<PAGE>
EATON VANCE
MUNICIPAL BOND
FUND L.P.
[Logo]
[picture of flags]
ANNUAL
SHAREHOLDER REPORT
DECEMBER 31, 1995
<PAGE>
TO SHAREHOLDERS
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PORTFOLIO OVERVIEW
Percentage of total investments
as of December 31, 1995
Number of issues............................................................70
Average quality.............................................................A+
Investment grade.........................................................80.4%
Effective maturity (years)...............................................12.45
Largest sectors:
Escrowed..............................................................17.2%
Insured hospitals......................................................8.8*
Hospitals..............................................................8.1
Nursing homes..........................................................6.9
Lease revenues.........................................................6.8
*Private insurance does not remove the market risks associated with this
investment.
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Eaton Vance Municipal Bond Fund L.P. had a total return of 17.4% during the year
ended December 31, 1995. That return was the result of a rise in net asset value
per share from $9.26 on December 31, 1994 to $10.21 on December 31, 1995, and
the reinvestment of $0.616 in monthly income dividends.
Based on the most recent dividend paid, and the Fund's net asset value per share
of $10.21 on December 31, 1995, the Fund's annualized distribution rate was
6.05%. To equal that rate, a couple in the 36% Federal tax bracket would have to
receive 9.45% from a taxable investment.
The Federal Reserve's efforts of recent years to achieve a soft landing paid off
handsomely in 1995, with the economy registering steady, non-inflationary growth
during the year. With inflation rising a modest 2.7%, the Fed finally found room
to ease interest rates, lowering the Federal funds rate in July, and again in
mid-December. The prospect of low inflation propelled the bond market throughout
the year, with 30-year Treasury bond yields* falling from 7.90% at the beginning
of the year to 5.95% at year-end.
However, the municipal bond market underper-formed the Treasury market, amid
investors' concerns over flat-tax proposals. Those concerns focused on the
possibility that, if passed, a flat tax would eliminate much of the current
graduated tax structure, and make municipal bonds less attractive to investors.
There are several reasons why we at Eaton Vance believe those concerns are
unwarranted. First, any comprehensive proposal to change the tax code faces
enormous obstacles, let alone a proposal that would eliminate the mortgage
interest deduction, the very cornerstone of home ownership. Second, the flat tax
has now become an issue in the presidential campaign, where it is sure to come
under the intense critical scrutiny of both voters and political pundits alike.
Finally, the municipal market is the primary source of funding for state and
municipal projects that provide a lifeline of services and infrastructure.
Congress is unlikely to close off this valuable source of funding. At Eaton
Vance, we are confident that the municipal market will maintain that valuable
role. Eaton Vance Municipal Bond Fund L.P. will continue to seek opportunities
in the vital municipal sector.
[Photo of Landon T. Clay]
Sincerely,
/s/Landon T. Clay
Landon T. Clay
Chairman
February 21, 1996
*Principal and interest payments of U.S. Treasury securities are guaranteed by
the U.S. government.
<PAGE>
Management Discussion
An interview with Thomas J. Fetter, President and Portfolio Manager of the Eaton
Vance Municipal Bond Fund L.P.
Q. TOM, THE BOND MARKET MADE A TREMENDOUS TURNAROUND THIS YEAR. WHAT DROVE THE
MARKET RECOVERY?
A. In 1995, the bond market posted its best year in a decade. There were
several factors behind the recovery: first, the economy has been in a period
of modest growth, with inflation remaining well in check. That has provided
a very favorable backdrop for all fixed income markets; second, the Federal
Reserve, after having calmed inflation through a tight money policy in 1994,
began to lower rates in 1995, dropping the Federal funds rate a notch in
July and again in December.
Third, foreign investors have been drawn to U.S. Treasuries by the
combination of low inflation and a rising dollar; and finally, Congress's
efforts to balance the budget and curtail the size of government - while at
times awkward and frustrating - have been generally well-received by
investors. In summary, 1995 provided a near-perfect scenario for bond
investors.
Q. DESPITE THE UNDERPERFORMANCE OF THE MUNICIPAL SECTOR, THE FUND DID HAVE A
VERY GOOD YEAR. WHAT CONTRIBUTED TO THE FUND'S STRONG PERFORMANCE?
A. Following the market decline of 1994, we remained fully invested in the
belief that 1995 would bring a market recovery. The Fund consequently
maintained a relatively long average maturity to take advantage of the
anticipated decline in interest rates. That strategy served the Fund well
throughout the year as the Fed pursued an increasingly accommodative credit
policy.
Q. WHERE HAVE YOU CONCENTRATED THE FUND'S INVESTMENTS?
[Photo of Thomas J. Fetter]
THOMAS J. FETTER
A. The Fund's two largest investment weightings remained escrowed bonds and
healthcare issues. Escrowed bonds are those that have been pre-refunded by
their issuers to take advantage of lower interest rates. Because they are
escrowed and backed by Treasury bond payments, they are of the very highest
quality. The Fund's escrowed holdings helped maintain a high average quality
as well as provide attractive income, as they were purchased at higher
interest rates.
Within the healthcare sector, we have focused on hospitals and nursing
homes. It should come as no surprise that the healthcare industry has become
increasingly competitive in recent years, given the strong push for
healthcare reform. The best positioned hospitals are likely to continue
faring well, while some of their less-competitive counter-parts may not
survive. The Fund has focused on cost-effective institutions with strong
demo-graphics, such as nursing homes, those with special expertise, such as
transplant or rehab facilities, and hospitals that have improved their
competitive position through mergers.
Q. WHAT WAS ATTRACTIVE ABOUT NON-RATED BONDS?
A. Non-rated bonds afforded us the opportunity to take advantage of attractive
yielding special situations without sacrificing our commitment to high
quality. Non-rated bonds may be smaller issues or issues that are less
widely followed by institutional analysts. While they therefore may provide
some unusual opportunties for investors, they require very thorough research
and constant monitoring. We have made non-rated bonds one of our specialties
at Eaton Vance over the years. We have a very experienced staff in this
area, and have recently expanded our resources further. In so doing, we have
added to our deciplined credit review process. Because we have recently
increased our analytical staff, we have the added capabilities and resources
needed to research these issues.
In addition, investing in non-rated bonds adds the dimension of further
diversification. Of course, when considering investments in non-rated bonds,
we follow the same rigorous procedures and demand the same high credit
standards that we apply to rated bonds.
Q. TOM, LOOKING AHEAD, WHAT IS YOUR OUTLOOK FOR THE MUNICIPAL MARKET IN 1996?
A. I believe that the bond market should fare well in 1996. The economy
continues to grow at a moderate pace, with little sign of inflation. In
fact, there is some conjecture that the ongoing budget impasse could slow
the economy over time. That would make the climate for the fixed-income
markets even better. With respect to the municipal market, the refundings of
recent years are all-but-completed. Therefore, new issue supply should
remain moderate.
Of course, the flat tax debate could continue to weigh on the market for
awhile. Realisti-cally, though, I believe the likelihood of enacting a flat
tax is very remote, given the objections of a wide array of political
constituencies. In the meantime, tax-exempt yields remain at extremely
attractive levels relative to taxable yields. We hope to take advantage of
that situation in the Fund. Looking ahead to 1996, in my view, municipal
bonds currently represent an unusual opportunity for tax-conscious
investors.
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 December 31, 1995, through December 31, 1995
Label A B
Label date Muni Bond L.P. Lehman Muni
- -----------------------------------------------
1 12/85+ 9623 10000
2 1/86 10070 10589
3 2/86 10475 11009
4 3/86 10567 11012
5 4/86 10507 11021
6 5/86 10376 10841
7 6/86 10513 10945
8 7/86 10554 11011
9 8/86 11042 11504
10 9/86 10939 11533
11 10/86 11189 11732
12 11/86 11403 11965
13 12/86 11422 11932
14 1/87 11689 12291
15 2/87 11832 12351
16 3/87 11751 12221
17 4/87 11113 11607
18 5/87 11056 11550
19 6/87 11241 11889
20 7/87 11273 12010
21 8/87 11306 12037
22 9/87 10817 11593
23 10/87 10929 11634
24 11/87 11186 11938
25 12/87 11419 12111
26 1/88 11893 12543
27 2/88 12021 12675
28 3/88 11784 12528
29 4/88 11845 12623
30 5/88 11880 12586
31 6/88 12093 12770
32 7/88 12198 12854
33 8/88 12232 12865
34 9/88 12493 13098
35 10/88 12797 13329
36 11/88 12633 13207
37 12/88 12884 13342
38 1/89 13050 13618
39 2/89 12956 13463
40 3/89 12934 13431
41 4/89 13323 13749
42 5/89 13596 14035
43 6/89 13797 14226
44 7/89 13909 14419
45 8/89 13751 14278
46 9/89 13698 14235
47 10/89 13919 14410
48 11/89 14156 14662
49 12/89 14256 14782
50 1/90 14078 14712
51 2/90 14241 14843
52 3/90 14265 14848
53 4/90 14020 14740
54 5/90 14457 15062
55 6/90 14609 15194
56 7/90 14874 15418
57 8/90 14477 15195
58 9/90 14518 15203
59 10/90 14722 15479
60 11/90 15159 15790
61 12/90 15250 15859
62 1/91 15458 16072
63 2/91 15567 16212
64 3/91 15575 16217
65 4/91 15805 16434
66 5/91 15963 16580
67 6/91 15915 16564
68 7/91 16179 16765
69 8/91 16443 16986
70 9/91 16675 17208
71 10/91 16837 17362
72 11/91 16894 17411
73 12/91 17307 17784
74 1/92 17275 17825
75 2/92 17280 17831
76 3/92 17302 17837
77 4/92 17452 17996
78 5/92 17749 18208
79 6/92 18085 18513
80 7/92 18662 19068
81 8/92 18353 18883
82 9/92 18433 19006
83 10/92 18045 18819
84 11/92 18578 19156
85 12/92 18849 19352
86 1/93 19064 19577
87 2/93 19778 20285
88 3/93 19592 20071
89 4/93 19830 20273
90 5/93 19991 20387
91 6/93 20365 20728
92 7/93 20369 20754
93 8/93 20787 21187
94 9/93 21127 21428
95 10/93 21171 21469
96 11/93 20932 21280
97 12/93 21397 21729
98 1/94 21642 21978
99 2/94 21035 21408
100 3/94 19955 20536
101 4/94 20021 20711
102 5/94 20271 20890
103 6/94 20128 20768
104 7/94 20484 21143
105 8/94 20612 21216
106 9/94 20235 20905
107 10/94 19835 20534
108 11/94 19326 20162
109 12/94 19842 20606
110 1/95 20534 21195
111 2/95 21186 21812
112 3/95 21318 22062
113 4/95 21342 22088
114 5/95 21960 22793
115 6/95 21698 22594
116 7/95 21791 22808
117 8/95 21973 23097
118 9/95 22066 23243
119 10/95 22521 23581
120 11/95 22978 23973
121 12/95 23301 24203
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
+ Index information is available only at month-end; therefore, the line
comparison begins at the next month-end following the commencement of the
Fund's investment operations.
FUND PERFORMANCE
In accordance with Securities and Exchange Commission guidelines, we are
including a per-formance chart that compares your Fund's 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 red line on the chart represents the Fund's performance, and includes
the Fund's maximum current sales charge of 4.75%. The Fund's 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
Index's total return does not reflect any com-missions or expenses that would be
incurred if an investor individually purchased or sold securities represented in
the Index.
<PAGE>
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PORTFOLIO OF INVESTMENTS
DECEMBER 31, 1995
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TAX-EXEMPT INVESTMENTS - 100.0%
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RATINGS (UNAUDITED)
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PRINCIPAL
STANDARD AMOUNT
MOODY'S & POOR'S (000 OMITTED) SECURITY VALUE
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ASSISTED LIVING - 1.1%
NR NR $ 1,000 North Syracuse NY Housing
Authority, AJM SR Housing Inc.
-- Janus Park Project,
8.0%, 6/1/24 $ 1,015,640
------------
EDUCATION - 4.9%
Baa1 BBB+ $ 5,000 New York State Dorm
Authority, State
University Educational
Facilities, 5.25%, 5/15/15 $ 4,771,650
------------
ESCROWED - 17.2%
Aaa AAA $ 1,000 Austin, Texas Combined
Utility System, 11.125%,
11/15/09 $ 1,240,480
Aaa NR 2,500 City of Boston, FHA
Insured, 7.625%, 2/15/21 2,896,850
Aaa AAA 8,000 Colorado Health Facilities
Authority, Liberty
Heights, FSA Insured,
0%, 7/15/24 1,272,000
Aaa NR 19,000 Dawson Ridge Colorado Met.
Dist. 0%, 10/1/22 3,461,230
Aaa AAA 500 Maine State Health &
Education, Cove Edge,
10.00%, 8/1/20 628,340
Aaa BBB 715 Massachusetts Health &
Education, St. John's
Hospital, 8.375%, 12/1/20 856,012
Aaa NR 715 Massachusetts IFA, Cape
Cod Hospital, 8.40%, 11/14/08 853,996
Aaa AAA 500 Massachusetts HEFA for
Newton-Wellesley
Hospital, 8.00%, 7/1/18(2) 556,040
A NR 600 Mississippi Hospital
Authority, Methodist
Hospital, 9.375%, 5/1/12 685,824
Aaa NR 5,000 Mississippi Housing
Finance Corp, SFMR, 0%, 6/1/15 1,648,300
Aaa A- 665 North Carolina Eastern
Municipal Power, 6.50%, 1/1/18 797,155
Aaa NR 6,000 Savannah, Georgia Economic
Development Authority,
0%, 12/1/21 1,143,960
NR NR 480 Vermont Education & Health
Building Authority
Northwestern Medical
Facility, 9.75%, 9/1/18 554,894
------------
$ 16,595,081
------------
HEALTH CARE - 6.1%
NR NR $ 1,000 Bell County, Texas Health
Facilities, Care
Institution Inc.,
9.00%, 11/1/24 $ 1,075,360
NR NR 540 Covington - Allegheny
County, Virginia, IFA,
Beverly Enterprises Inc.
Project, 9.375%, 9/1/01 614,358
NR NR 1000 Greene County, OH First
Mortgage for Fairview
Extended Care, 10.125%, 1/1/11 1,136,750
Baa1 BBB+ 830 New York Medical Care,
Mental Health Services,
7.875%, 8/15/20 947,404
Baa BBB 1,550 New York Medical Care,
Brookdale Medical
Center, 6.85%, 2/15/17 1,649,138
NR NR 500 Wisconsin Health Facility
Authority, Villa
Clement, 8.75%, 6/1/12 507,500
------------
$ 5,930,510
------------
HOSPITALS - 8.1%
Aa NR $ 4,780 Franklin, OH Hospital for
Riverside United
Methodist, 5.75%, 5/15/
20 $ 4,800,172
A A 500 Illinois Health &
Education Facilities,
Victory Memorial,
7.875%, 12/1/18 547,085
NR BBB- 1,000 Lufkin, TX Health Facility
- Memorial Health
Systems of East Texas,
6.875%, 2/15/26 992,980
NR A- 1,500 Union County Pennsylvania
Hospital Authority,
Evangelical Community
Hospital, 5.85%, 7/1/11 1,467,150
------------
$ 7,807,387
------------
HOUSING - 5.4%
NR AA $ 655 Arkansas Development
Finance Authority, SFMR,
8.00%, 8/15/11 $ 714,894
Aa NR 960 Colorado Housing Finance
Authority, 7.90%, 12/1/24 1,091,750
NR NR 1,300 Lake Creek Affordable
Housing Corporation,
Eagle County, Colorado,
8.00%, 12/1/23 1,343,784
Aa A+ 320 North Carolina Single
Family Mortgage Revenue,
8.125%, 9/1/19 334,272
NR A 1,650 Travis County Texas
Housing Finance Corp.,
Travis Station
Apartments Project,
6.75%, 4/1/19 1,747,349
------------
$ 5,232,049
------------
INDUSTRIAL DEVELOPMENT &
POLLUTION CONTROL REVENUE - 5.8%
A1 A+ $ 3,000 Ohio Air Quality
Development Authority
for Dayton Power & Light
Co.,
6.10%, 9/1/30 $ 3,121,650
NR BBB- 2,450 Port Camas-Washougan,
Washington, James River
Project,
6.70%, 4/1/23 2,519,262
------------
$ 5,640,912
------------
INSURED - EDUCATION - 3.0%
Aaa AAA $ 1,000 Seneca Valley, PA School
District, 5.85%, 2/15/20 $ 1,026,540
Aaa AAA 2,000 University of California -
Multiple Projects
(AMBAC), 4.875%, 9/1/19 1,868,120
------------
$ 2,894,660
------------
INSURED GENERAL
OBLIGATIONS - 2.1%
Aaa AAA $ 2,000 Florida State Board of
Education Capital Outlay $ 2,031,420
(MBIA), 5.60%, 6/1/25 ------------
INSURED - HOSPITAL - 8.8%
Aaa AAA $ 2,750 Colorado Health
Facilities, Sisters of
Charity Health Care
(MBIA),
5.25%, 5/15/14 $ 2,708,420
Aaa AAA 1,000 Fredericksburg, Virginia
Industrial Development
Authority (FGIC),
"INFLOS", Variable, 8/15/23(1) 1,162,800
Aaa AAA 1,000 Illinois Health Facilities
Authority Rush-
Presbyterian - St. Lukes
Medical Center (MBIA),
"INFLOS", Variable, 10/1/24(1) 1,202,760
Aaa AAA 1,000 King County, Washington,
Public Hospital District
No. 1 (AMBAC), 6.00%, 9/1/20 1,031,800
Aaa AAA 1,000 Rhode Island Health &
Educational Facility,
Rhode Island Hospital
(FGIC), "INFLOS",
Variable, 8/15/21(1)(2) 1,194,050
Aaa AAA 1,000 Salt Lake City, Utah IHC
Hospitals Inc., "INFLOS"(AMBAC),
Variable, 5/15/20(1)(2) 1,168,730
------------
$ 8,468,560
------------
INSURED - HOUSING - 2.3%
Aaa AAA $ 1,000 SCA MFMR Springfield,
Missouri (FSA), 7.15%,
1/1/30 $ 1,108,740
Aaa AAA 1,000 SCA MFMR Burnsville,
Minnesota (FSA), 7.10%,
1/1/30 1,108,740
------------
$ 2,217,480
------------
INSURED - TAX REVENUES - 1.4%
Aaa AAA $ 1,500 Culver City California
Redevelopment Finance
Authority (AMBAC), $ 1,342,515
4.6%, 11/1/20 ------------
INSURED - TRANSPORTATION - 2.2%
Aaa AAA $ 1,000 Port Authority of NY & NJ,
5.875%, 10/15/27 $ 1,032,060
Aaa AAA 1,000 Triborough Bridge and
Tunnel Authority of New
York, "RITES"
(AMBAC), Variable, 01/01/12(1) 1,137,760
------------
$ 2,169,820
------------
INSURED - UTILITIES - 1.0%
Aaa AAA $ 800 Puerto Rico Electric Power
Authority STRIPES (FSA), $ 921,392
Variable, 7/1/03(1) ------------
INSURED - WATER & SEWER - 4.1%
Aaa AAA $ 2,750 Massachusetts State Water
Resource Auth. (MBIA),
6.00%, 8/1/24 $ 2,870,203
Aaa AAA 1,155 Passaic Valley, New Jersey
Water Commission (FGIC),
5.00%, 12/15/22 1,097,608
------------
$ 3,967,811
------------
LEASE REVENUE/CERTIFICATES
OF PARTICIPATION - 6.8%
A A- $ 3,000 California Public Works
Board, California State
University Projects
5.50%, 12/1/18 $ 2,938,620
A A 3,565 Indiana Transportation
Authority Airport
Facilities, 6.25%, 11/1/16 3,676,691
------------
$ 6,615,311
------------
LIFE CARE - 4.2%
NR NR $ 1,060 Loudon County Virginia
IDA, Falcons Landing
Project, 8.75%, 11/1/24 $ 1,087,253
NR NR 200 New Hampshire Higher
Education, River Woods
at Exeter,
8.00%, 3/1/00 204,192
NR NR 655 New Hampshire Higher
Education, River Woods
at Exeter,
9.00%, 3/1/23 708,736
NR NR 1,000 New Jersey EDA, Keswick
Pines Project, 8.75%, 1/1/24 1,013,340
NR NR 1,000 Vermont IDA, Wake Robin
Corp. Project, 1993-A,
8.75%, 4/1/23(2) 1,059,150
------------
$ 4,072,671
------------
MISCELLANEOUS - 2.1%
NR NR $ 1,500 New Jersey Sports &
Exposition Authority,
Monmouth Park Project,
8.00%, 1/1/25 $ 1,672,620
NR NR 1,000 Retama Special Facilities,
Retama Race Track,
Texas, 8.75%, 12/15/18 350,000
------------
$ 2,022,620
------------
NURSING HOMES - 6.9%
NR NR $ 1,480 Bell County, Texas Health
Facilities, Normandy
Terrace Project,
9.00%, 4/1/23 $ 1,619,756
NR NR 630 Dauphin County
Pennsylvania IDA,
Susquehanna Center,
10.00%, 6/1/21 409,500
NR NR 1100 Massachusetts IFA Health
Care Fac-Age Institute
of Mass. Proj.,
8.05%, 11/1/25 1,107,843
NR NR 1,265 Montgomery, Pennsylvania,
IDA, Health Care
Facility - Geriatric
Health Care Institute,
8.375%, 7/1/23 1,331,261
NR NR 415 Okaloosa County Florida,
Beverly Enterprises,
10.75%, 10/1/03 451,698
NR NR 1,000 St. Paul Minnesota Housing
Authority, Highland Park
Project,
8.75%, 11/1/24 1,015,020
NR NR 680 Tarrant County Texas
Health Facilities
Development Corp.,
10.25%, 9/1/19 691,322
------------
$ 6,626,400
------------
SOLID WASTE - 0.8%
Aa3 AA- $ 750 Delaware County
Pennsylvania Industrial $ 785,393
Revenue, 8.10%, 12/1/13 ------------
TRANSPORTATION - 2.9%
Baa BBB $ 1,000 Denver Colorado City &
County Airport, 7.50%,
11/15/12 $ 1,110,940
NR NR 5,000 San Joaquin Hills,
California
Transportation Agency,
0%, 1/1/14 1,666,750
------------
$ 2,777,690
------------
UTILITIES - 2.8%
Aa AA $ 1,000 Colorado Springs Utility
System, 6.75%, 11/15/21 $ 1,106,660
A BBB+ 1,500 Massachusetts Municipal
Wholesale Electric Co.,
6.75%, 7/1/11 1,635,180
------------
$ 2,741,840
------------
TOTAL INVESTMENTS
(identified cost, $88,130,639) $ 96,648,812
============
(1) The above designated securities have been issued as inverse floater bonds.
(2) The above designated securities have been designated as collateral for
futures.
At December 31, 1995, the concentration of the Fund's investments in the various
states, determined as a percentage of total investments, is as follows:
Colorado 12%
Massachusetts 14%
New York 11%
Others, representing less than 10%
individually 63%
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, 1995, 24.8% 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 4.6% to 8.1% of total investments.
<PAGE>
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FINANCIAL STATEMENTS
STATEMENT OF ASSETS AND LIABILITIES
- ------------------------------------------------------------------------------
December 31, 1995
- ------------------------------------------------------------------------------
ASSETS:
Investments, at value (Note 1A) (identified cost,
$88,130,639) $96,648,812
Cash 24
Receivable for investments sold 20,542
Receivable for shares of partnership interest sold 30,197
Interest receivable 1,465,546
-----------
Total assets $98,165,121
LIABILITIES:
Demand note payable (Note 5) $ 739,000
Payable for investments purchased 991,939
Payable for daily variation margin on open
financial futures contracts (Note 1D) 5,833
Payable to affiliate --
Director General Partners' fees 1,396
Accrued expenses 16,947
---------
Total liabilities 1,755,115
-----------
NET ASSETS for 9,446,232 shares of partnership interest
outstanding $96,410,006
===========
NET ASSETS APPLICABLE TO SHARES OF PARTNERSHIP
INTEREST OWNED BY:
Limited Partners (9,317,912 shares) $95,100,348
General Partners --
Director partners (2,414 shares) $ 24,638
Adviser partners (125,906 shares) 1,285,020 1,309,658
--------- -----------
NET ASSETS (9,446,232 shares) $96,410,006
===========
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 $80,142,856
Accumulated net realized gain on investment and
financial futures transactions (computed on the
basis of identified cost) 7,873,149
Unrealized appreciation of investments and
financial futures contracts (computed on the
basis of identified cost) 8,512,340
Accumulated distributions in excess of net
investment income (118,339)
-----------
Total $96,410,006
===========
NET ASSET VALUE AND REDEMPTION PRICE PER SHARE OF
PARTNERSHIP INTEREST $10.21
======
COMPUTATION OF OFFERING PRICE: Offering price per
share (100/95.25 of $10.21) $10.72
======
On sales of $100,000 or more the offering price is reduced.
See notes to financial statements
<PAGE>
STATEMENT OF OPERATIONS
- ------------------------------------------------------------------------------
For the Year Ended December 31, 1995
- ------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest income $ 6,525,271
Expenses --
Investment management fee earned by Adviser
General Partner (Note 4) $ 480,694
Compensation of Director General Partners not
members of the Adviser General
Partner's organization 5,466
Custodian fee (Note 4) 50,927
Transfer and dividend disbursing agent fees 21,695
Printing and postage 48,417
Legal and accounting services 47,941
Registration fees 20,660
Interest expense (Note 5) 25,976
Miscellaneous 17,805
-----------
Total expenses $ 719,581
Deduct reduction of custodian fee (Note 4) 41,140
-----------
Net expenses 678,441
-----------
Net investment income $ 5,846,830
REALIZED AND UNREALIZED GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on investment transactions
computed on the basis of identified cost $ (633,799)
Net realized loss on financial futures contracts (1,616,176)
-----------
Net realized loss on investment and
financial futures transactions
($2,321,586 net gain (loss) for federal
income tax purposes) $(2,249,975)
Change in unrealized appreciation of investments
and financial futures contracts 11,515,682
-----------
Net realized and unrealized gain on investments 9,265,707
-----------
Net increase in net assets resulting from operations $15,112,537
===========
See notes to financial statements
<PAGE>
FINANCIAL HIGHLIGHTS (Continued)
STATEMENT OF CHANGES IN NET ASSETS
- -----------------------------------------------------------------------------
YEAR ENDED DECEMBER 31,
--------------------------
1995 1994
---- ----
INCREASE (DECREASE) IN NET ASSETS:
From operations --
Net investment income $ 5,846,830 $ 6,408,404
Net investment loss on investments (2,249,975) (1,891,871)
Change in unrealized appreciation
(depreciation) of investments 11,515,682 (12,681,127)
----------- ------------
Increase (decrease) in net assets from
operations $15,112,537 $ (8,164,594)
----------- ------------
Distributions to partners --
From net investment income $(5,846,830) $ (6,408,404)
In excess of net investment income (118,339) (6,943)
----------- ------------
Total distributions $(5,965,169) $ (6,415,347)
----------- ------------
Net decrease from transactions in shares of
partnership interest (Note 2) $(3,539,812) $ (9,042,301)
----------- ------------
Net increase (decrease) in net assets $ 5,607,556 $(23,622,242)
NET ASSETS:
At beginning of year 90,802,450 114,424,692
----------- ------------
At end of year (including distributions in
excess of net investment income of
$118,339 and $0, respectively) $96,410,006 $ 90,802,450
=========== ============
See notes to financial statements
<PAGE>
<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
- ------------------------------------------------------------------------------------------------------------
Year Ended December 31,
----------------------------------------------------------------------
1995 1994 1993 1992 1991
---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, beginning of year $ 9.260 $10.630 $ 9.950 $ 9.750 $ 9.200
------- ------- -------- -------- -------
INCOME FROM OPERATIONS:
Net investment income $ 0.604 $ 0.611 $ 0.614 $ 0.639 $ 0.638
Net realized and unrealized gain
(loss) on investments 0.962 (1.369) 0.692 0.195 0.552
------- ------- -------- -------- -------
Total income (loss) from
operations $ 1.566 $(0.758) $ 1.306 $ 0.834 $ 1.190
------- ------- -------- -------- -------
LESS DISTRIBUTIONS:
From net investment income $(0.604) $(0.611) $ (0.619) $ (0.634) $(0.638)
In excess of net investment income (0.012) (0.001) (0.007) 0.000 (0.002)
------- ------- -------- -------- -------
Total distributions $(0.616) $(0.612) $ (0.626) $ (0.634) $(0.640)
------- ------- -------- -------- -------
NET ASSET VALUE, end of year $10.210 $ 9.260 $ 10.630 $ 9.950 $ 9.750
======= ======= ======== ======== =======
TOTAL RETURN<F1> 17.40% (7.27)% 13.52% 8.91% 13.49%
RATIOS/SUPPLEMENTAL DATA:
Net assets, end of year (000's
omitted) $96,410 $90,802 $114,425 $103,208 $92,771
Ratio of expenses to average daily
net assets 0.76% 0.80% 0.72% 0.74% 0.76%
Ratio of net investment income to
average daily net assets 6.16% 6.26% 5.91% 6.50% 6.75%
PORTFOLIO TURNOVER 58% 58% 86% 60% 105%
<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. Total investment return is not computed on an annualized basis.
</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, 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.
- ------------------------------------------------------------------------------
(2) SHARES OF PARTNERSHIP INTEREST
Transactions in shares of partnership interest were as follows:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------------------------------------------------------------------------
1995 1994
----------------------------------------------- ------------------------------------------------
GENERAL LIMITED GENERAL LIMITED
PARTNERS PARTNERS AMOUNT PARTNERS PARTNERS AMOUNT
------------ --------------- ---------------- ------------ --------------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Sales -- 570,259 $ 5,610,100 -- 782,602 $ 7,819,982
Issued to partners electing
to receive payment of
distributions in shares 7,843 325,998 3,252,067 7,301 344,710 3,436,339
Redemptions -- (1,264,782) (12,401,979) -- (2,090,028) (20,298,622)
----- ---------- ------------ ----- ---------- ------------
Net increase (decrease) 7,843 (360,525) $ (3,539,812) 7,301 (962,716) $ (9,042,301)
===== ======== ============ ===== ======== ============
</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 $49,004,196
and $53,575,835, 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 year ended December
31, 1995, the fee was equivalent to 0.51% (annualized) of the Fund's average net
assets for such period and amounted to $480,694. 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 $5,600 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) 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. All significant credit balances used to
reduce the Fund's custody fees are reported as a reduction of expenses in the
statement of operations. Prior to November 10, 1995, IBT was an affiliate of
EVM. 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 year ended December 31,
1995, no significant amounts have been deferred.
- ------------------------------------------------------------------------------
(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, 1995 the Fund had an outstanding balance pursuant to the line of
credit in the amount of $739,000.
- ------------------------------------------------------------------------------
(6) FEDERAL INCOME TAX BASIS OF INVESTMENTS
The cost and unrealized appreciation/depreciation in value of the investments
owned at December 31, 1995, as computed on a federal income tax basis, were as
follows:
Aggregate cost $88,130,639
===========
Gross unrealized appreciation $ 9,349,633
Gross unrealized depreciation (831,460)
-----------
Net unrealized appreciation $ 8,518,173
===========
- ------------------------------------------------------------------------------
(7) DISTRIBUTIONS
On December 18, 1995, the Director General Partners of the Fund declared a
distribution of $0.0515 per share payable January 15, 1996, to partners of
record on January 2, 1996. On January 18, 1996, the Director General Partners
declared a distribution of $0.050 per share payable February 15, 1996, to
partners of record on February 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 meaningful only when all
related and offsetting transactions are considered. A summary of obligations
under these financial instruments at December 31, 1995, were as follows:
FUTURES
CONTRACTS NET UNREALIZED
EXPIRATION DATE CONTRACTS POSITION DEPRECIATION
- ---------------- ---------------------- -------- --------------
3/96 28 U.S. Treasury Bonds Short $(5,833)
The Fund has sufficient cash and/or securities to cover requirements on open
futures contracts.
<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, 1995, and the related statement of operations for the year then
ended, the statement of changes in net assets for the years ended December 31,
1995 and 1994, and the financial highlights for each of the years in the
five-year period ended December 31, 1995. 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 securities owned as of
December 31, 1995 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, 1995, 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
JANUARY 26, 1996
<PAGE>
INVESTMENT MANAGEMENT
EATON VANCE DIRECTOR GENERAL PARTNERS OFFICERS
MUNICIPAL LANDON T. CLAY LANDON T. CLAY
BOND FUND L.P. Chairman, Eaton Vance Chairman
24 Federal Street Management JOHN L. THORNDIKE
Boston, MA 02110 DONALD R. DWIGHT Alternate Chairman
President, Dwight Partners, THOMAS J. FETTER
Inc. President and Portfolio
Chairman, Newspapers of Manager
New England, Inc. JAMES L. O'CONNOR
SAMUEL L. HAYES, III Treasurer
Jacob H. Schiff Professor THOMAS OTIS
of Investment Banking, Secretary
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
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-2/96
