------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (Continued)
- ------------------------------------------ ----------------------------------------------------------------------------
<CAPTION>
RATINGS (UNAUDITED) PRINCIPAL
----------------------------- AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
GENERAL OBLIGATIONS - 2.5%
Baa1 A- $ 120 City of New York, New York, 8.25%, 11/15/16 $ 129,450
Aa A+ 2,500 State of California, 5.75%, 3/1/23 2,131,250
-----------
$ 2,260,700
-----------
HEALTH CARE - 3.4%
NR NR $ 1,000 Bell County, Texas Health Facilities, Care Institution
Inc., 9.00%, 4/1/23 $ 1,008,750
NR NR 600 Covington - Allegheny County, Virginia, IFA, Beverly
Enterprises Inc. Project, 9.375%, 9/1/01 659,250
Baa1 BBB+ 830 New York Medical Care, Mental Health Services,
7.875%, 8/15/20 870,462
NR NR 500 Wisconsin Health Facility Authority, Villa Clement,
8.75%, 6/1/12 501,250
-----------
$ 3,039,712
-----------
HOSPITALS REVENUE - 10.9%
Aa AA- $ 3,500 Colorado Health Facilities, Sisters of Charity Health
Care, 5.25%, 5/15/14 $ 2,878,750
Aa NR 3,250 Franklin County, Ohio Hospital, Riverside United
Methodist, 5.75%, 5/15/12 2,860,000
Aa NR 1,000 Franklin County, Ohio Hospital, Riverside United
Methodist, 5.75%, 5/15/20 838,750
A A 500 Illinois Health & Education Facilities Victory
Memorial, 7.875%, 12/1/18 520,000
NR A- 1,500 Union County Pennsylvania Hospital Authority,
Evangelical Community Hospital, 5.875%, 7/1/11 1,260,000
NR A- 1,140 Union County Pennsylvania Hospital Authority,
Evangelical Community Hospital, 5.875%, 7/1/23 903,450
NR NR 480 Vermont Education & Health Building Authority
Northwestern Medical Facility, 9.75%, 9/1/18 505,200
-----------
$ 9,766,150
-----------
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (Continued)
- ------------------------------------------ ----------------------------------------------------------------------------
<CAPTION>
RATINGS (UNAUDITED) PRINCIPAL
----------------------------- AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
HOUSING - 7.6%
NR AA $ 725 Arkansas Development Finance Authority, SFMR,
8.00%, 8/15/11 $ 766,688
Aa NR 1,000 Colorado Housing Finance Authority, 7.90%, 12/1/24 1,055,000
NR NR 1,300 Lake Creek Affordable Housing Corporation, Eagle
County, Colorado, 8.00%, 12/1/23 1,251,250
NR A 1,000 Metro Government of Nashville & Davidson Counties,
Tennessee Industrial Development Board,
5.90%, 2/1/19 863,750
Aa A+ 370 North Carolina Single Family Mortgage Revenue,
8.125%, 9/1/19 377,862
NR NR 1,000 North Syracuse NY Housing Authority, AJM SR Housing
Inc.-Janus Park Project, 8.0%, 6/1/24 903,750
NR NR 1,650 Travis County Texas Housing Finance Corp., Travis
Station Apartments Project, 6.75%, 4/1/19 <F3> 1,555,125
-----------
$ 6,773,425
-----------
INDUSTRIAL DEVELOPMENT & POLLUTION CONTROL REVENUE - 1.0%
NR BBB+ $ 1,000 Port Camas-Washougan, Washington, James River Project,
6.70%, 4/1/23 $ 896,250
-----------
INSURED TOTAL - 17.7%
INSURED - EDUCATION - 1.7%
Aaa AAA $ 2,000 University of California - Multiple Projects, (AMBAC),
4.875%, 9/1/19 $ 1,515,000
-----------
INSURED - HOSPITAL - 10.6%
Aaa AAA $ 1,000 Fredericksburg, Virginia Industrial Development
Authority (FGIC), "INFLOS", Variable, 8/15/23 <F1> $ 955,000
Aaa AAA 1,000 Illinois Health Facilities Authority Rush-Presbyterian
- St. Lukes Medical Center, (MBIA) "INFLOS",
Variable, 10/1/24 <F1> 980,000
Aaa AAA 1,000 King County, Washington, Public Hospital District No.
1 (AMBAC), 6.00%, 9/1/20 926,250
Aaa AAA 500 Massachusetts Health & Education Authority, Newton-
Wellesley Hospital (BIGI), 8.00%, 7/1/18 540,625
Aaa AAA 5,000 Mississippi Hospital Facilities Authority, Singing
River Hospital System (FSA), 5.50%, 3/1/23 4,112,500
Aaa AAA 1,000 Rhode Island Health & Educational Facility, Rhode
Island Hospital (FGIC), "INFLOS", Variable, 8/15/21<F1> 996,250
Aaa AAA 1,000 Salt Lake City, Utah IHC Hospitals Inc., "INFLOS",
(AMBAC), Variable, 5/15/20 <F1> 975,000
-----------
$ 9,485,625
-----------
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
- -----------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (Continued)
- ------------------------------------------ ----------------------------------------------------------------------------
<CAPTION>
RATINGS (UNAUDITED) PRINCIPAL
----------------------------- AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INSURED - HOUSING - 0.7%
Aaa AAA $ 210 Jefferson County Colorado SFMR, (MBIA),
8.875%, 10/1/13 $ 222,075
Aaa AAA 365 Mississippi Home Corp., SFMR, (FGIC), 9.25%, 3/1/12 389,181
-----------
$ 611,256
-----------
INSURED - TAX REVENUES - 1.2%
Aaa AAA $ 1,500 Culver City California Redevelopment Finance Authority
(AMBAC), 4.6%, 11/1/20 $ 1,081,875
-----------
INSURED - TRANSPORTATION - 1.1%
Aaa AAA $ 1,000 Triborough Bridge and Tunnel Authority of New York,
"RITES", (AMBAC), Variable, 1/1/12 <F1> $ 945,000
-----------
INSURED - UTILITIES - 0.9%
Aaa AAA $ 800 Puerto Rico Electric Power Authority STRIPES, (FSA),
Variable, 7/1/03 <F1> $ 778,000
-----------
INSURED - WATER & SEWER - 1.5%
Aaa AAA $ 1,500 New Jersey Economic Development Authority, Hackensack
Water Co. Project, (MBIA), 5.80%, 3/1/24 $ 1,329,375
-----------
LEASE REVENUE/CERTIFICATES OF PARTICIPATION - 8.5%
A1 A- $ 3,000 California Public Works Board, California State
University Projects 5.50%, 12/1/18 $ 2,418,750
A A 3,565 Indiana Transportation Authority Airport Facilities,
6.25%, 11/1/16 3,261,975
NR A- 2,500 University of Mississippi Medical Center Project,
5.90%, 12/1/23 1,981,250
-----------
$ 7,661,975
-----------
LIFE CARE - 4.3%
NR NR $ 1,060 Loudon County Virginia IDA, Falcons Landing Project,
8.75%, 11/1/24 $ 1,020,250
NR NR 200 New Hampshire Higher Educational, River Woods at
Exeter, 8.00%, 3/1/00 201,250
NR NR 655 New Hampshire Higher Educational, River Woods at
Exeter, 9.00%, 3/1/23 673,831
NR NR 1,000 New Jersey Economic Development Authority, Keswick
Pines Project, 8.75%, 1/1/24 947,500
NR NR 1,000 Vermont IDA, Wake Robin Corp. Project, 1993-A,
8.75%, 4/1/23 1,021,250
-----------
$ 3,864,081
-----------
<PAGE>
- -----------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (Continued)
- ------------------------------------------ ----------------------------------------------------------------------------
<CAPTION>
RATINGS (UNAUDITED) PRINCIPAL
----------------------------- AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
MISCELLANEOUS - 3.6%
NR NR $ 1,500 New Jersey Sports & Exposition Authority, Monmouth
Park Project, 8.00%, 1/1/25 <F2> $ 1,475,625
NR NR 1,000 Retama Special Facilities, Retama Rack Track, Texas,
8.75%, 12/15/18 977,500
NR NR 1,000 VRDC-IVRC Trust, Variable, 8/5/00 - (Massachusetts
Municipal Wholesale Electric Authority, (AMBAC),
4.70%, 7/1/02) <F1> 797,500
-----------
$ 3,250,625
-----------
NURSING HOMES - 5.9%
NR NR $ 1,495 Bell County, Texas Health Facilities, Normandy Terrace
Project, 9.00%, 4/1/23 $ 1,515,556
NR NR 630 Dauphin County Pennsylvania IDA, Susquehanna Center,
10.00%, 6/1/21 409,500
NR NR 1,265 Montgomery, Pennsylvania, IDA, Health Care Facility -
Geriatric Health Care Institute, 8.375%, 7/1/23 1,195,425
NR NR 440 Okaloosa County Florida, Beverly Enterprises, 10.75%,
10/1/03 481,250
NR NR 1,000 St. Paul Minnesota Housing & Redevelopment Authority
Highland Park Project, Series 1994, 8.75%, 11/1/24 946,250
NR NR 680 Tarrant County Texas Health Facilities Development
Corp., 10.25%, 9/1/19 700,400
-----------
$ 5,248,381
-----------
SOLID WASTE - 0.9%
Aa3 A+ $ 750 Delaware County Pennsylvania Industrial Revenue,
8.10%, 12/1/13
$ 792,188
-----------
TRANSPORTATION - 2.4%
A1 A $ 1,000 Dallas Fort Worth International Airport, Texas,
9.125%, 11/1/15 $ 1,055,000
Baa BB 1,000 Denver Colorado City & County Airport, 7.50%, 11/15/12 952,500
Aa AA- 145 Massachusetts Port Authority, 9.375%, 7/1/15 150,800
-----------
$ 2,158,300
-----------
<PAGE>
PORTFOLIO OF INVESTMENTS (Continued)
- -----------------------------------------------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS (Continued)
- ------------------------------------------ ----------------------------------------------------------------------------
<CAPTION>
RATINGS (UNAUDITED) PRINCIPAL
----------------------------- AMOUNT
STANDARD (000
MOODY'S & POOR'S OMITTED) SECURITY VALUE
----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
UTILITIES - 5.1%
NR NR $ 250 Beaver County, Pennsylvania, Pollution Control, Toledo
Edison, 10.75%, 11/15/15 $ 259,688
Aa AA 1,000 Colorado Springs, Colorado Utility, 6.75%, 11/15/21 1,010,000
A BBB+ 1,500 Massachusetts Municipal Wholesale Electric Co.,
6.75%, 7/1/11 1,488,750
Aa AA 10,250 Washington Public Power Supply System, Project 3,
0%, 7/1/18 1,947,500
-----------
$ 4,705,938
-----------
TOTAL INVESTMENTS (IDENTIFIED COST, $92,656,542) $89,653,200
-----------
-----------
<FN>
<F1> The above designated securities have been issued as inverse floater bonds.
<F2> The above designated securities have been issued as when-issued securities.
<F3> The above designated securities have been designated as collateral for when-issued securities.
At December 31, 1994, the concentration of the Fund's investments in the various states, determined as a percentage of total
investments, is as follows:
Colorado 16%
Other, representing less than 10% individually 84%
The Fund invests primarily in debt securities issued by municipalities. The
ability of the issuers of the debt securities to meet their obligations may be
affected by economic developments in a specific industry or municipality. In
order to reduce the risk associated with such economic developments, at December
31, 1994, 17.7% of the securities in the portfolio of investments are backed by
bond insurance of various financial institutions and financial guaranty
assurance agencies. The aggregate percentage by financial institution ranged
from 2.2% to 6.5% of total investments.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ----------------------------------------------------------------------------------------------------
December 31, 1994
- ----------------------------------------------------------------------------------------------------
<S> <C> <C>
ASSETS:
Investments, at value (Note 1A) (identified cost, $92,656,542) $89,653,200
Cash 400
Receivable for investments sold 1,559,859
Receivable for shares of partnership interest sold 5,815
Interest receivable 1,606,517
-----------
Total assets $92,825,791
LIABILITIES:
Demand note payable (Note 5) $ 510,000
Payable for investments purchased 1,477,250
Payable for shares of partnership interest redeemed 18,489
Payable to affiliates --
Director General Partners' fees 2,016
Custodian fees 1,836
Accrued expenses 13,750
----------
Total liabilities 2,023,341
-----------
NET ASSETS for 9,806,914 shares of partnership interest
outstanding $90,802,450
-----------
-----------
NET ASSETS APPLICABLE TO SHARES OF PARTNERSHIP INTEREST OWNED BY: $89,686,951
Limited Partners (9,686,437 shares)
General Partners --
Director partners (2,266 shares) $ 20,981
Advisor partner (118,211 shares) 1,094,518 1,115,499
---------- -----------
TOTAL NET ASSETS (9,806,914 shares) $90,802,450
-----------
-----------
SOURCES OF NET ASSETS:
Proceeds from sales of shares of partnership interest (including shares
issued to partners electing to receive payment of distributions in
shares), less cost of shares of partnership interest redeemed $83,682,668
Accumulated net realized gain on investment and financial
futures transactions (computed on the basis of identified cost) 10,123,124
Unrealized depreciation of investments (computed on the
basis of identified cost) (3,003,342)
-----------
Total $90,802,450
-----------
-----------
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE OF PARTNERSHIP
INTEREST $9.26
----
----
COMPUTATION OF OFFERING PRICE: Offering price per share
(100/95.25 of $9.26). $9.72
----
----
On sales of $100,000 or more the offering price is reduced.
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
FINANCIAL STATEMENTS (Continued)
STATEMENT OF OPERATIONS
---------------------------------------------------------------------------------------------------
For the Year Ended December 31, 1994
--------------------------------------------------------------------------------------------------
<S> <C> <C>
INVESTMENT INCOME:
Interest income $ 7,222,579
Expenses --
Investment management fee earned by Advisor General
Partner (Note 4) $ 523,944
Compensation of Director General Partners not members
of the Advisor General Partner's organization 8,168
Custodian fee (Note 4) 56,881
Interest 53,661
Transfer and dividend disbursing agent fees 52,205
Printing and postage 39,531
Legal and accounting services 39,793
Registration fees 20,282
Miscellaneous 19,710
-----------
Total expenses 814,175
------------
Net investment income $ 6,408,404
------------
REALIZED AND UNREALIZED LOSS ON INVESTMENTS:
Net realized loss on investment transactions computed on
the basis of identified cost $(1,842,926)
Net realized loss on financial futures contracts (48,945)
------------
Net realized loss on investment and financial
futures transactions ($2,281,483 net loss for
federal income tax purposes) $ (1,891,871)
Decrease in unrealized appreciation of investments (12,681,127)
------------
Net realized and unrealized loss on investments $(14,572,998)
------------
Net decrease in net assets from operations $ (8,164,594)
------------
------------
See notes to financial statements
</TABLE>
<PAGE>
<TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
-----------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------
1994 1993
---------------- ----------------
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 6,408,404 $ 6,496,980
Net realized loss on investments (1,891,871) 4,841,595
Change in unrealized appreciation (depreciation) of
investments (12,681,127) 2,526,828
------------ ------------
Increase (decrease) in net assets from operations $ (8,164,594) $ 13,865,403
Distributions to partners --
From net investment income (6,408,404) (6,543,931)
In excess of net investment income (6,943) (77,534)
Net increase (decrease) from transactions in shares of
partnership interest (9,042,301) 3,972,458
------------ ------------
Net increase (decrease) in net assets $(23,622,242) $ 11,216,396
NET ASSETS:
At beginning of year 114,424,692 103,208,296
------------ ------------
At end of year $ 90,802,450 $114,424,692
------------ ------------
------------ ------------
</TABLE>
<PAGE>
<TABLE>
- --------------------------------------------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
- --------------------------------------------------------------------------------------------------------------------
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
1994 1993 1992 1991 1990
--------------------------------------------------------------------------
NET ASSET VALUE, beginning of year $10.630 $ 9.950 $ 9.750 $ 9.200 $ 9.250
------- -------- -------- ------- -------
INCOME FROM OPERATIONS:
Net investment income $ 0.611 $ 0.614 $ 0.639 $ 0.638 $ 0.627
Net realized and unrealized gain
(loss) on investments (1.369) 0.692 0.195 0.552 (0.017)
------- -------- -------- ------- -------
Total income (loss) from
operations $(0.758) $ 1.306 $ 0.834 $ 1.190 $ 0.610
------- -------- -------- ------- -------
LESS DISTRIBUTIONS:
From net investment income $(0.611) $ (0.619) $ (0.634) $(0.638) $(0.627)
In excess of net investment income (0.001) (0.007) -- (0.002) (0.033)
------- -------- -------- ------- -------
Total distributions $(0.612) $ (0.626) $ (0.634) $(0.640) $(0.660)
------- -------- -------- ------- -------
NET ASSET VALUE, end of year $ 9.260 $ 10.630 $ 9.950 $ 9.750 $ 9.200
------- -------- -------- ------- -------
------- -------- -------- ------- -------
TOTAL RETURN<F1> (7.27)% 13.52% 8.91% 13.49% 6.97%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's
omitted) $90,802 $114,425 $103,208 $92,771 $80,907
Ratio of expenses to average net
assets 0.80% 0.72% 0.74% 0.76% 0.85%
Ratio of net investment income to
average net assets 6.26% 5.91% 6.50% 6.75% 6.94%
PORTFOLIO TURNOVER 58% 86% 60% 105% 187%
<FN>
<F1>Total investment return is calculated assuming a purchase at the net asset
value on the first day and a sale at the net asset value on the last day of
each period reported. Dividends and distributions, if any, are assumed to be
reinvested at the net asset value on the payable date.
See notes to financial statements
</TABLE>
<PAGE>
- --------------------------------------------------------------------------------
NOTES TO FINANCIAL STATEMENTS
- --------------------------------------------------------------------------------
(1) SIGNIFICANT ACCOUNTING POLICIES
The Fund is a limited partnership formed under the laws of the State of
California, and is registered under the Investment Company Act of 1940, as
amended, as a diversified, open-end, management investment company. Under the
Partnership Agreement, all partnership interests, whether of a limited partner
or a general partner, are represented by shares of the same class. 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 - Municipal bonds are normally valued on the basis of
valuations furnished by a pricing service. Taxable obligations, if any, for
which price quotations are readily available are normally valued at the mean
between the latest available bid and asked prices. Investments, if any, for
which there are no such valuations are valued at fair value using methods
determined in good faith by or at the direction of the Director General
Partners. Short-term obligations are valued at amortized cost, which
approximates value.
B. INCOME - Interest income is determined on the basis of interest accrued and
discount earned, adjusted for amortization of premium or discount on long-term
debt securities when required for federal income tax purposes.
C. INCOME TAXES - Interest income received by the Fund on investments in
municipal bonds, which is excludable from gross income under the Internal
Revenue Code, will retain its status as income exempt from federal income tax
when allocated to the Fund's partners. 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. No provision is made by the Fund for
federal or state taxes on any taxable income of the partnership because each
partner is individually responsible for the payment of any taxes on his share of
such taxable income.
D. FINANCIAL FUTURES CONTRACTS - Upon the entering of a financial futures
contract, the Fund is required to deposit ("initial margin") either in 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 Fund ("margin maintenance") each day, dependent on the daily
fluctuations in the value of the underlying security, and are recorded for book
purposes as unrealized gains or losses by the Fund. The Fund's investment in
financial futures contracts is designed only to hedge against anticipated future
changes in interest rates. Should interest rates move unexpectedly, the Fund may
not achieve the anticipated benefits of the financial futures contracts and may
realize a loss.
E. OTHER - Investment transactions are accounted for on a trade date basis.
Distributions to partners and shares of partnership interest issued in payment
thereof are recorded on the record date.
<PAGE>
- --------------------------------------------------------------------------------
(2) SHARES OF PARTNERSHIP INTEREST
Transactions in shares of partnership interest
were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
------------------------------------------------------------------------------------------------
1994 1993
---------------------------------------------- ----------------------------------------------
GENERAL LIMITED GENERAL LIMITED
PARTNERS PARTNERS AMOUNT PARTNERS PARTNERS AMOUNT
----------- -------------- --------------- ----------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C>
Sales -- 782,602 $ 7,819,982 -- 1,415,062 $ 14,600,246
Issued to partners
electing to
receive payment
of distributions
in shares 7,301 344,710 3,436,339 6,666 338,355 3,548,771
Redemptions -- (2,090,028) (20,298,622) (28) (1,372,312) (14,176,559)
----- --------- ------------ ----- --------- ------------
Net increase
(decrease) 7,301 (962,716) $ (9,042,301) 6,638 381,105 $ 3,972,458
----- --------- ------------ ----- --------- ------------
----- --------- ------------ ----- --------- ------------
</TABLE>
- --------------------------------------------------------------------------------
(3) PURCHASES AND SALES OF INVESTMENTS
The Fund invests primarily in 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 of investments, other than short-term obligations, aggregated $59,642,910
and $71,176,248, respectively.
- --------------------------------------------------------------------------------
(4) INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment management fee, computed at the monthly rate of 0.025% (0.300%
per annum) of average daily net assets and 3.00% of gross income (excluding net
realized gains on sales of securities) up to $500 million and at reduced rates
as daily net assets exceed that level, was earned by Eaton Vance Management
(EVM), the Advisor General Partner, as compensation for management and
investment advisory services rendered to the Fund. For the year ended December
31, 1994, the fee was equivalent to 0.51% of the Fund's average net assets for
such period and amounted to $523,944. Except as to Director General Partners who
are not members of EVM's organization, officers and Director General Partners
receive remuneration for their services to the Fund out of such investment
management fee. Eaton Vance Distributors, Inc., a subsidiary of EVM and the
Fund's principal underwriter, received approximately $27,000 as its portion of
the sales charge on sales of partnership interest in the Fund. The custodian fee
was paid to Investors Bank & Trust Company (IBT), a subsidiary of EVM, for its
services 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 balances the Fund maintains with IBT. Certain of the Director General
Partners of the Fund are directors/ trustees and/or officers of the above
organizations.
<PAGE>
NOTES TO FINANCIAL STATEMENTS (Continued)
- --------------------------------------------------------------------------------
(5) LINE OF CREDIT
The Fund participates with other funds managed by EVM in a $120 million
unsecured line of credit with a bank. The line of credit consists of a $20
million committed facility and a $100 million discretionary facility. Borrowings
will be made by the Fund solely to facilitate the handling of unusual and/or
unanticipated short-term cash requirements. Interest is charged to each fund,
based on its borrowings, at an amount above either the bank's adjusted
certificate of deposit rate, a variable adjusted certificate of deposit rate, or
a federal funds effective rate. In addition, a fee computed at an annual rate of
1/4 of 1% on the $20 million committed facility and on the daily unused portion
of the $100 million discretionary facility is allocated among the participating
funds at the end of each quarter. At December 31, 1994 the Fund had an
outstanding balance pursuant to the line of credit in the amount of $510,000.
- --------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at December 31, 1994, as computed on a federal income tax basis, were as
follows:
Aggregate cost $92,656,542
-----------
-----------
Gross unrealized appreciation $ 2,616,317
Gross unrealized depreciation 5,619,659
-----------
Net unrealized depreciation $ 3,003,342
-----------
-----------
- --------------------------------------------------------------------------------
(7) DISTRIBUTIONS
On December 19, 1994, the Director General Partners of the Fund declared a
distribution of $0.051 per share payable January 16, 1995, to partners on record
on January 3, 1995.
On January 18, 1995, the Director General Partners declared a distribution of
$0.051 per share payable February 15, 1995, to partners of record on February 1,
1995.
<PAGE>
INDEPENDENT AUDITORS' REPORT
----------------------------------------------------------------------------
To the Partners of
Eaton Vance Municipal Bond Fund L.P.:
We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments, of Eaton Vance Municipal Bond Fund L.P., as of
December 31, 1994, and the related statement of operations for the year then
ended, the statement of changes in net assets for the years ended December 31,
1994 and 1993, and the financial highlights for each of the years in the
five-year period ended December 31, 1994. These financial statements and
financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned as of
December 31, 1994 by correspondence with the custodian and brokers. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Eaton Vance
Municipal Bond Fund L.P. as of December 31, 1994, the results of its operations,
the changes in its net assets and its financial highlights for the respective
stated periods in conformity with generally accepted accounting principles.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
February 3, 1995
<PAGE>
INVESTMENT ADVISER
Eaton Vance Management
24 Federal Street
Boston, MA 02110
PRINCIPAL UNDERWRITER
Eaton Vance Distributors, Inc.
24 Federal Street
Boston, MA 02110
(800) 225-6265
CUSTODIAN
Investors Bank & Trust Company
24 Federal Street
Boston, MA 02110
TRANSFER AGENT
The Shareholder Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
INDEPENDENT AUDITORS
Deloitte & Touche LLP
125 Summer 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 distribution
plan, sales charges and expenses. Please read the prospectus
carefully before you invest or send money.
EATON VANCE
MUNICIPAL BOND FUND L.P.
24 FEDERAL STREET
BOSTON, MA 02110
T-MBSRC
EATON VANCE
MUNICIPAL BOND
FUND L.P.
[Photograph]
ANNUAL
SHAREHOLDER REPORT
DECEMBER 31, 1994
