Eaton Vance Insured Michigan Municipal Bond Fund
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
811-21224
Investment Company Act File Number
Eaton Vance Insured Michigan Municipal Bond Fund
(Exact Name of Registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices)
Maureen A. Gemma
Eaton Vance Management, 255 State Street, Boston, Massachusetts 02109
(Name and Address of Agent for Services)
(617) 482-8260
(Registrant’s Telephone Number, Including Area Code)
September 30
Date of Fiscal Year End
December 31, 2008
Date of Reporting Period
 
 

 

 

TABLE OF CONTENTS

Item 1. Schedule of Investments
Item 2. Controls and Procedures
Signatures
EX-99.CERT Section 302 Certifications
Item 1. Schedule of Investments

 

 

Eaton Vance Insured Michigan Municipal Bond Fund   as of December 31, 2008
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments — 176.8%
                 
Principal Amount            
(000's omitted)     Security   Value  
 
Electric Utilities — 4.8%
$ 920    
Michigan Strategic Fund, (Detroit Edison Pollution Control), 5.45%, 9/1/29
   $ 844,137  
       
 
      
       
 
   $ 844,137  
       
 
      
Escrowed/Prerefunded — 9.6%
$ 1,500    
Michigan Hospital Finance Authority, (Sparrow Obligation Group), Prerefunded to 11/15/11, 5.625%, 11/15/36
   $ 1,678,845  
       
 
      
       
 
   $ 1,678,845  
       
 
      
Hospital — 13.6%
$ 400    
Michigan Hospital Finance Authority, (Chelsea Community Hospital), 5.00%, 5/15/30
   $ 259,504  
  1,000    
Michigan Hospital Finance Authority, (Oakwood Hospital System), 5.75%, 4/1/32
     763,580  
  1,500    
Michigan Hospital Finance Authority, (Trinity Health), 5.375%, 12/1/30
     1,348,545  
       
 
      
       
 
   $ 2,371,629  
       
 
      
Insured-Electric Utilities — 2.3%
$ 500    
Michigan Strategic Fund, (Detroit Edison Co.), (XLCA), 5.25%, 12/15/32
   $ 399,765  
       
 
      
       
 
   $ 399,765  
       
 
      
Insured-Escrowed/Prerefunded — 50.0%
$ 750    
Detroit School District, (School Bond Loan Fund), (FSA), Prerefunded to 5/1/12, 5.125%, 5/1/31
   $ 825,833  
  1,250    
Detroit Sewer Disposal, (FGIC), Prerefunded to 7/1/11, 5.125%, 7/1/31
     1,349,087  
  1,500    
Lansing Building Authority, (MBIA), Prerefunded to 6/1/13, 5.00%, 6/1/29
     1,685,580  
  1,150    
Michigan Hospital Finance Authority, (St. John Health System), (AMBAC), Escrowed to Maturity, 5.00%, 5/15/28
     1,156,060  
  1,750    
Michigan House of Representatives, (AMBAC), Escrowed to Maturity, 0.00%, 8/15/22
     928,165  
  2,615    
Michigan House of Representatives, (AMBAC), Escrowed to Maturity, 0.00%, 8/15/23
     1,303,211  
  1,300    
Reed City Public Schools, (FSA), Prerefunded to 5/1/14, 5.00%, 5/1/29
     1,480,232  
       
 
      
       
 
   $ 8,728,168  
       
 
      
Insured-General Obligations — 24.2%
$ 1,960    
Grand Rapids and Kent County Joint Building Authority, (DeVos Place), (MBIA), 0.00%, 12/1/27(1)
   $ 673,182  
  750    
Greenville Public Schools, (MBIA), 5.00%, 5/1/25
     749,948  
  1,330    
Okemos Public School District, (MBIA), 0.00%, 5/1/19
     783,037  
  1,000    
Pinconning Area Schools, (FSA), 5.00%, 5/1/33
     947,400  
  1,000    
Royal Oak, (AGC), 6.25%, 10/1/28
     1,072,300  
       
 
      
       
 
   $ 4,225,867  
       
 
      
Insured-Hospital — 8.6%
$ 500    
Michigan Hospital Finance Authority, (Mid-Michigan Obligation Group), (AMBAC), 5.00%, 4/15/32
   $ 355,840  
  1,590    
Royal Oak Hospital Finance Authority, (William Beaumont Hospital), (MBIA), 5.25%, 11/15/35
     1,149,252  
       
 
      
       
 
   $ 1,505,092  
       
 
      

1

 

 

                 
Principal Amount            
(000’s omitted)     Security   Value  
 
Insured-Lease Revenue/Certificates of Participation — 8.8%
$ 3,100    
Michigan State Building Authority, (FGIC), 0.00%, 10/15/30
   $ 699,639  
  1,000    
Michigan State Building Authority, (FGIC), (FSA), 0.00%, 10/15/29
     260,830  
  795    
Puerto Rico Public Buildings Authority, (CIFG), 5.25%, 7/1/36
     584,365  
       
 
      
       
 
   $ 1,544,834  
       
 
      
Insured-Public Education — 17.7%
$ 1,500    
Central Michigan University, (AMBAC), 5.05%, 10/1/32
   $ 1,345,125  
  750    
Lake Superior State University, (AMBAC), 5.125%, 11/15/26
     624,847  
  1,200    
Wayne University, (MBIA), 5.00%, 11/15/37
     1,116,876  
       
 
      
       
 
   $ 3,086,848  
       
 
      
Insured-Sewer Revenue — 2.2%
$ 500    
Detroit Sewer Disposal System, (MBIA), 4.50%, 7/1/35
   $ 375,565  
       
 
      
       
 
   $ 375,565  
       
 
      
Insured-Special Tax Revenue — 16.0%
$ 7,030    
Puerto Rico Sales Tax Financing, (AMBAC), 0.00%, 8/1/54
   $ 258,282  
  845    
Puerto Rico Sales Tax Financing, (MBIA), 0.00%, 8/1/44
     72,543  
  1,675    
Puerto Rico Sales Tax Financing, (MBIA), 0.00%, 8/1/45
     133,649  
  1,115    
Puerto Rico Sales Tax Financing, (MBIA), 0.00%, 8/1/46
     82,421  
  1,500    
Wayne Charter County, (Airport Hotel-Detroit Metropolitan Airport), (MBIA), 5.00%, 12/1/30
     1,357,290  
  1,000    
Ypsilanti Community Utilities Authority, (Sanitary Sewer System), (FGIC), 5.00%, 5/1/32
     891,300  
       
 
      
       
 
   $ 2,795,485  
       
 
      
Insured-Utilities — 8.4%
$ 1,000    
Lansing Board of Water and Light, (Water Supply, Steam and Electric Utility), (FSA), 5.00%, 7/1/25(2)
   $ 979,110  
  510    
Lansing Board of Water and Light, (Water Supply, Steam and Electric Utility), (FSA), 5.00%, 7/1/26
     487,091  
       
 
      
       
 
   $ 1,466,201  
       
 
      
Insured-Water Revenue — 8.3%
$ 1,600    
Detroit Water Supply System, (FGIC), 5.00%, 7/1/30
   $ 1,449,328  
       
 
      
       
 
   $ 1,449,328  
       
 
      
Private Education — 2.3%
$ 500    
Michigan Higher Education Facilities Authority, (Hillsdale College), 5.00%, 3/1/35
   $ 402,750  
       
 
      
       
 
   $ 402,750  
       
 
      
       
 
        
Total Tax-Exempt Investments — 176.8%
(identified cost $33,531,933)		   $ 30,874,514  
       
 
      
       
 
        
Auction Preferred Shares Plus Cumulative Unpaid Dividends — (76.3)%   $ (13,325,466 )
       
 
      
       
 
        
Other Assets, Less Liabilities — (0.5)%   $ (81,484 )
       
 
      
       
 
        
Net Assets Applicable to Common Shares — 100.0%   $ 17,467,564  
       
 
      
     
AGC
  - Assured Guaranty Corp.
     
AMBAC
  - AMBAC Financial Group, Inc.
     
CIFG
  - CIFG Assurance North America, Inc.
     
FGIC
  - Financial Guaranty Insurance Company
 
    

2

 

 

     
FSA
  - Financial Security Assurance, Inc.
     
MBIA
  - Municipal Bond Insurance Association
     
XLCA
  - XL Capital Assurance, Inc.
     
 
  The Fund invests primarily in debt securities issued by Michigan 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, 2008, 82.8% of total investments are backed by bond insurance of various financial institutions and financial guaranty assurance agencies. The aggregate percentage insured by an individual financial institution ranged from 1.3% to 26.4% of total investments.
     
(1)
  Security (or a portion thereof) has been segregated to cover margin requirements on open financial futures contracts.
     
(2)
  Security (or a portion thereof) has been pledged as collateral for open swap contracts.

3

 

 

A summary of financial instruments at December 31, 2008 is as follows:
Futures Contracts
                                 
Expiration           Aggregate             Net Unrealized  
Date   Contracts   Position   Cost     Value     Depreciation  
 
3/09  
11 U.S. Treasury Bond
   Short   $ (1,370,578 )   $ (1,518,516 )   $ (147,938 )
3/09  
  4 U.S. Treasury Note
   Short     (491,236 )     (503,000 )     (11,764 )
   
 
                          
   
 
                       $ (159,702 )
   
 
                          
Interest Rate Swaps
                                 
            Annual     Floating   Effective Date/      
    Notional     Fixed Rate     Rate   Termination   Net Unrealized  
Counterparty   Amount     Paid By Fund     Paid To Fund   Date   Depreciation  
 
JPMorgan Chase Co.
   $ 450,000       4.743 %   3-month USD-
LIBOR-BBA		   September 14, 2009 /
September 14, 2039		   $ (169,859 )
Merrill Lynch Capital
Services, Inc.
     675,000       4.682     3-month USD-LIBOR-BBA   April 1, 2009 /
April 1, 2039		     (255,015 )
Morgan Stanley Capital
Services, Inc.
     350,000       4.691     3-month USD-
LIBOR-BBA		   June 11, 2009 /
June 11, 2039		     (131,339 )
 
                              
 
                           $ (556,213 )
 
                              
The effective date represents the date on which the Fund and the counterparty to the interest rate swap contract begin interest payment accruals.
At December 31, 2008, the Fund had sufficient cash and/or securities to cover commitments under these contracts.
The cost and unrealized appreciation (depreciation) of investments of the Fund at December 31, 2008, as determined on a federal income tax basis, were as follows:
         
Aggregate cost
   $ 33,524,844  
 
      
Gross unrealized appreciation
   $ 1,013,535  
Gross unrealized depreciation
     (3,663,865 )
 
      
Net unrealized depreciation
   $ (2,650,330 )
 
      
The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157 (FAS 157), “Fair Value Measurements”, effective October 1, 2008. FAS 157 established a three-tier hierarchy to prioritize the assumptions, referred to as inputs, used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
  •   Level 1 — quoted prices in active markets for identical investments
 
  •   Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
 
  •   Level 3 — significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
At December 31, 2008, the inputs used in valuing the Fund’s investments, which are carried at value, were as follows:
                         
            Investments in     Other Financial  
        Valuation Inputs   Securities     Instruments*  
Level 1
   Quoted Prices   $ —     $ (159,702 )
Level 2
   Other Significant Observable Inputs     30,874,514       (556,213 )
Level 3
   Significant Unobservable Inputs     —       —  
 
                    
Total
           $ 30,874,514     $ (715,915 )
 
                    
*   Other financial instruments include futures and interest rate swap contracts not reflected in the Portfolio of Investments, which are valued at the unrealized appreciation (depreciation) on the instrument.
The Fund held no investments or other financial instruments as of September 30, 2008 whose fair value was determined using Level 3 inputs.
For information on the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to the Fund’s most recent financial statements included in its semiannual or annual report to shareholders.

4

 

 

Item 2. Controls and Procedures
(a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant on this Form N-Q has been recorded, processed, summarized and reported within the time period specified in the Commission’s rules and forms and that the information required to be disclosed by the registrant on this Form N-Q has been accumulated and communicated to the registrant’s principal executive officer and principal financial officer in order to allow timely decisions regarding required disclosure.
(b) There have been no changes in the registrant’s internal controls over financial reporting during the fiscal quarter for which the report is being filed that have materially affected, or are reasonably likely to materially affect the registrant’s internal control over financial reporting.

 

 

Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Eaton Vance Insured Michigan Municipal Bond Fund
         
By:
  /s/ Cynthia J. Clemson
 
Cynthia J. Clemson 		   
 
  President    
 
        
Date:
  February 23, 2009    
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
         
By:
  /s/ Cynthia J. Clemson
 
Cynthia J. Clemson 		   
 
  President    
 
        
Date:
  February 23, 2009    
 
        
By:
  /s/ Barbara E. Campbell    
 
       
 
  Barbara E. Campbell    
 
  Treasurer    
 
        
Date:
  February 23, 2009