Eaton Vance Insured California Municipal Bond Fund
 
 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-Q
QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
811-21217
Investment Company Act File Number
Eaton Vance Insured California Municipal Bond Fund II
(Exact Name of Registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
(Address of Principal Executive Offices)
Maureen A. Gemma
Eaton Vance Management, 255 State Street, Boston, Massachusetts 02109
(Name and Address of Agent for Services)
(617) 482-8260
(Registrant’s Telephone Number, Including Area Code)
September 30
Date of Fiscal Year End
December 31, 2008
Date of Reporting Period
 
 

 

 

TABLE OF CONTENTS

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

 

 

Eaton Vance Insured California Municipal Bond Fund II   as of December 31, 2008
     
PORTFOLIO OF INVESTMENTS (Unaudited)    
Tax-Exempt Investments — 194.1%
                 
Principal Amount            
(000's omitted)     Security   Value  
 
Hospital — 14.8%
$ 1,445    
California Health Facilities Financing Authority, (Cedars-Sinai Medical Center), 5.00%, 11/15/34
   $ 1,073,505  
  2,940    
California Statewide Communities Development Authority, (Huntington Memorial Hospital), 5.00%, 7/1/35
     2,118,887  
  500    
California Statewide Communities Development Authority, (John Muir Health), 5.00%, 8/15/36
     367,190  
  1,900    
California Statewide Communities Development Authority, (Kaiser Permanente), 5.25%, 3/1/45
     1,377,633  
  555    
Washington Township Health Care District, 5.00%, 7/1/32
     399,212  
       
 
      
       
 
   $ 5,336,427  
       
 
      
Insured-Electric Utilities — 7.7%
$ 1,475    
Glendale Electric, (MBIA), 5.00%, 2/1/32
   $ 1,315,523  
  1,500    
Los Angeles Department of Water and Power, (AMBAC), (BHAC), 5.00%, 7/1/26(3)
     1,459,103  
       
 
      
       
 
   $ 2,774,626  
       
 
      
Insured-Escrowed/Prerefunded — 1.1%
$ 395    
Orange County Water District, Certificates of Participation, (MBIA), Escrowed to Maturity, 5.00%, 8/15/34
   $ 403,733  
       
 
      
       
 
   $ 403,733  
       
 
      
Insured-General Obligations — 64.7%
$ 740    
Antelope Valley Community College District, (Election of 2004), (MBIA), 5.25%, 8/1/39
   $ 711,458  
  8,680    
Arcadia Unified School District, (FSA), 0.00%, 8/1/38
     1,298,528  
  3,115    
Arcadia Unified School District, (FSA), 0.00%, 8/1/40
     408,595  
  3,270    
Arcadia Unified School District, (FSA), 0.00%, 8/1/41
     402,701  
  1,500    
Carlsbad Unified School District, (Election of 2006), (MBIA), 5.25%, 8/1/32
     1,474,050  
  19,350    
Chabot-Las Positas Community College District, (AMBAC), 0.00%, 8/1/43
     2,089,993  
  5,000    
Clovis Unified School District, (FGIC), 0.00%, 8/1/20
     3,200,450  
  6,675    
Coast Community College District, (Election of 2002), (FSA), 0.00%, 8/1/35
     1,282,668  
  1,080    
El Camino Hospital District, (MBIA), 4.45%, 8/1/36
     874,800  
  2,350    
Long Beach Unified School District, (Election of 1999), (FSA), 5.00%, 8/1/31(1)
     2,245,777  
  2,075    
Los Angeles Community College District, (Election of 2001), (FGIC), (FSA), 5.00%, 8/1/32
     1,967,598  
  1,845    
Los Osos Community Services, Wastewater Assessment District, (MBIA), 5.00%, 9/2/33
     1,295,854  
  1,000    
Mount Diablo Unified School District, (FSA), 5.00%, 8/1/25(2)
     994,390  
  4,300    
San Mateo County Community College District, (Election of 2001), (FGIC), 0.00%, 9/1/21
     2,142,260  
  1,600    
Santa Clara Unified School District, (Election of 2004), (FSA), 4.375%, 7/1/30
     1,351,792  
  3,200    
Union Elementary School District, (FGIC), 0.00%, 9/1/22
     1,542,816  
       
 
      
       
 
   $ 23,283,730  
       
 
      
Insured-Hospital — 7.2%
$ 1,250    
California Statewide Communities Development Authority, (Kaiser Permanente), (BHAC), 5.00%, 3/1/41(3)
   $ 1,126,694  
  1,750    
California Statewide Communities Development Authority, (Sutter Health), (FSA), 5.05%, 8/15/38(3)
     1,468,206  
       
 
      
       
 
   $ 2,594,900  
       
 
      

1

 

 

                 
Principal Amount            
(000’s omitted)     Security   Value  
 
Insured-Lease Revenue/Certificates of Participation — 17.6%
$ 4,250    
California Public Works Board, Lease Revenue, (Department of General Services), (AMBAC), 5.00%, 12/1/27
   $ 3,694,907  
  1,750    
San Diego County Water Authority, Certificates of Participation, (FSA), 5.00%, 5/1/38(3)
     1,642,559  
  1,075    
San Jose Financing Authority, (Civic Center), (AMBAC), 5.00%, 6/1/32
     1,010,038  
       
 
      
       
 
   $ 6,347,504  
       
 
      
Insured-Public Education — 15.1%
$ 4,000    
California State University, (AMBAC), 5.00%, 11/1/33
   $ 3,552,520  
  2,000    
California State University, (BHAC), (FSA), 5.00%, 11/1/39(3)
     1,878,410  
       
 
      
       
 
   $ 5,430,930  
       
 
      
Insured-Special Assessment Revenue — 16.9%
$ 2,500    
Cathedral City Public Financing Authority, (Housing Redevelopment), (MBIA), 5.00%, 8/1/33
   $ 2,000,950  
  2,500    
Cathedral City Public Financing Authority, (Tax Allocation Redevelopment), (MBIA), 5.00%, 8/1/33
     1,994,850  
  1,750    
Irvine Public Facility and Infrastructure Authority, (AMBAC), 5.00%, 9/2/26
     1,372,297  
  945    
Murrieta Redevelopment Agency Tax, (MBIA), 5.00%, 8/1/32
     717,170  
       
 
      
       
 
   $ 6,085,267  
       
 
      
Insured-Special Tax Revenue — 15.5%
$ 2,195    
Hesperia Public Financing Authority, (Redevelopment and Housing Project), (XLCA), 5.00%, 9/1/37
   $ 1,617,605  
  13,400    
Puerto Rico Sales Tax Financing, (AMBAC), 0.00%, 8/1/54
     492,316  
  2,325    
Puerto Rico Sales Tax Financing, (MBIA), 0.00%, 8/1/44
     199,601  
  4,610    
Puerto Rico Sales Tax Financing, (MBIA), 0.00%, 8/1/45
     367,832  
  2,905    
Puerto Rico Sales Tax Financing, (MBIA), 0.00%, 8/1/46
     214,738  
  245    
Sacramento Area Flood Control Agency, (BHAC), 5.50%, 10/1/28
     251,299  
  1,215    
Sacramento Area Flood Control Agency, (BHAC), 5.625%, 10/1/37
     1,237,247  
  260    
San Francisco Bay Area Rapid Transportation District, Sales Tax Revenue, (AMBAC), 5.00%, 7/1/31
     248,175  
  985    
San Francisco Bay Area Rapid Transportation District, Sales Tax Revenue, (AMBAC), 5.125%, 7/1/36
     942,349  
       
 
      
       
 
   $ 5,571,162  
       
 
      
Insured-Transportation — 6.4%
$ 2,000    
Puerto Rico Highway and Transportation Authority, (FGIC), 5.25%, 7/1/39
   $ 1,441,520  
  3,670    
San Joaquin Hills Transportation Corridor Agency, (MBIA), 0.00%, 1/15/27
     882,635  
       
 
      
       
 
   $ 2,324,155  
       
 
      
Insured-Water Revenue — 20.3%
$ 1,235    
Calleguas Las Virgines Public Financing Authority, (Municipal Water District), (BHAC), (FGIC), 4.75%, 7/1/37
   $ 1,089,579  
  2,500    
Contra Costa Water District, (FSA), 5.00%, 10/1/32(3)
     2,376,253  
  1,500    
Los Angeles Department of Water and Power, (MBIA), 3.00%, 7/1/30(3)
     959,610  
  1,750    
Los Angeles Department of Water and Power, (FGIC), 5.125%, 7/1/41
     1,592,308  
  1,655    
Santa Clara Valley Water District, (FSA), 3.75%, 6/1/28
     1,277,577  
       
 
      
       
 
   $ 7,295,327  
       
 
      
Water Revenue — 6.8%
$ 2,490    
California Department of Water Resources, (Central Valley), 5.00%, 12/1/29
   $ 2,454,941  
       
 
      
       
 
   $ 2,454,941  
       
 
      
       
 
        
Total Tax-Exempt Investments — 194.1%
(identified cost $83,267,035)		   $ 69,902,702  
       
 
      

2

 

 

                 
              
          Value  
 
       
 
        
Auction Preferred Shares Plus Cumulative Unpaid Dividends — (71.4)%   $ (25,700,000 )
       
 
      
       
 
        
Other Assets, Less Liabilities — (22.7)%   $ (8,194,985 )
       
 
      
       
 
        
Net Assets Applicable to Common Shares — 100.0%   $ 36,007,717  
       
 
      
     
AMBAC
  -  AMBAC Financial Group, Inc.
 
BHAC
  -  Berkshire Hathaway Assurance Corp.
 
FGIC
  -  Financial Guaranty Insurance Company
 
FSA
  -  Financial Security Assurance, Inc.
 
MBIA
  -  Municipal Bond Insurance Association
 
XLCA
  -  XL Capital Assurance, Inc.
 
 
  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 December 31, 2008, 88.9% of total investments are backed by bond insurance of various financial institutions and financial guaranty assurance agencies. The aggregate percentage insured by an individual financial institution ranged from 2.3% to 26.6% of total investments.
 
(1)
  Security (or a portion thereof) has been pledged as collateral for open swap contracts.
 
(2)
  Security (or a portion thereof) has been segregated to cover margin requirements on open financial futures contracts.
 
(3)
  Security represents the underlying municipal bond of a tender option bond trust.

3

 

 

A summary of financial instruments at December 31, 2008 is as follows:
Futures Contracts
                                         
Expiration                 Aggregate             Net Unrealized  
Date     Contracts   Position     Cost     Value     Depreciation  
3/09  
47 U.S. Treasury Bond
   Short   $ (5,856,107 )   $ (6,488,203 )   $ (632,096 )
       
 
                              
Interest Rate Swaps
                                 
            Annual     Floating   Effective Date/      
    Notional     Fixed Rate     Rate   Termination   Net Unrealized  
Counterparty   Amount     Paid By Fund     Paid To Fund   Date   Depreciation  
 
JP Morgan Chase Co.
   $ 1,137,500       4.743 %   3-month USD-
LIBOR-BBA		   September 14, 2009 /
September 14, 2039		   $ (429,365 )
Merrill Lynch Capital Services, Inc.
     1,812,500       4.682     3-month USD-
LIBOR-BBA		   April 1, 2009 /
April 1, 2039		     (684,763 )
Morgan Stanley Capital Services, Inc.
     1,400,000       4.691     3-month USD-
LIBOR-BBA		   June 11, 2009 /
June 11, 2039		     (525,357 )
 
                              
 
                           $ (1,639,485 )
 
                              
The effective date represents the date on which the Fund and the counterparty to the interest rate swap contract begin interest payment accruals.
At December 31, 2008, the Fund had sufficient cash and/or securities to cover commitments under these contracts.
The cost and unrealized appreciation (depreciation) of investments of the Fund at December 31, 2008, as determined on a federal income tax basis, were as follows:
         
Aggregate cost
   $ 73,493,328  
 
      
Gross unrealized appreciation
   $ 563,006  
Gross unrealized depreciation
     (13,728,632 )
 
      
Net unrealized depreciation
   $ (13,165,626 )
 
      
The Fund adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157 (FAS 157), “Fair Value Measurements”, effective October 1, 2008. FAS 157 established a three-tier hierarchy to prioritize the assumptions, referred to as inputs, used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
  •   Level 1 — quoted prices in active markets for identical investments
 
  •   Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
 
  •   Level 3 — significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments)
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
At December 31, 2008, the inputs used in valuing the Fund’s investments, which are carried at value, were as follows:
                         
            Investments in     Other Financial  
        Valuation Inputs   Securities     Instruments*  
Level 1  
Quoted Prices
   $ —     $ (632,096 )
Level 2  
Other Significant Observable Inputs
     69,902,702       (1,639,485 )
Level 3  
Significant Unobservable Inputs
     —       —  
       
 
            
Total  
 
   $ 69,902,702     $ (2,271,581 )
       
 
            

*   Other financial instruments include futures and interest rate swap contracts not reflected in the Portfolio of Investments, which are valued at the unrealized appreciation (depreciation) on the instrument.
The Fund held no investments or other financial instruments as of September 30, 2008 whose fair value was determined using Level 3 inputs.
For information on the Fund’s policy regarding valuation of investments and other significant accounting policies, please refer to the Fund’s most recent financial statements included in its semiannual or annual report to shareholders.

4

 

 

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

 

 

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