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 Michigan Municipal Bond Fund
(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, Massachusetts 02110
(Address of Principal Executive Offices)
Maureen A. Gemma
Two International Place, Boston, Massachusetts 02110
(Name and Address of Agent for Services)
(617) 482-8260
(Registrant’s Telephone Number, Including Area Code)
September 30
Date of Fiscal Year End
June 30, 2012
Date of Reporting Period
Item 1. Schedule of Investments
Eaton Vance
Michigan Municipal Bond Fund
June 30, 2012
PORTFOLIO OF INVESTMENTS (Unaudited)
Tax-Exempt Investments — 161.9%
| Security | Principal Amount (000’s omitted) |
Value | ||||||
| Education — 1.1% |
||||||||
| Michigan Higher Education Facilities Authority (Hillsdale College), 5.00%, 3/1/35 |
$ | 250 | $ | 253,325 | ||||
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|
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| $ | 253,325 | |||||||
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| Electric Utilities — 2.1% |
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| Michigan Public Power Agency, 5.00%, 1/1/43 |
$ | 450 | $ | 466,362 | ||||
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|
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| $ | 466,362 | |||||||
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|
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| Escrowed/Prerefunded — 9.6% |
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| Michigan Hospital Finance Authority, (Chelsea Community Hospital), Prerefunded to 5/15/15, 5.00%, 5/15/30 |
$ | 400 | $ | 450,664 | ||||
| Michigan Hospital Finance Authority, (Oakwood Hospital System), Prerefunded to 4/1/13, 5.75%, 4/1/32 |
1,000 | 1,041,990 | ||||||
| Michigan Hospital Finance Authority, (Trinity Health Corp.), Prerefunded to 12/1/12, 5.375%, 12/1/30 |
640 | 653,969 | ||||||
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|
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| $ | 2,146,623 | |||||||
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|
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| General Obligations — 8.0% |
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| Comstock Park Public Schools, 5.00%, 5/1/28 |
$ | 170 | $ | 189,030 | ||||
| Comstock Park Public Schools, 5.125%, 5/1/31 |
205 | 227,577 | ||||||
| Comstock Park Public Schools, 5.25%, 5/1/33 |
165 | 183,006 | ||||||
| Howell Public Schools, 4.50%, 5/1/29 |
620 | 669,327 | ||||||
| Livingston County, 4.00%, 6/1/28 |
230 | 244,828 | ||||||
| Livingston County, 4.00%, 6/1/30 |
245 | 257,816 | ||||||
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|
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| $ | 1,771,584 | |||||||
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| Hospital — 19.2% |
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| Grand Traverse Hospital, 5.375%, 7/1/35 |
$ | 750 | $ | 814,050 | ||||
| Kalamazoo Hospital Finance Authority, (Bronson Health Care Group), 5.25%, 5/15/33 |
500 | 542,210 | ||||||
| Kent Hospital Finance Authority, (Spectrum Health System), 5.00%, 1/15/31 |
750 | 830,655 | ||||||
| Michigan Finance Authority, (Oakwood Obligated Group), 5.00%, 11/1/32 |
500 | 545,735 | ||||||
| Michigan Hospital Finance Authority, (Mclaren Health Care), 5.00%, 6/1/35(1) |
750 | 804,862 | ||||||
| Michigan Hospital Finance Authority, (Trinity Health Corp.), 5.00%, 12/1/48 |
700 | 735,175 | ||||||
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| $ | 4,272,687 | |||||||
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| Insured-Education — 5.4% |
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| Ferris State University, (AGC), 5.125%, 10/1/33 |
$ | 435 | $ | 472,523 | ||||
| Wayne University, (NPFG), 5.00%, 11/15/37 |
700 | 736,827 | ||||||
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| $ | 1,209,350 | |||||||
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| Insured-Electric Utilities — 7.2% |
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| Michigan Strategic Fund, (Detroit Edison Co.), (XLCA), 5.25%, 12/15/32 |
$ | 500 | $ | 502,775 | ||||
| Puerto Rico Electric Power Authority, (NPFG), 5.25%, 7/1/26 |
1,000 | 1,104,730 | ||||||
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| $ | 1,607,505 | |||||||
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|
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| Insured-Escrowed/Prerefunded — 36.9% |
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| Central Michigan University, (AMBAC), Prerefunded to 10/1/13, 5.05%, 10/1/32 |
$ | 750 | $ | 794,850 | ||||
| Lansing Building Authority, (NPFG), Prerefunded to 6/1/13, 5.00%, 6/1/29 |
1,500 | 1,566,330 | ||||||
1
| Security | Principal Amount (000’s omitted) |
Value | ||||||
| Michigan Hospital Finance Authority, (St. John Health System), (AMBAC), Escrowed to Maturity, 5.00%, 5/15/28 |
$ | 1,150 | $ | 1,154,163 | ||||
| Michigan House of Representatives, (AMBAC), Escrowed to Maturity, 0.00%, 8/15/22 |
1,750 | 1,336,282 | ||||||
| Michigan House of Representatives, (AMBAC), Escrowed to Maturity, 0.00%, 8/15/23 |
2,615 | 1,947,103 | ||||||
| Reed City Public Schools, (AGM), Prerefunded to 5/1/14, 5.00%, 5/1/29 |
1,300 | 1,411,254 | ||||||
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| $ | 8,209,982 | |||||||
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| Insured-General Obligations — 21.8% |
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| Grand Rapids and Kent County Joint Building Authority, (DeVos Place), (NPFG), 0.00%, 12/1/27 |
$ | 1,960 | $ | 1,116,063 | ||||
| Greenville Public Schools, (NPFG), 5.00%, 5/1/25 |
375 | 379,748 | ||||||
| Okemos Public School District, (NPFG), 0.00%, 5/1/19(2) |
1,330 | 1,119,820 | ||||||
| Pinconning Area Schools, (AGM), 5.00%, 5/1/33 |
1,000 | 1,065,500 | ||||||
| Royal Oak, (AGC), 6.25%, 10/1/28 |
1,000 | 1,181,870 | ||||||
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| $ | 4,863,001 | |||||||
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| Insured-Hospital — 6.1% |
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| Michigan Hospital Finance Authority, (Mid-Michigan Obligation Group), (AMBAC), 5.00%, 4/15/32 |
$ | 500 | $ | 500,330 | ||||
| Royal Oak Hospital Finance Authority, (William Beaumont Hospital), (NPFG), 5.25%, 11/15/35 |
855 | 855,616 | ||||||
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| $ | 1,355,946 | |||||||
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| Insured-Lease Revenue/Certificates of Participation — 7.7% |
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| Michigan Building Authority, (AGM), (FGIC), 0.00%, 10/15/29 |
$ | 1,000 | $ | 436,240 | ||||
| Michigan Building Authority, (FGIC), (NPFG), 0.00%, 10/15/30 |
3,100 | 1,274,782 | ||||||
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| $ | 1,711,022 | |||||||
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| Insured-Special Tax Revenue — 6.4% |
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| Puerto Rico Sales Tax Financing Corp., (AMBAC), 0.00%, 8/1/54 |
$ | 3,005 | $ | 254,433 | ||||
| Puerto Rico Sales Tax Financing Corp., (NPFG), 0.00%, 8/1/45 |
1,165 | 174,995 | ||||||
| Wayne Charter County, (Airport Hotel-Detroit Metropolitan Airport), (NPFG), 5.00%, 12/1/30 |
1,000 | 1,001,690 | ||||||
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| $ | 1,431,118 | |||||||
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| Insured-Utilities — 6.9% |
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| Lansing Board of Water and Light, (Water Supply, Steam and Electric Utility), (AGM), 5.00%, 7/1/25 |
$ | 1,000 | $ | 1,020,060 | ||||
| Lansing Board of Water and Light, (Water Supply, Steam and Electric Utility), (AGM), 5.00%, 7/1/26 |
510 | 519,522 | ||||||
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| $ | 1,539,582 | |||||||
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| Insured-Water and Sewer — 13.5% |
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| Detroit Sewer Disposal System, (NPFG), 4.50%, 7/1/35 |
$ | 500 | $ | 461,870 | ||||
| Detroit Water Supply System, (FGIC), (NPFG), 5.00%, 7/1/30 |
1,425 | 1,425,356 | ||||||
| Grand Rapids Water Supply System, (AGC), 5.00%, 1/1/29 |
1,000 | 1,125,900 | ||||||
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| $ | 3,013,126 | |||||||
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| Special Tax Revenue — 5.1% |
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| Michigan Trunk Line Fund, 5.00%, 11/15/36 |
$ | 1,000 | $ | 1,131,380 | ||||
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| $ | 1,131,380 | |||||||
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| Water and Sewer — 4.9% |
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| Grand Rapids Sanitary Sewer System, 5.00%, 1/1/28 |
$ | 650 | $ | 809,783 | ||||
| Port Huron, Water Supply System, 5.25%, 10/1/31 |
250 | 270,240 | ||||||
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| $ | 1,080,023 | |||||||
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2
| Security | Principal Amount (000’s omitted) |
Value | ||||
| Total Tax-Exempt Investments — 161.9% |
$ | 36,062,616 | ||||
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| Auction Preferred Shares Plus Cumulative Unpaid Dividends — (59.8)% |
$ | (13,325,423 | ) | |||
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| Other Assets, Less Liabilities — (2.1)% |
$ | (466,059 | ) | |||
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| Net Assets Applicable to Common Shares — 100.0% |
$ | 22,271,134 | ||||
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The percentage shown for each investment category in the Portfolio of Investments is based on net assets applicable to common shares.
| AGC |
- | Assured Guaranty Corp. | ||
| AGM |
- | Assured Guaranty Municipal Corp. | ||
| AMBAC |
- | AMBAC Financial Group, Inc. | ||
| FGIC |
- | Financial Guaranty Insurance Company | ||
| NPFG |
- | National Public Finance Guaranty Corp. | ||
| 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 June 30, 2012, 69.2% 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 1.4% to 31.1% of total investments.
| (1) | When-issued security. |
| (2) | Security (or a portion thereof) has been segregated to cover payable for when-issued securities. |
A summary of open financial instruments at June 30, 2012 is as follows:
Futures Contracts
| Expiration Month/Year |
Contracts |
Position | Aggregate Cost | Value | Net Unrealized Depreciation |
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| 9/12 | 5 U.S. 30-Year Treasury Bond | Short | $ | (739,241 | ) | $ | (739,844 | ) | $ | (603 | ) | |||||
At June 30, 2012, the Fund had sufficient cash and/or securities to cover commitments under these contracts.
The Fund is subject to interest rate risk in the normal course of pursuing its investment objective. Because the Fund holds fixed-rate bonds, the value of these bonds may decrease if interest rates rise. The Fund purchases and sells U.S. Treasury futures contracts to hedge against changes in interest rates.
At June 30, 2012, the aggregate fair value of open derivative instruments (not considered to be hedging instruments for accounting disclosure purposes) in a liability position and whose primary underlying risk exposure is interest rate risk was $603.
3
The cost and unrealized appreciation (depreciation) of investments of the Fund at June 30, 2012, as determined on a federal income tax basis, were as follows:
| Aggregate cost |
$ | 33,248,695 | ||
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| Gross unrealized appreciation |
$ | 2,977,971 | ||
| Gross unrealized depreciation |
(164,050 | ) | ||
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| Net unrealized appreciation |
$ | 2,813,921 | ||
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Under generally accepted accounting principles for fair value measurements, a three-tier hierarchy to prioritize the assumptions, referred to as inputs, is 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) |
In cases where the inputs used to measure fair value fall in different levels of the fair value hierarchy, the level disclosed is determined based on the lowest level input that is significant to the fair value measurement in its entirety. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
At June 30, 2012, the hierarchy of inputs used in valuing the Fund’s investments and open derivative instruments, which are carried at value, were as follows:
| Asset Description | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Tax-Exempt Investments |
$ | — | $ | 36,062,616 | $ | — | $ | 36,062,616 | ||||||||
| Total Investments |
$ | — | $ | 36,062,616 | $ | — | $ | 36,062,616 | ||||||||
| Liability Description | ||||||||||||||||
| Futures Contracts |
$ | (603 | ) | $ | — | $ | — | $ | (603 | ) | ||||||
| Total |
$ | (603 | ) | $ | — | $ | — | $ | (603 | ) | ||||||
The Fund held no investments or other financial instruments as of September 30, 2011 whose fair value was determined using Level 3 inputs. At June 30, 2012, there were no investments transferred between Level 1 and Level 2 during the fiscal year to date then ended.
For information on the Fund’s policy regarding the 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 Michigan Municipal Bond Fund | ||
| By: | /s/ Cynthia J. Clemson | |
| Cynthia J. Clemson | ||
| President | ||
Date: August 27, 2012
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: August 27, 2012
| By: | /s/ Barbara E. Campbell | |
| Barbara E. Campbell | ||
| Treasurer |
Date: August 27, 2012