<PAGE>
MUTUAL FUNDS
[LOGO] EDUCATION
FOR PEOPLE
[BRICKS GRAPHIC]
WHO PAY
TAXES-Registered Trademark-
SEMIANNUAL REPORT JUNE 30, 2000
[CARS GRAPHIC] EATON VANCE
MUNICIPAL
BOND
FUND
[LOGO]
75 YEARS OF EXCELLENCE
EATON VANCE
75TH ANNIVERSARY
[BRIDGE GRAPHIC]
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
INVESTMENT UPDATE
[PHOTO]
Thomas J. Fetter
President
Investment Environment
--------------------------------------------------------------------------------
THE ECONOMY
- The U.S. expansion continued in the first half of 2000, although amid signs
of moderation. Housing starts tumbled, while leading indicators signaled
slower demand. Gross domestic product rose 5.5% in the second quarter of
2000, a solid performance but well below the pace of 1999.
- The Federal Reserve's interest rate hikes may finally be taking effect. In an
attempt to engineer a "soft landing" for the economy, the Fed has raised its
benchmark Federal Funds rate - a key short-term rate barometer - on six
occasions in the past year alone, for a total of 175 basis points (1.75%).
- Sharply higher interest rates created a difficult investment climate for
municipal bond funds. The funds in Lipper's General Municipal Debt
Classification had an average return of 3.95% for the six months ended June
30, 2000.(1)
The Fund
--------------------------------------------------------------------------------
MANAGEMENT DISCUSSION
- Hospital bonds were the Fund's largest holdings. The Fund found opportunities
in lower investment-grade bonds, including a BBB-rated, 7.50% issue for
Trinitas Hospital, formed by the recent merger of two Elizabeth, New Jersey
hospitals.
- Management maintained an exposure to the higher education sector. The Fund's
investments included issues that supported well-regarded institutions such as
Boston University, Boston College, Rockefeller University and Oberlin
College.
- Life care facility and nursing home issues were prominent among the Fund's
non-rated holdings. In addition to financing important health care
alternatives for senior citizens, the bonds provided above-average income.
PERFORMANCE FOR THE PAST SIX MONTHS
- The Fund's Class A shares had a total return of 5.32% during the six months
ended June 30, 2000.(2) This return was the result of an increase in net
asset value (NAV) to $8.79 per share on June 30, 2000 from $8.59 on December
31, 1999, and the reinvestment of $0.249 in dividends.(3)
- The Fund's Class B shares had a total return of 5.04% during the six months
ended June 30, 2000.(2) This return was the result of an increase in NAV to
$8.73 per share on June 30, 2000 from $8.52 on December 31, 1999 and the
reinvestment of $0.213 in dividends.(3)
- The Fund's Class I shares had a total return of 5.39% during the six months
ended June 30, 2000.(2) This return was the result of an increase in NAV to
$9.60 per share on June 30, 2000 from $9.38 on December 31, 1999 and the
reinvestment of $0.277 in dividends.(3)
- Based on the Fund's most recent dividends and NAVs on June 30, 2000 of $8.79
per share for Class A, $8.73 for Class B and $9.60 for Class I, the Fund's
distribution rates were 5.36%, 4.87% and 5.80%, respectively.(4) The
distribution rates of Class A, Class B and Class I are equivalent to taxable
rates of 8.87%, 8.06% and 9.60%, respectively.(5)
- The SEC 30-day yields for Class A, B and I shares at June 30 were 5.56%,
5.10% and 5.92%, respectively.(6) The SEC 30-day yields of Class A, Class B
and Class I are equivalent to taxable yields of 9.21%, 8.44% and 9.80%,
respectively.(5)
--------------------------------------------------------------------------------
(1) It is not possible to invest directly in an Index or Lipper Classification.
(2) These returns do not include the 4.75% maximum sales charge for the
Fund's Class A shares or the applicable contingent deferred sales charge
(CDSC) for Class B shares. There is generally no sales charge for the Class I
shares. (3) A portion of the Fund's income may be subject to federal and
state income tax and/or federal alternative minimum tax. (4) The Fund's
distribution rate represents actual distributions paid to shareholders and is
calculated by dividing the last distribution per share (annualized) by the
net asset value. (5) Taxable-equivalent rates assume maximum 39.6% federal
income tax rate. A lower rate would result in lower tax-equivalent figures.
(6) The Fund's SEC yield is calculated by dividing the net investment income
per share for the 30-day period by the offering price at the end of the
period and annualizing the result. (7) Returns are historical and are
calculated by determining the percentage change in net asset value with all
distributions reinvested. SEC returns for Class A reflect the maximum 4.75%
sales charge. SEC returns for Class B reflect the applicable CDSC based on
the following schedule: 5% - 1st and 2nd years; 4% - 3rd year; 3% - 4th year;
2% - 5th year; 1% - 6th year. (8) Fund Overview is subject to change.
Past performance is no guarantee of future results. Investment return and
market price will fluctuate so that shares, when sold, may be worth more or
less than their original cost.
--------------------------------------------------------------------------------
FUND INFORMATION
AS OF JUNE 30, 2000
<TABLE>
<CAPTION>
Performance(7) Class A Class B Class I
--------------------------------------------------------------------------------
Average Annual Total Returns (at net asset value)
--------------------------------------------------------------------------------
<S> <C> <C> <C>
One Year -1.50% -2.08% -1.23%
Five Years N.A. N.A. 5.70
Ten Years N.A. N.A. 6.96
Life of Fund+ 0.73 -0.46 7.12
SEC Average Annual Total Returns (including sales charge or applicable CDSC)
--------------------------------------------------------------------------------
One Year -6.17% -6.74% -1.23%
Five Years N.A. N.A. 5.70
Ten Years N.A. N.A. 6.96
Life of Fund+ -1.23 -1.90 7.12
</TABLE>
+Inception dates: Class A: 1/6/98; Class B: 1/14/98; Class I: 3/16/78
<TABLE>
<CAPTION>
Fund Overview(8)
-------------------------------------------------------------------------------
<S> <C>
Number of Issues 105
Average Maturity 25.1 Yrs.
Effective Maturity 22.6 Yrs.
Average Rating A
Average Call 11.6 Yrs.
Average Dollar Price $85.97
</TABLE>
--------------------------------------------------------------------------------
MUTUAL FUND SHARES ARE NOT INSURED BY THE FDIC AND ARE NOT DEPOSITS OR OTHER
OBLIGATIONS OF, OR GUARANTEED BY, ANY DEPOSITORY INSTITUTION. SHARES ARE SUBJECT
TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF PRINCIPAL INVESTED.
--------------------------------------------------------------------------------
2
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
PORTFOLIO OF INVESTMENTS (UNAUDITED)
TAX-EXEMPT INVESTMENTS -- 99.1%
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
-------------------------------------------------------------------------
Assisted Living -- 1.4%
-------------------------------------------------------------------------
$ 1,000 Bell County, TX, Health Facilities
Authority, (Care Institute, Inc. -
Texas), 9.00%, 11/1/24 $ 1,084,420
990 St. Paul, MN, Housing and Redevelopment,
(Care Institute, Inc. - Highland),
8.75%, 11/1/24 1,070,932
-------------------------------------------------------------------------
$ 2,155,352
-------------------------------------------------------------------------
Education -- 6.3%
-------------------------------------------------------------------------
$ 1,850 California Educational Facilities
Authority, (Santa Clara University),
5.00%, 9/1/23 $ 1,685,553
2,000 Massachusetts DFA, (Boston University),
5.45%, 5/15/59 1,748,740
2,500 Massachusetts HEFA, (Boston College),
4.75%, 6/1/31 2,072,775
2,500 New York Dormitory Authority,
(Rockefeller University), 4.75%, 7/1/37 2,091,125
700 New York Dormitory Authority, (State
University Educational Facilities),
4.75%, 5/15/28 580,629
1,750 Ohio Higher Educational Facilities,
(Oberlin College), Variable Rate,
10/1/29(1)(2) 1,341,952
-------------------------------------------------------------------------
$ 9,520,774
-------------------------------------------------------------------------
Electric Utilities -- 1.5%
-------------------------------------------------------------------------
$ 500 Connecticut Development Authority,
(Connecticut Light and Power), Variable
Rate, 9/1/28(1)(2) $ 389,400
500 Connecticut Development Authority,
(Western Mass Electric), Variable Rate,
9/1/28(1)(2) 389,400
1,500 Massachusetts Municipal Wholesale
Electric Co., 6.75%, 7/1/11 1,567,545
-------------------------------------------------------------------------
$ 2,346,345
-------------------------------------------------------------------------
Escrowed / Prerefunded -- 9.4%
-------------------------------------------------------------------------
$14,000 Dawson Ridge, CO, Metropolitan District
#1, Escrowed to Maturity, 0.00%, 10/1/22 $ 3,018,540
1,000 Maricopa County, AZ, IDA, (Place Five
and The Greenery), Escrowed to Maturity,
8.625%, 1/1/27 1,214,790
5,500 Massachusetts Turnpike Authority,
Escrowed to Maturity, 5.00%, 1/1/20 5,083,760
2,500 San Joaquin Hills Transportation
Corridor Agency, CA, Toll Road Bonds,
Escrowed to Maturity, 0.00%, 1/1/14 1,221,525
10,000 San Joaquin Hills Transportation
Corridor Agency, CA, Toll Road Bonds,
Escrowed to Maturity, 0.00%, 1/1/25 2,414,300
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
-------------------------------------------------------------------------
Escrowed / Prerefunded (continued)
-------------------------------------------------------------------------
$ 6,000 Savannah, GA, EDA, Escrowed to Maturity,
0.00%, 12/1/21 $ 1,306,500
-------------------------------------------------------------------------
$ 14,259,415
-------------------------------------------------------------------------
General Obligations -- 5.2%
-------------------------------------------------------------------------
$ 1,495 Bell Mountain Ranch, CO, (Metropolitan
District), 6.625%, 11/15/25 $ 1,355,472
1,250 California, Variable Rate, 12/1/23(1)(2) 1,256,662
2,000 California, Variable Rate, 5/1/26(1)(2) 1,972,720
2,000 Florida Board of Education,
4.75%, 6/1/28 1,692,020
2,000 Georgia, 4.25%, 8/1/18 1,696,360
-------------------------------------------------------------------------
$ 7,973,234
-------------------------------------------------------------------------
Health Care-Miscellaneous -- 3.0%
-------------------------------------------------------------------------
$ 2,479 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 5.50%, 12/1/36 $ 2,169,329
2,083 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 5.50%, 12/1/36 1,822,236
590 Tax Revenue Exempt Securities Trust,
Community Health Provider, (Pooled Loan
Program Various States Trust
Certificates), 6.00%, 12/1/36 539,489
-------------------------------------------------------------------------
$ 4,531,054
-------------------------------------------------------------------------
Hospital -- 12.8%
-------------------------------------------------------------------------
$ 990 Bell County, TX, (Heritage Oaks
Healthcare), 6.70%, 6/1/29 $ 866,587
1,500 California Health Facilities Financing
Authority, (Cedars-Sinai Medical
Center), Variable Rate, 12/1/34(1)(2) 1,511,430
1,000 Chautauqua County, NY, IDA, (Women's
Christian Association), 6.40%, 11/15/29 856,650
2,000 Colorado Health Facilities Authority,
(Rocky Mountain Adventist),
6.625%, 2/1/22 1,808,200
1,500 Forsyth County, GA, Hospital Authority
Revenue, (Georgia Baptist Health Care
System), 6.375%, 10/1/28 1,273,695
1,885 Louisiana Public Facilities Authority,
(General Health Systems),
6.80%, 11/1/16 1,867,375
1,500 Maricopa County, AZ, IDA, (Mayo
Foundation), Residual Certificates,
5.25%, 11/15/37 1,326,120
3,000 Massachusetts HEFA, (Partners Healthcare
System), 5.25%, 7/1/29 2,496,420
3,000 New Jersey Health Care Facilities
Financing Authority, (Trinitas
Hospital), 7.50%, 7/1/30 3,035,460
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
3
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
-------------------------------------------------------------------------
Hospital (continued)
-------------------------------------------------------------------------
$ 2,000 Orange County, FL, Health Facilities
Authority, (Westminster Community Care),
6.60%, 4/1/24 $ 1,786,280
265 Prince George's County, MD, (Greater
Southeast Healthcare System),
6.20%, 1/1/08(3) 92,750
1,030 Prince George's County, MD, (Greater
Southeast Healthcare System),
6.375%, 1/1/23(3) 360,500
1,135 Rochester, MN, Health Care Facilities,
(Mayo Clinic), Variable Rate,
11/15/27(1)(2) 1,027,640
1,500 San Benito, CA, Health Care District,
5.40%, 10/1/20 1,171,110
-------------------------------------------------------------------------
$ 19,480,217
-------------------------------------------------------------------------
Housing -- 2.8%
-------------------------------------------------------------------------
$ 1,480 Lake Creek, CO, (Affordable Housing
Corp.), 6.25%, 12/1/23 $ 1,362,518
945 Maricopa County, AZ, IDA, (National
Health Facilities II), 6.375%, 1/1/19 873,218
1,340 North Little Rock, AR, Residential
Housing Facilities, (Parkstone Place),
6.50%, 8/1/21 1,261,007
800 Travis County, TX, HFC, (Travis Station
Apartments), 6.75%, 4/1/19 823,640
-------------------------------------------------------------------------
$ 4,320,383
-------------------------------------------------------------------------
Industrial Development Revenue -- 5.3%
-------------------------------------------------------------------------
$ 620 Florence County, SC, (Stone Container
Co.), 7.375%, 2/1/07 $ 617,743
1,000 Iowa Finance Authority, (Southbridge
Mall), 6.375%, 12/1/13 974,900
1,600 Mississippi Business Finance Corp.,
(System Energy Resources),
5.90%, 5/1/22 1,393,120
1,750 New Jersey EDA, (Holt Hauling),
7.75%, 3/1/27 1,718,972
2,450 Port Camas-Washougan, WA, (James River),
6.70%, 4/1/23 2,441,450
1,005 Valdez, AK, (British Petroleum),
Variable
Rate, 8/1/25(1)(2) 944,509
-------------------------------------------------------------------------
$ 8,090,694
-------------------------------------------------------------------------
Insured-Electric Utilities -- 2.2%
-------------------------------------------------------------------------
$ 3,000 Piedmont, SC, Municipal Power Agency,
(MBIA), 4.75%, 1/1/25 $ 2,516,760
800 Puerto Rico Electric Power Authority,
STRIPES, (FSA), Variable Rate, 7/1/03(1) 837,000
-------------------------------------------------------------------------
$ 3,353,760
-------------------------------------------------------------------------
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
-------------------------------------------------------------------------
Insured-General Obligations -- 1.0%
-------------------------------------------------------------------------
$ 1,000 Detroit, MI, School District, (FGIC),
4.75%, 5/1/28 $ 841,840
2,340 Merced, CA, Union High School District,
(FGIC), 0.00%, 8/1/20 729,893
-------------------------------------------------------------------------
$ 1,571,733
-------------------------------------------------------------------------
Insured-Hospital -- 2.2%
-------------------------------------------------------------------------
$ 2,250 Cuyahoga County, OH, (Cleveland Clinic),
(MBIA), 5.125%, 1/1/29 $ 2,009,363
1,500 Maryland HEFA, (Medlantic/Helix Issue),
(AMBAC), 5.25%, 8/15/38 1,365,660
-------------------------------------------------------------------------
$ 3,375,023
-------------------------------------------------------------------------
Insured-Housing -- 1.4%
-------------------------------------------------------------------------
$ 1,000 SCA MFMR Receipts, Burnsville, MN,
(FSA), 7.10%, 1/1/30 $ 1,061,040
1,000 SCA MFMR Receipts, Springfield, MO,
(FSA), 7.10%, 1/1/30 1,061,040
-------------------------------------------------------------------------
$ 2,122,080
-------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 1.3%
-------------------------------------------------------------------------
$ 2,500 San Mateo County, CA, Joint Powers
Financing Authority, (FSA), Variable
Rate, 7/15/29(1)(2) $ 1,996,100
-------------------------------------------------------------------------
$ 1,996,100
-------------------------------------------------------------------------
Insured-Transportation -- 6.1%
-------------------------------------------------------------------------
$ 1,500 Central Puget Sound, WA, Transportation
Authority, (FGIC), 4.75%, 2/1/28 $ 1,259,025
1,500 Florida Turnpike Authority, (Department
of Transportation), (FGIC),
4.50%, 7/1/27 1,223,310
1,500 Metropolitan Transportation Authority,
NY, Commuter Facilities Revenue,
(AMBAC), 5.00%, 7/1/20 1,356,555
1,500 New Jersey Turnpike Authority, (MBIA),
Variable
Rate, 1/1/30(2)(4) 1,375,335
1,500 Ohio Turnpike Commission, (FGIC),
4.75%, 2/15/28 1,268,700
2,000 Puerto Rico Highway and Transportation
Authority, (FSA), 4.75%, 7/1/38 1,688,480
1,000 Triborough Bridge and Tunnel Authority,
RITES, (AMBAC), Variable Rate,
1/1/12(1)(2) 1,075,230
-------------------------------------------------------------------------
$ 9,246,635
-------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
4
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
-------------------------------------------------------------------------
Insured-Water and Sewer -- 3.6%
-------------------------------------------------------------------------
$ 1,000 Fairmont, WV, Waterworks, (AMBAC),
4.50%, 7/1/24 $ 818,710
1,000 Loudoun County, VA, Sanitation
Authority, Water and Sewer Revenue,
(MBIA), 4.75%, 1/1/30 840,750
3,000 New York City, NY, Municipal Water
Finance Authority, (Water and Sewer
System), (FGIC), 4.75%, 6/15/31 2,511,810
1,500 Prince William County, Service
Authority, (FGIC), 4.75%, 7/1/29 1,262,670
-------------------------------------------------------------------------
$ 5,433,940
-------------------------------------------------------------------------
Lease Revenue / Certificates of Participation -- 0.7%
-------------------------------------------------------------------------
$ 1,000 Hardeman County, TN, (Correctional
Facilities Corp.), 7.75%, 8/1/17 $ 1,022,090
-------------------------------------------------------------------------
$ 1,022,090
-------------------------------------------------------------------------
Miscellaneous -- 1.6%
-------------------------------------------------------------------------
$ 1,000 Barona, CA, (Band of Mission Indians),
8.25%, 1/1/20 $ 978,210
500 San Juan, NM, Pueblo Development
Authority, 7.00%, 10/15/06 475,475
1,000 Santa Fe, NM, (Crow Hobbs),
8.50%, 9/1/16 1,044,960
-------------------------------------------------------------------------
$ 2,498,645
-------------------------------------------------------------------------
Nursing Home -- 3.5%
-------------------------------------------------------------------------
$ 1,405 Bell County, TX, (Riverside Healthcare,
Inc. - Normandy Terrace), 9.00%, 4/1/23 $ 1,560,941
945 Clovis, NM, IDR, (Retirement Ranches,
Inc.), 7.75%, 4/1/19 947,476
205 Covington-Allegheny County, VA, IDA,
(Beverly Enterprises), 9.375%, 9/1/01 208,137
1,100 Massachusetts IFA, (Age Institute of
Massachusetts), 8.05%, 11/1/25 1,139,116
1,230 Montgomery, PA, IDA, (Advancement of
Geriatric Health Care Institute),
8.375%, 7/1/23 1,278,856
680 Tarrant County, TX, Health Facilities,
(3927 Foundation), 10.25%, 9/1/19 238,789
-------------------------------------------------------------------------
$ 5,373,315
-------------------------------------------------------------------------
Senior Living / Life Care -- 6.5%
-------------------------------------------------------------------------
$ 1,255 Albuquerque, NM, Retirement Facilities,
(La Vida Liena Retirement Center),
5.75%, 12/15/28 $ 992,655
1,500 Albuquerque, NM, Retirement Facilities,
(La Vida Liena Retirement Center),
6.60%, 12/15/28 1,287,765
1,000 Colorado HFA, Revenue Refunding and
Improvement, (Volunteers of America),
5.875%, 7/1/28 805,010
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
-------------------------------------------------------------------------
Senior Living / Life Care (continued)
-------------------------------------------------------------------------
$ 1,290 Grove City, PA, Area Hospital Health
Facilities Authority, (Grove Manor),
6.625%, 8/15/29 $ 1,135,071
1,500 Kansas City, MO, IDA, (Kingswood United
Methodist Manor), 5.875%, 11/15/29 1,191,615
1,500 North Miami, FL, Health Facilities
Authority, (Imperial Club),
6.75%, 1/1/33 1,279,395
550 Ohio HFA, Retirement Rental Housing,
(Encore Retirement Partners),
6.75%, 3/1/19 476,229
1,500 Summit County, OH, Healthcare
Facilities, (Village at Saint Edward),
5.75%, 12/1/25 1,195,935
1,700 Wisconsin HEFA, (Wisconsin Illinois
Senior Housing), 7.00%, 8/1/29 1,569,814
-------------------------------------------------------------------------
$ 9,933,489
-------------------------------------------------------------------------
Special Tax Revenue -- 6.8%
-------------------------------------------------------------------------
$ 1,240 Brentwood, CA, Infrastructure Financing
Authority, 5.60%, 9/2/19 $ 1,126,242
1,710 Fleming Island, FL, Plantation Community
Development District, 6.30%, 2/1/05 1,703,502
1,500 Frederick County, MD, Urbana Community
Development Authority, 6.625%, 7/1/25 1,423,035
1,985 Lincoln, CA, Public Financing Authority,
(Twelve Bridges), 6.20%, 9/2/25 1,909,808
1,200 New York City, NY, Transitional Finance
Authority Revenue, 4.75%, 11/1/23 1,026,900
3,500 New York LGAC, 5.00%, 4/1/21 3,201,765
-------------------------------------------------------------------------
$ 10,391,252
-------------------------------------------------------------------------
Transportation -- 7.9%
-------------------------------------------------------------------------
$ 1,500 Connector 2000 Association, Inc., SC
Bridge & Toll Road Revenue, (Southern
Connector), 5.25%, 1/1/23 $ 1,133,850
10,000 Foothills, CA, (Eastern Transportation
Corridor Agency), 0.00%, 1/1/18 3,710,700
758 Indiana Transportation Finance
Authority, 6.25%, 11/1/16 770,113
3,500 New Jersey Transportation Authority,
Variable Rate, 6/15/17(1)(2) 3,040,170
1,000 Port Authority of New York and New
Jersey, 5.375%, 3/1/28 951,340
2,500 Puerto Rico Highway and Transportation
Authority, 5.50%, 7/1/36 2,376,350
-------------------------------------------------------------------------
$ 11,982,523
-------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
5
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
<C> <S> <C>
-------------------------------------------------------------------------
Utilities-Electrical and Gas -- 2.3%
-------------------------------------------------------------------------
$ 4,150 San Antonio, TX, Electric and Natural
Gas Revenue, 4.50%, 2/1/21 $ 3,456,037
-------------------------------------------------------------------------
$ 3,456,037
-------------------------------------------------------------------------
Water and Sewer -- 4.3%
-------------------------------------------------------------------------
$ 1,500 Los Angeles, CA, Department of Water and
Power, Variable Rate, 2/15/30(1)(2) $ 1,553,370
1,500 Metropolitan Water District, (Southern
California Waterworks), 4.75%, 7/1/22 1,311,525
3,000 Metropolitan Water District, (Southern
California Waterworks), Variable Rate,
7/1/27(2)(4) 2,131,320
1,500 Sacramento County, CA, Sanitation
District Financing Authority Revenue,
5.875%, 12/1/27 1,506,435
-------------------------------------------------------------------------
$ 6,502,650
-------------------------------------------------------------------------
Total Tax-Exempt Investments -- 99.1%
(identified cost $157,329,508) $150,936,740
-------------------------------------------------------------------------
Other Assets, Less Liabilities -- 0.9% $ 1,344,571
-------------------------------------------------------------------------
Net Assets -- 100.0% $152,281,311
-------------------------------------------------------------------------
</TABLE>
At June 30, 2000, the concentration of the Fund's investments in the various
states, determined as a percentage of net assets, is as follows:
<TABLE>
<S> <C>
California 18.5%
Others, representing less than 10% individually 80.6%
</TABLE>
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, 2000, 18.0% 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 insured by financial
institutions ranged from 3.1% to 6.0% of total investments.
(1) Security has been issued as an inverse floater bond.
(2) Security exempt from registration under Rule 144A of the Securities Act
of 1933. These securities may be resold in transactions exempt from
registration, normally to qualified institutional buyers.
(3) Non-income producing security.
(4) Security has been issued as a leveraged inverse floater bond.
SEE NOTES TO FINANCIAL STATEMENTS
6
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
AS OF JUNE 30, 2000
<S> <C>
Assets
------------------------------------------------------
Investments, at value
(identified cost, $157,329,508) $150,936,740
Receivable for investments sold 35,000
Receivable for Fund shares sold 37,117
Interest receivable 3,086,010
------------------------------------------------------
TOTAL ASSETS $154,094,867
------------------------------------------------------
Liabilities
------------------------------------------------------
Payable for investments purchased $ 1,022,665
Dividends payable 383,567
Demand note payable 200,000
Payable for Fund shares redeemed 96,564
Payable to affiliate for Trustees' fees 3,829
Due to bank 50,214
Accrued expenses 56,717
------------------------------------------------------
TOTAL LIABILITIES $ 1,813,556
------------------------------------------------------
NET ASSETS $152,281,311
------------------------------------------------------
Sources of Net Assets
------------------------------------------------------
Paid-in capital $162,796,319
Accumulated distributions in excess of
net realized gain (computed on the
basis of identified cost) (4,149,249)
Accumulated undistributed net
investment income 27,009
Net unrealized depreciation (computed on
the basis of identified cost) (6,392,768)
------------------------------------------------------
TOTAL $152,281,311
------------------------------------------------------
Class A Shares
------------------------------------------------------
NET ASSETS $ 46,615,000
SHARES OUTSTANDING 5,301,877
NET ASSET VALUE AND REDEMPTION PRICE PER
SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 8.79
MAXIMUM OFFERING PRICE PER SHARE
(100 DIVIDED BY 95.25 of $8.79) $ 9.23
------------------------------------------------------
Class B Shares
------------------------------------------------------
NET ASSETS $ 22,607,488
SHARES OUTSTANDING 2,589,482
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 8.73
------------------------------------------------------
Class I Shares
------------------------------------------------------
NET ASSETS $ 83,058,823
SHARES OUTSTANDING 8,648,622
NET ASSET VALUE, OFFERING PRICE AND
REDEMPTION PRICE PER SHARE
(net assets DIVIDED BY shares of
beneficial interest outstanding) $ 9.60
------------------------------------------------------
</TABLE>
On sales of $25,000 or more, the offering price of Class A shares is reduced.
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE SIX MONTHS ENDED
JUNE 30, 2000
<S> <C>
Investment Income
-----------------------------------------------------
Interest $ 5,107,539
-----------------------------------------------------
TOTAL INVESTMENT INCOME $ 5,107,539
-----------------------------------------------------
Expenses
-----------------------------------------------------
Investment adviser fee $ 378,444
Trustees fees and expenses 10,972
Distribution and service fees
Class A 38,341
Class B 99,034
Transfer and dividend disbursing agent
fees 58,164
Custodian fee 54,494
Legal and accounting services 29,594
Registration fees 25,339
Printing and postage 10,322
Interest 45,483
Miscellaneous 9,477
-----------------------------------------------------
TOTAL EXPENSES $ 759,664
-----------------------------------------------------
NET INVESTMENT INCOME $ 4,347,875
-----------------------------------------------------
Realized and Unrealized Gain (Loss)
-----------------------------------------------------
Net realized gain (loss) --
Investment transactions (identified
cost basis) $(1,743,228)
Financial futures contracts 40,508
-----------------------------------------------------
NET REALIZED LOSS $(1,702,720)
-----------------------------------------------------
Change in unrealized appreciation
(depreciation) --
Investments (identified cost basis) $ 5,236,239
-----------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $ 5,236,239
-----------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 3,533,519
-----------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 7,881,394
-----------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
7
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
INCREASE (DECREASE) JUNE 30, 2000 YEAR ENDED
IN NET ASSETS (UNAUDITED) DECEMBER 31, 1999
<S> <C> <C>
-----------------------------------------------------------------------------
From operations --
Net investment income $ 4,347,875 $ 8,865,765
Net realized loss (1,702,720) (2,060,510)
Net change in unrealized
appreciation (depreciation) 5,236,239 (23,024,209)
-----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM OPERATIONS $ 7,881,394 $ (16,218,954)
-----------------------------------------------------------------------------
Distributions to shareholders --
From net investment income
Class A $ (1,338,612) $ (2,600,117)
Class B (550,251) (891,318)
Class I (2,426,537) (5,374,330)
In excess of net investment income
Class A (5,466) (43,503)
Class B -- (4,100)
Class I -- (88,693)
In excess of net realized gains
Class A -- (91,540)
Class B -- (41,414)
Class I -- (158,431)
-----------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO SHAREHOLDERS $ (4,320,866) $ (9,293,446)
-----------------------------------------------------------------------------
Transactions in shares of beneficial interest --
Proceeds from sale of shares
Class A $ 4,683,349 $ 38,376,724
Class B 2,686,347 19,208,003
Class I 5,523,085 9,905,056
Net asset value of shares issued to
shareholders in payment of
distributions declared
Class A 528,060 1,562,297
Class B 304,649 574,467
Class I 1,124,378 2,705,265
Cost of shares redeemed
Class A (9,015,210) (15,030,293)
Class B (3,662,502) (3,906,414)
Class I (10,553,934) (18,964,373)
-----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS
FROM FUND SHARE TRANSACTIONS $ (8,381,778) $ 34,430,732
-----------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS $ (4,821,250) $ 8,918,332
-----------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
NET ASSETS (UNAUDITED) DECEMBER 31, 1999
-----------------------------------------------------------------------------
<S> <C> <C>
At beginning of period $ 157,102,561 $ 148,184,229
-----------------------------------------------------------------------------
AT END OF PERIOD $ 152,281,311 $ 157,102,561
-----------------------------------------------------------------------------
Accumulated undistributed
net investment income
included in net assets
-----------------------------------------------------------------------------
AT END OF PERIOD $ 27,009 $ --
-----------------------------------------------------------------------------
</TABLE>
SEE NOTES TO FINANCIAL STATEMENTS
8
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS A
--------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 ------------------------
(UNAUDITED) 1999 1998(1)(2)
<S> <C> <C> <C>
----------------------------------------------------------------------------------------
Net asset value -- Beginning of period $ 8.590 $ 9.970 $10.000
----------------------------------------------------------------------------------------
Income (loss) from operations
----------------------------------------------------------------------------------------
Net investment income $ 0.248 $ 0.505 $ 0.502
Net realized and unrealized gain (loss) 0.201 (1.357) 0.099
----------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.449 $(0.852) $ 0.601
----------------------------------------------------------------------------------------
Less distributions
----------------------------------------------------------------------------------------
From net investment income $(0.248) $(0.504) $(0.522)
In excess of net investment income (0.001) (0.008) --
From net realized gain -- -- (0.061)
In excess of net realized gain -- (0.016) (0.048)
----------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.249) $(0.528) $(0.631)
----------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD $ 8.790 $ 8.590 $ 9.970
----------------------------------------------------------------------------------------
TOTAL RETURN(3) 5.32% (8.85)% 6.07%
----------------------------------------------------------------------------------------
Ratios/Supplemental Data
----------------------------------------------------------------------------------------
Net assets, end of period
(000's omitted) $46,615 $49,427 $32,352
Ratios (As a percentage of average daily
net assets):
Expenses 1.00%(4) 0.71% 0.65%
Expenses after custodian fee
reduction 1.00%(4) 0.69% 0.60%
Net investment income 5.82%(4) 5.31% 5.07%
Portfolio Turnover 24% 80% 38%
----------------------------------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(2) For the period from the commencement of offering of Class A shares,
January 6, 1998, to December 31, 1998.
(3) Total 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
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(4) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
9
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS B
--------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 ------------------------
(UNAUDITED) 1999 1998(1)(2)
<S> <C> <C> <C>
----------------------------------------------------------------------------------------
Net asset value -- Beginning of period $ 8.520 $ 9.880 $10.000
----------------------------------------------------------------------------------------
Income (loss) from operations
----------------------------------------------------------------------------------------
Net investment income $ 0.216 $ 0.431 $ 0.416
Net realized and unrealized gain (loss) 0.205 (1.343) 0.006
----------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM OPERATIONS $ 0.421 $(0.912) $ 0.422
----------------------------------------------------------------------------------------
Less distributions
----------------------------------------------------------------------------------------
From net investment income $(0.211) $(0.430) $(0.433)
In excess of net investment income -- (0.002) --
From net realized gain -- -- (0.051)
In excess of net realized gain -- (0.016) (0.058)
----------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.211) $(0.448) $(0.542)
----------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD $ 8.730 $ 8.520 $ 9.880
----------------------------------------------------------------------------------------
TOTAL RETURN(3) 5.04% (9.51)% 4.03%
----------------------------------------------------------------------------------------
Ratios/Supplemental Data
----------------------------------------------------------------------------------------
Net assets, end of period (000's
omitted) $22,607 $22,738 $10,008
Ratios (As a percentage of average daily
net assets):
Expenses 1.72%(4) 1.47% 1.39%
Expenses after custodian fee
reduction 1.72%(4) 1.45% 1.34%
Net investment income 5.08%(4) 4.61% 4.33%
Portfolio Turnover 24% 80% 38%
----------------------------------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(2) For the period from the commencement of offering of Class B shares,
January 14, 1998, to December 31, 1998.
(3) Total 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
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(4) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
10
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CLASS I
----------------------------------------------------------------------------
SIX MONTHS ENDED YEAR ENDED DECEMBER 31,
JUNE 30, 2000 --------------------------------------------------------
(UNAUDITED) 1999 1998(1) 1997 1996 1995
<S> <C> <C> <C> <C> <C> <C>
--------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning
of period $ 9.380 $10.870 $10.840 $10.070 $10.210 $ 9.260
--------------------------------------------------------------------------------------------------------------
Income (loss) from operations
--------------------------------------------------------------------------------------------------------------
Net investment income $ 0.280 $ 0.553 $0.574 $ 0.584 $ 0.605 $ 0.604
Net realized and unrealized
gain (loss) 0.218 (1.464) 0.141 0.785 (0.143) 0.962
--------------------------------------------------------------------------------------------------------------
TOTAL INCOME (LOSS) FROM
OPERATIONS $ 0.498 $(0.911) $0.715 $ 1.369 $ 0.462 $ 1.566
--------------------------------------------------------------------------------------------------------------
Less distributions
--------------------------------------------------------------------------------------------------------------
From net investment income $(0.278) $(0.554) $(0.576 ) $(0.584) $(0.594) $(0.604)
In excess of net investment
income -- (0.009) -- (0.015) (0.008) (0.012)
From net realized gain -- -- (0.109) -- -- --
In excess of net realized gain -- (0.016) -- -- -- --
--------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS $(0.278) $(0.579) $(0.685 ) $(0.599) $(0.602) $(0.616)
--------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF
PERIOD $ 9.600 $ 9.380 $10.870 $10.840 $10.070 $10.210
--------------------------------------------------------------------------------------------------------------
TOTAL RETURN(2) 5.39% (8.69)% 6.75% 14.13% 4.78% 17.40%
--------------------------------------------------------------------------------------------------------------
Ratios/Supplemental Data
--------------------------------------------------------------------------------------------------------------
Net assets, end of period
(000's omitted) $83,059 $84,938 $105,824 $92,375 $88,184 $96,410
Ratios (As a percentage of
average daily net assets):
Expenses 0.83%(3) 0.69% 0.70% 0.81% 0.78% 0.76%
Expenses after custodian
fee reduction 0.83%(3) 0.67% 0.65% 0.77% 0.74% --
Net investment income 5.97%(3) 5.38% 5.25% 5.69% 6.12% 6.16%
Portfolio Turnover 24% 80% 38% 34% 30% 58%
--------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Net investment income per share was computed using average shares
outstanding.
(2) Total 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
reinvested at the net asset value on the reinvestment date. Total return
is not computed on an annualized basis.
(3) Annualized.
SEE NOTES TO FINANCIAL STATEMENTS
11
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1 Significant Accounting Policies
-------------------------------------------
Eaton Vance Municipal Bond Fund (the Fund) is a diversified entity of the
type commonly known as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as an open-end management
investment company. The Fund is a series of Eaton Vance Mutual Funds Trust
(the Trust). The Fund offers three classes of shares. Class A shares are
generally sold subject to a sales charge imposed at time of purchase.
Class B shares are sold at net asset value and are subject to a contingent
deferred sales charge (see Note 6). Class I shares are sold at net asset
value. Each class represents a pro rata interest in the Fund, but votes
separately on class-specific matters and (as noted below) is subject to
different expenses. Realized and unrealized gains and losses are allocated
daily to each class of shares based on the relative net assets of each class
to the total net assets of the Fund. Net investment income, other than class
specific expenses, is allocated daily to each class of shares based upon the
ratio of the value of each class' paid shares to the total value of all paid
shares. Each class of shares differs in its distribution plan and certain
other class specific expenses. 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. Futures contracts and
options on financial futures contracts listed on commodity exchanges are
valued at closing settlement prices. Over-the-counter options on financial
futures are normally valued at the mean between the latest 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 Trustees. 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 -- The Fund's policy is to comply with the provisions of the
Internal Revenue Code applicable to regulated investment companies and to
distribute to shareholders each year all of its taxable and tax-exempt
income, including any net realized gain on investments. Accordingly, no
provision for federal income or excise tax is necessary. Dividends paid by
the Fund from net interest on tax-exempt municipal bonds are not includable
by shareholders as gross income for federal income tax purposes because the
Fund intends to meet certain requirements of the Internal Revenue Code
applicable to regulated investment companies which will enable the Fund to
pay exempt-interest dividends. 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. At December 31, 1999, the Fund, for
federal income tax purposes had a capital loss carryover of $1,863,510 which
will reduce the taxable income arising from future net realized gains on
investments, if any, to the extent permitted by the Internal Revenue Code,
and thus will reduce the amount of distributions to shareholders which would
otherwise be necessary to relieve the Fund of any liability for federal
income or excise tax. The capital loss carryover expires on December 31,
2007. Additionally, at December 31, 1999, net capital losses of $445,201
attributable to security transactions incurred after October 31, 1999 are
treated as arising on the first day of the Fund's next taxable year.
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 for both hedging
against anticipated future changes in interest rates and investment purposes.
Should interest rates move unexpectedly, the Fund may not achieve the
anticipated benefits of the financial futures contracts and may realize a
loss.
E Put Options on Financial Futures Contracts -- Upon the purchase of a put
option on a financial futures contract by the Fund, the premium paid is
recorded as an investment, the value of which is marked-to-market daily. When
a purchased option expires, the Fund will realize a loss in the amount of the
cost of the option. When the Fund enters into a closing sale transaction, the
Fund will realize a gain or loss depending on whether the sales proceeds from
the closing sale transaction are greater or less than the cost of the option.
When the Fund exercises a
12
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
put option, settlement is made in cash. The risk associated with purchasing
options is limited to the premium originally paid.
F When-issued and Delayed Delivery Transactions -- The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the securities
purchased. Securities purchased on a when-issued or delayed delivery basis
are marked-to-market daily and begin accruing interest on settlement date.
G Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
to the Fund. Pursuant to the custodian agreement, IBT receives a fee reduced
by credits which are determined based on the average daily cash balance the
Fund maintains with IBT. All significant credit balances used to reduce the
Fund's custodian fees are reported as a reduction of total expenses in the
Statement of Operations.
H 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 income and expense during the reporting period. Actual results could
differ from those estimates.
I Other -- Investment transactions are accounted for on a trade date basis.
J Interim Financial Statements -- The interim financial statements relating to
June 30, 2000 and for the six months 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.
2 Distributions to Shareholders
-------------------------------------------
The net income of the Fund is determined daily and substantially all of the
net income so determined is declared as a dividend to shareholders of record
at the time of declaration. Distributions are paid monthly. Distributions are
paid in the form of additional shares or, at the election of the shareholder,
in cash. Distributions of realized capital gains, if any, are made at least
annually. Shareholders may reinvest capital gain distributions in additional
shares of the Fund at the net asset value as of the ex-dividend date.
The Fund distinguishes between distributions on a tax basis and a financial
reporting basis. Generally accepted accounting principles require that only
distributions in excess of tax basis earnings and profits be reported in the
financial statements as a return of capital. Differences in the recognition
or classification of income between the financial statements and tax earnings
and profits which result in temporary over distributions for financial
statement purposes are classified as distributions in excess of net
investment income or accumulated net realized gains. Permanent differences
between book and tax accounting relating to distributions are reclassified to
paid-in capital.
3 Shares of Beneficial Interest
-------------------------------------------
Transactions in shares of beneficial interest were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
CLASS A (UNAUDITED) DECEMBER 31, 1999
<S> <C> <C>
-----------------------------------------------------------------------------
Sales 539,033 4,001,503
Issued to shareholders electing to
receive payments of distributions in
Fund shares 60,946 167,567
Redemptions (1,054,252) (1,656,768)
-----------------------------------------------------------------------------
NET INCREASE (DECREASE) (454,273) 2,512,302
-----------------------------------------------------------------------------
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
CLASS B (UNAUDITED) DECEMBER 31, 1999
<S> <C> <C>
-----------------------------------------------------------------------------
Sales 315,372 2,028,334
Issued to shareholders electing to
receive payments of distributions in
Fund shares 35,596 62,180
Redemptions (430,242) (434,690)
-----------------------------------------------------------------------------
NET INCREASE (DECREASE) (79,274) 1,655,824
-----------------------------------------------------------------------------
</TABLE>
13
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30, 2000 YEAR ENDED
CLASS I (UNAUDITED) DECEMBER 31, 1999
<S> <C> <C>
-----------------------------------------------------------------------------
Sales 586,114 945,281
Issued to shareholders electing to
receive payments of distributions in
Fund shares 119,184 264,623
Redemptions (1,116,182) (1,882,488)
-----------------------------------------------------------------------------
NET DECREASE (410,884) (672,584)
-----------------------------------------------------------------------------
</TABLE>
4 Investment Adviser Fee and Other Transactions with Affiliates
-------------------------------------------
The investment adviser fee, computed at the monthly rate of 0.025% (0.300%
per annum) of the 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), as compensation for management and investment
advisory services rendered to the Fund. For the six months ended June 30,
2000, the fee was equivalent to 0.50% (annualized) of the Fund's average
daily net assets for such period and amounted to $378,444. Except as to
Trustees of the Fund who are not members of EVM's organization, officers and
Trustees receive remuneration for their services to the Fund out of such
investment adviser fee. The Fund was informed that Eaton Vance Distributors,
Inc. (EVD), a subsidiary of EVM and the Fund's principal underwriter,
received $1,753 from the Fund as its portion of the sales charge on sales of
Class A shares for the six months ended June 30, 2000.
Trustees of the Fund that are not affiliated with the Investment Adviser may
elect to defer receipt of all or a percentage of their annual fees in
accordance with the terms of the Trustees Deferred Compensation Plan. For the
six months ended June 30, 2000, no significant amounts have been deferred.
Certain officers and Trustees of the Fund are officers of the above
organizations.
5 Distribution and Service Plans
-------------------------------------------
The Fund has in effect a distribution plan for Class B (Class B Plan)
pursuant to Rule 12b-1 under the Investment Company Act of 1940 and a Service
Plan for Class A shares (Class A Plan) (collectively, the Plans). The
Class B Plan requires the Fund to pay the principal underwriter, EVD, amounts
equal to 1/365 of 0.75% of the Fund's class B daily net assets for providing
ongoing distribution services and facilities to the Fund. The Fund will
automatically discontinue payments to EVD during any period in which there
are no outstanding Uncovered Distribution Charges, which are equivalent to
the sum of (i) 5% of the aggregate amount received by the Fund for the
class B shares sold plus, (ii) interest calculated by applying the rate of 1%
over the prevailing prime rate to the outstanding balance of Uncovered
Distribution Charges due EVD reduced by the aggregate amount of contingent
deferred sales charges (see Note 6) and amounts theretofore paid to or
payable to EVD. The amount payable to EVD with respect to each day is accrued
on such day as a liability of the Fund and, accordingly, reduces the Class B
net assets. The Fund paid or accrued distribution fees of $83,071 for
Class B shares to EVD for the six months ended June 30, 2000, representing
0.75% of the average daily net assets for Class B shares. At June 30, 2000,
the amount of Uncovered Distribution Charges EVD calculated under the
Class B Plan was approximately $1,043,000.
The Plans authorize the Fund to make payments of service fees to EVD,
investment dealers and other persons in amounts not exceeding 0.25% of the
Fund's average daily net assets attributable to Class A and Class B shares
for each fiscal year. The Trustees initially implemented the Plans by
authorizing the Fund to make quarterly service fee payments to EVD and
investment dealers equal to 0.25% per annum of the Fund's average daily net
assets attributable to Class A and Class B shares based on the value of Fund
shares sold by such persons and remaining outstanding for at least one year.
On October 4, 1999, the Trustees approved service fee payments equal to 0.25%
per annum of the Fund's average daily net assets attributable to Class A and
Class B shares for any fiscal year on shares of the Fund sold on or after
October 12, 1999. Service fee payments will be made for personal services
and/or the maintenance of shareholder accounts. Service fees are separate and
distinct from the sales commissions and distribution fees payable by the Fund
to EVD, and, as such are not subject to automatic discontinuance when there
are no outstanding Uncovered Distribution Charges of EVD. Service fees for
the six months ended June 30, 2000 amounted to $38,341 and $15,963 for
Class A and Class B shares, respectively.
6 Contingent Deferred Sales Charge
-------------------------------------------
A contingent deferred sales charge (CDSC) generally is imposed on redemptions
of Class B shares made within six years of purchase. Generally, the CDSC is
based upon the lower of the net asset value at date of redemption or date of
purchase. No charge is levied on Class B shares acquired by reinvestment of
dividends or capital gain distributions.
14
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
The Class B CDSC is imposed at declining rates that begin at 5% in the first
and second year of redemption after purchase, declining one percentage point
each subsequent year. No CDSC is levied on shares which have been sold to EVM
or its affiliates or to their respective employees or clients and may be
waived under certain other limited conditions. CDSC charges are paid to EVD
to reduce the amount of Uncovered Distribution Charges calculated under the
Class B Distribution Plan (see Note 5). CDSC charges received when no
Uncovered Distribution Charges exist will be credited to the Fund. EVD
received approximately $73,000 of CDSC paid by Class B shareholders for the
six months ended June 30, 2000.
7 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 $36,988,039 and $48,365,166 respectively.
8 Line of Credit
-------------------------------------------
The Fund participates with other portfolios and funds managed by EVM and
affiliates in a $150 million unsecured line of credit with a group of banks.
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 participating portfolio or fund based on its borrowings at an
amount above either the Eurodollar rate or federal funds rate. In addition, a
fee computed at an annual rate of 0.10% on the daily unused portion of the
line of credit is allocated among the participating portfolios and funds at
the end of each quarter. The average daily loan balance for the six months
ended June 30, 2000 was $1,848,000 and the average interest rate was 6.39%.
At June 30, 2000, amounts outstanding under the line of credit
totaled $200,000.
9 Federal Income Tax Basis of Investments
-------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investment securities at June 30, 2000, as computed on a federal income tax
basis, were as follows:
<TABLE>
<S> <C>
AGGREGATE COST $157,329,508
------------------------------------------------------
Gross unrealized appreciation $ 3,261,411
Gross unrealized depreciation (9,654,179)
------------------------------------------------------
NET UNREALIZED DEPRECIATION $ (6,392,768)
------------------------------------------------------
</TABLE>
10 Financial Instruments
-------------------------------------------
The Fund regularly trades in financial instruments with off-balance sheet
risk in the normal course of its investing activities to assist in managing
exposure to various market risks. These financial instruments include 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. At June 30, 2000, there were no
obligations under these financial instruments outstanding.
15
<PAGE>
EATON VANCE MUNICIPAL BOND FUND AS OF JUNE 30, 2000
INVESTMENT MANAGEMENT
EATON VANCE MUNICIPAL BOND FUND
Officers
James B. Hawkes
President and Trustee
William H. Ahern, Jr.
Vice President
Thomas J. Fetter
Vice President and
Portfolio Manager
Armin J. Lang
Vice President
Michael R. Mach
Vice President
Robert B. MacIntosh
Vice President
Edward E. Smiley, Jr.
Vice President
James L. O'Connor
Treasurer
Alan R. Dynner
Secretary
Trustees
Jessica M. Bibliowicz
President and Chief Executive Officer,
National Financial Partners
Donald R. Dwight
President, Dwight Partners, Inc.
Samuel L. Hayes, III
Jacob H. Schiff Professor of Investment
Banking Emeritus, Harvard University
Graduate School of Business Administration
Norton H. Reamer
Chairman of the Board,
United Asset Management Corporation
Lynn A Stout
Professor of Law,
Georgetown University Law Center
Jack L. Treynor
Investment Adviser and Consultant
16
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INVESTMENT ADVISER
EATON VANCE MANAGEMENT
The Eaton Vance Building
255 State Street
Boston, MA 02109
PRINCIPAL UNDERWRITER
EATON VANCE DISTRIBUTORS, INC.
The Eaton Vance Building
255 State Street
Boston, MA 02109
(617) 482-8260
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT
PFPC, INC.
Attn: Eaton Vance Funds
P.O. Box 9656
Providence, RI 02904-9653
(800) 262-1122
EATON VANCE MUNICIPAL BOND FUND
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
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This report must be preceded or accompanied by a current prospectus which
contains more complete information on the Fund, including its sales charges and
expenses. Please read the prospectus carefully before you invest or send money.
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279-8/00 MBSRC
