[EATON VANCE LOGO]
[PHOTO OF BRICK WALL]
[EDUCATION]
SEMIANNUAL REPORT MARCH 31, 2003
[PHOTO OF HIGHWAY]
EATON VANCE
INSURED
MUNICIPAL
BOND
FUNDS
INSURED MUNICIPAL
INSURED CALIFORNIA
INSURED NEW YORK
[PHOTO OF BRIDGE]
IMPORTANT NOTICE REGARDING DELIVERY
OF SHAREHOLDER DOCUMENTS
The Securities and Exchange Commission (SEC) permits mutual funds to deliver
only one copy of shareholder documents, including prospectuses, proxy
statements and shareholder reports, to fund investors with multiple accounts
at the same residential or post office box address. This practice is often
called "householding" and it helps eliminate duplicate mailings to
shareholders.
EATON VANCE, OR YOUR FINANCIAL ADVISER, MAY HOUSEHOLD THE MAILING OF YOUR
DOCUMENTS INDEFINITELY UNLESS YOU INSTRUCT EATON VANCE, OR YOUR FINANCIAL
ADVISER, OTHERWISE.
If you would prefer that your Eaton Vance documents not be householded, please
contact Eaton Vance at 1-800-262-1122, or contact your financial adviser.
Your instructions that householding not apply to delivery of your Eaton Vance
documents will be effective within 30 days of receipt by Eaton Vance or your
financial adviser.
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
LETTER TO SHAREHOLDERS
[Thomas J. Fetter Photo]
Thomas J. Fetter
President
Amid the dramatic interest rate decline of recent years, many bonds issued at
relatively high interest rates from 1993-1998 have been pre-refunded by their
issuers. As a result, escrowed bonds have played an increasingly prominent
role in municipal bond portfolios. However, while these bonds are valued by
professional investors, analysts and portfolio managers, many individual
investors have little knowledge of why bonds are escrowed. As part of our
continuing educational series, we thought it might be helpful to discuss the
mechanics of escrowed bonds and the role of those bonds in the municipal
market.
The process of escrowing
municipal bonds to maturity...
In the escrowing process, an issuing jurisdiction essentially refinances
original-issue debt with newer, usually lower-interest debt. The jurisdiction
issues a "refunding bond," the proceeds of which are used to purchase
specially-issued U.S. Treasury bonds - State and Local Government Series
bonds, which are held in an irrevocable escrow account by a trustee bank. The
principal and interest payments of these Treasury bonds exactly match the
future principal and interest payments of the issuer's original bonds.
The principal and interest from these U.S. Treasuries are directed solely to
pay the interest and principal on the tax-exempt bonds for which the escrow
account was established. Thus, the original bonds are now backed by U.S.
Treasuries and are, therefore, deemed among the highest quality of all
tax-exempt issues.
Benefits for issuers: lower interest rates and added flexibility...
When municipal bonds are escrowed, they are said to be "defeased." That means
that the bonds are no longer governed by the original covenants and are no
longer a direct obligation of the original issuer. The most common defeasance
- "high-to-low" defeasance - is based on an economic rationale, in which an
issuer seeks to take advantage of a significant decline in interest rates -
much the same way homeowners refinance their mortgages. By refunding
high-coupon bonds with lower-coupon debt, issuers are able to reduce their
interest expenses and save taxpayers and ratepayers money.
A second, less common procedure is "low-to-high" defeasance - in which
relatively low-coupon bonds are refunded with higher-coupon bonds. This
refunding is generally based on a pressing political or structural need, done
primarily to effect a change in bond covenants. This change may provide more
flexibility for issuers by broadening a project's mandate or redefining
revenue sources.
Benefits for investors: higher quality,
shorter maturities, attractive coupons...
For investors, owning a bond that has been escrowed generally provides an
immediate upgrade in quality - and often in price - because the bond is now
backed by U.S. Treasuries. In addition, because these bonds are typically
called at their earliest call date, they will have a shorter effective
maturity and, therefore, less volatility. Finally, in most cases, the bond
continues to pay an above-average coupon. These characteristics can represent
distinct advantages for investors.
However compelling these benefits are, a portfolio manager still faces a key
decision: whether to hold the bond with its attractive coupon and no credit
risk - or - to sell the bond at its increased market value and redeploy the
increased purchasing power at current interest rates. The portfolio manager
must factor in market conditions, the interest rate outlook, the availability
of bonds in the marketplace and call provisions. If the escrowed bond's
original call provisions have been waived, that will dramatically improve the
bond's trading characteristics.
These decisions can have a profound effect upon performance. Moreover, the
treatment of escrowed bonds is yet another area that demonstrates the value of
professional management. We believe that familiarity with bond covenants,
trading patterns and in-depth analysis can provide investors a major advantage
in municipal bond investing.
Sincerely,
/s/ Thomas J. Fetter
Thomas J. Fetter
President
May 7, 2003
Shares of the Funds 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.
Yields will vary.
2
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
MARKET RECAP
The U.S. economy turned in a poor performance over the six months ended March
31, 2003. Waning consumer confidence and reduced capital spending resulted in
weak demand for goods and services, a condition aggravated by the prolonged
decline in the equity markets. Consumer spending, which had held up
surprisingly well through much of 2002, slowed significantly by year end. For
their part, businesses were loathe to commit new capital investment in an
uncertain economy. These trends contributed to rising unemployment and
increased volatility in the financial markets.
Helped by low interest rates and sales
incentives, the auto and housing markets
kept the U.S. economy afloat...
While economic activity remained sluggish, there were some bright spots that
kept the economy afloat. Together with manufacturers' incentives, record-low
interest rates encouraged car buyers. Similarly, low mortgage rates kept the
housing market alive, although the torrid sales pace of recent years has
cooled considerably. By year-end, however, amid rising consumer debt and an
increasing jobless rate, there were signs that U.S. consumers were adopting
more conservative spending habits.
The Federal Reserve again lowered short-term
interest rates in November...
After rising a feeble 1.4% in the fourth quarter of 2002, the nation's Gross
Domestic Product expanded 1.6% in the first quarter of 2003, according to
preliminary figures. The nation's unemployment rate moved higher, as a clouded
outlook prompted businesses to reduce payrolls. Meanwhile, business investment
in new technology - which generates innovation, improves productivity and is
often viewed as a key to recovery - was generally deferred until business
owners can see beyond the current uncertainties. Against this backdrop, the
Federal Reserve, which had held rates steady through most of the year, saw
danger of a further retrenchment in November and reduced the Federal Funds
rate - a key short-term interest rate barometer - to 1.25%, a 40-year low. The
bond markets - whose prices move in the opposite direction of interest rates -
rallied in response to that action. Ten-year Treasury bond yields, which were
as high as 5.40% in March 2002 - declined to 3.80% by March 31, 2003, as the
economic recovery failed to materialize.
Facing revenue shortfalls, many states are consid-
ering tax increases...
We continue to believe that municipal bonds merit a place in a diversified
investment portfolio. Amid the uncertain economic outlook, we believe the
prospect of a dramatic increase in interest rates remains remote. In addition,
with states reporting revenue shortfalls as a result of the weak economy, many
are faced with looming budget deficits. Because the overwhelming majority are
legally obligated to balance their budgets, legislatures are faced with the
unpleasant prospect of raising state taxes to achieve a balanced ledger. The
potential for higher state taxes could make municipal bonds even more
compelling for tax-conscious investors.
Municipal bond yields exceeded Treasury yields
30-Year AAA-rated
General Oligation (GO) Bonds* 4.93%
Taxable equivalent yield
in 38.6% tax bracket 8.03%
30-Year Treasury Bond 4.82%
Principal and interest payments of Treasury securities are guaranteed by the
U.S. government.
*GO yields are a compilation of a representative variety of general
obligations and are not necessarily representative of the Funds' yield.
Statistics as of March 31, 2003.
Past performance is no guarantee of future results.
Source: Bloomberg, L.P.
THE VIEWS EXPRESSED THROUGHOUT THIS REPORT ARE THOSE OF THE VARIOUS PORTFOLIO
MANAGERS AND ARE CURRENT ONLY THROUGH THE END OF THE PERIOD OF THE REPORT AS
STATED ON THE COVER. THESE VIEWS ARE SUBJECT TO CHANGE AT ANY TIME BASED UPON
MARKET OR OTHER CONDITIONS, AND EATON VANCE DISCLAIMS ANY RESPONSIBILITY TO
UPDATE SUCH VIEWS. THESE VIEWS MAY NOT BE RELIED ON AS INVESTMENT ADVICE AND,
BECAUSE INVESTMENT DECISIONS FOR AN EATON VANCE FUND ARE BASED ON MANY
FACTORS, MAY NOT BE RELIED ON AS AN INDICATION OF TRADING INTENT ON BEHALF OF
ANY EATON VANCE FUND.
3
EATON VANCE INSURED MUNICIPAL BOND FUND AS OF MARCH 31, 2003
INVESTMENT UPDATE
[Thomas J. Fetter Photo]
Thomas J. Fetter
Portfolio Manager
MANAGEMENT UPDATE
- The U.S. economy remained subdued in late 2002 and early 2003. Political and
economic uncertainties constrained consumer and business spending and
tempered near-term expectations for growth. The nation's jobless rate was
5.8% in March 2003, up from 5.7% a year ago.
- Insured* transportation bonds constituted the Fund's largest sector
weighting at March 31, 2003. The Fund's investments were well diversified
across the nation and spanned a broad range of projects, including
turnpikes, an airport authority, and mass transit.
- Insured* water and sewer bonds remained a significant focus of the Fund.
Because utilities and other essential services bonds are backed by user
fees, they tend to have more stable revenues than bonds backed by more
discretionary expenditures.
- Insured* general obligations (GOs) were a major investment for the Fund.
Given the budgetary problems facing many state and local governments,
insured* GOs represented a source of quality and good liquidity.
- In its initial months of operation, the Fund has emphasized the importance
of call protection. Given the sharp decline in interest rates, bonds with
approaching call dates tend to have less favorable performance
characteristics.
FUND STATISTICS(1)
- Number of Issues: 104
- Effective Maturity: 12.9 years
- Average Rating: AAA
- Average Call: 11.5 years
- Average Dollar Price: $88.05
THE FUND
PERFORMANCE FOR THE PAST SIX MONTHS
- Based on share price (traded on the American Stock Exchange), the Fund had a
total return of -4.77% for the six months ended March 31, 2003. That return
was the result of a decrease in share price from $15.00 on September 30,
2002 to $13.83 on March 31, 2003, and the reinvestment of $0.454 in regular
monthly dividends.(2)
- Based on net asset value, the Fund had a total return of 0.84% for the six
months ended March 31, 2003. That return was the result of a decrease in
net asset value from $14.81 on September 30, 2002 to $14.46 on March 31,
2003, and the reinvestment of all distributions.
- Based on the most recent dividend and a share price of $13.83, the Fund had
a market yield of 6.56% at March 31, 2003.(3) The Fund's market yield is
equivalent to a taxable yield of 10.68%.(4)
RATING DISTRIBUTION(1)
By total investments
[CHART]
A 6.4%
AA 6.4%
AAA 87.2%
FUND INFORMATION
AS OF MARCH 31, 2003
PERFORMANCE(5)
AVERAGE ANNUAL TOTAL RETURNS (BY SHARE PRICE, AMERICAN STOCK EXCHANGE)
------------------------------------------------------------------------
Life of Fund (8/30/02) -0.28%
AVERAGE ANNUAL TOTAL RETURNS (BY NET ASSET VALUE)
------------------------------------------------------------------------
Life of Fund (8/30/02) 4.26%
[CHART]
5 LARGEST CATEGORIES(1)
By net assets applicable to common shares
Insured - Transportation* 36.5%
Insured - Water & Sewer* 34.5%
Insured - General Oligations* 26.5%
Insured - Electric Utilities* 10.8%
Insured - Utilities* 10.0%
-------------------------------------------------------------------------------
(1) Fund Statistics, Rating Distribution and Five Largest Categories are
subject to change. Rating Distribution is determined by dividing the
total market value of the issues by the total investments of the Fund.
(2) A portion of the Fund's income may be subject to federal and state
income tax.
(3) The Fund's market yield is calculated by dividing the most recent
dividend per share by the share price at the end of the period and
annualizing the result.
(4) Taxable-equivalent yield assumes maximum 38.60% federal income tax
rate. A lower rate would result in a lower tax-equivalent figure.
(5) Returns are historical and are calculated by determining the percentage
change in share price or net asset value with all distributions
reinvested.
* Private insurance does not remove the risk of loss of principal associated
with insured investments due to changes in market conditions.
Past performance is no guarantee of future results. Investment return and
share price will fluctuate so that shares, when sold, may be worth more or
less than their original cost.
4
EATON VANCE INSURED CALIFORNIA MUNICIPAL BOND FUND AS OF MARCH 31, 2003
INVESTMENT UPDATE
[Cynthia J. Clemson Photo]
Cynthia J. Clemson
Portfolio Manager
MANAGEMENT UPDATE
- The California economic recovery stalled in 2002, amid a significant
fall-off in consumer spending. The state suffered job losses in
information technology, the service sector and manufacturing, as employers
responded to weaker orders with layoffs. The state's March 2003 jobless
rate was 6.6%, unchanged from a year ago.
- Insured* general obligations (GOs) constituted a large Fund investment. In
an uncertain economic environment, many states and municipalities have
experienced an uncertain revenue outlook. Therefore, insured GOs
represented a dependable revenue stream as well as an added element of
quality.
- Insured* transportation bonds constituted a sizable portion of the Fund and
represented quality issuers. These bonds financed major projects needed to
upgrade major transportation infrastructure, including airport, highway
and mass transit projects.
- Insured* water and sewer bonds have played a prominent role in the Fund.
These issues are often sought by investors in a slow economy because they
finance an essential service and are less vulnerable to cutbacks in
consumer spending.
- With the dramatic decline in interest rates increasing call risk,
management emphasized non-callable bonds and bonds with favorable call
characteristics. The calling of older, higher-coupon bonds has made call
protection an important consideration for investors.
FUND STATISTICS(1)
- Number of Issues: 91
- Effective Maturity: 10.0 years
- Average Rating: AAA
- Average Call: 8.7 years
- Average Dollar Price: $91.23
THE FUND
PERFORMANCE FOR THE PAST SIX MONTHS
- Based on share price (traded on the American Stock Exchange), the Fund had
a total return of -7.24% for the six months ended March 31, 2003. That
return was the result of a decrease in share price from $15.00 on
September 30, 2002 to $13.46 on March 31, 2003, and the reinvestment of
$0.450 in regular monthly dividends.(2)
- Based on net asset value, the Fund had a total return of -0.27% for the six
months ended March 31, 2003. That return was the result of a decrease in
net asset value from $14.76 on September 30, 2002 to $14.24 on March 31,
2003, and the reinvestment of all distributions.
- Based on the most recent dividend and a share price of $13.46, the Fund had
a market yield of 6.69% at March 31, 2003.(3) The Fund's market yield is
equivalent to a taxable yield of 12.01%.(4)
RATING DISTRIBUTION(1)
By total investments
[CHART]
A 2.0%
AA 11.3%
AAA 86.7%
FUND INFORMATION AS OF MARCH 31, 2003
PERFORMANCE(5)
AVERAGE ANNUAL TOTAL RETURNS (BY SHARE PRICE, AMERICAN STOCK EXCHANGE)
---------------------------------------------------------------------------
Life of Fund (8/30/02) -2.87%
AVERAGE ANNUAL TOTAL RETURNS (BY NET ASSET VALUE)
---------------------------------------------------------------------------
Life of Fund (8/30/02) 2.76%
[CHART]
5 LARGEST CATEGORIES(1)
By net assets applicable to common shares
Insured - General Obligations* 26.0%
Insured - Lease Revenue/COPs* 23.0%
Insured - Transportation* 20.1%
Insured - Water & Sewer* 18.8%
Insured - Special Tax Revenue* 17.7%
-------------------------------------------------------------------------------
(1) Fund Statistics, Rating Distribution and Five Largest Categories are
subject to change. Rating Distribution is determined by dividing the
total market value of the issues by the total investments of the Fund.
(2) A portion of the Fund's income may be subject to federal and state income
tax.
(3) The Fund's market yield is calculated by dividing the most recent
dividend per share by the share price at the end of the period and
annualizing the result.
(4) Taxable-equivalent yield assumes maximum 44.31% combined federal and
state income tax rate. A lower rate would result in a lower
tax-equivalent figure.
(5) Returns are historical and are calculated by determining the percentage
change in share price or net asset value with all distributions
reinvested.
* Private insurance does not remove the risk of loss of principal associated
with insured investments due to changes in market conditions.
Past performance is no guarantee of future results. Investment
return and share price will fluctuate so that shares, when sold, may be
worth more or less than their original cost.
5
EATON VANCE INSURED NEW YORK MUNICIPAL BOND FUND AS OF MARCH 31, 2003
INVESTMENT UPDATE
[Thomas J. Fetter Photo]
Thomas J. Fetter
Portfolio Manager
MANAGEMENT UPDATE
- The New York economy has yet to regain its pre-September 11 level of
employment. The key financial services sector remained under pressure, as
the equity markets experienced continued volatility and underwriting was
below the pace of previous years. The state's March 2003 jobless rate was
6.1%, up from 6.0% a year ago.
- Insured* transportation bonds represented the Fund's largest sector
weighting at March 31, 2003. Investments included bonds for tunnel and
bridge authorities, thruways and port facilities, which are among New York
State's most frequent and well-regarded issuers.
- The Fund had large investments in insured* education bonds. These
issues, which financed the construction of classroom and dormitories for
colleges and universities throughout the state are typically less
vulnerable to an economic slowdown than cyclical bonds.
- Insured* hospital bonds constituted a major focus for the Fund. In the
competitive New York hospital sector, the Fund emphasized institutions
with sound financial structures, good management and highly marketable
specialities.
- The Fund has made diversification a primary goal in its first months of
operation. Management also established good call protection in order to
protect against untimely calls and improve the Fund's performance
potential.
FUND STATISTICS(1)
- Number of Issues: 65
- Effective Maturity: 11.7 years
- Average Rating: AAA
- Average Call: 9.6 years
- Average Dollar Price: $99.52
THE FUND
PERFORMANCE FOR THE PAST SIX MONTHS
- Based on share price (traded on the American Stock Exchange), the Fund
had a total return of -6.40% for the six months ended March 31, 2003. That
return was the result of a decrease in share price from $15.06 on September
30, 2002 to $13.65 on March 31, 2003, and the reinvestment of $0.450 in
regular monthly dividends.(2)
- Based on net asset value, the Fund had a total return of 1.37% for the
six months ended March 31, 2003. That return was the result of a decrease
in net asset value from $14.69 on September 30, 2002 to $14.42 on March 31,
2003, and the reinvestment of all distributions.
- Based on the most recent dividend and a share price of $13.65, the Fund
had a market yield of 6.59% at March 31, 2003.(3) The Fund's market yield is
equivalent to a taxable yield of 11.52%.(4)
[CHART]
RATING DISTRIBUTION(1)
By total investments
A 2.5%
AA 12.7%
AAA 84.8%
FUND INFORMATION
AS OF MARCH 31, 2003
PERFORMANCE(5)
AVERAGE ANNUAL TOTAL RETURNS (BY SHARE PRICE, AMERICAN STOCK EXCHANGE)
---------------------------------------------------------------------------
Life of Fund (8/30/02) -1.60%
AVERAGE ANNUAL TOTAL RETURNS (BY NET ASSET VALUE)
---------------------------------------------------------------------------
Life of Fund (8/30/02) 3.95%
[CHART]
5 LARGEST CATEGORIES(1)
By net assets applicable to common shares
Insured - Transportation* 51.2%
Insured - Education* 32.4%
Insured - Hospital* 22.0%
Water & Sewer* 11.6%
Insured - Special Tax Revenue* 9.5%
-------------------------------------------------------------------------------
(1) Fund Statistics, Rating Distribution and Five Largest Categories are
subject to change. Rating Distribution is determined by dividing the
total market value of the issues by the total investments of the Fund.
(2) A portion of the Fund's income may be subject to federal and state
income tax.
(3) The Fund's market yield is calculated by dividing the most recent
dividend per share by the share price at the end of the period and
annualizing the result.
(4) Taxable-equivalent yield assumes maximum 42.81% combined federal and
state income tax rate. A lower rate would result in a lower
tax-equivalent figure.
(5) Returns are historical and are calculated by determining the percentage
change in share price or net asset value with all distributions
reinvested.
* Private insurance does not remove the risk of loss of principal
associated with insured investments due to changes in market conditions.
Past performance is no guarantee of future results. Investment return
and share price will fluctuate so that shares, when sold, may be worth
more or less than their original cost.
6
INSURED MUNICIPAL BOND FUND AS OF MARCH 31, 2003
PORTFOLIO OF INVESTMENTS (UNAUDITED)
TAX-EXEMPT INVESTMENTS -- 162.5%
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
---------------------------------------------------------------------------
Education -- 5.3%
---------------------------------------------------------------------------
$ 22,000 Massachusetts HEFA, (Harvard
University), 5.125%, 7/15/37 $ 22,583,880
25,940 North Carolina Capital Facilities
Finance Agency, (Duke University),
5.125%, 7/1/42 26,549,331
---------------------------------------------------------------------------
$ 49,133,211
---------------------------------------------------------------------------
Electric Utilities -- 1.4%
---------------------------------------------------------------------------
$ 13,500 Salt River, AZ, Agricultural
Improvements and Power District,
4.75%, 1/1/32 $ 13,446,540
---------------------------------------------------------------------------
$ 13,446,540
---------------------------------------------------------------------------
General Obligations -- 6.8%
---------------------------------------------------------------------------
$ 15,000 California, 5.25%, 4/1/30 $ 15,274,500
2,615 Frisco, TX, Independent School District,
0.00%, 8/15/27 697,080
3,610 Frisco, TX, Independent School District,
(PSF), 0.00%, 8/15/28 908,132
45,500 New York City, NY, 5.25%, 1/15/33 46,386,340
---------------------------------------------------------------------------
$ 63,266,052
---------------------------------------------------------------------------
Hospital -- 1.2%
---------------------------------------------------------------------------
$ 6,500 Cuyahoga County, OH, (Cleveland Clinic
Health System), 5.50%, 1/1/29(1) $ 6,477,185
4,500 South Miami, FL, Health Facility
Authority, (Baptist Health),
5.25%, 11/15/33 4,462,470
---------------------------------------------------------------------------
$ 10,939,655
---------------------------------------------------------------------------
Insured-Education -- 4.6%
---------------------------------------------------------------------------
$ 2,000 Cincinnati, OH, Technical and Community
College, (AMBAC), 5.00%, 10/1/28 $ 2,040,960
40,440 University of California, (FGIC),
5.00%, 9/1/27 40,893,332
---------------------------------------------------------------------------
$ 42,934,292
---------------------------------------------------------------------------
Insured-Electric Utilities -- 10.8%
---------------------------------------------------------------------------
$ 21,355 Chelan County, WA, Public Utility
District No. 1, (Columbia River),
(MBIA), 0.00%, 6/1/27 $ 5,746,844
10,000 Forsyth, MT, PCR, (Puget Sound Energy),
(AMBAC), 5.00%, 3/1/31 10,206,400
60,755 South Carolina Public Service Authority,
(FSA), 5.125%, 1/1/37 61,960,379
18,990 Southern Minnesota Municipal Power
Agency, (MBIA), 0.00%, 1/1/21 8,253,624
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
---------------------------------------------------------------------------
Insured-Electric Utilities (continued)
---------------------------------------------------------------------------
$ 10,650 Southern Minnesota Municipal Power
Agency, (MBIA), 0.00%, 1/1/22 $ 4,352,229
23,745 Southern Minnesota Municipal Power
Agency, (MBIA), 0.00%, 1/1/24 8,573,607
6,000 Westmoreland County, PA, Municipal
Authority, (MBIA), 0.00%, 8/15/23 2,108,400
---------------------------------------------------------------------------
$ 101,201,483
---------------------------------------------------------------------------
Insured-General Obligations -- 26.5%
---------------------------------------------------------------------------
$ 60,000 California, (XLCA), 5.00%, 10/1/28 $ 60,838,200
19,130 Chicago, IL, (MBIA), 5.00%, 1/1/41 19,112,400
15,530 Chicago, IL, Board of Education,
(Chicago School Reform), (FGIC),
0.00%, 12/1/30 3,424,210
41,300 Chicago, IL, Board of Education,
(Chicago School Reform), (FGIC),
0.00%, 12/1/21 15,841,028
23,800 Chicago, IL, Board of Education, (FGIC),
0.00%, 12/1/20 9,759,666
36,135 Chicago, IL, Board of Education, (FGIC),
0.00%, 12/1/30 8,006,071
10,000 Chicago, IL, Board of Education, (FGIC),
0.00%, 12/1/31 2,095,300
19,000 Chicago, IL, Board of Education, (FGIC),
0.00%, 12/1/29 4,424,720
10,500 Chicago, IL, Board of Education, (FGIC),
0.00%, 12/1/29 2,456,685
10,000 Chicago, IL, Board of Education, (FSA),
5.00%, 12/1/31 10,115,000
10,000 Detroit, MI, School District, (FGIC),
5.00%, 5/1/32 10,186,000
14,375 Detroit, MI, School District, (FGIC),
5.25%, 5/1/28 15,021,156
3,300 Grand Rapids and Kent County, MI, Joint
Building Authority, (MBIA),
0.00%, 12/1/30 782,529
11,140 Grand Rapids and Kent County, MI, Joint
Building Authority, (MBIA),
0.00%, 12/1/30 2,504,161
20,425 Kane Cook and Du Page Counties, IL,
School District No. 46, (AMBAC),
0.00%, 1/1/21 8,183,276
50,650 Kane Cook and Du Page Counties, IL,
School District No. 46, (AMBAC),
0.00%, 1/1/22 18,994,256
10,000 King County, WA, (MBIA), 5.25%, 1/1/34 10,259,000
1,000 Trotwood-Madison City School District,
OH, (School Improvements), (FGIC),
5.00%, 12/1/30 1,021,080
19,945 Washington, (Motor Vehicle Fuel),
(MBIA), 0.00%, 6/1/22 7,300,468
20,495 Washington, (Motor Vehicle Fuel),
(MBIA), 0.00%, 6/1/23 6,984,286
20,830 Washington, (Motor Vehicle Fuel),
(MBIA), 0.00%, 6/1/24 6,633,105
21,300 Washington, (Motor Vehicle Fuel),
(MBIA), 0.00%, 6/1/25 6,374,664
SEE NOTES TO FINANCIAL STATEMENTS
7
INSURED MUNICIPAL BOND FUND AS OF MARCH 31, 2003
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
---------------------------------------------------------------------------
Insured-General Obligations (continued)
---------------------------------------------------------------------------
$ 21,125 Washington, (Motor Vehicle Fuel),
(MBIA), 0.00%, 6/1/26 $ 5,951,124
21,070 Washington, (Motor Vehicle Fuel),
(MBIA), 0.00%, 6/1/27 5,615,787
21,510 Washington, (Motor Vehicle Fuel),
(MBIA), 0.00%, 6/1/28 5,418,584
---------------------------------------------------------------------------
$ 247,302,756
---------------------------------------------------------------------------
Insured-Hospital -- 2.5%
---------------------------------------------------------------------------
$ 5,000 California Health Facilities Financing
Authority, (Sutter Health), (MBIA),
5.00%, 8/15/38 $ 5,032,000
11,700 Maryland HEFA, (Medlantic/Helix Issue),
(AMBAC), 5.25%, 8/15/38 12,414,987
6,000 Maryland HEFA, (Medlantic/Helix Issue),
(FSA), 5.25%, 8/15/38 6,366,660
---------------------------------------------------------------------------
$ 23,813,647
---------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 5.9%
---------------------------------------------------------------------------
$ 12,010 Anaheim, CA, Public Financing Authority
Lease Revenue, (FSA), 5.00%, 3/1/37 $ 12,130,941
42,795 San Jose, CA, Financing Authority,
(Civic Center), (AMBAC), 5.00%, 6/1/37 43,395,414
---------------------------------------------------------------------------
$ 55,526,355
---------------------------------------------------------------------------
Insured-Special Tax Revenue -- 7.8%
---------------------------------------------------------------------------
$ 10,000 Arizona Tourism and Sports Authority,
(Multipurpose Stadium Facility), (MBIA),
5.00%, 7/1/24 $ 10,269,800
5,305 Arizona Tourism and Sports Authority,
(Multipurpose Stadium Facility), (MBIA),
5.00%, 7/1/25 5,435,079
3,000 Dade County, FL, Convention Center
Special Tax, (AMBAC), 5.00%, 10/1/35 3,037,380
18,980 Houston, TX, Hotel Occupancy Tax,
(AMBAC), 0.00%, 9/1/24 6,025,391
20,000 Metropolitan Pier and Exposition
Authority, (McCormick Place Expansion),
IL, (MBIA), 0.00%, 6/15/32 4,104,000
10,500 Reno, NV, Sales and Room Tax, (AMBAC),
5.125%, 6/1/37 10,669,785
33,000 Utah Transportation Authority Sales Tax,
(FSA), 5.00%, 6/15/32 33,492,030
---------------------------------------------------------------------------
$ 73,033,465
---------------------------------------------------------------------------
Insured-Transportation -- 36.5%
---------------------------------------------------------------------------
$ 6,000 Cleveland, OH, Airport System, (FSA),
5.00%, 1/1/31 $ 6,090,060
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
---------------------------------------------------------------------------
Insured-Transportation (continued)
---------------------------------------------------------------------------
$ 10,200 E-470 Public Highway Authority, CO,
(MBIA), 0.00%, 9/1/21 $ 3,948,624
15,000 Los Angeles County, CA, Metropolitan
Transportation Authority, (AMBAC),
5.00%, 7/1/25 15,089,100
28,810 Massachusetts Turnpike Authority,
(AMBAC), 5.00%, 1/1/39 28,963,557
9,985 Massachusetts Turnpike Authority,
Metropolitan Highway System, (MBIA),
5.125%, 1/1/37 10,109,114
5,600 Metropolitan Transportation Authority,
NY, (FGIC), 5.00%, 11/15/25 5,704,664
10,000 Metropolitan Transportation Authority,
NY, (FSA), 5.00%, 11/15/30 10,156,000
24,400 Metropolitan Transportation Authority,
NY, (FSA), 5.00%, 11/15/32 24,780,640
20,000 Metropolitan Transportation Authority,
NY, (MBIA), 5.00%, 11/15/30 20,312,000
8,000 Metropolitan Transportation Authority,
NY, (MBIA), 5.00%, 11/15/31 8,124,800
20,000 Nevada Department of Business and
Industry, (Las Vegas Monorail -1st
Tier), (AMBAC), 5.375%, 1/1/40 20,620,000
10,070 Nevada Department of Business and
Industry, (Las Vegas Monorail), (AMBAC),
0.00%, 1/1/23 3,549,574
3,100 Nevada Department of Business and
Industry, (Las Vegas Monorail), (AMBAC),
0.00%, 1/1/28 812,324
17,500 Northwest Parkway Public Highway
Authority, CO, (FSA), 5.25%, 6/15/41 18,092,550
75,000 San Joaquin Hills, CA, Transportation
Corridor Agency, (MBIA), 0.00%, 1/15/31 16,854,750
45,020 San Joaquin Hills, CA, Transportation
Corridor Agency, (MBIA), 0.00%, 1/15/26 13,352,482
119,000 San Joaquin Hills, CA, Transportation
Corridor Agency, (MBIA), 0.00%, 1/15/34 22,755,180
87,045 San Joaquin Hills, CA, Transportation
Corridor Agency, (Toll Road Bonds),
(MBIA), 0.00%, 1/15/25 27,289,478
40,165 Texas Turnpike Authority, (AMBAC),
0.00%, 8/15/20 16,688,557
62,400 Texas Turnpike Authority, (AMBAC),
5.00%, 8/15/42 62,419,344
5,000 Triborough Bridge and Tunnel Authority,
NY, (MBIA), 5.00%, 11/15/32 5,078,000
---------------------------------------------------------------------------
$ 340,790,798
---------------------------------------------------------------------------
Insured-Utilities -- 10.0%
---------------------------------------------------------------------------
$ 5,000 Illinois Development Finance Authority,
(Peoples Gas, Light and Coke), (AMBAC),
5.00%, 2/1/33 $ 5,059,750
67,000 Los Angeles, CA, Department of Water and
Power, (FGIC), 5.00%, 7/1/43 67,548,060
SEE NOTES TO FINANCIAL STATEMENTS
8
INSURED MUNICIPAL BOND FUND AS OF MARCH 31, 2003
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
---------------------------------------------------------------------------
Insured-Utilities (continued)
---------------------------------------------------------------------------
$ 15,000 Philadelphia, PA, Gas Works Revenue,
(FSA), 5.00%, 7/1/26 $ 15,282,150
5,700 Philadelphia, PA, Gas Works Revenue,
(FSA), 5.00%, 8/1/32 5,789,319
---------------------------------------------------------------------------
$ 93,679,279
---------------------------------------------------------------------------
Insured-Water and Sewer -- 34.5%
---------------------------------------------------------------------------
$ 5,300 Arkansas Community Water System, Public
Water Authority, (MBIA), 5.00%, 10/1/42 $ 5,341,870
30,000 Atlanta, GA, Water and Wastewater,
(MBIA), 5.00%, 11/1/39(2) 30,236,400
5,000 Atlanta, GA, Water and Wastewater,
(MBIA), 5.00%, 11/1/33 5,089,300
12,530 Baltimore, MD, (Water Projects), (FGIC),
5.125%, 7/1/42 12,788,995
33,825 Birmingham, AL, Waterworks and Sewer
Board, (MBIA), 5.00%, 1/1/37(3) 33,991,081
30,365 Birmingham, AL, Waterworks and Sewer
Board, (MBIA), 5.00%, 1/1/43 30,397,491
13,670 Chicago, IL, Wastewater Transmission,
(MBIA), 0.00%, 1/1/23 4,827,834
8,000 Chicago, IL, Water Revenue, (AMBAC),
5.00%, 11/1/26 8,114,000
26,000 East Bay, CA, Municipal Utility District
Water System, (MBIA), 5.00%, 6/1/38 26,271,180
42,070 Jefferson County, AL, Sewer, (FGIC),
5.00%, 2/1/41 42,113,753
16,850 Jefferson County, AL, Sewer, (FGIC),
5.00%, 2/1/27 17,168,633
25,000 Jefferson County, AL, Sewer, (FGIC),
5.00%, 2/1/32 25,399,250
20,000 Jefferson County, AL, Sewer, (FGIC),
5.00%, 2/1/33 20,276,800
19,000 King County, WA, Sewer, (FGIC),
5.00%, 1/1/31 19,260,680
10,000 New York City, NY, Municipal Water
Finance Authority, (Water and Sewer
System), (MBIA), 5.125%, 6/15/34 10,282,300
26,560 Passaic Valley, NJ, Sewer Commissioners,
(FGIC), 2.50%, 12/1/32 16,810,621
20,000 Pittsburgh, PA, Water and Sewer
Authority, (FGIC), 0.00%, 9/1/26 5,718,200
8,500 San Antonio, TX, Water System, (FSA),
5.00%, 5/15/28 8,601,405
---------------------------------------------------------------------------
$ 322,689,793
---------------------------------------------------------------------------
Other Revenue -- 2.0%
---------------------------------------------------------------------------
$ 9,415 Tobacco Settlement Financing Corp., NJ,
6.125%, 6/1/42 $ 7,749,204
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
---------------------------------------------------------------------------
Other Revenue (continued)
---------------------------------------------------------------------------
$ 11,750 Tobacco Settlement Financing Corp., NJ,
6.75%, 6/1/39 $ 10,608,605
---------------------------------------------------------------------------
$ 18,357,809
---------------------------------------------------------------------------
Special Tax Revenue -- 1.6%
---------------------------------------------------------------------------
$ 15,000 New York, NY, Transitional Finance
Authority, 5.00%, 2/1/31 $ 15,155,850
---------------------------------------------------------------------------
$ 15,155,850
---------------------------------------------------------------------------
Transportation -- 4.4%
---------------------------------------------------------------------------
$ 30,790 Triborough Bridge and Tunnel Authority,
NY, 5.00%, 1/1/32 $ 31,124,687
10,000 Triborough Bridge and Tunnel Authority,
NY, 5.25%, 11/15/30 10,391,600
---------------------------------------------------------------------------
$ 41,516,287
---------------------------------------------------------------------------
Water and Sewer -- 0.7%
---------------------------------------------------------------------------
$ 6,000 JEA, FL, Water and Sewer, 5.25%, 10/1/37 $ 6,074,460
---------------------------------------------------------------------------
$ 6,074,460
---------------------------------------------------------------------------
Total Tax-Exempt Investments -- 162.5%
(identified cost $1,494,227,988) $1,518,861,732
---------------------------------------------------------------------------
Other Assets, Less Liabilities -- 0.9% $ 8,113,420
---------------------------------------------------------------------------
Auction Preferred Shares Plus Cumulative Unpaid Dividends
-- (63.4)% $ (592,632,025)
---------------------------------------------------------------------------
Net Assets Applicable to Common Shares -- 100.0%
$ 934,343,127
---------------------------------------------------------------------------
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
March 31, 2003, 85.6% 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 4.0% to 26.7% of total investments.
(1) When-issued security.
(2) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
(3) Security (or a portion thereof) has been segregated to cover when-
issued securities.
SEE NOTES TO FINANCIAL STATEMENTS
9
INSURED CALIFORNIA MUNICIPAL BOND FUND AS OF MARCH 31, 2003
PORTFOLIO OF INVESTMENTS (UNAUDITED)
TAX-EXEMPT INVESTMENTS -- 162.5%
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
--------------------------------------------------------------------------
Escrowed / Prerefunded -- 8.1%
--------------------------------------------------------------------------
$ 5,110 Foothill/Eastern, Transportation
Corridor Agency, Escrowed to Maturity,
0.00%, 1/1/30 $ 1,295,998
18,790 Foothill/Eastern, Transportation
Corridor Agency, Escrowed to Maturity,
0.00%, 1/1/21 7,936,332
20,000 Foothill/Eastern, Transportation
Corridor Agency, Escrowed to Maturity,
0.00%, 1/1/23 7,447,400
9,175 San Joaquin Hills, Transportation
Corridor Agency, Escrowed to Maturity,
0.00%, 1/1/22 3,631,281
13,400 San Joaquin Hills, Transportation
Corridor Agency, Escrowed to Maturity,
0.00%, 1/1/24 4,688,928
--------------------------------------------------------------------------
$ 24,999,939
--------------------------------------------------------------------------
General Obligations -- 3.2%
--------------------------------------------------------------------------
$ 3,000 California, 5.00%, 2/1/21 $ 3,045,210
6,750 California, 5.25%, 4/1/30 6,873,525
--------------------------------------------------------------------------
$ 9,918,735
--------------------------------------------------------------------------
Insured-Education -- 13.0%
--------------------------------------------------------------------------
$ 1,835 California University, (AMBAC),
5.00%, 11/1/33 $ 1,870,617
22,500 University of California, (FGIC),
5.00%, 9/1/27 22,752,225
15,000 University of California, (FGIC),
5.125%, 9/1/30 15,401,550
--------------------------------------------------------------------------
$ 40,024,392
--------------------------------------------------------------------------
Insured-Electric Utilities -- 1.7%
--------------------------------------------------------------------------
$ 4,000 Sacramento, Municipal Electric Utility
District, (FSA), 5.00%, 8/15/28 $ 4,079,280
1,000 Southern California Public Power
Authority, (Magnolia Power), (MBIA),
5.00%, 7/1/25 1,021,250
--------------------------------------------------------------------------
$ 5,100,530
--------------------------------------------------------------------------
Insured-Escrowed / Prerefunded -- 1.0%
--------------------------------------------------------------------------
$ 7,540 Foothill/Eastern, Transportation
Corridor Agency, (FSA), Escrowed to
Maturity, 0.00%, 1/1/21 $ 3,184,670
--------------------------------------------------------------------------
$ 3,184,670
--------------------------------------------------------------------------
Insured-General Obligations -- 26.0%
--------------------------------------------------------------------------
$ 2,840 Azusa Unified School District, (FSA),
0.00%, 7/1/25 $ 868,756
2,160 Azusa Unified School District, (FSA),
0.00%, 7/1/26 625,082
3,290 Azusa Unified School District, (FSA),
0.00%, 7/1/27 899,453
6,030 Burbank Unified School District, (FGIC),
0.00%, 8/1/21 2,371,780
7,705 California, (AMBAC), 5.00%, 4/1/27(1) 7,812,639
2,180 Ceres Unified School District, (FGIC),
0.00%, 8/1/25 663,919
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
--------------------------------------------------------------------------
Insured-General Obligations (continued)
--------------------------------------------------------------------------
$ 6,980 Chaffey Joint Union High School
District, (FSA), 5.00%, 5/1/27 $ 7,130,628
2,900 Folsom Cordova Unified School District,
(MBIA), 0.00%, 10/1/22 1,056,673
1,465 Folsom Cordova Unified School District,
(MBIA), 0.00%, 10/1/23 500,825
3,100 Folsom Cordova Unified School District,
(MBIA), 0.00%, 10/1/23 1,059,766
1,505 Folsom Cordova Unified School District,
(MBIA), 0.00%, 10/1/25 454,299
1,835 Huntington Beach City School District,
(FGIC), 0.00%, 8/1/24 593,090
2,060 Huntington Beach City School District,
(FGIC), 0.00%, 8/1/25 627,373
2,140 Huntington Beach City School District,
(FGIC), 0.00%, 8/1/26 616,555
2,000 Jurupa Unified School District, (FGIC),
0.00%, 8/1/23 689,720
2,875 Jurupa Unified School District, (FGIC),
0.00%, 8/1/24 929,229
3,825 Jurupa Unified School District, (FGIC),
0.00%, 8/1/25 1,164,904
2,000 Jurupa Unified School District, (FGIC),
0.00%, 8/1/26 576,220
2,235 Kings Canyon Joint Unified School
District, (FGIC), 0.00%, 8/1/25 680,669
3,580 Modesto High School District, Stanislaus
County, (FGIC), 0.00%, 8/1/25 1,090,289
3,720 Orchard School District, (FGIC),
0.00%, 8/1/21 1,463,188
5,000 Riverside Unified School District,
(FGIC), 5.00%, 2/1/27 5,106,450
12,000 San Diego Unified School District,
(FGIC), 0.00%, 7/1/20 5,072,160
10,000 San Diego Unified School District,
(FGIC), 0.00%, 7/1/22 3,691,100
10,000 San Diego Unified School District,
(FGIC), 0.00%, 7/1/23 3,463,600
1,550 San Diego Unified School District,
(FGIC), 5.00%, 7/1/27 1,580,953
7,100 San Jose Evergreen Community College
District, (MBIA), 5.00%, 9/1/26 7,258,898
8,000 San Juan Unified School District, (FSA),
0.00%, 8/1/21 3,146,640
3,735 San Mateo County Community College
District, (FGIC), 0.00%, 9/1/20 1,565,600
5,000 San Mateo County Community College
District, (FGIC), 0.00%, 9/1/22 1,829,700
4,365 San Mateo County Community College
District, (FGIC), 0.00%, 9/1/23 1,498,766
3,955 San Mateo County Community College
District, (FGIC), 0.00%, 9/1/25 1,199,156
SEE NOTES TO FINANCIAL STATEMENTS
10
INSURED CALIFORNIA MUNICIPAL BOND FUND AS OF MARCH 31, 2003
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
--------------------------------------------------------------------------
Insured-General Obligations (continued)
--------------------------------------------------------------------------
$ 5,240 San Mateo Union High School District,
(FGIC), 0.00%, 9/1/21 $ 2,052,298
2,740 Santa Ana Unified School District,
(MBIA), 5.00%, 8/1/32 2,792,005
1,000 Union Elementary School District,
(FGIC), 0.00%, 9/1/21 392,020
3,825 Union Elementary School District,
(FGIC), 0.00%, 9/1/24 1,230,847
3,000 Ventura County Community College
District, (MBIA), 5.00%, 8/1/27 3,065,160
1,985 Victor Elementary School District,
(FGIC), 0.00%, 8/1/25 604,532
2,500 West Contra Costa Unified School
District, (FGIC), 5.00%, 8/1/31 2,538,925
--------------------------------------------------------------------------
$ 79,963,867
--------------------------------------------------------------------------
Insured-Hospital -- 6.8%
--------------------------------------------------------------------------
$20,860 California Health Facilities Financing
Authority, (Sutter Health), (MBIA),
5.00%, 8/15/38 $ 20,993,504
--------------------------------------------------------------------------
$ 20,993,504
--------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 23.0%
--------------------------------------------------------------------------
$ 2,000 Anaheim, Public Financing Authority
Lease Revenue, (FSA), 0.00%, 9/1/30 $ 457,300
5,000 Anaheim, Public Financing Authority
Lease Revenue, (FSA), 0.00%, 9/1/35 865,050
8,545 Anaheim, Public Financing Authority
Lease Revenue, (FSA), 0.00%, 9/1/29 2,061,908
30,000 Anaheim, Public Financing Authority
Lease Revenue, (FSA), 5.00%, 3/1/37 30,302,100
1,000 California Public Works Board Lease
Revenue, (Department of General
Services), (AMBAC), 5.00%, 12/1/27 1,018,050
3,750 Orange County Water District, (MBIA),
5.00%, 8/15/34 3,818,813
6,000 Sacramento Financing Authority, (City
Hall Redevelopment), (FSA),
5.00%, 12/1/28 6,121,800
15,000 San Jose Financing Authority, (Civic
Center), (AMBAC), 5.00%, 6/1/37 15,210,450
5,850 Shasta Joint Powers Financing Authority,
(County Administration Building),
(MBIA), 5.00%, 4/1/29 5,949,041
5,000 Shasta Joint Powers Financing Authority,
(County Administration Building),
(MBIA), 5.00%, 4/1/33 5,080,650
--------------------------------------------------------------------------
$ 70,885,162
--------------------------------------------------------------------------
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
--------------------------------------------------------------------------
Insured-Special Tax Revenue -- 17.7%
--------------------------------------------------------------------------
$ 7,000 Manteca Redevelopment Agency, (FSA),
5.00%, 10/1/32 $ 7,156,800
3,675 Manteca Redevelopment Agency, (FSA),
5.00%, 10/1/25 3,767,169
1,800 Murrieta Redevelopment Agency Tax,
(MBIA), 5.00%, 8/1/32 1,839,762
2,500 North City, School Facility Financing
Authority, (AMBAC), 0.00%, 9/1/26 707,325
7,000 Pomona Public Financing Authority,
(MBIA), 5.00%, 2/1/33 7,101,500
1,425 San Francisco, Bay Area Rapid
Transportation District, (AMBAC),
5.00%, 7/1/28 1,445,221
7,000 San Francisco, Bay Area Rapid
Transportation District, (AMBAC),
5.125%, 7/1/36 7,150,080
13,000 Tustin Unified School District, (FSA),
5.00%, 9/1/32 13,219,180
12,000 Tustin Unified School District, (FSA),
5.00%, 9/1/38 12,165,960
--------------------------------------------------------------------------
$ 54,552,997
--------------------------------------------------------------------------
Insured-Transportation -- 20.1%
--------------------------------------------------------------------------
$ 4,000 Alameda Corridor Transportation
Authority, (MBIA), 4.75%, 1/1/25 $ 4,004,160
37,400 Los Angeles County, Metropolitan
Transportation Authority, (AMBAC),
5.00%, 7/1/25 37,622,156
13,940 Sacramento County, Airport System,
(FSA), 5.00%, 7/1/27 14,197,472
3,445 San Joaquin Hills, Transportation
Corridor Agency, (MBIA), 0.00%, 1/15/30 819,049
5,000 San Joaquin Hills, Transportation
Corridor Agency, (MBIA), 0.00%, 1/15/31 1,123,650
4,045 Santa Clara Valley Transportation
Authority, (MBIA), 5.00%, 6/1/26 4,119,388
--------------------------------------------------------------------------
$ 61,885,875
--------------------------------------------------------------------------
Insured-Utilities -- 4.9%
--------------------------------------------------------------------------
$15,000 Los Angeles Department of Water and
Power, (MBIA), 5.125%, 7/1/41 $ 15,239,850
--------------------------------------------------------------------------
$ 15,239,850
--------------------------------------------------------------------------
Insured-Water and Sewer -- 18.8%
--------------------------------------------------------------------------
$ 8,180 California Water Resource, (Central
Valley), (FGIC), 5.00%, 12/1/29 $ 8,346,054
5,500 Contra Costa Water District, (FSA),
4.50%, 10/1/31 5,257,560
7,620 East Bay Municipal Utility District
Water System, (MBIA), 5.00%, 6/1/38 7,699,477
2,000 East Bay Municipal Utility District
Water System, (MBIA), 5.00%, 6/1/26 2,036,780
23,115 East Bay Municipal Utility District
Water System, (MBIA), 5.00%, 6/1/38 23,356,089
SEE NOTES TO FINANCIAL STATEMENTS
11
INSURED CALIFORNIA MUNICIPAL BOND FUND AS OF MARCH 31, 2003
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
--------------------------------------------------------------------------
Insured-Water and Sewer (continued)
--------------------------------------------------------------------------
$ 4,000 East Bay, Municipal Utility District
Water System, (MBIA), 4.75%, 6/1/34 $ 3,986,840
3,350 Long Beach Water Revenue, (MBIA),
5.00%, 5/1/24 3,427,218
3,750 San Diego, (Water Utility Fund), (FGIC),
4.75%, 8/1/28 3,747,038
--------------------------------------------------------------------------
$ 57,857,056
--------------------------------------------------------------------------
Utilities -- 1.6%
--------------------------------------------------------------------------
$ 4,750 Los Angeles, Department of Water and
Power, 5.00%, 7/1/24 $ 4,817,070
--------------------------------------------------------------------------
$ 4,817,070
--------------------------------------------------------------------------
Water and Sewer -- 16.6%
--------------------------------------------------------------------------
$ 7,500 California Water Resource, (Central
Valley), 4.75%, 12/1/24 $ 7,501,350
4,970 California Water Resource, (Central
Valley), 5.00%, 12/1/29 5,030,038
38,180 Southern California Metropolitan Water
District, 5.00%, 7/1/37 38,571,345
--------------------------------------------------------------------------
$ 51,102,733
--------------------------------------------------------------------------
Total Tax-Exempt Investments -- 162.5%
(identified cost $496,274,803) $ 500,526,380
--------------------------------------------------------------------------
Other Assets, Less Liabilities -- 0.8% $ 2,454,368
--------------------------------------------------------------------------
Auction Preferred Shares Plus Cumulative Unpaid Dividends
-- (63.3)% $(195,024,576)
--------------------------------------------------------------------------
Net Assets Applicable to Common Shares-- 100.0%
$ 307,956,172
--------------------------------------------------------------------------
The Fund invests primarily in debt securities issued by California
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 March 31, 2003, 81.9% 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 0.6% to 25.5% of
total investments.
(1) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
SEE NOTES TO FINANCIAL STATEMENTS
12
INSURED NEW YORK MUNICIPAL BOND FUND AS OF MARCH 31, 2003
PORTFOLIO OF INVESTMENTS (UNAUDITED)
TAX-EXEMPT INVESTMENTS -- 161.3%
PRINCIPAL
AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Education -- 0.5%
-------------------------------------------------------------------------
$ 1,000 New York Dormitory Authority,
(University Dormitory Facility),
5.00%, 7/1/32 $ 1,009,140
-------------------------------------------------------------------------
$ 1,009,140
-------------------------------------------------------------------------
General Obligations -- 4.1%
-------------------------------------------------------------------------
$ 3,075 New York City, 5.25%, 6/1/27 $ 3,131,887
3,000 New York City, 5.25%, 1/15/28 3,058,440
3,000 New York City, 5.25%, 1/15/33 3,058,440
-------------------------------------------------------------------------
$ 9,248,767
-------------------------------------------------------------------------
Hospital -- 4.4%
-------------------------------------------------------------------------
$10,000 New York Dormitory Authority, (North
General Hospital), 5.00%, 2/15/25 $ 10,005,600
-------------------------------------------------------------------------
$ 10,005,600
-------------------------------------------------------------------------
Insured-Education -- 32.4%
-------------------------------------------------------------------------
$ 8,000 New York City Industrial Development
Agency, (New York University), (AMBAC),
5.00%, 7/1/41 $ 8,072,080
5,900 New York Dormitory Authority, (Fordham
University), (FGIC), 5.00%, 7/1/27 5,993,456
5,000 New York Dormitory Authority, (Fordham
University), (MBIA), 5.00%, 7/1/28 5,063,300
10,000 New York Dormitory Authority, (New York
Medical College), (MBIA), 5.00%, 7/1/21 10,321,300
1,000 New York Dormitory Authority, (New York
University), (AMBAC), 5.00%, 7/1/31 1,013,760
5,020 New York Dormitory Authority, (New York
University), (AMBAC), 5.00%, 7/1/41 5,065,230
3,000 New York Dormitory Authority, (New York
University), (AMBAC), 5.50%, 7/1/40 3,433,920
7,585 New York Dormitory Authority, (Rochester
Institute of Technology), (AMBAC),
5.25%, 7/1/32 7,897,350
2,070 New York Dormitory Authority,
(Rockefeller University), (MBIA),
4.75%, 7/1/37 2,052,881
1,750 New York Dormitory Authority, (School
Districts Financing Program), (MBIA),
5.00%, 10/1/30 1,777,125
7,000 New York Dormitory Authority, (St. John
University), (MBIA), 4.75%, 7/1/28 6,953,660
335 New York Dormitory Authority, (State
University), (MBIA), 4.75%, 5/15/28 375,361
275 New York Dormitory Authority, (State
University), (MBIA), 4.75%, 5/15/28 273,190
2,000 New York Dormitory Authority,
(University Dormitory Facility), (XLCA),
5.00%, 7/1/24 2,033,180
PRINCIPAL
AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Insured-Education (continued)
-------------------------------------------------------------------------
$13,000 New York Dormitory Authority,
(University Educational Facility),
(MBIA), 4.75%, 5/15/25 $ 12,972,830
-------------------------------------------------------------------------
$ 73,298,623
-------------------------------------------------------------------------
Insured-Electric Utilities -- 3.1%
-------------------------------------------------------------------------
$ 5,000 Long Island Power Authority Electric
System Revenue, (FSA), 0.00%, 6/1/22 $ 1,978,850
4,000 Long Island Power Authority, (FSA),
0.00%, 6/1/20 1,797,280
6,250 Long Island Power Authority, (FSA),
0.00%, 6/1/26 1,957,250
4,785 Long Island Power Authority, (FSA),
0.00%, 6/1/28 1,345,638
-------------------------------------------------------------------------
$ 7,079,018
-------------------------------------------------------------------------
Insured-General Obligations -- 4.8%
-------------------------------------------------------------------------
$ 575 Cattaraugus County, (MBIA),
4.75%, 9/15/27 $ 570,302
575 Cattaraugus County, (MBIA),
4.75%, 9/15/28 570,205
575 Cattaraugus County, (MBIA),
4.75%, 9/15/29 570,107
3,400 Patchogue-Medford Union Free School
District, (FGIC), 4.50%, 10/1/27 3,270,562
3,625 Sachem Central School District, (MBIA),
5.00%, 6/15/26 3,719,504
2,005 Sachem Central School District, (MBIA),
5.00%, 6/15/27 2,054,002
-------------------------------------------------------------------------
$ 10,754,682
-------------------------------------------------------------------------
Insured-Hospital -- 22.0%
-------------------------------------------------------------------------
$17,500 New York City Health and Hospital Corp.,
(Health Systems), (AMBAC),
5.00%, 2/15/23 $ 17,930,850
10,600 New York Dormitory Authority, (Hospital
Surgery), (AMBAC), 5.00%, 2/1/38 10,681,620
2,965 New York Dormitory Authority, (Mental
Health Services Facility Improvements),
(FSA), 5.25%, 8/15/30 3,057,063
7,000 New York Dormitory Authority, (Municipal
Health Facilities Improvement), (FSA),
4.75%, 1/15/29 6,932,730
11,000 New York Dormitory Authority, (New York
Presbyterian Hospital), (AMBAC),
5.00%, 8/1/32 11,116,600
-------------------------------------------------------------------------
$ 49,718,863
-------------------------------------------------------------------------
Insured-Lease Revenue / Certificates of Participation -- 1.4%
-------------------------------------------------------------------------
$ 3,150 New York Urban Development Corp.,
(Personal Income Tax), (FGIC),
5.00%, 3/15/33 $ 3,200,558
-------------------------------------------------------------------------
$ 3,200,558
-------------------------------------------------------------------------
Insured-Solid Waste -- 2.2%
-------------------------------------------------------------------------
$ 1,710 Ulster County Resource Recovery Agency,
Solid Waste System, (AMBAC),
0.00%, 3/1/19 $ 810,643
SEE NOTES TO FINANCIAL STATEMENTS
13
INSURED NEW YORK MUNICIPAL BOND FUND AS OF MARCH 31, 2003
PORTFOLIO OF INVESTMENTS (UNAUDITED) CONT'D
PRINCIPAL
AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Insured-Solid Waste (continued)
-------------------------------------------------------------------------
$ 1,645 Ulster County Resource Recovery Agency,
Solid Waste System, (AMBAC),
0.00%, 3/1/20 $ 734,328
1,790 Ulster County Resource Recovery Agency,
Solid Waste System, (AMBAC),
0.00%, 3/1/21 749,956
1,240 Ulster County Resource Recovery Agency,
Solid Waste System, (AMBAC),
0.00%, 3/1/22 486,750
1,090 Ulster County Resource Recovery Agency,
Solid Waste System, (AMBAC),
0.00%, 3/1/23 401,730
1,490 Ulster County Resource Recovery Agency,
Solid Waste System, (AMBAC),
0.00%, 3/1/24 515,957
3,735 Ulster County Resource Recovery Agency,
Solid Waste System, (AMBAC),
0.00%, 3/1/25 1,221,569
-------------------------------------------------------------------------
$ 4,920,933
-------------------------------------------------------------------------
Insured-Special Tax Revenue -- 9.5%
-------------------------------------------------------------------------
$ 9,000 New York City Transitional Finance
Authority, (Future Tax), (MBIA),
5.00%, 5/1/31 $ 9,126,270
12,000 New York Urban Development Corp.,
(Personal Income Tax), (MBIA),
5.125%, 3/15/27 12,338,040
-------------------------------------------------------------------------
$ 21,464,310
-------------------------------------------------------------------------
Insured-Transportation -- 51.2%
-------------------------------------------------------------------------
$37,750 Metropolitan Transportation Authority,
(FSA), 5.00%, 11/15/30 $ 38,338,900
22,060 Metropolitan Transportation Authority,
(FSA), 5.00%, 11/15/32(1) 22,404,136
5,000 New York Thruway Authority, (FGIC),
5.00%, 1/1/25 5,061,000
8,900 Port Authority of New York and New
Jersey, (FSA), 4.75%, 11/1/29 8,927,234
5,775 Port Authority of New York and New
Jersey, (MBIA), 5.125%, 10/15/30 5,919,895
10,000 Triborough Bridge and Tunnel Authority,
(FGIC), 5.00%, 1/1/32 10,144,400
24,600 Triborough Bridge and Tunnel Authority,
(MBIA), 5.00%, 11/15/32 24,983,760
-------------------------------------------------------------------------
$ 115,779,325
-------------------------------------------------------------------------
Insured-Water and Sewer -- 7.0%
-------------------------------------------------------------------------
$ 1,650 Buffalo Municipal Water Finance
Authority, (FGIC), 5.00%, 7/1/28 $ 1,670,889
1,000 Buffalo Municipal Water Finance
Authority, (FSA), 5.125%, 7/1/32 1,028,870
1,920 Clifton Park Water Authority, (FGIC),
5.00%, 10/1/26 1,927,373
11,000 New York City Municipal Water Finance
Authority, Water and Sewer, (MBIA),
5.125%, 6/15/34 11,310,530
-------------------------------------------------------------------------
$ 15,937,662
-------------------------------------------------------------------------
PRINCIPAL
AMOUNT
(000'S OMITTED) SECURITY VALUE
-------------------------------------------------------------------------
Special Tax Revenue -- 2.4%
-------------------------------------------------------------------------
$ 1,925 New York City Transitional Finance
Authority, 5.00%, 8/1/24 $ 1,954,279
3,500 New York City Transitional Finance
Authority, 5.00%, 2/1/31 3,536,365
-------------------------------------------------------------------------
$ 5,490,644
-------------------------------------------------------------------------
Transportation -- 4.7%
-------------------------------------------------------------------------
$ 5,000 Metropolitan Transportation Authority,
5.125%, 1/1/29 $ 5,103,000
3,000 New York Thruway Authority,
5.25%, 1/1/21 3,106,740
2,450 Triborough Bridge and Tunnel Authority,
5.00%, 1/1/32 2,476,632
-------------------------------------------------------------------------
$ 10,686,372
-------------------------------------------------------------------------
Water and Sewer -- 11.6%
-------------------------------------------------------------------------
$ 8,090 New York City Municipal Water Finance
Authority, Water and Sewer,
5.00%, 6/15/28 $ 8,172,680
1,000 New York City Municipal Water Finance
Authority, Water and Sewer,
5.125%, 6/15/31 1,021,420
9,750 New York City Municipal Water Finance
Authority, Water and Sewer,
5.125%, 6/15/32 9,958,845
7,000 New York Environmental Facility Corp.,
Clean Water, 5.00%, 6/15/28 7,118,300
-------------------------------------------------------------------------
$ 26,271,245
-------------------------------------------------------------------------
Total Tax-Exempt Investments -- 161.3%
(identified cost $358,256,362) $ 364,865,742
-------------------------------------------------------------------------
Other Assets, Less Liabilities -- 1.7% $ 3,837,440
-------------------------------------------------------------------------
Auction Preferred Shares Plus Cumulative Unpaid Dividends
-- (63.0)% $(142,509,760)
-------------------------------------------------------------------------
Net Assets Applicable to Common Shares -- 100.0%
$ 226,193,422
-------------------------------------------------------------------------
The Fund invests primarily in debt securities issued by New York
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 March 31, 2003, 82.8% of the securities in the
portfolio of investments are backed by bond insurance of various financial
institutions and financial guaranty assurance agencies. The aggregate
percentage insured by financial institutions ranged from 0.6% to 30.4% of
total investments.
(1) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
SEE NOTES TO FINANCIAL STATEMENTS
14
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
FINANCIAL STATEMENTS (UNAUDITED)
STATEMENTS OF ASSETS AND LIABILITIES
AS OF MARCH 31, 2003
INSURED MUNICIPAL FUND INSURED CALIFORNIA FUND INSURED NEW YORK FUND
------------------------------------------------------------------------------------------------------------
Assets
------------------------------------------------------------------------------------------------------------
Investments --
Identified cost $1,494,227,988 $496,274,803 $358,256,362
Unrealized appreciation 24,633,744 4,251,577 6,609,380
------------------------------------------------------------------------------------------------------------
INVESTMENTS, AT VALUE $1,518,861,732 $500,526,380 $364,865,742
------------------------------------------------------------------------------------------------------------
Cash $ -- $ -- $ 514,276
Receivable for investments sold 14,665,958 2,466,273 1,797,759
Interest receivable 16,769,283 5,123,413 4,999,733
Prepaid expenses 291,637 5,098 6,651
------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $1,550,588,610 $508,121,164 $372,184,161
------------------------------------------------------------------------------------------------------------
Liabilities
------------------------------------------------------------------------------------------------------------
Payable for investments purchased $ 15,300,300 $ 3,671,454 $ 3,268,601
Payable for daily variation margin
on open financial futures
contracts 787,875 309,375 188,719
Payable for when-issued securities 6,365,656 -- --
Due to bank 1,051,388 1,104,533 --
Payable to affiliate for Trustees'
fees 1,047 -- 112
Accrued expenses 107,192 55,054 23,547
------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 23,613,458 $ 5,140,416 $ 3,480,979
------------------------------------------------------------------------------------------------------------
Auction preferred shares at
liquidation value plus cumulative
unpaid dividends 592,632,025 195,024,576 142,509,760
------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON
SHARES $ 934,343,127 $307,956,172 $226,193,422
------------------------------------------------------------------------------------------------------------
Sources of Net Assets
------------------------------------------------------------------------------------------------------------
Common Shares, $0.01 par value,
unlimited number of
shares authorized $ 646,067 $ 216,282 $ 156,884
Additional paid-in capital 911,980,601 305,169,971 221,222,189
Accumulated net realized loss
(computed on the basis of
identified cost) (4,844,377) (2,590,014) (1,738,864)
Accumulated undistributed net
investment income 2,576,110 476,407 99,291
Net unrealized appreciation
(computed on the basis of
identified cost) 23,984,726 4,683,526 6,453,922
------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON
SHARES $ 934,343,127 $307,956,172 $226,193,422
------------------------------------------------------------------------------------------------------------
Auction Preferred Shares Issued and Outstanding
(Liquidation preference of $25,000 per share)
------------------------------------------------------------------------------------------------------------
23,700 7,800 5,700
------------------------------------------------------------------------------------------------------------
Common Shares Outstanding
------------------------------------------------------------------------------------------------------------
64,606,667 21,628,202 15,688,357
------------------------------------------------------------------------------------------------------------
Net Asset Value Per Common Share
------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON
SHARES DIVIDED BY COMMON SHARES
ISSUED AND OUTSTANDING $ 14.46 $ 14.24 $ 14.42
------------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
15
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
FINANCIAL STATEMENTS (UNAUDITED) CONT'D
STATEMENTS OF OPERATIONS
FOR THE SIX MONTHS ENDED MARCH 31, 2003
INSURED MUNICIPAL FUND INSURED CALIFORNIA FUND INSURED NEW YORK FUND
------------------------------------------------------------------------------------------------------
Investment Income
------------------------------------------------------------------------------------------------------
Interest $35,463,719 $11,468,593 $ 8,170,516
------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME $35,463,719 $11,468,593 $ 8,170,516
------------------------------------------------------------------------------------------------------
Expenses
------------------------------------------------------------------------------------------------------
Investment adviser fee $ 4,568,203 $ 1,504,492 $ 1,103,445
Trustees fees and expenses 10,428 6,796 5,096
Legal and accounting services 43,917 32,015 17,221
Printing and postage 23,709 9,715 4,550
Custodian fee 171,992 106,824 71,298
Transfer and dividend
disbursing agent 26,817 25,176 25,148
Preferred shares remarketing
agent fee 600,617 203,014 148,357
Miscellaneous 48,846 12,978 2,397
------------------------------------------------------------------------------------------------------
TOTAL EXPENSES $ 5,494,529 $ 1,901,010 $ 1,377,512
------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ 147,517 $ 89,981 $ 71,298
Preliminary reduction of
investment adviser fee 2,248,962 780,079 590,365
------------------------------------------------------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 2,396,479 $ 870,060 $ 661,663
------------------------------------------------------------------------------------------------------
NET EXPENSES $ 3,098,050 $ 1,030,950 $ 715,849
------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $32,365,669 $10,437,643 $ 7,454,667
------------------------------------------------------------------------------------------------------
Realized and Unrealized Gain (Loss)
------------------------------------------------------------------------------------------------------
Net realized gain (loss) --
Investment transactions
(identified cost basis) $(4,844,377) $(2,590,014) $(1,729,400)
------------------------------------------------------------------------------------------------------
NET REALIZED LOSS $(4,844,377) $(2,590,014) $(1,729,400)
------------------------------------------------------------------------------------------------------
Change in unrealized
appreciation (depreciation)
--
Investments (identified
cost basis) $(4,182,561) $(4,710,896) $ 1,154,198
Financial futures contracts (649,018) 431,949 (155,458)
------------------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED
APPRECIATION (DEPRECIATION) $(4,831,579) $(4,278,947) $ 998,740
------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED
LOSS $(9,675,956) $(6,868,961) $ (730,660)
------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED
SHAREHOLDERS $(2,833,873) $ (853,755) $ (697,978)
------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
FROM OPERATIONS $19,855,840 $ 2,714,927 $ 6,026,029
------------------------------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
16
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
FINANCIAL STATEMENTS (UNAUDITED) CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED MARCH 31, 2003
INCREASE (DECREASE) IN NET ASSETS INSURED MUNICIPAL FUND INSURED CALIFORNIA FUND INSURED NEW YORK FUND
---------------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 32,365,669 $ 10,437,643 $ 7,454,667
Net realized loss (4,844,377) (2,590,014) (1,729,400)
Net change in unrealized
appreciation (depreciation) (4,831,579) (4,278,947) 998,740
Distributions to preferred
shareholders (2,833,873) (853,755) (697,978)
---------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 19,855,840 $ 2,714,927 $ 6,026,029
---------------------------------------------------------------------------------------------------------
Distributions to common
shareholders --
From net investment income $(29,315,277) $ (9,731,900) $ (7,056,786)
---------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON
SHAREHOLDERS $(29,315,277) $ (9,731,900) $ (7,056,786)
---------------------------------------------------------------------------------------------------------
Capital share transactions --
Proceeds from sale of common
shares(1) $ 21,487,500 $ 7,377,375 $ 6,159,750
Reinvestment of distributions
to common shareholders -- 89,787 371,259
Offering costs and preferred
shares underwriting
discounts (12,303,952) (4,127,999) (3,046,141)
---------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
CAPITAL SHARE TRANSACTIONS $ 9,183,548 $ 3,339,163 $ 3,484,868
---------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET
ASSETS $ (275,889) $ (3,677,810) $ 2,454,111
---------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares
---------------------------------------------------------------------------------------------------------
At beginning of period $934,619,016 $311,633,982 $223,739,311
---------------------------------------------------------------------------------------------------------
AT END OF PERIOD $934,343,127 $307,956,172 $226,193,422
---------------------------------------------------------------------------------------------------------
Accumulated undistributed net investment income
included in net assets applicable to common shares
---------------------------------------------------------------------------------------------------------
AT END OF PERIOD $ 2,576,110 $ 476,407 $ 99,291
---------------------------------------------------------------------------------------------------------
(1) Proceeds from sale of shares net of sales load paid of $1,012,500,
$347,625 and $290,250 for Insured Municipal Fund, Insured California
Fund and Insured New York Fund, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
17
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
FINANCIAL STATEMENTS CONT'D
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE PERIOD ENDED SEPTEMBER 30, 2002(1)
INCREASE (DECREASE) IN NET ASSETS INSURED MUNICIPAL FUND INSURED CALIFORNIA FUND INSURED NEW YORK FUND
---------------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 2,359,591 $ 624,419 $ 399,388
Net realized loss -- -- (9,464)
Net change in unrealized
appreciation (depreciation) 28,816,305 8,962,473 5,455,182
---------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
OPERATIONS $ 31,175,896 $ 9,586,892 $ 5,845,106
---------------------------------------------------------------------------------------------------------
Capital share transactions --
Proceeds from sale of common
shares (2) $903,907,500 $302,257,500 $218,098,125
Offering costs (564,380) (310,410) (303,920)
---------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM
CAPITAL TRANSACTIONS $903,343,120 $301,947,090 $217,794,205
---------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $934,519,016 $311,533,982 $223,639,311
---------------------------------------------------------------------------------------------------------
Net Assets Applicable to Common Shares
---------------------------------------------------------------------------------------------------------
At beginning of period $ 100,000 $ 100,000 $ 100,000
---------------------------------------------------------------------------------------------------------
AT END OF PERIOD $934,619,016 $311,633,982 $223,739,311
---------------------------------------------------------------------------------------------------------
Accumulated undistributed net investment income
included in net assets applicable to common shares
---------------------------------------------------------------------------------------------------------
AT END OF PERIOD $ 2,359,591 $ 624,419 $ 399,388
---------------------------------------------------------------------------------------------------------
(1) For the period from the start of business, August 30, 2002, to September
30, 2002.
(2) Proceeds from sale of shares net of sales load paid of $42,592,500,
$14,242,500 and $10,276,875 for Insured Municipal Fund, Insured
California Fund and Insured New York Fund, respectively.
SEE NOTES TO FINANCIAL STATEMENTS
18
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
INSURED MUNICIPAL FUND
----------------------------------------------
SIX MONTHS ENDED PERIOD ENDED SEPTEMBER 30,
MARCH 31, 2003 --------------------------
(UNAUDITED)(1) 2002(1)(2)
--------------------------------------------------------------------------------
Net asset value -- Beginning
of period (Common shares) $ 14.810 $ 14.325(3)
--------------------------------------------------------------------------------
Income (loss) from operations
--------------------------------------------------------------------------------
Net investment income $ 0.502 $ 0.040
Net realized and unrealized
gain (loss) (0.163) 0.454
Distributions to preferred
shareholders (0.044) --
--------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 0.295 $ 0.494
--------------------------------------------------------------------------------
Less distributions to common shareholders
--------------------------------------------------------------------------------
From net investment income $ (0.454) $ --
--------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON
SHAREHOLDERS $ (0.454) $ --
--------------------------------------------------------------------------------
PREFERRED AND COMMON SHARES
OFFERING COSTS CHARGED TO
PAID-IN CAPITAL $ (0.007) $ (0.009)
--------------------------------------------------------------------------------
PREFERRED SHARES UNDERWRITING
DISCOUNTS $ (0.184) $ --
--------------------------------------------------------------------------------
NET ASSET VALUE -- END OF
PERIOD (COMMON SHARES) $ 14.460 $ 14.810
--------------------------------------------------------------------------------
MARKET VALUE -- END OF PERIOD
(COMMON SHARES) $ 13.830 $ 15.000
--------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON NET
ASSET VALUE 0.84%(5) 3.39%(4)
--------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON
MARKET VALUE (4.77)%(5) 4.71%(4)
--------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
19
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
INSURED MUNICIPAL FUND
----------------------------------------------
SIX MONTHS ENDED PERIOD ENDED SEPTEMBER 30,
MARCH 31, 2003 --------------------------
(UNAUDITED)(1) 2002(1)(2)
--------------------------------------------------------------------------------
Ratios/Supplemental Data+ ++
--------------------------------------------------------------------------------
Net assets applicable to
common shares, end of
period (000's omitted) $934,343 $934,619
Ratios (As a percentage of
average net assets
applicable to common
shares):
Net expenses(6) 0.71%(7) 0.48%(7)
Net expenses after
custodian fee
reduction(6) 0.68%(7) 0.46%(7)
Net investment income(6) 7.07%(7) 3.20%(7)
Portfolio Turnover 36% 0%
+ The operating expenses of the Fund reflect a reduction of the investment
adviser fee. Had such action not been taken, the ratios and net investment
income per share would have been as follows:
Ratios (As a percentage of
average net assets
applicable to common
shares):
Expenses(6) 1.20%(7) 0.80%(7)
Expenses after custodian
fee reduction(6) 1.17%(7) 0.78%(7)
Net investment income(6) 6.58%(7) 2.88%(7)
Net investment income per
share $ 0.467 $ 0.036
--------------------------------------------------------------------------------
++ The ratios reported above are based on net assets applicable solely to common
shares. The ratios based on net assets, including amounts related to
preferred shares, are as follows:
Ratios (As a percentage of
average total net assets):
Net expenses 0.46%(7)
Net expenses after
custodian fee reduction 0.44%(7)
Net investment income 4.58%(7)
--------------------------------------------------------------------------------
+ The operating expenses of the Fund reflect a reduction of the investment
advisor fee. Had such action not been taken, the ratios would have been as
follows:
Ratios (As a percentage of
average total net assets):
Expenses 0.78%(7)
Expenses after custodian
fee reduction 0.76%(7)
Net investment income 4.26%(7)
--------------------------------------------------------------------------------
Senior Securities:
Total preferred shares
outstanding 23,700
Asset coverage per
preferred share(8) $ 64,429
Involuntary liquidation
preference per preferred
share(9) $ 25,000
Approximate market value
per preferred share(9) $ 25,000
--------------------------------------------------------------------------------
(1) Computed using average common shares outstanding.
(2) For the period from the start of business, August 30, 2002, to September
30, 2002.
(3) Net asset value at beginning of period reflects the deduction of the
sales load of $0.675 per share paid by the shareholder from the $15.000
offering price.
(4) Total investment return on net asset value is calculated assuming a
purchase at the offering price of $15.000 less the sales load of $0.675
per share paid by the shareholder on the first day and a sale at the net
asset value on the last day of the period reported. Total investment
return on market value is calculated assuming a purchase at the offering
price of $15.000 less the sales load of $0.675 per share paid by the
shareholder on the first day and a sale at the current market price on
the last day of the period reported. Total investment return on net
asset value and total investment return on market value are not computed
on an annualized basis.
(5) Returns are historical and are calculated by determining the percentage
change in net asset value or market value with all distributions
reinvested. Total return is not computed on an annualized basis.
(6) Ratios do not reflect the effect of dividend payments to preferred
shareholders. Ratios to average net assets applicable to common shares
reflect the Fund's leveraged capital structure.
(7) Annualized.
(8) Calculated by subtracting the Fund's total liabilities (not including
the preferred shares) from the Fund's total assets, and dividing this by
the number of preferred shares outstanding.
(9) Plus accumulated and unpaid dividends.
SEE NOTES TO FINANCIAL STATEMENTS
20
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
INSURED CALIFORNIA FUND
----------------------------------------------
SIX MONTHS ENDED PERIOD ENDED SEPTEMBER 30,
MARCH 31, 2003 --------------------------
(UNAUDITED)(1) 2002(1)(2)
--------------------------------------------------------------------------------
Net asset value -- Beginning
of period (Common shares) $ 14.760 $ 14.325(3)
--------------------------------------------------------------------------------
Income (loss) from operations
--------------------------------------------------------------------------------
Net investment income $ 0.483 $ 0.031
Net realized and unrealized
gain (loss) (0.321) 0.420
Distributions to preferred
shareholders (0.040) --
--------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 0.122 $ 0.451
--------------------------------------------------------------------------------
Less distributions to common shareholders
--------------------------------------------------------------------------------
From net investment income $ (0.450) $ --
--------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON
SHAREHOLDERS $ (0.450) $ --
--------------------------------------------------------------------------------
PREFERRED AND COMMON SHARES
OFFERING COSTS CHARGED TO
PAID-IN CAPITAL $ (0.011) $ (0.016)
--------------------------------------------------------------------------------
PREFERRED SHARES UNDERWRITING
DISCOUNTS $ (0.181) $ --
--------------------------------------------------------------------------------
NET ASSET VALUE -- END OF
PERIOD (COMMON SHARES) $ 14.240 $ 14.760
--------------------------------------------------------------------------------
MARKET VALUE -- END OF PERIOD
(COMMON SHARES) $ 13.460 $ 15.000
--------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON NET
ASSET VALUE (0.27)%(5) 3.04%(4)
--------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON
MARKET VALUE (7.24)%(5) 4.71%(4)
--------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
21
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
INSURED CALIFORNIA FUND
----------------------------------------------
SIX MONTHS ENDED PERIOD ENDED SEPTEMBER 30,
MARCH 31, 2003 --------------------------
(UNAUDITED)(1) 2002(1)(2)
--------------------------------------------------------------------------------
Ratios/Supplemental Data+ ++
--------------------------------------------------------------------------------
Net assets applicable to
common shares, end of
period (000's omitted) $307,956 $311,634
Ratios (As a percentage of
average net assets
applicable to common
shares):
Net expenses(6) 0.74%(7) 0.61%(7)
Net expenses after
custodian fee
reduction(6) 0.68%(7) 0.59%(7)
Net investment income(6) 6.92%(7) 2.54%(7)
Portfolio Turnover 23% 0%
+ The operating expenses of the Fund reflect a reduction of the investment
adviser fee. Had such action not been taken, the ratios and net investment
income per share would have been as follows:
Ratios (As a percentage of
average net assets
applicable to common
shares):
Expenses(6) 1.26%(7) 0.93%(7)
Expenses after custodian
fee reduction(6) 1.20%(7) 0.91%(7)
Net investment income(6) 6.40%(7) 2.22%(7)
Net investment income per
share $ 0.447 $ 0.027
--------------------------------------------------------------------------------
++ The ratios reported above are based on net assets applicable solely to comon
shares. The ratios based on net assets, including amounts related to
preferred shares, are as follows:
Ratios (As a percentage of
average total net assets):
Net expenses 0.48%(7)
Net expenses after
custodian fee reduction 0.44%(7)
Net investment income 4.48%(7)
--------------------------------------------------------------------------------
+ The operating expenses of the Fund reflect a reduction of the investment
adviser fee. Had such action not been taken, the ratios would have been as
follows:
Ratios (As a percentage of
average total net assets):
Expenses 0.81%(7)
Expenses after custodian
fee reduction 0.77%(7)
Net investment income 4.15%(7)
--------------------------------------------------------------------------------
Senior Securities:
Total preferred shares
outstanding 7,800
Asset coverage per
preferred share(8) $ 64,485
Involuntary liquidation
preference per preferred
share(9) $ 25,000
Approximate market value
per preferred share(9) $ 25,000
--------------------------------------------------------------------------------
(1) Computed using average common shares outstanding.
(2) For the period from the start of business, August 30, 2002, to September
30, 2002.
(3) Net asset value at beginning of period reflects the deduction of the
sales load of $0.675 per share paid by the shareholder from the $15.000
offering price.
(4) Total investment return on net asset value is calculated assuming a
purchase at the offering price of $15.000 less the sales load of $0.675
per share paid by the shareholder on the first day and a sale at the net
asset value on the last day of the period reported. Total investment
return on market value is calculated assuming a purchase at the offering
price of $15.000 less the sales load of $0.675 per share paid by the
shareholder on the first day and a sale at the current market price on
the last day of the period reported. Total investment return on net
asset value and total investment return on market value are not computed
on an annualized basis.
(5) Returns are historical and are calculated by determining the percentage
change in net asset value or market value with all distributions
reinvested. Total return is not computed on an annualized basis.
(6) Ratios do not reflect the effect of dividend payments to preferred
shareholders. Ratios to average net assets applicable to common shares
reflect the Fund's leveraged capital structure.
(7) Annualized.
(8) Calculated by subtracting the Fund's total liabilities (not including
the preferred shares) from the Fund's total assets, and dividing this by
the number of preferred shares outstanding.
(9) Plus accumulated and unpaid dividends.
SEE NOTES TO FINANCIAL STATEMENTS
22
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
INSURED NEW YORK FUND
----------------------------------------------
SIX MONTHS ENDED PERIOD ENDED SEPTEMBER 30,
MARCH 31, 2003 --------------------------
(UNAUDITED)(1) 2002(1)(2)
--------------------------------------------------------------------------------
Net asset value -- Beginning
of period (Common shares) $ 14.690 $ 14.325(3)
--------------------------------------------------------------------------------
Income (loss) from operations
--------------------------------------------------------------------------------
Net investment income $ 0.476 $ 0.028
Net realized and unrealized
gain (loss) (0.056) 0.358
Distributions to preferred
shareholders (0.045) --
--------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 0.375 $ 0.386
--------------------------------------------------------------------------------
Less distributions to common shareholders
--------------------------------------------------------------------------------
From net investment income $ (0.450) $ --
--------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON
SHAREHOLDERS $ (0.450) $ --
--------------------------------------------------------------------------------
PREFERRED AND COMMON SHARES
OFFERING COSTS CHARGED TO
PAID-IN CAPITAL $ (0.013) $ (0.021)
--------------------------------------------------------------------------------
PREFERRED SHARES UNDERWRITING
DISCOUNTS $ (0.182) $ --
--------------------------------------------------------------------------------
NET ASSET VALUE -- END OF
PERIOD (COMMON SHARES) $ 14.420 $ 14.690
--------------------------------------------------------------------------------
MARKET VALUE -- END OF PERIOD
(COMMON SHARES) $ 13.650 $ 15.060
--------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON NET
ASSET VALUE 1.37%(5) 2.55%(4)
--------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON
MARKET VALUE (6.40)%(5) 5.13%(4)
--------------------------------------------------------------------------------
SEE NOTES TO FINANCIAL STATEMENTS
23
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
FINANCIAL STATEMENTS CONT'D
FINANCIAL HIGHLIGHTS
INSURED NEW YORK FUND
----------------------------------------------
SIX MONTHS ENDED PERIOD ENDED SEPTEMBER 30,
MARCH 31, 2003 --------------------------
(UNAUDITED)(1) 2002(1)(2)
--------------------------------------------------------------------------------
Ratios/Supplemental Data+ ++
--------------------------------------------------------------------------------
Net assets applicable to
common shares, end of
period (000's omitted) $226,193 $223,739
Ratios (As a percentage of
average net assets
applicable to common
shares):
Net expenses(6) 0.71%(7) 0.71%(7)
Net expenses after
custodian fee
reduction(6) 0.65%(7) 0.68%(7)
Net investment income(6) 6.72%(7) 2.26%(7)
Portfolio Turnover 42% 8%
+ The operating expenses of the Fund reflect a reduction of the investment
adviser fee. Had such action not been taken, the ratios and net investment
income per share would have been as follows:
Ratios (As a percentage of
average net assets
applicable to common
shares):
Expenses(6) 1.24%(7) 1.03%(7)
Expenses after custodian
fee reduction(6) 1.18%(7) 1.00%(7)
Net investment income(6) 6.19%(7) 1.94%(7)
Net investment income per
share $ 0.438 $ 0.024
--------------------------------------------------------------------------------
++ The ratios reported are based on net assets applicable solely to common
shares. The ratios based on net assets, including amounts related to
preferred shares, are as follows:
Ratios (As a percentage of
average total net assets):
Net expenses 0.46%(7)
Net expenses after
custodian fee reduction 0.42%(7)
Net investment income 4.36%(7)
--------------------------------------------------------------------------------
+ The operating expenses of the Fund reflect a reduction of the investment
adviser fee. Had such action not been taken, the ratios would have been as
follows:
Ratios (As a percentage of
average total net assets):
Expenses 0.81%(7)
Expenses after custodian
fee reduction 0.77%(7)
Net investment income 4.01%(7)
--------------------------------------------------------------------------------
Senior Securities:
Total preferred shares
outstanding 5,700
Asset coverage per
preferred share(8) $ 64,685
Involuntary liquidation
preference per preferred
share(9) $ 25,000
Approximate market value
per preferred share(9) $ 25,000
--------------------------------------------------------------------------------
(1) Computed using average common shares outstanding.
(2) For the period from the start of business, August 30, 2002, to September
30, 2002.
(3) Net asset value at beginning of period reflects the deduction of the
sales load of $0.675 per share paid by the shareholder from the $15.000
offering price.
(4) Total investment return on net asset value is calculated assuming a
purchase at the offering price of $15.000 less the sales load of $0.675
per share paid by the shareholder on the first day and a sale at the net
asset value on the last day of the period reported. Total investment
return on market value is calculated assuming a purchase at the offering
price of $15.000 less the sales load of $0.675 per share paid by the
shareholder on the first day and a sale at the current market price on
the last day of the period reported. Total investment return on net
asset value and total investment return on market value are not computed
on an annualized basis.
(5) Returns are historical and are calculated by determining the percentage
change in net asset value or market value with all distributions
reinvested. Total return is not computed on an annualized basis.
(6) Ratios do not reflect the effect of dividend payments to preferred
shareholders. Ratios to average net assets applicable to common shares
reflect the Fund's leveraged capital structure.
(7) Annualized.
(8) Calculated by subtracting the Fund's total liabilities (not including
the preferred shares) from the Fund's total assets, and dividing this by
the number of preferred shares outstanding.
(9) Plus accumulated and unpaid dividends.
SEE NOTES TO FINANCIAL STATEMENTS
24
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1 Significant Accounting Policies
-------------------------------------------
Eaton Vance Insured Municipal Bond Fund (Insured Municipal Fund), Eaton Vance
Insured California Municipal Bond Fund (Insured California Fund), and Eaton
Vance Insured New York Municipal Bond Fund (Insured New York Fund),
(individually referred to as the Fund or collectively the Funds) are
registered under the Investment Company Act of 1940, as amended, as non-
diversified, closed-end management investment companies. The Insured
Municipal Fund was organized under the laws of the Commonwealth of
Massachusetts by an Agreement and Declaration of Trust dated July 2, 2002.
The Insured California Fund and the Insured New York Fund were organized
under the laws of the Commonwealth of Massachusetts by an Agreement and
Declaration of Trust dated July 8, 2002. Each Fund's investment objective is
to achieve current income exempt from regular federal income tax, including
alternative minimum tax, and taxes in its specified state. Each Fund seeks to
achieve its objective by investing primarily in high grade municipal
obligations that are insured as to the timely payment of principal and
interest.
The following is a summary of significant accounting policies consistently
followed by each Fund in the preparation of its financial statements. The
policies are in conformity with accounting principles generally accepted in
the United States of America.
A Investment Valuation -- Municipal bonds are normally valued on the basis of
valuations furnished by a pricing service. Futures contracts listed on the
commodity exchanges are valued at closing settlement prices. Interest rate
swaps are normally valued on the basis of valuations furnished by a broker.
Short-term obligations, maturing in sixty days or less, are valued at
amortized cost, which approximates fair value. Investments for which
valuations or market quotations are unavailable are valued at fair value
using methods determined in good faith by or at the direction of the
Trustees.
B Investment Transactions -- Investment transactions are recorded on a trade
date basis. Realized gains and losses from such transactions are determined
using the specific identification method. Securities purchased or sold on a
when-issued or delayed delivery basis may be settled a month or more after
the transaction date. The securities so purchased are subject to market
fluctuations during this period. To the extent that when-issued or delayed
delivery purchases are outstanding, the Fund instructs the custodian to
segregate assets in a separate account, with a current value at least equal
to the amount of its purchase commitments.
C Income -- Interest income is determined on the basis of interest accrued,
adjusted for amortization of premium or discount.
D Federal Taxes -- Each 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, if any, and
tax-exempt income, including any net realized gain on investments. Therefore,
no provision for federal income or excise tax is necessary. At September 30,
2002, the Insured New York Fund, for federal income tax purposes, had a
capital loss carryover of $9,464 which will reduce the taxable income arising
from future net realized gain 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. Such capital loss carryover will
expire on September 30, 2010.
In addition, each Fund intends to satisfy conditions which will enable it to
designate distributions from the interest income generated by its investments
in municipal obligations, which are exempt from regular federal income taxes
when received by each Fund, as exempt-interest dividends.
E Offering Costs -- Costs incurred by the Funds in connection with the
offerings of the common shares and preferred shares were recorded as a
reduction of capital paid in excess of par applicable to common shares.
F Financial Futures Contracts -- Upon the entering of a financial futures
contract, a 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 a 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 a Fund. A 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, a Fund may not achieve the anticipated benefits of
the financial futures contracts and may realize a loss.
G Interest Rate Swaps -- The Funds may enter into interest rate swap agreements
to enhance return, to hedge against fluctuations in securities prices or
interest rates or as substitution for the purchase and sale of securities.
Pursuant to these agreements, the Funds make bi-annual payments at a fixed
interest rate. In exchange, the Funds
25
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
receive payments based on the interest rate of a benchmark industry index.
During the term of the outstanding swap agreement, changes in the underlying
value of the swap are recorded as unrealized gains and losses. The value of
the swap is determined by changes in the relationship between two rates of
interest. The Funds are exposed to credit loss in the event of
non-performance by the swap counterparty. However, the Funds do not
anticipate non-performance by the counterparty. Risk may also arise from the
unanticipated movements in value of interest rates.
H Use of Estimates -- The preparation of financial statements in conformity
with accounting principles generally accepted in the United States of America
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 Expense Reduction -- Investors Bank & Trust Company (IBT) serves as custodian
of the Funds. Pursuant to the respective custodian agreements, IBT receives a
fee reduced by credits which are determined based on the average daily cash
balances each Fund maintains with IBT. All significant credit balances used
to reduce the Funds' custodian fees are reported as a reduction of total
expenses in the Statement of Operations.
J Interim Financial Statements -- The interim financial statements relating to
March 31, 2003 and for the six months then ended have not been audited by
independent certified public accountants, but in the opinion of the Funds'
management reflect all adjustments, consisting only of normal recurring
adjustments, necessary for the fair presentation of the financial statements.
2 Auction Preferred Shares (APS)
-------------------------------------------
Each Fund issued Auction Preferred Shares on October 29, 2002 in a public
offering. The underwriting discounts and other offering costs were recorded
as a reduction of the capital of the common shares of each Fund. Dividends on
the APS, which accrue daily, are cumulative at a rate which was established
at the offering of each Fund's APS and have been reset every seven days
thereafter by an auction. Effective March 4, 2003, a special dividend period
of 364 days was set on the Series B shares of the Insured Municipal Fund. The
dividend rate, which matures on March 2, 2004 is 1.18%. Auction Preferred
Shares issued and outstanding as of March 31, 2003 and dividend rate ranges
for the six months ended March 31, 2003 are as indicated below:
PREFERRED SHARES DIVIDEND RATE
FUND ISSUED AND OUTSTANDING RANGES
--------------------------------------------------------------------------------
Insured Municipal Fund Series A 4,740 0.90% - 1.60%
Insured Municipal Fund Series B 4,740 0.90% - 1.55%
Insured Municipal Fund Series C 4,740 0.85% - 1.55%
Insured Municipal Fund Series D 4,740 0.95% - 1.55%
Insured Municipal Fund Series E 4,740 0.94% - 1.55%
Insured California Fund Series A 3,900 0.85% - 1.45%
Insured California Fund Series B 3,900 0.89% - 1.45%
Insured New York Fund Series A 2,850 0.89% - 1.65%
Insured New York Fund Series B 2,850 0.95% - 1.60%
The APS are redeemable at the option of each Fund at a redemption price equal
to $25,000 per share, plus accumulated and unpaid dividends on any dividend
payment date. The APS are also subject to mandatory redemption at a
redemption price equal to $25,000 per share, plus accumulated and unpaid
dividends, if any Fund is in default for an extended period on its asset
maintenance requirements with respect to the APS. If the dividends on the APS
shall remain unpaid in an amount equal to two full years' dividends, the
holders of the APS as a class have the right to elect a majority of the Board
of Trustees. In general, the holders of the APS and the Common Shares have
equal voting rights of one vote per share, except that the holders of the
APS, as a separate class, have the right to elect at least two members of the
Board of Trustees. The APS have a liquidation preference of $25,000 per
share, plus accumulated and unpaid dividends. Each Fund is required to
maintain certain asset coverage with respect to the APS as defined in each
Fund's By-Laws and the Investment Company Act of 1940. Each Fund pays an
annual fee equivalent to 0.25% of the preferred shares liquidation value for
the remarketing efforts associated with the preferred auction.
3 Distributions to Shareholders
-------------------------------------------
Each Fund intends to make monthly distributions of net investment income,
after payments of any dividends on any outstanding Auction Preferred Shares.
Distributions are recorded on the ex-dividend date. Distributions to
preferred shareholders are recorded daily and are payable at the end of each
dividend period. Each dividend payment period for the Auction Preferred
Shares is generally seven days. Effective March 4, 2003, the Series B shares
set a special dividend period of 364 days. The applicable
26
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
dividend rate for Auction Preferred Shares on March 31, 2003 are listed
below. For the six months ended March 31, 2003, the amount of dividends each
Fund paid to Auction Preferred shareholders and average APS dividend rates
for such period were as follows:
DIVIDENDS PAID TO AVERAGE APS
APS PREFERRED SHAREHOLDERS DIVIDEND RATES
DIVIDEND RATES FOR THE SIX MONTHS FOR THE SIX MONTHS
AS OF ENDED ENDED
FUND MARCH 31, 2003 MARCH 31, 2003 MARCH 31, 2003
----------------------------------------------------------------------------------------------------
Insured Municipal Fund Series A 0.90% $568,705 1.16%
Insured Municipal Fund Series B 1.18% 573,744 1.18%
Insured Municipal Fund Series C 0.95% 550,873 1.12%
Insured Municipal Fund Series D 0.95% 571,669 1.17%
Insured Municipal Fund Series E 1.00% 568,882 1.15%
Insured California Fund Series A 0.90% 420,902 1.02%
Insured California Fund Series B 0.95% 432,853 1.06%
Insured New York Fund Series A 0.89% 349,096 1.17%
Insured New York Fund Series B 1.00% 348,882 1.16%
The Funds distinguish between distributions on a tax basis and a financial
reporting basis. Accounting principles generally accepted in the United
States of America require that only distributions in excess of tax basis
earnings and profits be reported in the financial statements as a return of
capital. Permanent differences between book and tax accounting relating to
distributions are reclassified to paid in capital. These differences relate
primarily to the method for amortizing premiums.
4 Investment Adviser Fee and Other Transactions with Affiliates
-------------------------------------------
The investment adviser fee, computed at an annual rate of 0.65% of each
Fund's average weekly gross assets, was earned by Eaton Vance Management
(EVM) as compensation for investment advisory services rendered to each Fund.
Except for Trustees of each Fund who are not members of EVM's organization,
officers and Trustees receive remuneration for their services to each Fund
out of such investment adviser fee. For the six months ended March 31, 2003,
the fee was equivalent to 0.65% (annualized) of each Fund's average weekly
gross assets and amounted to $4,568,203, $1,504,492, and $1,103,445 for
Insured Municipal Fund, Insured California Fund and Insured New York Fund,
respectively. EVM also serves as the administrator of the Funds, but
currently receives no compensation for such service.
In addition, EVM has contractually agreed to reimburse the Fund for fees and
other expenses in the amount of 0.32% of average weekly gross assets of each
Fund during the first five full years of each Fund's operations, 0.24% of
average weekly gross assets of each Fund in year six, 0.16% in year seven and
0.08% in year eight. For the six months ended March 31, 2003, EVM
contractually waived $2,248,962, $740,673 and $543,234 of its investment
advisory fee for Insured Municipal Fund, Insured California Fund and Insured
New York Fund, respectively. In addition, EVM made a preliminary waiver of
$39,406 and $47,131 of its investment advisory fee for Insured California
Fund and Insured New York Fund, respectively, in order to enhance the net
investment income of each Fund.
Trustees of the Funds that are not affiliated with EVM 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
March 31, 2003, no significant amounts have been deferred.
Certain officers and one Trustee of each Fund are officers of the above
organization.
5 Investments
-------------------------------------------
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, for the six months ended March 31, 2003 were as
follows:
INSURED MUNICIPAL FUND
--------------------------------------------------------
Purchases $1,099,289,223
Sales 506,046,082
INSURED CALIFORNIA FUND
--------------------------------------------------------
Purchases $ 306,010,862
Sales 107,107,377
INSURED NEW YORK FUND
--------------------------------------------------------
Purchases $ 295,129,474
Sales 139,316,275
27
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
NOTES TO FINANCIAL STATEMENTS (UNAUDITED) CONT'D
6 Federal Income Tax Basis of Unrealized Appreciation (Depreciation)
-------------------------------------------
The cost and unrealized appreciation (depreciation) in value of the
investments owned by each Fund at March 31, 2003, as computed for federal
income tax purposes, were as follows:
INSURED MUNICIPAL FUND
--------------------------------------------------------
AGGREGATE COST $1,494,009,631
--------------------------------------------------------
Gross unrealized appreciation $ 31,474,170
Gross unrealized depreciation (6,622,069)
--------------------------------------------------------
NET UNREALIZED APPRECIATION $ 24,852,101
--------------------------------------------------------
INSURED CALIFORNIA FUND
--------------------------------------------------------
AGGREGATE COST $ 496,007,630
--------------------------------------------------------
Gross unrealized appreciation $ 6,438,280
Gross unrealized depreciation (1,919,530)
--------------------------------------------------------
NET UNREALIZED APPRECIATION $ 4,518,750
--------------------------------------------------------
INSURED NEW YORK FUND
--------------------------------------------------------
AGGREGATE COST $ 358,237,423
--------------------------------------------------------
Gross unrealized appreciation $ 6,821,013
Gross unrealized depreciation (192,694)
--------------------------------------------------------
NET UNREALIZED APPRECIATION $ 6,628,319
--------------------------------------------------------
7 Shares of Beneficial Interest
-------------------------------------------
Each Declaration of Trust permits the Trustees to issue an unlimited number
of full and fractional $0.01 par value common shares. Transactions in common
shares were as follows:
INSURED MUNICIPAL FUND
----------------------
SIX MONTHS ENDED
MARCH 31, 2003 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2002(1)
------------------------------------------------------------------------------------------
Sales 1,500,000 63,100,000
------------------------------------------------------------------------------------------
NET INCREASE 1,500,000 63,100,000
------------------------------------------------------------------------------------------
INSURED CALIFORNIA FUND
------------------------------------------------
SIX MONTHS ENDED
MARCH 31, 2003 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2002(1)
------------------------------------------------------------------------------------------
Sales 515,000 21,100,000
Shares issued pursuant to the Fund's
dividend reinvestment plan 6,535 --
------------------------------------------------------------------------------------------
NET INCREASE 521,535 21,100,000
------------------------------------------------------------------------------------------
INSURED NEW YORK FUND
------------------------------------------------
SIX MONTHS ENDED
MARCH 31, 2003 YEAR ENDED
(UNAUDITED) SEPTEMBER 30, 2002(1)
------------------------------------------------------------------------------------------
Sales 430,000 15,225,000
Shares issued pursuant to the Fund's
dividend reinvestment plan 26,690 --
------------------------------------------------------------------------------------------
NET INCREASE 456,690 15,225,000
------------------------------------------------------------------------------------------
(1) For the period from the start of business, August 30, 2002 to
September 30, 2002.
8 Financial Instruments
-------------------------------------------
Each Fund may trade 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 each Fund
has in particular classes of financial instruments and does not necessarily
represent the amounts potentially subject to risk. The measurement of the
risks associated with these instruments is meaningful only when all related
and offsetting transactions are considered.
A summary of obligations under these financial instruments at March 31, 2003
is as follows:
FUTURES CONTRACTS
------------------------------------------------------------------------------------------------
NET UNREALIZED
EXPIRATION APPRECIATION
FUND DATE CONTRACTS POSITION (DEPRECIATION)
------------------------------------------------------------------------------------------------
Insured Municipal 6/03 764 U.S. Treasury Bond Short $(649,018)
------------------------------------------------------------------------------------------------
Insured California 6/03 300 U.S. Treasury Bond Short $ 431,949
------------------------------------------------------------------------------------------------
Insured New York 6/03 183 U.S. Treasury Bond Short $(155,458)
At March 31, 2003, each Fund had sufficient cash and/or securities to cover
margin requirements on open futures contracts.
28
EATON VANCE INSURED MUNICIPAL BOND FUNDS
Dividend Reinvestment Plan
Each Fund offers a dividend reinvestment plan (the Plan) pursuant to which
shareholders may elect to have dividends and capital gains distributions
automatically reinvested in common shares (the Shares) of the same Fund. You may
elect to participate in the Plan by completing the Dividend Reinvestment Plan
Application Form. If you do not participate, you will receive all distributions
in cash paid by check mailed directly to you by PFPC Inc. as dividend paying
agent. On the distribution payment date, if the net asset value per Share is
equal to or less than the market price per Share plus estimated brokerage
commissions, then new Shares will be issued. The number of Shares shall be
determined by the greater of the net asset value per Share or 95% of the market
price. Otherwise, Shares generally will be purchased on the open market by the
Plan Agent. Distributions subject to income tax (if any) are taxable whether or
not shares are reinvested.
If your shares are in the name of a brokerage firm, bank, or other nominee, you
can ask the firm or nominee to participate in the Plan on your behalf. If the
nominee does not offer the Plan, you will need to request that your shares be
re-registered in your name with each Fund's transfer agent, PFPC Inc., or you
will not be able to participate.
The Plan Agent's service fee for handling distributions will be paid by each
Fund. Each participant will be charged their pro rata share of brokerage
commissions on all open-market purchases.
Plan participants may withdraw from the Plan at any time by writing to the Plan
Agent at the address noted on the following page. If you withdraw, you will
receive shares in your name for all Shares credited to your account under the
Plan. If a participant elects by written notice to the Plan Agent to have the
Plan Agent sell part or all of his or her Shares and remit the proceeds, the
Plan Agent is authorized to deduct a $5.00 fee plus brokerage commissions from
the proceeds.
If you wish to participate in the Plan and your shares are held in your own
name, you may complete the form on the following page and deliver it to the Plan
Agent.
Any inquiries regarding the Plan can be directed to the Plan Agent, PFPC Inc.,
at 1-800-331-1710.
29
EATON VANCE INSURED MUNICIPAL BOND FUNDS
Application for Participation in Dividend Reinvestment Plan
This form is for shareholders who hold their common shares in their own names.
If your common shares are held in the name of a brokerage firm, bank, or other
nominee, you should contact your nominee to see if it will participate in the
Plan on your behalf. If you wish to participate in the Plan, but your brokerage
firm, bank, or nominee is unable to participate on your behalf, you should
request that your common shares be re-registered in your own name which will
enable your participation in the Plan.
The following authorization and appointment is given with the understanding that
I may terminate it at any time by terminating my participation in the Plan as
provided in the terms and conditions of the Plan.
------------------------------------------------------
Please print exact name on account
------------------------------------------------------
Shareholder signature Date
------------------------------------------------------
Shareholder signature Date
Please sign exactly as your common shares are registered.
All persons whose names appear on the share certificate
must sign.
YOU SHOULD NOT RETURN THIS FORM IF YOU WISH TO RECEIVE YOUR DIVIDENDS AND
DISTRIBUTIONS IN CASH. THIS IS NOT A PROXY.
THIS AUTHORIZATION FORM, WHEN SIGNED, SHOULD BE MAILED TO THE FOLLOWING ADDRESS:
Eaton Vance Insured Municipal Bond Funds
c/o PFPC Inc.
P.O. Box 43027
Providence, RI 02940-3027
800-331-1710
--------------------------------------------------------------------------------
NUMBER OF EMPLOYEES
Each Fund is organized as a Massachusetts business trust and is registered under
the Investment Company Act of 1940, as amended, as a closed-end,
non-diversified, management investment company and has no employees.
NUMBER OF SHAREHOLDERS
As of March 31, 2003, our records indicate that there are 336, 86 and 73
registered shareholders for Insured Municipal Fund, Insured California Fund and
Insured New York Fund, respectively, and approximately 32,000, 8,100 and 7,600
shareholders owning the Fund shares in street name, such as through brokers,
banks, and financial intermediaries for Insured Municipal Fund, Insured
California Fund and Insured New York Fund, respectively.
If you are a street name shareholder and wish to receive Fund reports directly,
which contain important information about a Fund, please write or call:
Eaton Vance Distributors, Inc.
The Eaton Vance Building
255 State Street
Boston, MA 02109
1-800-225-6265
AMERICAN STOCK EXCHANGE SYMBOLS
Insured Municipal Fund EIM
Insured California Fund EVM
Insured New York Fund ENX
30
EATON VANCE INSURED MUNICIPAL BOND FUNDS AS OF MARCH 31, 2003
INVESTMENT MANAGEMENT
EATON VANCE INSURED MUNICIPAL BOND FUNDS
Officers
Thomas J. Fetter
President and Portfolio Manager
of Insured Municipal Bond Fund
and Insured New York Municipal
Bond Fund
James B. Hawkes
Vice President and Trustee
Cynthia J. Clemson
Vice President and Portfolio
Manager of Insured California
Municipal Bond Fund
Robert B. MacIntosh
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
President, Unicorn Corporation
Chairman, Hellman, Jordan Management Co., Inc.
Advisory Director of Berkshire Capital Corporation
Lynn A. Stout
Professor of Law,
UCLA School of Law
31
INVESTMENT ADVISER AND ADMINISTRATOR OF EATON VANCE INSURED MUNICIPAL BOND FUNDS
EATON VANCE MANAGEMENT
The Eaton Vance Building
255 State Street
Boston, MA 02109
CUSTODIAN
INVESTORS BANK & TRUST COMPANY
200 Clarendon Street
Boston, MA 02116
TRANSFER AGENT AND DIVIDEND DISBURSING AGENT
PFPC INC.
Attn: Eaton Vance Insured Municipal Bond Funds
P.O. Box 43027
Providence, RI 02940-3027
(800) 331-1710
EATON VANCE FUNDS
EATON VANCE MANAGEMENT
PRIVACY NOTICE
The Eaton Vance organization is committed to ensuring your financial privacy.
This notice is being sent to comply with privacy regulations of the
Securities and Exchange Commission. Each of the above financial institutions
has in effect the following policy with respect to nonpublic personal
information about its customers:
- Only such information received from you, through application forms or
otherwise, and information about your Eaton Vance fund transactions will
be collected.
- None of such information about you (or former customers) will be disclosed
to anyone, except as permitted by law (which includes disclosure to
employees necessary to service your account).
- Policies and procedures (including physical, electronic and procedural
safeguards) are in place that are designed to protect the confidentiality
of such information.
For more information about Eaton Vance's privacy policies,
call: 1-800-262-1122
Eaton Vance Insured Municipal Bond Funds
The Eaton Vance Building
255 State Street
Boston, MA 02109
1453-5/03 CE-IMBSRC