<PAGE>
To Shareholders
Eaton Vance Municipal Bond Fund L.P. had a total return of -1.2% during the six
months ended June 30, 1996. That return was the result of a decline in net asset
value per share from $10.21 on December 31, 1995 to $9.79 on June 30, 1996, and
the reinvestment of $0.301 in monthly income dividends.
Based on the most recent dividend paid, and the Fund's net asset value per share
of $9.79 on June 30, 1996, the Fund's annualized distribution rate was 6.13%. To
equal that rate, a couple in the 36% Federal tax bracket would have to receive
9.58% from a taxable investment.
Following a strong performance in 1995, most fixed-income investors anticipated
stable to lower rates in 1996. Early in the year, those hopes appeared
justified, as the Federal Reserve followed its December, 1995, rate cut with
another easing in January. That action lowered the federal funds rate - a key
short-term interest rate barometer - to 5.25%.
However, amid anecdotal evidence of growing economic momentum, interest rates
moved higher in the months that followed. In his spring Graham-Rudman testimony
before Congress, Fed Chairman Alan Greenspan suggested that further reductions
were less likely in light of strong employment data. Indeed, job creation in the
subsequent months ran well above expectations.
While economic growth has been far from robust, investors have looked
increasingly to the Federal Reserve amid continued speculation that the Fed will
choose to tighten credit in coming months. Inflation remained in the 2% range,
but concerns over a growing economy and the possibility of higher inflation
pushed 30-year Treasury bond yields from 5.95% at the beginning of the year to
over 7% at the end of June.
The difficulties in the Treasury market were echoed in the municipal market,
although to a lesser extent. Importantly, as portfolio manager Tom Fetter
indicates in the pages that follow, there is continuing value in the municipal
bond market. With a focus on those values, Eaton Vance Municipal Bond Fund, L.P.
will continue to pursue tax-saving opportunities for tax-weary investors.
- ------------------------- Sincerely,
/s/ Landon T. Clay
[Photo of Landon T. Clay]
Landon T. Clay
Chairman
- ------------------------- August 21, 1996
- --------------------------------------------------------------------------------
PORTFOLIO OVERVIEW
Percentage of total investments
as of June 30, 1996
Number of issues ........................................... 68
Average quality ............................................ A
Investment grade ........................................... 78.1%
Effective maturity (years) ................................. 15.14
Largest sectors:
Escrowed ................................................ 17.0%
Insured hospitals ....................................... 13.1*
Hospitals ............................................... 9.3
Nursing homes ........................................... 7.5
Lease revenue ........................................... 7.0
*Private insurance does not remove the market risks associated with this
investment.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Fund shares are not guaranteed 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.
- --------------------------------------------------------------------------------
<PAGE>
Management Discussion
An interview with Thomas J. Fetter, President and Portfolio Manager of the Eaton
Vance Municipal Bond Fund L.P.
Q. TOM, IT'S BEEN ROUGH SLEDDING FOR THE OVERALL BOND MARKET IN THE FIRST HALF
OF 1996. BUT THE MUNICIPAL MARKET STILL OUTPERFORMED THE TREASURY MARKET.
A. Yes, while the bond market in general has not fared well in the first half
of the year, the municipal bond market managed to outperform the taxable
market. One reason for the muni market's outperformance was the fact that
tax-exempt bonds offered very good value relative to taxable bonds.
Tax-exempt yields were close to 89% of taxable yields as the
year began.
Supply and demand factors also favored municipal bonds as the period brought
a record amount of bond calls nearly $60 billion in June and July alone.
Most investors chose to retain the option of tax-free income and reinvested
those assets in municipal bonds. That reinvestment into the municipal market
provided additional support for tax-exempt bond prices.
Q. WHERE HAVE YOU CONCENTRATED THE FUND'S INVESTMENTS?
A. There has been been little change in the largest sector weightings. Escrowed
bonds and healthcare issues remain the largest exposures. We've also
continued to look for opportunities in the non-rated segment of the market,
where strong research efforts can turn up good values.
- ---------------------------
[Photo of Thomas J. Fetter]
- ---------------------------
THOMAS J. FETTER
Q. HOSPITAL BONDS HAVE LONG BEEN AN IMPORTANT PART OF THE FUND. COULD YOU GIVE
AN EXAMPLE OF ONE OF THE FUND'S HOSPITAL BONDS?
A. Yes. An issue for Riverside United Methodist Hospital, in Franklin, Ohio, is
among the Fund's largest holdings. Riverside represents the largest acute
care facility in central Ohio and the dominant facility in the Columbus
area. The hospital has been able to attract a growing number of patients
from surrounding counties. That growth should continue with the increase in
service area growth trends.
The merger of Riverside with Grant Medical Center, an affiliate of national
healthcare leader U.S. Health Corp., should allow the hospital to realize
several important benefits. Those include reduced costs and the ability to
enhance revenue growth through contract negotiations with system providers.
The proceeds of this $144 million bond issue were used to refund earlier
bonds that financed improvements at the hospital.
Q. WHY WERE YOU ATTRACTED TO THIS ISSUE?
A. Riverside is a well-regarded issuer that represents the kind of hospital
that is likely to prevail in the rapidly changing health care environment.
The facility has realized impressive economies of scale, while achieving
continued growth and benefiting from the favorable demographics of its
service area. That gives Riverside the profile that is attractive to
investors in health care bonds.
Q. HAVE YOU MADE ANY SPECIAL ADJUSTMENTS TO THE FUND AMID THE MARKET DECLINE?
A. Yes. Because we are long-term investors, we view the occasional market
declines as an opportunity to take advantage of market inefficiencies that
may have occured. The recent market decline afforded us the opportunity to
make several such adjustments. First, we have improved the call protection
of the Portfolio by eliminating bonds having unfavorable call
characteristics. This makes the Fund less vulnerable to untimely early bond
redemptions and affords the Fund additional upside potential in the event of
a market rally.
Next, we have reduced the number of insured issues in the Portfolio in favor
of selected lower-rated investment quality bonds and non-rated bonds. The
new mix of bonds should offer better value and greater opportunity for
capital appreciation.
Finally, we've reduced the Portfolio's holdings in bonds with relatively low
yields in favor of higher-yielding issues. That has significantly improved
the "book yield" of the Portfolio and will enable the Fund to maintain its
attractive dividend stream.
Q. TOM, LOOKING AHEAD, WHAT IS YOUR OUTLOOK FOR THE MUNICIPAL MARKET
IN 1996?
A. I'm optimistic about the prospects for the market. While the economy has
registered moderate growth in 1995, there is very little sign of inflation.
In addition, recent remarks by Fed Chairman Greenspan suggest that he
expects the economy may slow somewhat in the second half of the year. That
is good for the bond market.
In the political arena, the flat tax debate that dominated the early days of
the election campaign has fallen silent. The sober reality of imposing such
a dramatic change in the tax code has caused many voters to have second
thoughts.
Finally, the near-non-stop stock market rally of the past 18 months, which
had distracted some fixed-income investors, has apparently lost some
momentum in recent weeks. That should give investors a reason to look more
closely at fundamentals. From a fundamental standpoint, municipal bonds
remain an excellent value. In my view, this is clearly a good time for
tax-conscious investors to consider municipal bonds.
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------------------------
PORTFOLIO OF INVESTMENTS
JUNE 30, 1996
(UNAUDITED)
- ----------------------------------------------------------------------------------------------------
TAX-EXEMPT INVESTMENTS - 100.0%
- ----------------------------------------------------------------------------------------------------
<CAPTION>
RATINGS
- -------------------
PRINCIPAL
STANDARD AMOUNT
MOODY'S & POOR'S (000 OMITTED) SECURITY VALUE
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
ASSISTED LIVING - 3.4%
NR NR $ 1,000 Bell County, TX Health Facilities -
Elder Care Project, 9.0%, 11/01/24 $ 1,068,000
NR NR 1,000 North Syracuse, NY Housing Authority,
AJM SR Housing Inc.-- Janus
Park Project, 8.0%, 6/1/24 992,270
NR NR 1,000 St. Paul, MN - Highland Park Project,
8.75%, 11/01/24 1,053,030
-----------
$ 3,113,300
-----------
EDUCATION - 5.0%
Baa1 BBB+ $ 5,000 New York State Dorm Authority, State
University Educational Facilities,
5.25%, 5/15/15(3) $ 4,527,100
-----------
ESCROWED - 17.0%
Aaa AAA $ 1,000 Austin, Texas Combined Utility System,
11.125%, 11/15/09 $ 1,201,250
Aaa NR 2,500 Boston City Hospital, FHA Insured,
7.625%, 2/15/21 2,816,925
Aaa AAA 8,000 Colorado Health Facilities Authority,
Liberty Heights, FSA Insured,
0%, 7/15/24 1,131,520
Aaa NR 19,000 Dawson Ridge Colorado Met. Dist., 0%,
10/1/22 3,044,560
Baa BBB 1,000 Denver, Colorado City and County
Airport, 7.50% 11/15/12 1,149,400
Aaa AAA 500 Maine State Health & Education, Coves
Edge, 10.00%, 8/1/20 607,580
Aaa NR 715 Massachusetts Health & Education, St.
John's Hospital, 8.375%, 12/1/20 830,187
Aaa NR 715 Massachusetts IFA, Cape Cod Hospital,
8.40%, 11/15/08 823,809
Aaa NR 5,000 Mississippi Housing Finance Corp, SFMR,
0%, 6/1/15 1,604,950
Aaa BBB+ 665 North Carolina Eastern Municipal Power,
6.50%, 1/1/18 730,443
Aaa NR 6,000 Savannah, Georgia Economic Development
Authority, 0%, 12/1/21 1,018,980
NR NR 480 Vermont Education & Health Building
Authority Northwestern Medical
Facility, 9.75%, 9/1/18 542,141
-----------
$15,501,745
-----------
HEALTH CARE - 3.3%
Baa1 BBB+ $ 830 New York Medical Care, Mental Health
Services, 7.875%, 8/15/20 $ 923,060
Baa BBB 1,550 New York Medical Care, Brookdale
Medical Center, 6.85%, 2/15/17 1,589,789
NR NR 500 Wisconsin Health Facility Authority,
Villa Clement, 8.75%, 6/1/12 503,825
-----------
$ 3,016,674
-----------
HOSPITALS - 9.3%
Aa AA- $ 4,000 Greenville, SC Hospital System, 5.25%,
5/1/23 $ 3,602,000
A A 500 Illinois Health & Education Facilities,
Victory Memorial, 7.875%, 12/1/18 534,425
NR BBB 2,000 Louisiana PFA General Health System
Project 6.80%, 11/1/16 1,988,840
NR BBB- 1,000 Lufkin, Texas Health Facility -
Memorial Health System of East Texas,
6.875%, 2/15/26 972,210
NR A- 1,500 Union County Pennsylvania Hospital
Authority, Evangelical Community
Hospital, 5.875%, 7/1/11 1,400,670
-----------
$ 8,498,145
-----------
HOUSING - 5.5%
NR AA $ 610 Arkansas Development Finance Authority,
SFMR, 8.00%, 8/15/11(3) $ 653,292
Aa NR 930 Colorado Housing Finance Authority,
7.90%, 12/1/24 1,040,410
NR NR 1,248 Lake Creek Affordable Housing
Corporation, Eagle County, Colorado,
8.00%, 12/1/23 1,279,724
Aa AA 320 North Carolina Single Family Mortgage
Revenue, 8.125%, 9/1/19 330,621
NR A 1,650 Travis County Texas Housing Finance
Corp., Travis Station Apartments
Project, 6.75%, 4/1/19(3) 1,700,820
-----------
$ 5,004,867
-----------
INDUSTRIAL DEVELOPMENT & POLLUTION
CONTROL REVENUE - 3.7%
NR NR $ 900 Florence County, SC IDR - Stone
Container Project, 7.375%, 2/1/07 $ 920,502
NR BBB- 2,450 Port Camas-Washougal, Washington, James
River Project, 6.70%, 4/1/23 2,449,657
-----------
$ 3,370,159
-----------
INSURED - EDUCATION - 1.9%
Aaa AAA $ 2,000 University of California - Multiple
Projects (AMBAC), 4.875%, 9/1/19 $ 1,717,960
-----------
INSURED - HOSPITAL - 13.1%
Aaa AAA $ 2,750 Colorado Health Facilities, Sisters of
Charity Health Care (MBIA),
5.25%, 5/15/14 $ 2,591,655
Aaa AAA 2,980 Franklin, Ohio Hospital for Riverside
United Methodist, 5.75%,
5/15/20 (AMBAC) 2,926,628
Aaa AAA 1,000 Fredericksburg, Virginia Industrial
Development Authority
(FGIC), "INFLOS", Variable, 8/15/23
(1) 1,084,000
Aaa AAA 1,000 Illinois Health Facilities Authority
Rush-Presbyterian - St. Lukes Medical
Center (MBIA), "INFLOS", Variable,
10/1/24(1) 1,109,690
Aaa AAA 1,000 King County, Washington, Public
Hospital District No. 1 (AMBAC),
6.00%, 9/1/20 1,003,540
Aaa AAA 1,000 Rhode Island Health & Educational
Facility, Rhode Island Hospital
(FGIC),''INFLOS'', Variable, 8/15/21
(1)(4) 1,120,120
Aaa AAA 1,000 Salt Lake City, Utah IHC Hospitals
Inc., "INFLOS" (AMBAC),
Variable, 5/15/20(1)(4) 1,106,710
Aaa AAA 1000 Scottsdale, AZ IDA Hospital Forward
Delivery, 6.125%, 9/1/17 (AMBAC)(2) 960,420
-----------
$11,902,763
-----------
INSURED - HOUSING - 2.4%
Aaa AAA $ 1,000 SCA MFMR Springfield, Missouri (FSA),
7.10%, 1/1/30 $ 1,079,890
Aaa AAA 1,000 SCA MFMR Burnsville, Minnesota (FSA),
7.10%, 1/1/30 1,079,890
-----------
$ 2,159,780
-----------
INSURED - TAX REVENUE - 1.4%
Aaa AAA $ 1,500 Culver City California Redevelopment
Finance Authority (AMBAC),
4.6%, 11/1/20 $ 1,231,290
-----------
INSURED - TRANSPORTATION - 1.2%
Aaa AAA $ 1,000 Triborough Bridge and Tunnel Authority
of New York, "RITES" (AMBAC),
Variable, 01/01/12(1) $ 1,071,190
-----------
INSURED - UTILITIES - 1.0%
Aaa AAA $ 800 Puerto Rico Electric Power Authority
STRIPES (FSA), Variable, 7/1/03(1) $ 867,648
-----------
INSURED - WATER & SEWER - 1.1%
Aaa AAA $ 1,155 Passaic Valley, New Jersey Water
Commission (FGIC), 5.00%, 12/15/22 $ 1,011,041
-----------
LEASE REVENUE/CERTIFICATES OF
PARTICIPATION - 7.0%
A A- $ 3,000 California Public Works Board,
California State University Projects,
5.50%, 12/1/18 $ 2,771,160
A A 3,565 Indiana Transportation Authority
Airport Facilities, 6.25%, 11/1/16 3,592,165
-----------
$ 6,363,325
-----------
LIFE CARE - 4.3%
NR NR $ 1,060 Loudon County Virginia IDA, Falcons
Landing Project, 8.75%, 11/1/24 $ 1,078,815
NR NR 655 New Hampshire Higher Education, River
Woods at Exeter,
9.00%, 3/1/23 706,201
NR NR 1,000 New Jersey EDA, Keswick Pines Project,
8.75%, 1/1/24 1,043,200
NR NR 1,000 Vermont IDA, Wake Robin Corp. Project,
1993-A, 8.75%, 4/1/23(4) 1,077,320
-----------
$ 3,905,536
-----------
MISCELLANEOUS - 2.0%
NR NR $ 1,500 New Jersey Sports & Exposition
Authority, Monmouth Park Project,
8.00%, 1/1/25 $ 1,623,600
NR NR 967 Retama Special Facilities, Retama Race
Track, Texas, 8.75%, 12/15/18* 222,482
-----------
$ 1,846,082
-----------
NURSING HOMES - 7.5%
NR NR $ 1,470 Bell County, Texas Health Facilities,
Normandy Terrace Project,
9.00%, 4/1/23 $ 1,582,734
NR NR 540 Covington Allegheny, Virginia IDA -
Beverly Enterprises, 9.375% 9/1/01 604,060
NR NR 1,000 Green County, OH - Fairview Extended
Care, 10.125% 1/1/11 1,120,790
NR NR 1,100 Massachusetts IFA Health Care Facility
- Age Institute of Mass. Project,
8.05%, 11/1/25 1,090,012
NR NR 1,265 Montgomery, Pennsylvania, IDA, Health
Care Facility - Geriatric Health Care
Institute, 8.375%, 7/1/23 1,313,943
NR NR 415 Okaloosa County Florida, Beverly
Enterprises, 10.75%, 10/1/03 444,058
NR NR 680 Tarrant County Texas Health Facilities
Development Corp.,
10.25%, 9/1/19 703,800
-----------
$ 6,859,397
-----------
SOLID WASTE - 0.9%
Aa3 AA- $ 750 Delaware County Pennsylvania Industrial
Revenue, 8.10%, 12/1/13(3) $ 779,790
-----------
SPECIAL TAX REVENUE - 1.8%
Baa1 A $ 1,750 Puerto Rico Highway & Transportation
Authority, 5.50%, 7/1/36 $ 1,630,318
-----------
TRANSPORTATION - 4.3%
NR NR $ 1,000 Lake of the Ozarks, Missouri Bridge
System, 6.40%, 12/1/25 $ 946,900
NR NR 5,000 San Joaquin Hills, California
Transportation Agency, 0%, 1/1/14 1,544,200
NR NR 10,000 San Joaquin Hills, California
Transportation Agency, 0%, 1/1/25 1,459,100
-----------
$ 3,950,200
-----------
UTILITIES - 2.9%
Aa AA $ 1,000 Colorado Springs Utility System, 6.75%,
11/15/21 $ 1,091,300
A BBB+ 1,500 Massachusetts Municipal Wholesale
Electric Co., 6.75%, 7/1/11 1,565,775
-----------
$ 2,657,075
-----------
TOTAL INVESTMENTS (identified cost,
$86,073,199) $90,985,385
===========
(1) The above designated securities have been issued as inverse floater bonds.
(2) The above designated securities have been issued as when-issued securities.
(3) The above designated securities have been designated as collateral for
when-issued securities.
(4) The above designated securities have been designated as collateral for
futures.
* Non-income producing security.
</TABLE>
At June 30, 1996, the concentration of the Fund's investments in the various
states, determined as a percentage of total investments, is as follows:
Colorado 13%
California 10%
New York 9%
Others, representing less than 10% individually 68%
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 June
30, 1996, 22% 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 3.5% to 7.8% of total investments.
See notes to financial statements.
<PAGE>
- ------------------------------------------------------------------------------
FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$86,073,199) $90,985,385
Cash 490
Receivable for shares of partnership interest sold 7,330
Interest receivable 1,449,536
-----------
Total assets $92,442,741
LIABILITIES:
Demand note payable (Note 5) $1,512,000
Payable for investments purchased 970,714
Payable for daily variation margin on open
financial futures contracts (Note 1D) 90,000
Payable for shares of partnership interest
purchased 156,748
Payable to affiliate --
Director General Partners' fees 1,680
Accrued expenses 24,192
----------
Total liabilities 2,755,334
-----------
NET ASSETS for 9,157,239 shares of partnership interest
outstanding $89,687,407
===========
NET ASSETS APPLICABLE TO SHARES OF PARTNERSHIP
INTEREST OWNED BY:
Limited Partners (9,024,986 shares) $88,392,650
General Partners --
Director partners (2,488 shares) $ 24,358
Adviser partners (129,765 shares) 1,270,399 1,294,757
---------- -----------
NET ASSETS (9,157,239 shares) $89,687,407
===========
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 $77,283,660
Accumulated net realized gain on investment and
financial futures transactions (computed on the
basis of identified cost) 7,845,808
Unrealized appreciation of investments and
financial futures contracts (computed on the
basis of identified cost) 4,688,681
Accumulated distributions in excess of net
investment income (130,742)
-----------
Total $89,687,407
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE OF
PARTNERSHIP INTEREST $ 9.79
======
COMPUTATION OF OFFERING PRICE: Offering price per
share (100/96.25 of $9.79) $10.17
======
On sales of $50,000 or more the offering price is reduced.
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the Six Months Ended June 30, 1996 (Unaudited)
- ------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income $ 3,175,749
Expenses --
Investment management fee earned by Adviser
General Partner (Note 4) $ 233,424
Compensation of Director General Partners not
members of the Adviser General
Partner's organization 3,534
Custodian fee 25,665
Transfer and dividend disbursing agent fees 9,930
Printing and postage 30,042
Legal and accounting services 41,077
Registration fees 20,132
Interest expense (Note 5) 16,004
Miscellaneous 20,622
-----------
Total expenses $ 400,430
Deduct reduction of custodian fee 25,665
-----------
Net expenses 374,765
-----------
Net investment income $ 2,800,984
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on investment transactions
computed on the basis of identified cost $ (72,129)
Net realized gain on financial futures contracts 44,788
-----------
Net realized loss on investment and
financial futures transactions $ (27,341)
Change in unrealized appreciation of investments
and financial futures contracts (3,823,659)
-----------
Net realized and unrealized gain on investments $(3,851,000)
-----------
Net decrease in net assets resulting from operations $(1,050,016)
===========
See notes to financial statements
<PAGE>
STATEMENTS OF CHANGES IN NET ASSETS
- ------------------------------------------------------------------------------
SIX MONTHS
ENDED
JUNE 30, 1996 YEAR ENDED
(UNAUDITED) DECEMBER 31, 1995
------------- -----------------
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 2,800,984 $ 5,846,830
Net realized loss on investments and
financial futures contracts (27,341) (2,249,975)
Change in unrealized appreciation of
investments (3,823,659) 11,515,682
----------- -----------
Increase (decrease) in net assets
from operations $(1,050,016) $15,112,537
----------- -----------
Distributions to partners --
From net investment income $(2,800,984) $(5,846,830)
In excess of net investment income (12,403) (118,339)
----------- -----------
Total distributions $(2,813,387) $(5,965,169)
----------- -----------
Net decrease from transactions in shares
of partnership interest (Note 2) $(2,859,196) $(3,539,812)
----------- -----------
Net increase (decrease) in net assets $(6,722,599) $ 5,607,556
NET ASSETS:
At beginning of period 96,410,006 90,802,450
----------- -----------
At end of period (including distributions
in excess of net investment income of
$130,742 and $118,339, respectively) $89,687,407 $96,410,006
=========== ===========
See notes to financial statements
<PAGE>
<TABLE>
FINANCIAL HIGHLIGHTS
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED
JUNE 30, YEAR ENDED DECEMBER 31,
1996 -----------------------------------------------------------------------
(UNAUDITED) 1995 1994 1993 1992 1991
---------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning
of period $10.210 $ 9.260 $ 10.630 $ 9.950 $ 9.750 $ 9.200
------- ------- -------- -------- -------- -------
INCOME FROM OPERATIONS:
Net investment income $ 0.300 $ 0.604 $ 0.611 $ 0.614 $ 0.639 $ 0.638
Net realized and
unrealized gain (loss)
on investments (0.419) 0.962 (1.369) 0.692 0.195 0.552
------- ------- -------- -------- -------- -------
Total income (loss)
from operations $(0.119) $ 1.566 $ (0.758) $ 1.306 $ 0.834 $ 1.190
------- ------- -------- -------- -------- -------
LESS DISTRIBUTIONS:
From net investment
income
$(0.300) $(0.604) $ (0.611) $ (0.619) $ (0.634) $(0.638)
In excess of net
investment income (0.001) (0.012) (0.001) (0.007) -- (0.002)
------- ------- -------- -------- -------- -------
Total distributions
$(0.301) $(0.616) $ (0.612) $ (0.626) $ (0.634) $(0.640)
------- ------- -------- -------- -------- -------
NET ASSET VALUE, end of
period $ 9.790 $10.210 $ 9.260 $ 10.630 $ 9.950 $ 9.750
======= ======= ======== ======== ======== =======
TOTAL RETURN(1) (1.18%) 17.40% (7.27%) 13.52% 8.91% 13.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of period
(000's omitted) $89,687 $96,410 $90,802 $114,425 $103,208 $92,771
Ratio of expenses to
average daily net assets(2) 0.86%+ 0.76% 0.80% 0.72% 0.74% 0.76%
Ratio of expenses to
average daily net assets
after custodian fee
reduction 0.81%+ 0.72% -- -- -- --
Ratio of net investment
income to average daily
net assets 6.09%+ 6.16% 6.26% 5.91% 6.50% 6.75%
PORTFOLIO TURNOVER 17% 58% 58% 86% 60% 105%
+ Computed on an annualized basis.
(1) Total investment return is calculated assuming a purchase at the net asset value on the first day and a sale at the net
asset value on the last day of each period reported. Dividends and distributions, if any, are assumed to be reinvested at
the net asset value on the payable date. Total investment return is not computed on an annualized basis.
(2) The annualized expense ratios for the six months ended June 30, 1996 and the year ended December 31, 1995 have been
adjusted to reflect a change in reporting requirements. The new reporting guidelines require the Portfolio to increase
its expense ratios by the effect of any expense offset arrangements with its service providers. The expense ratios for
each of the periods ended on or before December 31, 1994 have not been adjusted to reflect this change.
See notes to financial statements
</TABLE>
<PAGE>
------------------------------
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
- ------------------------------------------------------------------------------
(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, maturing in sixty days or less, 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.
F. USE OF ESTIMATES -- The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts
of revenue and expense during the reporting period. Actual results could
differ from those amounts.
G. INTERIM FINANCIAL INFORMATION -- The interim financial statements relating
to June 30, 1996 and for the six-month period then ended have not been audited
by independent certified public accountants, but in the opinion of the Fund's
management, reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
<PAGE>
- ------------------------------------------------------------------------------
(2) SHARES OF PARTNERSHIP INTEREST
Transactions in shares of partnership interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, 1996
(UNAUDITED) YEAR ENDED DECEMBER 31, 1995
------------------------------------------- ------------------------------------------
GENERAL LIMITED GENERAL LIMITED
PARTNERS PARTNERS AMOUNT PARTNERS PARTNERS AMOUNT
---------- ---------- ------------ --------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C>
Sales -- 94,569 $ 1,947,400 -- 570,259 $ 5,610,100
Issued to partners electing
to receive payment of
distributions in shares 3,933 147,406 1,507,942 7,843 325,998 3,252,067
Redemptions -- (534,901) (5,314,538) -- (1,264,782) (12,401,979)
----- -------- ----------- ----- ---------- ------------
Net increase (decrease) 3,933 (292,926) $(2,859,196) 7,843 (368,525) $ (3,539,812)
===== ======== =========== ===== ========== ============
</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
$15,972,115 and $18,270,854, 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 Adviser General Partner, as compensation for management and
investment advisory services rendered to the Fund. For the six months ended June
30, 1996, the fee was equivalent to 0.50% (annualized) of the Fund's average net
assets for such period and amounted to $233,424. 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 under writer, received approximately $500 as its
portion of the sales charge on sales of partnership interest in the Fund.
Certain of the Director General Partners of the Fund are directors/trustees
and/or officers of the above organizations. Director General Partners of the
Fund that are not affiliated with the Investment Advisor 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 six months ended June 30,
1996, no significant amounts have been deferred.
- ------------------------------------------------------------------------------
(5) LINE OF CREDIT
The Fund participates with other funds managed by EVM and affiliates 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 June
30, 1996 the Fund had an outstanding balance pursuant to the line of credit in
the amount of $1,512,000.
- ------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at June 30, 1996, as computed on a federal income tax basis, were as
follows:
Aggregate cost $86,073,199
===========
Gross unrealized appreciation $ 6,114,670
Gross unrealized depreciation (1,202,484)
-----------
Net unrealized appreciation $ 4,912,186
===========
- ------------------------------------------------------------------------------
(7) DISTRIBUTIONS
On June 17, 1996, the Director General Partners of the Fund declared a
distribution of $0.050 per share payable July 15, 1996 to partners of record
on July 1, 1996. On July 18, 1996, the Director General Partners declared a
distribution of $0.050 per share payable August 15, 1996, to partners of
record on August 1, 1996.
- ------------------------------------------------------------------------------
(8) FINANCIAL INSTRUMENTS
The Fund regularly trades in financial instruments with off-balance sheet risk
in the normal course of their investing activities to assist in managing
exposure to various market risks. These financial instruments include written
options and futures contracts and may involve, to a varying degree, elements of
risk in excess of the amounts recognized for financial statement purposes. The
notional or contractual amounts of these instruments represent the investment
the Fund has in particular classes of financial instruments and does not
necessarily represent the amounts potentially subject to risk. The measurement
of the risks associated with these instruments is meaning ful only when all
related and offsetting transactions are considered.
A summary of obligations under these financial instruments at June 30, 1996,
were as follows:
FUTURES
CONTRACTS NET UNREALIZED
EXPIRATION DATE CONTRACTS POSITION DEPRECIATION
- --------------------- ------------------------- ---------- ----------------
9/96 80 U.S. Treasury Bonds Short $(223,505)
The Fund has sufficient cash and/or securities to cover requirements on open
futures contracts.
<PAGE>
--------------------------
INVESTMENT MANAGEMENT
EATON VANCE DIRECTOR GENERAL OFFICERS
MUNICIPAL PARTNERS
BOND FUND L.P. LANDON T. CLAY
24 Federal Street LANDON T. CLAY Chairman
Boston, MA 02110 Chairman, Eaton Vance
Management JOHN L. THORNDIKE
Alternate Chairman
DONALD R. DWIGHT
President, Dwight THOMAS J. FETTER
Partners, Inc. President and
Chairman, Newspapers Portfolio Manager
of New England, Inc.
JAMES L. O'CONNOR
Treasurer
SAMUEL L. HAYES, III
Jacob H. Schiff THOMAS OTIS
Professor of Secretary
Investment Banking,
Harvard University
Graduate School of
Business
Administration
NORTON H. REAMER
President and
Director, United
Asset Management
Corporation
JOHN L. THORNDIKE
Director, Fiduciary
Company Incorporated
JACK L. TREYNOR
Investment Adviser
and Consultant
<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
89 South Street
P.O. Box 1537
Boston, MA 02205-1537
TRANSFER AGENT
First Data Investor Services Group, Inc.
BOS725
P.O. Box 1559
Boston, MA 02104
(800) 262-1122
INDEPENDENT AUDITORS
Deloitte & Touche LLP
125 Summer Street
Boston, MA 02110
EATON VANCE
MUNICIPAL BOND
FUND L.P.
[Graphic Omitted]
[Photo of Capital Building]
SEMI-ANNUAL
SHAREHOLDER REPORT
JUNE 30, 1996
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-6/96
