<Page>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21219
---------
Eaton Vance Insured 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)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Name and Address of Agent for Services)
(617) 482-8260
--------------
(registrant's Telephone Number)
September 30
------------
Date of Fiscal Year End
September 30, 2004
------------------
Date of Reporting Period
ITEM 1. REPORTS TO STOCKHOLDERS
<Page>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21217
---------
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)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Name and Address of Agent for Services)
(617) 482-8260
--------------
(registrant's Telephone Number)
September 30
------------
Date of Fiscal Year End
September 30, 2004
------------------
Date of Reporting Period
ITEM 1. REPORTS TO STOCKHOLDERS
<Page>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21222
---------
Eaton Vance Insured Florida Municipal Bond Fund
-----------------------------------------------
(Exact Name of registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Address of Principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Name and Address of Agent for Services)
(617) 482-8260
--------------
(registrant's Telephone Number)
September 30
------------
Date of Fiscal Year End
September 30, 2004
------------------
Date of Reporting Period
ITEM 1. REPORTS TO STOCKHOLDERS
<Page>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21225
---------
Eaton Vance Insured Massachusetts Municipal Bond Fund
-----------------------------------------------------
(Exact Name of registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Address of Principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Name and Address of Agent for Services)
(617) 482-8260
--------------
(registrant's Telephone Number)
September 30
------------
Date of Fiscal Year End
September 30, 2004
------------------
Date of Reporting Period
ITEM 1. REPORTS TO STOCKHOLDERS
<Page>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21224
---------
Eaton Vance Insured Michigan Municipal Bond Fund
------------------------------------------------
(Exact Name of registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Address of Principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Name and Address of Agent for Services)
(617) 482-8260
--------------
(registrant's Telephone Number)
September 30
------------
Date of Fiscal Year End
September 30, 2004
------------------
Date of Reporting Period
ITEM 1. REPORTS TO STOCKHOLDERS
<Page>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21229
---------
Eaton Vance Insured New Jersey Municipal Bond Fund
--------------------------------------------------
(Exact Name of registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Address of Principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Name and Address of Agent for Services)
(617) 482-8260
--------------
(registrant's Telephone Number)
September 30
------------
Date of Fiscal Year End
September 30, 2004
------------------
Date of Reporting Period
ITEM 1. REPORTS TO STOCKHOLDERS
<Page>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21218
---------
Eaton Vance Insured New York 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)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Name and Address of Agent for Services)
(617) 482-8260
--------------
(registrant's Telephone Number)
September 30
------------
Date of Fiscal Year End
September 30, 2004
------------------
Date of Reporting Period
ITEM 1. REPORTS TO STOCKHOLDERS
<Page>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21226
---------
Eaton Vance Insured Ohio Municipal Bond Fund
--------------------------------------------
(Exact Name of registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Address of Principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Name and Address of Agent for Services)
(617) 482-8260
--------------
(registrant's Telephone Number)
September 30
------------
Date of Fiscal Year End
September 30, 2004
------------------
Date of Reporting Period
ITEM 1. REPORTS TO STOCKHOLDERS
<Page>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act File Number: 811-21227
---------
Eaton Vance Insured Pennsylvania Municipal Bond Fund
----------------------------------------------------
(Exact Name of registrant as Specified in Charter)
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Address of Principal Executive Offices)
Alan R. Dynner
The Eaton Vance Building, 255 State Street, Boston, Massachusetts 02109
-----------------------------------------------------------------------
(Name and Address of Agent for Services)
(617) 482-8260
--------------
(registrant's Telephone Number)
September 30
------------
Date of Fiscal Year End
September 30, 2004
------------------
Date of Reporting Period
ITEM 1. REPORTS TO STOCKHOLDERS
<Page>
[EV LOGO]
[GRAPHIC IMAGE]
ANNUAL REPORT SEPTEMBER 30, 2004
EATON VANCE INSURED MUNICIPAL BOND FUNDS
CLOSED-END FUNDS:
INSURED MUNICIPAL II
INSURED CALIFORNIA II
INSURED FLORIDA
INSURED MASSACHUSETTS
INSURED MICHIGAN
INSURED NEW JERSEY
INSURED NEW YORK II
INSURED OHIO
INSURED PENNSYLVANIA
<Page>
EATON VANCE FUNDS
EATON VANCE MANAGEMENT
BOSTON MANAGEMENT AND RESEARCH
EATON VANCE DISTRIBUTORS, INC.
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.
IMPORTANT NOTICE
REGARDING DELIVERY OF
SHAREHOLDER DOCUMENTS
The Securities and Exchange Commission permits 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.
Each Fund will file a schedule of its portfolio holdings on Form N-Q with the
Securities and Exchange Commission (the "SEC") for the first and third quarters
of each fiscal year. Each Fund's Form N-Q will be available on the Eaton Vance
website www.eatonvance.com, by calling Eaton Vance at 1-800-262-1122 or in the
EDGAR database on the SEC's website at www.sec.gov. Form N-Q may also be
reviewed and copied at the SEC's public reference room in Washington, D.C. (call
1-800-732-0330 for information on the operation of the public reference room).
From time to time, funds are required to vote proxies related to the securities
held by the funds. The Eaton Vance Funds or their underlying Portfolios vote
proxies according to a set of policies and procedures approved by the Funds' and
Portfolios' Boards. You may obtain a description of these policies and
procedures without charge, upon request, by calling 1-800-262-1122. This
description is also available on the Securities and Exchange Commission's
website at http://www.sec.gov.
<Page>
EATON VANCE INSURED MUNICIPAL BOND FUNDS as of September 30, 2004
LETTER TO SHAREHOLDERS
[PHOTO OF THOMAS J. FETTER]
Thomas J. Fetter
President
The municipal bond market consists of a broad array of bond issues, with widely
varying features and performance characteristics that may make them appropriate
for a specific investment scenario. In this edition of our continuing
educational series, we will feature zero coupon bonds - a variety of bond that
has seen increasing use by investors over the past 20 years - and discuss why
they can provide flexibility in managing a bond portfolio.
THE 1980's BROUGHT NEW VARIATIONS TO THE BOND MARKET...
Any discussion of zero coupon bonds should start with the term "coupon."
Traditionally, bonds were issued in certificate form, with interest coupons
attached, which the owner would clip and present for payment. The coupon rate
indicates the rate of annual interest the issuer pays to the bondholder. For
example, a $1,000 bond with a 5% coupon makes two semiannual interest payments
of $25 each.
Today, most bonds are issued as "book-entry bonds," registered in the owner's
name on the books of the issuer, but not delivered in certificate form. That
change has not only replaced the antiquated coupon-clipping system, but also
encouraged the development of new types of bonds - including zero coupon bonds,
introduced in 1982.
ZERO-COUPONS: NO INTEREST PAYMENTS, BUT A PREDICTABLE LUMP-SUM PAYMENT AT
MATURITY...
Zero coupon bonds do not have coupons attached and do not make regular interest
payments. Instead, they are issued at a discount, usually well below par, or
face value. As with coupon bonds, the bondholder receives face value if the bond
is held to its maturity date. Over time - from its issuance to its maturity -
zero coupon bonds accrete to par, meaning that their price appreciates over time
to reflect the accrual of "imputed" compound interest. An investor holding a
zero coupon bond to maturity receives a lump sum payment from the issuer for
face value reflecting the initial investment plus interest that has accrued.
Although zero coupon bonds do not pay any interest until they mature, the
accrual of "imputed" compound interest is recognized currently. Mutual funds are
required to distribute substantially all of their income (including accrued
income) annually. A fund may therefore be required to sell securities to obtain
cash needed for income distributions.
ZERO COUPON BONDS PROVIDE PORTFOLIO MANAGERS ADDITIONAL FLEXIBILITY...
For a portfolio manager, zero coupons can play a useful strategic role. Like
other bonds, zero coupon bond prices are affected by market conditions, changes
in an issuer's underlying fundamentals and fluctuations in interest rates.
Because they pay no coupon or periodic interest payments, they typically display
more price sensitivity than other bonds in response to changes in interest
rates. Therefore, zero coupon bonds can provide more appreciation potential in a
declining interest rate environment. Of course, zero coupons display increased
DOWNSIDE volatility in the event of an INCREASE in interest rates.
Some zero coupon bonds start out as coupon-bearing bonds, which are then
deposited with a trustee and subsequently "stripped" of their coupons. New
securities are then created from principal and coupon payments. This allows an
investor to choose a maturity to match the time when funds will be needed.
Moreover, because of their many permutations, zero coupon bonds can help balance
income-oriented bonds with performance-oriented zero coupons, providing more
versatility in managing a municipal portfolio.
Sincerely,
/s/ Thomas J. Fetter
Thomas J. Fetter
President
November 10, 2004
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
<Page>
EATON VANCE INSURED MUNICIPAL BOND FUNDS as of September 30, 2004
MARKET RECAP
The U.S. economy continued to expand in the year ended September 30, 2004,
although at a somewhat more moderate rate as the fiscal year drew to a close.
One key economic factor was the surge in gasoline and energy prices, which
raised fears that inflation could re-emerge. Amid those concerns, bond market
performance was less robust in the second half of the year than in the first
half.
IN AN UNEVEN ECONOMY, SOME SECTORS GENERATED GROWTH...
The nation's Gross Domestic Product grew by 3.7% in the third quarter of 2004,
following a 2.8% rise in the second quarter. Economic activity was uneven, with
some segments slowing, while others grew at varying rates. For example, retail
sales slowed in reaction to consumer concerns over inflation and ongoing
geo-political events. Auto sales were impacted by higher gas prices, with buyers
opting for fuel-efficient smaller vehicles over SUVs and trucks.
Interestingly, manufacturing activity grew stronger, driven by rising demand for
durable goods and capital equipment. Demand for aerospace equipment, steel
products, industrial machinery, and information technology products was
especially strong. Non-durable goods manufacturing, tied more closely to
consumer spending, weakened significantly. The construction sector followed
recent patterns, with residential building on the rise, while commercial
activity lagged.
HOWEVER ERRATIC, JOB GROWTH HAS GAINED SOME STRENGTH...
Meanwhile, job growth continued to puzzle many economists throughout much of the
year. Having made significant productivity improvements during the recent
economic downturn, many businesses were slow to return to previous employment
levels. As a result, job gains during the summer and early fall fell short of
expectations. However, later reports brought news of a surge in new employment,
with strength in construction areas, as well as in the energy, transportation,
health care and service sectors. The nation's unemployment rate fell to 5.4% in
September 2004, down from 6.1% a year earlier.
[CHART]
Municipal bond yields were 98% of Treasury yields
<Table>
30-Year AAA-rated General Obligation (GO) Bonds* 4.81%
Taxable equivalent yield in 35.0% tax bracket 7.40%
30-Year Treasury Bond 4.91%
</Table>
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 a Fund's yield. Statistics as of
September 30, 2004.
Past performance is no guarantee of future results.
Source: Bloomberg, L.P.
THE FEDERAL RESERVE REMAINED VIGILANT IN LIGHT OF RISING INFLATION...
Inflation re-emerged as a concern to investors and to the Federal Reserve. Oil
prices soared amid supply concerns, which were exacerbated by the continuing
turmoil in the Middle East, hurricanes in the Gulf of Mexico and surging demand
from China. Against that backdrop, the Federal Reserve emphasized that it would
wage a vigorous fight against inflation. After maintaining a stable interest
rate policy for more than a year, the Fed raised its benchmark Federal Funds
rate by 25 basis points in June, August and September 2004.
Following a strong rally in the first half of the year, the municipal bond
market lost some momentum in the second half, as inflation exerted upward
pressure on interest rates. For the year ended September 30, 2004, the Lehman
Brothers Municipal Bond Index had a total return of 4.60%.*
*It is not possible to invest directly in an Index. The Index's total return
does not reflect commissions or expenses that would have been incurred if an
investor individually purchased or sold the securities represented in the Index.
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
<Page>
EATON VANCE INSURED MUNICIPAL BOND FUND II as of September 30, 2004
INVESTMENT UPDATE
THE FUND
- - Based on share price (traded on the American Stock Exchange), the Fund had a
total return of 14.59% for the year ended September 30, 2004. That return was
the result of an increase in share price from $14.00 on September 30, 2003 to
$14.82 on September 30, 2004 and the reinvestment of $1.001 in regular
monthly dividends and $0.158 in capital gain distributions.(1)
- - Based on net asset value, the Fund had a total return of 10.00% for the year
ended September 30, 2004. That return was the result of an increase in net
asset value per share from $14.79 on September 30, 2003 to $15.03 on
September 30, 2004, and the reinvestment of all distributions.
- - In comparison, the Lehman Brothers Municipal Bond Index had a total return of
4.60% during the year ended September 30, 2004.(2)
- - Based on the most recent dividend and a share price of $14.82, the Fund had a
market yield of 6.75% at September 30, 2004.(3) The Fund's market yield is
equivalent to a taxable yield of 10.38%.(4)
[CHART]
RATING DISTRIBUTION(5),(6)
By total investments
<Table>
AAA 84.4%
AA 3.9%
A 10.5%
BBB 0.2%
Non-Rated 1.0%
</Table>
* Private insurance does not decrease the risk of loss of principal associated
with this investment.
[PHOTO OF WILLIAM H. AHERN]
William H. Ahern
Portfolio Manager
MANAGEMENT UPDATE
- - The U.S. economy continued to expand modestly in 2004, although consumers
grew increasingly worried about rising fuel costs. Economic growth was
supported primarily by capital spending, as businesses made new investments
in computers and machinery. The U.S. jobless rate was 5.4% in September 2004,
down from 6.1% a year ago.
- - Insured* transportation bonds were the Fund's largest sector weighting at
September 30, 2004. These bonds financed the construction and upgrading of
major transportation projects, including those for highways and turnpike
authorities, bridges and tunnels, rapid transit, skyway and monorail
construction.
- - Insured* general obligations (GOs) were a major focus of the Fund. In an
uneven recovery, the revenue outlook for states and municipalities has
remained under careful scrutiny. Insured* GOs provided a dependable revenue
stream, as well as very high quality.
- - Insured* water revenue bonds were a large commitment of the Fund. Essential
service revenues have tended to be less affected by the overall economy.
Water issues have constituted a large portion of municipal issuance in recent
years, as states have addressed the issues of growth and aging
infrastructure.
- - At September 30, 2004, the Fund had leverage in the amount of approximately
37% of the Fund's total assets. The Fund uses leverage through the issuance
of preferred shares. Use of financial leverage creates an opportunity for
increased income, but, at the same time, creates special risks (including the
likelihood of greater volatility of net asset value and market price of
common shares).
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL
AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR
SHARE PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY
BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED
TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE
MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN.
FUND INFORMATION
as of September 30, 2004
PERFORMANCE(7)
<Table>
Average Annual Total Return (by share price, American Stock Exchange)
One Year 14.59%
Life of Fund (11/29/02) 9.23
Average Annual Total Return (by net asset value)
One Year 10.00%
Life of Fund (11/29/02) 10.07
</Table>
(1) A PORTION OF THE FUND'S INCOME MAY BE SUBJECT TO FEDERAL INCOME TAX AND/OR
ALTERNATIVE MINIMUM TAX; INCOME MAY BE SUBJECT TO STATE INCOME TAX.
(2) IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. THE INDEX'S TOTAL RETURN
DOES NOT REFLECT THE COMMISSIONS OR EXPENSES THAT WOULD HAVE BEEN INCURRED
IF AN INVESTOR INDIVIDUALLY PURCHASED OR SOLD THE SECURITIES REPRESENTED IN
THE INDEX.
(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 A MAXIMUM 35.00% FEDERAL INCOME TAX RATE.
A LOWER TAX RATE WOULD RESULT IN A LOWER TAX-EQUIVALENT FIGURE.
(5) RATING DISTRIBUTION MAY NOT BE REPRESENTATIVE OF THE FUND'S CURRENT OR
FUTURE INVESTMENTS.
(6) RATING DISTRIBUTION IS DETERMINED BY DIVIDING THE TOTAL MARKET VALUE OF THE
ISSUES BY THE TOTAL INVESTMENTS OF THE FUND.
(7) RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE
CHANGE IN SHARE PRICE OR NET ASSET VALUE WITH ALL DISTRIBUTIONS REINVESTED.
PERFORMANCE RESULTS REFLECT THE EFFECT OF LEVERAGE RESULTING FROM THE
FUND'S ISSUANCE OF AUCTION PREFERRED SHARES.
4
<Page>
EATON VANCE INSURED CALIFORNIA MUNICIPAL BOND FUND II as of September 30, 2004
INVESTMENT UPDATE
THE FUND
- - Based on share price (traded on the American Stock Exchange), the Fund had a
total return of 13.27% for the year ended September 30, 2004. That return was
the result of an increase in share price from $13.80 on September 30, 2003 to
$14.58 on September 30, 2004 and the reinvestment of $0.948 in regular
monthly dividends and $0.060 in capital gain distributions.(1)
- - Based on net asset value, the Fund had a total return of 6.84% for the year
ended September 30, 2004. That return was the result of a decrease in net
asset value per share from $14.56 on September 30, 2003 to $14.51 on
September 30, 2004, and the reinvestment of all distributions.
- - In comparison, the Lehman Brothers Municipal Bond Index had a total return of
4.60% during the year ended September 30, 2004.(2)
- - Based on the most recent dividend and a share price of $14.58, the Fund had a
market yield of 6.50% at September 30, 2004.(3) The Fund's market yield is
equivalent to a taxable yield of 11.03%.(4)
[CHART]
RATING DISTRIBUTION(5),(6)
By total investments
<Table>
AAA 93.4%
AA 2.9%
A 3.7%
</Table>
* Private insurance does not decrease the risk of loss of principal associated
with this investment.
[PHOTO OF CYNTHIA J. CLEMSON]
Cynthia J. Clemson
Portfolio Manager
MANAGEMENT UPDATE
- - While the California economy managed to halt its job losses in 2004, the
state continued to lag the nation in new job creation. Although the state's
information technology area was slow to recover, business services, energy
and construction sectors were strong. The state's September 2004 jobless rate
was 5.9%, down from 6.7% a year ago.
- - Insured* general obligations (GOs) constituted the Fund's largest sector
weighting at September 30, 2004. The Fund's investments focused primarily on
local school district bonds. Given the slow recovery of the California
economy, insured* GOs provided an added measure of security.
- - Insured* lease revenue/certificates of participation (COPs) constituted
significant investments. COPs are an alternative financing tool employed to
finance educational facilities, water facilities and public improvements.
- - Insured* sewer revenue bonds were large investments for the Fund. With
California facing critical water shortages, large communities such as Los
Angeles and the Bay Area play a major role in developing more efficient water
and wastewater treatment facilities.
- - At September 30, 2004, the Fund had leverage in the amount of approximately
38% of the Fund's total assets. The Fund uses leverage through the issuance
of preferred shares. Use of financial leverage creates an opportunity for
increased income, but, at the same time, creates special risks (including the
likelihood of greater volatility of net asset value and market price of
common shares).
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL
AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR
SHARE PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY
BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED
TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE
MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN.
FUND INFORMATION
as of September 30, 2004
PERFORMANCE(7)
<Table>
Average Annual Total Return (by share price, American Stock Exchange)
One Year 13.27%
Life of Fund (11/29/02) 7.62
Average Annual Total Return (by net asset value)
One Year 6.84%
Life of Fund (11/29/02) 7.34
</Table>
(1) A PORTION OF THE FUND'S INCOME MAY BE SUBJECT TO FEDERAL INCOME TAX AND/OR
ALTERNATIVE MINIMUM TAX; INCOME MAY BE SUBJECT TO STATE INCOME TAX.
(2) IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. THE INDEX'S TOTAL RETURN
DOES NOT REFLECT THE COMMISSIONS OR EXPENSES THAT WOULD HAVE BEEN INCURRED
IF AN INVESTOR INDIVIDUALLY PURCHASED OR SOLD THE SECURITIES REPRESENTED IN
THE INDEX.
(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 A MAXIMUM 41.05% COMBINED FEDERAL AND
STATE INCOME TAX RATE. A LOWER TAX RATE WOULD RESULT IN A LOWER
TAX-EQUIVALENT FIGURE.
(5) RATING DISTRIBUTION MAY NOT BE REPRESENTATIVE OF THE FUND'S CURRENT OR
FUTURE INVESTMENTS.
(6) RATING DISTRIBUTION IS DETERMINED BY DIVIDING THE TOTAL MARKET VALUE OF THE
ISSUES BY THE TOTAL INVESTMENTS OF THE FUND.
(7) RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE
CHANGE IN SHARE PRICE OR NET ASSET VALUE WITH ALL DISTRIBUTIONS REINVESTED.
PERFORMANCE RESULTS REFLECT THE EFFECT OF LEVERAGE RESULTING FROM THE
FUND'S ISSUANCE OF AUCTION PREFERRED SHARES.
5
<Page>
EATON VANCE INSURED FLORIDA MUNICIPAL BOND FUND as of September 30, 2004
INVESTMENT UPDATE
THE FUND
- - Based on share price (traded on the American Stock Exchange), the Fund had a
total return of 12.29% for the year ended September 30, 2004. That return was
the result of an increase in share price from $14.10 on September 30, 2003 to
$14.75 on September 30, 2004 and the reinvestment of $0.930 in regular
monthly dividends and $0.080 in capital gain distributions.(1)
- - Based on net asset value, the Fund had a total return of 7.12% for the year
ended September 30, 2004. That return was the result of a decrease in net
asset value per share from $14.55 on September 30, 2003 to $14.52 on
September 30, 2004, and the reinvestment of all distributions.
- - In comparison, the Lehman Brothers Municipal Bond Index had a total return of
4.60% during the year ended September 30, 2004.(2)
- - Based on the most recent dividend and a share price of $14.75, the Fund had a
market yield of 6.31% at September 30, 2004.(3) The Fund's market yield is
equivalent to a taxable yield of 9.71%.(4)
[CHART]
RATING DISTRIBUTION(5),(6)
By total investments
<Table>
AAA 92.0%
AA 5.2%
A 2.8%
</Table>
* Private insurance does not decrease the risk of loss of principal associated
with this investment.
[PHOTO OF CRAIG BRANDON]
Craig Brandon
Portfolio Manager
MANAGEMENT UPDATE
- - Florida's economic recovery has remained among the strongest in the nation.
Residential building has fueled a robust construction sector, while tourism -
despite the disruptions caused by a very active hurricane season - has
continued to recover. The state's jobless rate was 4.5% in September 2004,
down from 5.1% a year ago.
- - Insured* special tax revenue bonds were the Fund's largest sector weightings
at September 30, 2004. These bonds are secured by the levy of special
assessments - as opposed to property taxes - by local governments. The levies
help defray costs on improvements or infrastructures that benefit local
property owners.
- - Within the insured* hospital sector, the Fund focused its investments on
institutions with lean operations, sound finances and in-demand specialties,
such as cancer and cardiac care and children's health services.
- - Insured* general obligations (GOs) were a significant investment. In a strong
state economic recovery, Florida municipalities have seen a rebound in tax
receipts.
- - At September 30, 2004, the Fund had leverage in the amount of approximately
38% of the Fund's total assets. The Fund uses leverage through the issuance
of preferred shares. Use of financial leverage creates an opportunity for
increased income, but, at the same time, creates special risks (including the
likelihood of greater volatility of net asset value and market price of
common shares).
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL
AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR
SHARE PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY
BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED
TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE
MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN.
FUND INFORMATION
as of September 30, 2004
PERFORMANCE(7)
<Table>
Average Annual Total Return (by share price, American Stock Exchange)
One Year 12.29%
Life of Fund (11/29/02) 8.27
Average Annual Total Return (by net asset value)
One Year 7.12%
Life of Fund (11/29/02) 7.35
</Table>
(1) A PORTION OF THE FUND'S INCOME MAY BE SUBJECT TO FEDERAL INCOME TAX AND/OR
ALTERNATIVE MINIMUM TAX AND STATE INTANGIBLES TAX.
(2) IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. THE INDEX'S TOTAL RETURN
DOES NOT REFLECT THE COMMISSIONS OR EXPENSES THAT WOULD HAVE BEEN INCURRED
IF AN INVESTOR INDIVIDUALLY PURCHASED OR SOLD THE SECURITIES REPRESENTED IN
THE INDEX.
(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 A MAXIMUM 35.00% COMBINED FEDERAL AND
STATE INTANGIBLES TAX RATE. A LOWER TAX RATE WOULD RESULT IN A LOWER
TAX-EQUIVALENT FIGURE.
(5) RATING DISTRIBUTION MAY NOT BE REPRESENTATIVE OF THE FUND'S CURRENT OR
FUTURE INVESTMENTS.
(6) RATING DISTRIBUTION IS DETERMINED BY DIVIDING THE TOTAL MARKET VALUE OF THE
ISSUES BY THE TOTAL INVESTMENTS OF THE FUND.
(7) RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE
CHANGE IN SHARE PRICE OR NET ASSET VALUE WITH ALL DISTRIBUTIONS REINVESTED.
PERFORMANCE RESULTS REFLECT THE EFFECT OF LEVERAGE RESULTING FROM THE
FUND'S ISSUANCE OF AUCTION PREFERRED SHARES.
6
<Page>
EATON VANCE INSURED MASSACHUSETTS MUNICIPAL BOND FUND as of September 30, 2004
INVESTMENT UPDATE
THE FUND
- - Based on share price (traded on the American Stock Exchange), the Fund had a
total return of 16.66% for the year ended September 30, 2004. That return was
the result of an increase in share price from $14.45 on September 30, 2003 to
$15.57 on September 30, 2004 and the reinvestment of $0.948 in regular
monthly dividends and $0.225 in capital gain distributions.(1)
- - Based on net asset value, the Fund had a total return of 9.74% for the year
ended September 30, 2004. That return was the result of an increase in net
asset value per share from $14.67 on September 30, 2003 to $14.87 on
September 30, 2004, and the reinvestment of all distributions.
- - In comparison, the Lehman Brothers Municipal Bond Index had a total return of
4.60% during the year ended September 30, 2004.(2)
- - Based on the most recent dividend and a share price of $15.57, the Fund had a
market yield of 6.09% at September 30, 2004.(3) The Fund's market yield is
equivalent to a taxable yield of 9.89%.(4)
[CHART]
RATING DISTRIBUTION(5),(6)
By total investments
<Table>
AAA 84.7%
AA 5.2%
A 7.3%
BBB 2.8%
</Table>
* Private insurance does not decrease the risk of loss of principal associated
with this investment.
[PHOTO OF ROBERT B. MACINTOSH]
Robert B. MacIntosh
Portfolio Manager
MANAGEMENT UPDATE
- - The Massachusetts economy continued to improve in 2004, although job growth
trailed the national economy. Construction activity was strong, especially in
the residential segment. The state's financial sector reflected the recovery
of the financial markets. The state's September 2004 jobless rate was 4.6%,
down from 5.9% a year ago and below the national rate.
- - Insured* private and public education bonds were among the Fund's largest
sector weighting at September 30, 2004, including some of Massachusetts's
finest universities. Historically, these institutions have tended to enjoy
strong applicant demand and stable revenues, irrespective of the economic
environment.
- - Insured general obligations (GOs)* remained a significant focus for the Fund.
Secured by the Commonwealth's various taxing powers - or, for local issuers,
by local property taxes - these bonds are deemed the most secure of all
municipal debt.
- - Insured* lease revenue/certificates of participation (COPs) were major Fund
holdings. These are bonds whose principal and interest are payable from
rental payments from a lessee, often drawn from the earnings of an enterprise
or taxes levied by the lessee.
- - At September 30, 2004, the Fund had leverage in the amount of approximately
37% of the Fund's total assets. The Fund uses leverage through the issuance
of preferred shares. Use of financial leverage creates an opportunity for
increased income, but, at the same time, creates special risks (including the
likelihood of greater volatility of net asset value and market price of
common shares).
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL
AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR
SHARE PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY
BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED
TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE
MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN.
FUND INFORMATION
as of September 30, 2004
PERFORMANCE(7)
<Table>
Average Annual Total Return (by share price, American Stock Exchange)
One Year 16.66%
Life of Fund (11/29/02) 12.01
Average Annual Total Return (by net asset value)
One Year 9.74%
Life of Fund (11/29/02) 9.24
</Table>
(1) A PORTION OF THE FUND'S INCOME MAY BE SUBJECT TO FEDERAL INCOME TAX AND/OR
ALTERNATIVE MINIMUM TAX; INCOME MAY BE SUBJECT TO STATE INCOME TAX.
(2) IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. THE INDEX'S TOTAL RETURN
DOES NOT REFLECT THE COMMISSIONS OR EXPENSES THAT WOULD HAVE BEEN INCURRED
IF AN INVESTOR INDIVIDUALLY PURCHASED OR SOLD THE SECURITIES REPRESENTED IN
THE INDEX.
(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 A MAXIMUM 38.45% COMBINED FEDERAL AND
STATE INCOME TAX RATE. A LOWER TAX RATE WOULD RESULT IN A LOWER
TAX-EQUIVALENT FIGURE.
(5) RATING DISTRIBUTION MAY NOT BE REPRESENTATIVE OF THE FUND'S CURRENT OR
FUTURE INVESTMENTS.
(6) RATING DISTRIBUTION IS DETERMINED BY DIVIDING THE TOTAL MARKET VALUE OF THE
ISSUES BY THE TOTAL INVESTMENTS OF THE FUND.
(7) RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE
CHANGE IN SHARE PRICE OR NET ASSET VALUE WITH ALL DISTRIBUTIONS REINVESTED.
PERFORMANCE RESULTS REFLECT THE EFFECT OF LEVERAGE RESULTING FROM THE
FUND'S ISSUANCE OF AUCTION PREFERRED SHARES.
7
<Page>
EATON VANCE INSURED MICHIGAN MUNICIPAL BOND FUND as of September 30, 2004
INVESTMENT UPDATE
THE FUND
- - Based on share price (traded on the American Stock Exchange), the Fund had a
total return of 14.60% for the year ended September 30, 2004. That return was
the result of an increase in share price from $14.41 on September 30, 2003 to
$15.49 on September 30, 2004 and the reinvestment of $0.948 in regular
monthly dividends.(1)
- - Based on net asset value, the Fund had a total return of 8.96% for the year
ended September 30, 2004. That return was the result of an increase in net
asset value per share from $14.52 on September 30, 2003 to $14.84 on
September 30, 2004, and the reinvestment of all distributions.
- - In comparison, the Lehman Brothers Municipal Bond Index had a total return of
4.60% during the year ended September 30, 2004.(2)
- - Based on the most recent dividend and a share price of $15.49, the Fund had a
market yield of 6.12% at September 30, 2004.(3) The Fund's market yield is
equivalent to a taxable yield of 9.80%.(4)
[CHART]
RATING DISTRIBUTION(5),(6)
By total investments
<Table>
AAA 81.9%
AA 4.4%
A 13.7%
</Table>
* Private insurance does not decrease the risk of loss of principal associated
with this investment.
[PHOTO OF WILLIAM H. AHERN]
William H. Ahern
Portfolio Manager
MANAGEMENT UPDATE
- - Michigan's economy saw a weak recovery in 2004, with employment growth among
the slowest of the 50 states. Manufacturing continued to shed jobs, despite
new sales incentives in the key auto sector, while government jobs declined
amid budgetary concerns. The state's September 2004 jobless rate was 6.8%,
down from 7.6% a year ago.
- - Insured* general obligations (GOs) constituted the Fund's largest sector
weighting at September 30, 2004 and provided a high-quality investment in a
still-recovering economy. The Fund's investments were focused on school
district and local board of education issues, which typically have fairly
stable revenues.
- - In a highly competitive hospital sector, the Fund remained very selective.
Management emphasized insured* bonds of institutions it believes have a
competitive advantage due to marketable health care services and underlying
financial strength.
- - Insured* special tax revenue bonds were significant investments. Secured by
the levy of special assessments, the bonds helped finance improvements that
benefited local property owners.
- - At September 30, 2004, the Fund had leverage in the amount of approximately
38% of the Fund's total assets. The Fund uses leverage through the issuance
of preferred shares. Use of financial leverage creates an opportunity for
increased income, but, at the same time, creates special risks (including the
likelihood of greater volatility of net asset value and market price of
common shares).
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL
AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR
SHARE PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY
BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED
TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE
MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN.
FUND INFORMATION
as of September 30, 2004
PERFORMANCE(7)
<Table>
Average Annual Total Return (by share price, American Stock Exchange)
One Year 14.60%
Life of Fund (11/29/02) 10.76
Average Annual Total Return (by net asset value)
One Year 8.96%
Life of Fund (11/29/02) 8.21
</Table>
(1) A PORTION OF THE FUND'S INCOME MAY BE SUBJECT TO FEDERAL INCOME TAX AND/OR
ALTERNATIVE MINIMUM TAX; INCOME MAY BE SUBJECT TO STATE INCOME TAX.
(2) IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. THE INDEX'S TOTAL RETURN
DOES NOT REFLECT THE COMMISSIONS OR EXPENSES THAT WOULD HAVE BEEN INCURRED
IF AN INVESTOR INDIVIDUALLY PURCHASED OR SOLD THE SECURITIES REPRESENTED IN
THE INDEX.
(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 A MAXIMUM 37.54% COMBINED FEDERAL AND
STATE INCOME TAX RATE. A LOWER TAX RATE WOULD RESULT IN A LOWER
TAX-EQUIVALENT FIGURE.
(5) RATING DISTRIBUTION MAY NOT BE REPRESENTATIVE OF THE FUND'S CURRENT OR
FUTURE INVESTMENTS.
(6) RATING DISTRIBUTION IS DETERMINED BY DIVIDING THE TOTAL MARKET VALUE OF THE
ISSUES BY THE TOTAL INVESTMENTS OF THE FUND.
(7) RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE
CHANGE IN SHARE PRICE OR NET ASSET VALUE WITH ALL DISTRIBUTIONS REINVESTED.
PERFORMANCE RESULTS REFLECT THE EFFECT OF LEVERAGE RESULTING FROM THE
FUND'S ISSUANCE OF AUCTION PREFERRED SHARES.
8
<Page>
EATON VANCE INSURED NEW JERSEY MUNICIPAL BOND FUND as of September 30, 2004
INVESTMENT UPDATE
THE FUND
- - Based on share price (traded on the American Stock Exchange), the Fund had a
total return of 15.37% for the year ended September 30, 2004. That return was
the result of an increase in share price from $14.52 on September 30, 2003 to
$15.49 on September 30, 2004 and the reinvestment of $0.960 in regular
monthly dividends and $0.206 in capital gain distributions.(1)
- - Based on net asset value, the Fund had a total return of 9.83% for the year
ended September 30, 2004. That return was the result of an increase in net
asset value per share from $14.76 on September 30, 2003 to $14.99 on
September 30, 2004, and the reinvestment of all distributions.
- - In comparison, the Lehman Brothers Municipal Bond Index had a total return of
4.60% during the year ended September 30, 2004.(2)
- - Based on the most recent dividend and a share price of $15.49, the Fund had a
market yield of 6.20% at September 30, 2004.(3) The Fund's market yield is
equivalent to a taxable yield of 10.48%.(4)
[CHART]
RATING DISTRIBUTION(5),(6)
By total investments
<Table>
AAA 85.1%
AA 6.4%
A 3.6%
BBB 4.9%
</Table>
* Private insurance does not decrease the risk of loss of principal associated
with this investment.
[PHOTO OF ROBERT B. MACINTOSH]
Robert B. MacIntosh
Portfolio Manager
MANAGEMENT UPDATE
- - The New Jersey economy continued to expand in 2004, with new employment
generated across the state. Job growth exceeded the national rate, with the
strongest areas in construction, health care, state and local government and
business services. The state's September 2004 jobless rate was 4.8%, down
from 5.8% a year ago.
- - Insured* public education bonds were the Fund's largest sector weighting at
September 30, 2004, and generally enjoyed stable enrollment and revenues. The
Fund's investments included bonds for the state university system, a
community college and the state's medical and dentistry school.
- - Insured* transportation bonds were major components of the Fund. Investments
included bonds for river authorities, port facilities and regional
transportation authorities, which are key elements of New Jersey's economic
infrastructure.
- - Insured* general obligations bonds represented a significant investment for
the Fund. With a focus on issuers management believed likely to weather a
still uncertain economic outlook, the Fund's holdings were investments of
high quality and liquidity.
- - At September 30, 2004, the Fund had leverage in the amount of approximately
37% of the Fund's total assets. The Fund uses leverage through the issuance
of preferred shares. Use of financial leverage creates an opportunity for
increased income, but, at the same time, creates special risks (including the
likelihood of greater volatility of net asset value and market price of
common shares).
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL
AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR
SHARE PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY
BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED
TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE
MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN.
FUND INFORMATION
as of September 30, 2004
PERFORMANCE(7)
<Table>
Average Annual Total Return (by share price, American Stock Exchange)
One Year 15.37%
Life of Fund (11/29/02) 11.63
Average Annual Total Return (by net asset value)
One Year 9.83%
Life of Fund (11/29/02) 9.66
</Table>
(1) A PORTION OF THE FUND'S INCOME MAY BE SUBJECT TO FEDERAL INCOME TAX AND/OR
ALTERNATIVE MINIMUM TAX; INCOME MAY BE SUBJECT TO STATE INCOME TAX.
(2) IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. THE INDEX'S TOTAL RETURN
DOES NOT REFLECT THE COMMISSIONS OR EXPENSES THAT WOULD HAVE BEEN INCURRED
IF AN INVESTOR INDIVIDUALLY PURCHASED OR SOLD THE SECURITIES REPRESENTED IN
THE INDEX.
(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 A MAXIMUM 40.83% COMBINED FEDERAL AND
STATE INCOME TAX RATE. A LOWER TAX RATE WOULD RESULT IN A LOWER
TAX-EQUIVALENT FIGURE.
(5) RATING DISTRIBUTION MAY NOT BE REPRESENTATIVE OF THE FUND'S CURRENT OR
FUTURE INVESTMENTS.
(6) RATING DISTRIBUTION IS DETERMINED BY DIVIDING THE TOTAL MARKET VALUE OF THE
ISSUES BY THE TOTAL INVESTMENTS OF THE FUND.
(7) RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE
CHANGE IN SHARE PRICE OR NET ASSET VALUE WITH ALL DISTRIBUTIONS REINVESTED.
PERFORMANCE RESULTS REFLECT THE EFFECT OF LEVERAGE RESULTING FROM THE
FUND'S ISSUANCE OF AUCTION PREFERRED SHARES.
9
<Page>
EATON VANCE INSURED NEW YORK MUNICIPAL BOND FUND II as of September 30, 2004
INVESTMENT UPDATE
THE FUND
- - Based on share price (traded on the American Stock Exchange), the Fund had a
total return of 14.39% for the year ended September 30, 2004. That return was
the result of an increase in share price from $13.71 on September 30, 2003 to
$14.46 on September 30, 2004 and the reinvestment of $0.963 in regular
monthly dividends and $0.221 in capital gain distributions.(1)
- - Based on net asset value, the Fund had a total return of 8.75% for the year
ended September 30, 2004. That return was the result of an increase in net
asset value per share from $14.87 on September 30, 2003 to $14.91 on
September 30, 2004, and the reinvestment of all distributions.
- - In comparison, the Lehman Brothers Municipal Bond Index had a total return of
4.60% during the year ended September 30, 2004.(2)
- - Based on the most recent dividend and a share price of $14.46, the Fund had a
market yield of 6.66% at September 30, 2004.(3) The Fund's market yield is
equivalent to a taxable yield of 11.10%.(4)
[CHART]
RATING DISTRIBUTION(5),(6)
By total investments
<Table>
AAA 84.5%
AA 6.9%
A 3.8%
BBB 3.0%
Non-Rated 1.8%
</Table>
* Private insurance does not decrease the risk of loss of principal associated
with this investment.
[PHOTO OF THOMAS J. FETTER]
Thomas J. Fetter
Portfolio Manager
MANAGEMENT UPDATE
- - In 2004, the New York economy registered its strongest growth since the 2001
recession. The state saw a significant upturn in key sectors, such as
business services, information, technology and continued growth in health
care, education and tourism. These areas offset job losses in manufacturing,
banking and government. The state's September 2004 jobless rate was 5.5%,
down from 6.4% a year ago.
- - Insured* transportation bonds were the Fund's largest weighting at September
30, 2004. Holdings included issues for toll bridges, mass transit and port
authorities, which have increased their investments to meet the New York
area's growth and security needs.
- - Insured* private education bonds were a significant focus of the Fund, with
an emphasis on dormitory issues. These bonds provides financing for the
construction and expansion of dormitories, classrooms and lab facilities for
public and private universities throughout the state.
- - Insured* water and sewer bonds represented a major investment. Many New York
communities have needed to modernize their water facilities. Increased
issuance of bonds to finance these projects has provided the Fund with income
opportunities.
- - At September 30, 2004, the Fund had leverage in the amount of approximately
37% of the Fund's total assets. The Fund uses leverage through the issuance
of preferred shares. Use of financial leverage creates an opportunity for
increased income, but, at the same time, creates special risks (including the
likelihood of greater volatility of net asset value and market price of
common shares).
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL
AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR
SHARE PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY
BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED
TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE
MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN.
FUND INFORMATION
as of September 30, 2004
PERFORMANCE(7)
<Table>
Average Annual Total Return (by share price, American Stock Exchange)
One Year 14.39%
Life of Fund (11/29/02) 7.80
Average Annual Total Return (by net asset value)
One Year 8.75%
Life of Fund (11/29/02) 9.61
</Table>
(1) A PORTION OF THE FUND'S INCOME MAY BE SUBJECT TO FEDERAL INCOME TAX AND/OR
ALTERNATIVE MINIMUM TAX; INCOME MAY BE SUBJECT TO STATE INCOME TAX.
(2) IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. THE INDEX'S TOTAL RETURN
DOES NOT REFLECT THE COMMISSIONS OR EXPENSES THAT WOULD HAVE BEEN INCURRED
IF AN INVESTOR INDIVIDUALLY PURCHASED OR SOLD THE SECURITIES REPRESENTED IN
THE INDEX.
(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 A MAXIMUM 40.01% COMBINED FEDERAL AND
STATE INCOME TAX RATE. A LOWER TAX RATE WOULD RESULT IN A LOWER
TAX-EQUIVALENT FIGURE.
(5) RATING DISTRIBUTION MAY NOT BE REPRESENTATIVE OF THE FUND'S CURRENT OR
FUTURE INVESTMENTS.
(6) RATING DISTRIBUTION IS DETERMINED BY DIVIDING THE TOTAL MARKET VALUE OF THE
ISSUES BY THE TOTAL INVESTMENTS OF THE FUND.
(7) RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE
CHANGE IN SHARE PRICE OR NET ASSET VALUE WITH ALL DISTRIBUTIONS REINVESTED.
PERFORMANCE RESULTS REFLECT THE EFFECT OF LEVERAGE RESULTING FROM THE
FUND'S ISSUANCE OF AUCTION PREFERRED SHARES.
10
<Page>
EATON VANCE INSURED OHIO MUNICIPAL BOND FUND as of September 30, 2004
INVESTMENT UPDATE
THE FUND
- - Based on share price (traded on the American Stock Exchange), the Fund had a
total return of 12.49% for the year ended September 30, 2004. That return was
the result of an increase in share price from $14.43 on September 30, 2003 to
$15.20 on September 30, 2004 and the reinvestment of $0.930 in regular
monthly dividends and $0.033 in capital gain distributions.(1)
- - Based on net asset value, the Fund had a total return of 6.94% for the year
ended September 30, 2004. That return was the result of an increase in net
asset value per share from $14.62 on September 30, 2003 to $14.64 on
September 30, 2004, and the reinvestment of all distributions.
- - In comparison, the Lehman Brothers Municipal Bond Index had a total return of
4.60% during the year ended September 30, 2004.(2)
- - Based on the most recent dividend and a share price of $15.20, the Fund had a
market yield of 6.12% at September 30, 2004.(3) The Fund's market yield is
equivalent to a taxable yield of 10.18%.(4)
[CHART]
RATING DISTRIBUTION(5),(6)
By total investments
<Table>
AAA 82.8%
AA 6.1%
A 5.3%
BBB 2.6%
Non-Rated 3.2%
</Table>
* Private insurance does not decrease the risk of loss of principal associated
with this investment.
[PHOTO OF THOMAS J. FETTER]
Thomas J. Fetter
Portfolio Manager
MANAGEMENT UPDATE
- - Ohio's economy continued to stabilize in 2004, as the pace of job loss eased
significantly. While the long-troubled manufacturing sector contracted
further, the health care and educational sectors remained a strong source of
new job creation. The state's September 2004 jobless rate was 6.0%, down
slightly from 6.1% a year ago.
- - Insured* general obligations (GOs) were the Fund's largest sector weighting
at September 30, 2004, a high-quality investment in a still-recovering
economy. The Fund's investments were focused on school district and local
board of education issues, which typically had stable revenues, a
characteristic valued by investors.
- - Insured* public education bonds represented the second largest weighting
within the Fund. Investments included universities whose stable tuition and
fee income have provided some insulation in an uncertain economic climate.
- - Insured* special tax revenue bonds provided an attractive income stream.
Investments included issues for Hamilton County and Puerto Rico, providing
issuers added flexibility in financing infrastructure-related projects.
- - At September 30, 2004, the Fund had leverage in the amount of approximately
37% of the Fund's total assets. The Fund uses leverage through the issuance
of preferred shares. Use of financial leverage creates an opportunity for
increased income, but, at the same time, creates special risks (including the
likelihood of greater volatility of net asset value and market price of
common shares).
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL
AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR
SHARE PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY
BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED
TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE
MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN.
FUND INFORMATION
as of September 30, 2004
PERFORMANCE(7)
<Table>
Average Annual Total Return (by share price, American Stock Exchange)
One Year 12.49%
Life of Fund (11/29/02) 9.73
Average Annual Total Return (by net asset value)
One Year 6.94%
Life of Fund (11/29/02) 7.51
</Table>
(1) A PORTION OF THE FUND'S INCOME MAY BE SUBJECT TO FEDERAL INCOME TAX AND/OR
ALTERNATIVE MINIMUM TAX; INCOME MAY BE SUBJECT TO STATE INCOME TAX.
(2) IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. THE INDEX'S TOTAL RETURN
DOES NOT REFLECT THE COMMISSIONS OR EXPENSES THAT WOULD HAVE BEEN INCURRED
IF AN INVESTOR INDIVIDUALLY PURCHASED OR SOLD THE SECURITIES REPRESENTED IN
THE INDEX.
(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 A MAXIMUM 39.88% COMBINED FEDERAL AND
STATE INCOME TAX RATE. A LOWER TAX RATE WOULD RESULT IN A LOWER
TAX-EQUIVALENT FIGURE.
(5) RATING DISTRIBUTION MAY NOT BE REPRESENTATIVE OF THE FUND'S CURRENT OR
FUTURE INVESTMENTS.
(6) RATING DISTRIBUTION IS DETERMINED BY DIVIDING THE TOTAL MARKET VALUE OF THE
ISSUES BY THE TOTAL INVESTMENTS OF THE FUND.
(7) RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE
CHANGE IN SHARE PRICE OR NET ASSET VALUE WITH ALL DISTRIBUTIONS REINVESTED.
PERFORMANCE RESULTS REFLECT THE EFFECT OF LEVERAGE RESULTING FROM THE
FUND'S ISSUANCE OF AUCTION PREFERRED SHARES.
11
<Page>
EATON VANCE INSURED PENNSYLVANIA MUNICIPAL BOND FUND as of September 30, 2004
INVESTMENT UPDATE
THE FUND
- - Based on share price (traded on the American Stock Exchange), the Fund had a
total return of 12.57% for the year ended September 30, 2004. That return was
the result of an increase in share price from $14.33 on September 30, 2003 to
$14.98 on September 30, 2004 and the reinvestment of $0.937 in regular
monthly dividends and $0.140 in capital gain distributions.(1)
- - Based on net asset value, the Fund had a total return of 6.43% for the year
ended September 30, 2004. That return was the result of a decrease in net
asset value per share from $14.58 on September 30, 2003 to $14.41 on
September 30, 2004, and the reinvestment of all distributions.
- - In comparison, the Lehman Brothers Municipal Bond Index had a total return of
4.60% during the year ended September 30, 2004.(2)
- - Based on the most recent dividend and a share price of $14.98, the Fund had a
market yield of 6.26% at September 30, 2004.(3) The Fund's market yield is
equivalent to a taxable yield of 9.94%.(4)
[CHART]
RATING DISTRIBUTION(5),(6)
By total investments
<Table>
AAA 91.1%
A 8.4%
BBB 0.5%
</Table>
* Private insurance does not decrease the risk of loss of principal associated
with this investment.
[PHOTO OF CYNTHIA J. CLEMSON]
Cynthia J. Clemson
Portfolio Manager
MANAGEMENT UPDATE
- - Pennsylvania's job growth turned positive in 2004, following three years of
job losses. Employment gains were spread across a range of industries,
including retail, business services, education, health care, leisure and
tourism. The Commonwealth's September 2004 jobless rate was 5.3%, down from
5.4% a year ago.
- - Insured* general obligations (GOs) were the Fund's largest sector weighting
at September 30, 2004. With a slow recovery holding down tax revenue growth,
the Fund emphasized communities and school districts that management deemed
to have stable property values and reliable revenue sources.
- - Insured* transportation bonds were prominent in the Fund. Transportation
plays a key role in Pennsylvania's manufacturing-based economy. Investments
included issues for highways, turnpikes and port authorities.
- - Insured* private education bonds were significant holdings. These investments
provided quality investments from well-regarded issuers and included issues
from private universities, a vocational institution and a private preparatory
school.
- - At September 30, 2004, the Fund had leverage in the amount of approximately
38% of the Fund's total assets. The Fund uses leverage through the issuance
of preferred shares. Use of financial leverage creates an opportunity for
increased income, but, at the same time, creates special risks (including the
likelihood of greater volatility of net asset value and market price of
common shares).
PAST PERFORMANCE IS NO GUARANTEE OF FUTURE RESULTS. RETURNS ARE HISTORICAL
AND ARE CALCULATED BY DETERMINING THE PERCENTAGE CHANGE IN NET ASSET VALUE OR
SHARE PRICE (AS APPLICABLE) WITH ALL DISTRIBUTIONS REINVESTED. INVESTMENT
RETURN AND PRINCIPAL VALUE WILL FLUCTUATE SO THAT SHARES, WHEN REDEEMED, MAY
BE WORTH MORE OR LESS THAN THEIR ORIGINAL COST. PERFORMANCE IS FOR THE STATED
TIME PERIOD ONLY; DUE TO MARKET VOLATILITY, THE FUND'S CURRENT PERFORMANCE
MAY BE LOWER OR HIGHER THAN THE QUOTED RETURN.
FUND INFORMATION
as of September 30, 2004
PERFORMANCE(7)
<Table>
Average Annual Total Return (by share price, American Stock Exchange)
One Year 12.57%
Life of Fund (11/29/02) 9.40
Average Annual Total Return (by net asset value)
One Year 6.43%
Life of Fund (11/29/02) 7.12
</Table>
(1) A PORTION OF THE FUND'S INCOME MAY BE SUBJECT TO FEDERAL INCOME TAX AND/OR
ALTERNATIVE MINIMUM TAX; INCOME MAY BE SUBJECT TO STATE INCOME TAX.
(2) IT IS NOT POSSIBLE TO INVEST DIRECTLY IN AN INDEX. THE INDEX'S TOTAL RETURN
DOES NOT REFLECT THE COMMISSIONS OR EXPENSES THAT WOULD HAVE BEEN INCURRED
IF AN INVESTOR INDIVIDUALLY PURCHASED OR SOLD THE SECURITIES REPRESENTED IN
THE INDEX.
(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 A MAXIMUM 37.00% COMBINED FEDERAL AND
STATE INCOME TAX RATE. A LOWER TAX RATE WOULD RESULT IN A LOWER
TAX-EQUIVALENT FIGURE.
(5) RATING DISTRIBUTION MAY NOT BE REPRESENTATIVE OF THE FUND'S CURRENT OR
FUTURE INVESTMENTS.
(6) RATING DISTRIBUTION IS DETERMINED BY DIVIDING THE TOTAL MARKET VALUE OF THE
ISSUES BY THE TOTAL INVESTMENTS OF THE FUND.
(7) RETURNS ARE HISTORICAL AND ARE CALCULATED BY DETERMINING THE PERCENTAGE
CHANGE IN SHARE PRICE OR NET ASSET VALUE WITH ALL DISTRIBUTIONS REINVESTED.
PERFORMANCE RESULTS REFLECT THE EFFECT OF LEVERAGE RESULTING FROM THE
FUND'S ISSUANCE OF AUCTION PREFERRED SHARES.
12
<Page>
INSURED MUNICIPAL BOND FUND II as of September 30, 2004
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 157.2%
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 1.6%
$ 1,600 Cohasset, MN, PCR, (Allete, Inc.), 4.95%, 7/1/22 $ 1,621,520
750 Minnesota Municipal Power Agency, 5.00%, 10/1/34 752,520
- -----------------------------------------------------------------------------------------------------------
$ 2,374,040
- -----------------------------------------------------------------------------------------------------------
GENERAL OBLIGATIONS -- 7.4%
$ 4,500 California, 5.25%, 4/1/30 $ 4,627,755
2,215 California, 5.50%, 11/1/33 2,348,919
4,000 New York City, NY, 5.25%, 1/15/33 4,125,760
- -----------------------------------------------------------------------------------------------------------
$ 11,102,434
- -----------------------------------------------------------------------------------------------------------
HOSPITAL -- 5.4%
$ 380 Cuyahoga County, OH, (Cleveland Clinic Health System),
5.50%, 1/1/29 $ 392,624
500 Hawaii Pacific Health, 5.60%, 7/1/33 506,335
1,000 Highlands County, FL, Health Facilities Authority,
(Adventist Health System), 5.375%, 11/15/35 1,026,040
1,500 Lehigh County, PA, General Purpose Authority,
(Lehigh Valley Health Network), 5.25%, 7/1/32 1,507,215
4,500 South Miami, FL, Health Facility Authority,
(Baptist Health), 5.25%, 11/15/33 4,589,460
- -----------------------------------------------------------------------------------------------------------
$ 8,021,674
- -----------------------------------------------------------------------------------------------------------
INSURED-ELECTRIC UTILITIES -- 11.4%
$ 2,500 Burlington, KS, PCR, (Kansas Gas & Electric Co.),
(MBIA), 5.30%, 6/1/31 $ 2,640,200
22,685 Chelan County, WA, Public Utility District No. 1,
(Columbia River), (MBIA), 0.00%, 6/1/23 8,875,733
3,900 Jea, FL, Electric System, (FSA), 5.00%, 10/1/34 3,938,649
1,500 Municipal Energy Agency, NE, (Power Supply System),
(FSA), 5.00%, 4/1/36 1,530,510
- -----------------------------------------------------------------------------------------------------------
$ 16,985,092
- -----------------------------------------------------------------------------------------------------------
INSURED-GENERAL OBLIGATIONS -- 21.1%
$ 1,600 Alvin, TX, Independent School District,
(MBIA), 3.25%, 2/15/27 $ 1,245,391
2,550 Butler County, KS, Unified School District No. 394,
(FSA), 3.50%, 9/1/24 2,179,128
1,640 California, (XLCA), Variable Rate, 10/1/28(1)(2) 1,762,246
1,515 Chicago, IL, (MBIA), 5.00%, 1/1/42 1,523,529
10,000 Chicago, IL, Board of Education, (FGIC), 0.00%, 12/1/23 3,851,300
2,000 Desert Sands, CA, Unified School District, (Election of 2001),
(FSA), 5.00%, 6/1/24 2,089,560
$ 5,830 King County, WA, (MBIA), 5.25%, 1/1/34 $ 6,046,818
2,080 Philadelphia, PA, (FSA), Variable Rate, 9/15/31(1)(2) 2,177,885
1,400 Phoenix, AZ, (AMBAC), 3.00%, 7/1/28 1,056,566
5,490 Port Orange, FL, Capital Improvements, (FGIC),
5.00%, 10/1/35 5,612,921
10,000 Washington, (Motor Vehicle Fuel), (MBIA),
0.00%, 12/1/23 3,851,300
- -----------------------------------------------------------------------------------------------------------
$ 31,396,644
- -----------------------------------------------------------------------------------------------------------
INSURED-HOSPITAL -- 2.5%
$ 3,000 Maryland HEFA, (Medlantic/Helix Issue), (FSA),
Variable Rate, 8/15/38(1)(2) $ 3,697,860
- -----------------------------------------------------------------------------------------------------------
$ 3,697,860
- -----------------------------------------------------------------------------------------------------------
INSURED-LEASE REVENUE / CERTIFICATES OF
PARTICIPATION -- 2.9%
$ 4,250 Massachusetts Development Finance Agency, (MBIA),
5.125%, 2/1/34 $ 4,354,635
- -----------------------------------------------------------------------------------------------------------
$ 4,354,635
- -----------------------------------------------------------------------------------------------------------
INSURED-PRIVATE EDUCATION -- 3.8%
$ 2,500 Massachusetts Development Finance Agency,
(Boston University), (XLCA), 6.00%, 5/15/59 $ 3,022,225
2,500 Massachusetts Development Finance Agency,
(Franklin W. Olin College), (XLCA), 5.25%, 7/1/33 2,596,650
- -----------------------------------------------------------------------------------------------------------
$ 5,618,875
- -----------------------------------------------------------------------------------------------------------
INSURED-PUBLIC EDUCATION -- 7.8%
$ 3,500 College of Charleston, SC, Academic and
Administrative Facilities, (XLCA), 5.125%, 4/1/30 $ 3,609,690
5,335 University of California, (AMBAC), 5.00%, 9/1/27 5,452,103
2,500 University of Massachusetts Building Authority, (AMBAC),
5.25%, 11/1/29 2,635,025
- -----------------------------------------------------------------------------------------------------------
$ 11,696,818
- -----------------------------------------------------------------------------------------------------------
INSURED-SEWER REVENUE -- 1.7%
$ 2,575 Tacoma, WA, Sewer Revenue, (FGIC),
5.00%, 12/1/31 $ 2,611,230
- -----------------------------------------------------------------------------------------------------------
$ 2,611,230
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE -- 7.9%
$ 4,000 Metropolitan Pier and Exposition Authority,
(McCormick Place Expansion), IL, (MBIA),
5.25%, 6/15/42 $ 4,142,440
</Table>
See notes to financial statements
13
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE (CONTINUED)
$ 2,165 San Jose, CA, Redevelopment Agency Tax, (MBIA),
Variable Rate, 8/1/32(1)(2) $ 2,242,940
5,325 Utah Transportation Authority Sales Tax, (FSA),
5.00%, 6/15/32 5,410,626
- -----------------------------------------------------------------------------------------------------------
$ 11,796,006
- -----------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 38.4%
$ 4,000 Chicago, IL, Transportation, (Skywalk), (AMBAC),
5.25%, 1/1/31 $ 4,162,280
11,900 E-470 Public Highway Authority, CO, (MBIA),
0.00%, 9/1/22 4,980,745
12,390 E-470 Public Highway Authority, CO, (MBIA),
0.00%, 9/1/24 4,517,270
2,345 Massachusetts Turnpike Authority, Metropolitan
Highway System, (AMBAC), 5.00%, 1/1/39 2,362,588
5,000 Massachusetts Turnpike Authority, Metropolitan
Highway System, (MBIA), 5.00%, 1/1/37 5,042,450
3,835 Massachusetts Turnpike Authority, Metropolitan
Highway System, (MBIA), Variable Rate, 1/1/37(1)(2) 3,932,754
13,885 Nevada Department of Business and Industry,
(Las Vegas Monorail-1st Tier), (AMBAC), 0.00%, 1/1/20 6,703,956
5,000 South Carolina Transportation Infrastructure, (AMBAC),
5.25%, 10/1/31 5,228,300
10,000 Texas Turnpike Authority, (AMBAC), 5.00%, 8/15/42 10,041,400
10,000 Triborough Bridge and Tunnel Authority, NY, (MBIA),
5.00%, 11/15/32 10,210,300
- -----------------------------------------------------------------------------------------------------------
$ 57,182,043
- -----------------------------------------------------------------------------------------------------------
INSURED-UTILITIES -- 8.5%
$ 6,500 Los Angeles, CA, Department of Water and Power,
(FGIC), 5.00%, 7/1/43 $ 6,550,180
6,000 Philadelphia, PA, Gas Works Revenue, (FSA),
5.00%, 8/1/32 6,119,400
- -----------------------------------------------------------------------------------------------------------
$ 12,669,580
- -----------------------------------------------------------------------------------------------------------
INSURED-WATER AND SEWER -- 12.7%
$ 2,240 Atlanta, GA, Water and Sewer, (FGIC),
5.00%, 11/1/38(3) $ 2,265,334
4,895 Atlanta, GA, Water and Wastewater, (MBIA),
5.00%, 11/1/39 4,950,216
8,155 Birmingham, AL, Waterworks and Sewer Board, (MBIA),
5.00%, 1/1/37 8,295,021
1,950 New York City, NY, Municipal Water Finance Authority,
(Water and Sewer System), (AMBAC), 5.00%, 6/15/38 1,985,003
1,275 Pittsburgh, PA, Water and Sewer Authority, (AMBAC),
Variable Rate, 12/1/27(1)(2) 1,410,061
- -----------------------------------------------------------------------------------------------------------
$ 18,905,635
- -----------------------------------------------------------------------------------------------------------
INSURED-WATER REVENUE -- 14.1%
$ 2,330 Contra Costa, CA, Water District, (FSA),
Variable Rate, 10/1/32(1)(2) $ 2,476,976
3,450 Detroit, MI, Water Supply System, (MBIA),
Variable Rate, 7/1/34(1)(2) 3,647,651
7,000 Metropolitan Water District, CA, (FGIC),
5.00%, 10/1/36 7,155,260
2,870 San Antonio, TX, Water Revenue, (FGIC),
5.00%, 5/15/23 2,993,496
4,610 Texas Southmost Regional Water Authority, (MBIA),
5.00%, 9/1/32 4,675,416
- -----------------------------------------------------------------------------------------------------------
$ 20,948,799
- -----------------------------------------------------------------------------------------------------------
LEASE REVENUE / CERTIFICATES OF PARTICIPATION -- 3.1%
$ 4,500 Metropolitan Transportation Authority of New York,
Lease Contract, 5.125%, 1/1/29 $ 4,603,635
- -----------------------------------------------------------------------------------------------------------
$ 4,603,635
- -----------------------------------------------------------------------------------------------------------
OTHER REVENUE -- 1.5%
$ 1,500 Capital Trust Agency, FL, (Seminole Tribe Convention),
8.95%, 10/1/33 $ 1,743,465
430 Capital Trust Agency, FL, (Seminole Tribe Convention),
10.00%, 10/1/33 515,690
- -----------------------------------------------------------------------------------------------------------
$ 2,259,155
- -----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 5.4%
$ 7,980 Puerto Rico Highway and Transportation Authority,
5.125%, 7/1/43 $ 8,111,111
- -----------------------------------------------------------------------------------------------------------
$ 8,111,111
- -----------------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 157.2%
(IDENTIFIED COST $226,809,767) $ 234,335,266
- -----------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- 1.5% $ 2,260,939
- -----------------------------------------------------------------------------------------------------------
AUCTION PREFERRED SHARES PLUS CUMULATIVE
UNPAID DIVIDENDS -- (58.7)% $ (87,539,187)
- -----------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
COMMON SHARES -- 100.0% $ 149,057,018
- -----------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
14
<Page>
AMBAC - AMBAC Financial Group, Inc.
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 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
September 30, 2004, 84.4% 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 an individual
financial institution ranged from 4.7% to 36.3% of total investments.
(1) Security has been issued as a leveraged inverse floater bond.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
2004, the aggregate value of the securities is $21,348,373 or 14.3% of the
Fund's net assets.
(3) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
15
<Page>
INSURED CALIFORNIA MUNICIPAL BOND FUND II as of September 30, 2004
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 155.8%
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
GENERAL OBLIGATIONS -- 5.8%
$ 750 California, 5.00%, 2/1/21 $ 785,070
900 California, 5.25%, 4/1/30 925,551
1,465 California, 5.50%, 11/1/33 1,553,574
- -----------------------------------------------------------------------------------------------------------
$ 3,264,195
- -----------------------------------------------------------------------------------------------------------
INSURED-ELECTRIC UTILITIES -- 10.4%
$ 3,475 Glendale Electric, (MBIA), 5.00%, 2/1/32 $ 3,544,569
1,650 Puerto Rico Electric Power Authority, (FSA),
Variable Rate, 7/1/29(1)(2) 1,818,234
455 Sacramento Municipal Electric Utility District, (FSA),
Variable Rate, 8/15/28(2)(3) 486,582
- -----------------------------------------------------------------------------------------------------------
$ 5,849,385
- -----------------------------------------------------------------------------------------------------------
INSURED-GENERAL OBLIGATIONS -- 36.2%
$ 1,250 California, (AMBAC), 5.00%, 4/1/27 $ 1,280,225
415 California, (XLCA), Variable Rate, 10/1/28(2)(3) 445,934
5,000 Clovis Unified School District, (FGIC), 0.00%, 8/1/20 2,346,350
2,000 Laguna Salada Union School District, (FGIC),
0.00%, 8/1/22 828,140
2,350 Long Beach Unified School District, (Election of 1999),
(FSA), 5.00%, 8/1/31 2,394,109
1,710 Los Angeles Unified School District, (FGIC),
5.375%, 7/1/25 1,826,023
1,945 Los Osos Community Services, Wastewater
Assessment District, (MBIA), 5.00%, 9/2/33 1,972,288
1,000 Mount Diablo Unified School District, (FSA),
5.00%, 8/1/25 1,034,990
735 San Diego Unified School District, (MBIA),
Variable Rate, 7/1/24(2)(3) 1,079,818
4,300 San Mateo County Community College District,
(Election of 2001), (FGIC), 0.00%, 9/1/21 1,887,829
1,750 Santa Ana Unified School District, (MBIA),
5.00%, 8/1/32 1,786,155
1,000 Simi Valley Unified School District, (MBIA),
5.00%, 8/1/28 1,030,100
3,200 Union Elementary School District, (FGIC), 0.00%, 9/1/22 1,320,960
2,600 Union Elementary School District, (FGIC), 0.00%, 9/1/23 1,006,798
- -----------------------------------------------------------------------------------------------------------
$ 20,239,719
- -----------------------------------------------------------------------------------------------------------
INSURED-LEASE REVENUE / CERTIFICATES OF
PARTICIPATION -- 21.0%
$ 4,000 Anaheim, Public Financing Authority Lease Revenue,
(FSA), 5.00%, 3/1/37 $ 4,032,800
$ 4,250 California Public Works Board Lease Revenue,
(Department of General Services), (AMBAC),
5.00%, 12/1/27(4) $ 4,336,827
2,250 Orange County Water District Certificates of Participation,
(MBIA), 5.00%, 8/15/34 2,281,928
1,075 San Jose Financing Authority, (Civic Center), (AMBAC),
5.00%, 6/1/32 1,089,341
- -----------------------------------------------------------------------------------------------------------
$ 11,740,896
- -----------------------------------------------------------------------------------------------------------
INSURED-PUBLIC EDUCATION -- 14.3%
$ 4,000 California University, (AMBAC), 5.00%, 11/1/33 $ 4,078,440
3,790 University of California, (FGIC), 5.125%, 9/1/31 3,905,974
- -----------------------------------------------------------------------------------------------------------
$ 7,984,414
- -----------------------------------------------------------------------------------------------------------
INSURED-SEWER REVENUE -- 16.6%
$ 5,700 East Bay Municipal Utility District Water System,
(MBIA), 5.00%, 6/1/38 $ 5,776,779
3,425 Los Angeles Wastewater Treatment System, (FGIC),
5.00%, 6/1/28 3,509,152
- -----------------------------------------------------------------------------------------------------------
$ 9,285,931
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL ASSESSMENT REVENUE -- 15.9%
$ 2,500 Cathedral City Public Financing Authority,
(Housing Redevelopment), (MBIA), 5.00%, 8/1/33 $ 2,539,650
2,500 Cathedral City Public Financing Authority, (Tax Allocation
Redevelopment), (MBIA), 5.00%, 8/1/33 2,539,650
1,750 Irvine Public Facility and Infrastructure Authority
Assessment, (AMBAC), 5.00%, 9/2/26 1,796,183
2,000 Murrieta Redevelopment Agency Tax, (MBIA),
5.00%, 8/1/32 2,032,360
- -----------------------------------------------------------------------------------------------------------
$ 8,907,843
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE -- 11.2%
$ 1,000 San Francisco Bay Area Rapid Transportation District
Sales Tax Revenue, (AMBAC), 5.00%, 7/1/31 $ 1,018,560
3,750 San Francisco Bay Area Rapid Transportation District,
(AMBAC), 5.125%, 7/1/36 3,846,488
1,335 San Jose Redevelopment Agency Tax, (MBIA),
Variable Rate, 8/1/32(2)(3) 1,383,060
- -----------------------------------------------------------------------------------------------------------
$ 6,248,108
- -----------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 15.1%
$ 4,000 California Infrastructure and Economic Development,
(Bay Area Toll Bridges), (AMBAC), 5.00%, 7/1/36 $ 4,086,440
</Table>
See notes to financial statements
16
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION (CONTINUED)
$ 2,250 Los Angeles County Metropolitan Transportation
Authority, (FGIC), 5.25%, 7/1/30 $ 2,340,135
6,670 San Joaquin Hills Transportation Corridor Agency,
(MBIA), 0.00%, 1/15/27 2,058,095
- -----------------------------------------------------------------------------------------------------------
$ 8,484,670
- -----------------------------------------------------------------------------------------------------------
INSURED-UTILITIES -- 3.2%
$ 1,750 Los Angeles Department of Water and Power,
(FGIC), 5.125%, 7/1/41 $ 1,775,690
- -----------------------------------------------------------------------------------------------------------
$ 1,775,690
- -----------------------------------------------------------------------------------------------------------
INSURED-WATER REVENUE -- 1.6%
$ 835 Contra Costa Water District, (FSA),
Variable Rate, 10/1/32(2)(3) $ 887,672
- -----------------------------------------------------------------------------------------------------------
$ 887,672
- -----------------------------------------------------------------------------------------------------------
WATER REVENUE -- 4.5%
$ 2,500 California Water Resource, (Central Valley),
5.00%, 12/1/29 $ 2,534,475
- -----------------------------------------------------------------------------------------------------------
$ 2,534,475
- -----------------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 155.8%
(IDENTIFIED COST $85,114,128) $ 87,202,998
- -----------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- 4.5% $ 2,511,805
- -----------------------------------------------------------------------------------------------------------
AUCTION PREFERRED SHARES PLUS CUMULATIVE
UNPAID DIVIDENDS -- (60.3)% $ (33,759,746)
- -----------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
COMMON SHARES -- 100.0% $ 55,955,057
- -----------------------------------------------------------------------------------------------------------
</Table>
AMBAC - AMBAC Financial Group, Inc.
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 September 30, 2004, 93.3% 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 an
individual financial institution ranged from 0.5% to 32.1% of total investments.
(1) Security has been issued as an inverse floater bond.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
2004, the aggregate value of the securities is $6,101,300 or 10.9% of the
Fund's net assets.
(3) Security has been issued as a leveraged inverse floater bond.
(4) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
17
<Page>
INSURED FLORIDA MUNICIPAL BOND FUND as of September 30, 2004
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 158.2%
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 5.4%
$ 2,000 Jacksonville Electric Authority, (Electric System),
5.25%, 10/1/31 $ 2,017,080
- -----------------------------------------------------------------------------------------------------------
$ 2,017,080
- -----------------------------------------------------------------------------------------------------------
HOSPITAL -- 5.6%
$ 1,050 Highlands County, Health Facility Authority, (Adventist
Health), 5.25%, 11/15/23 $ 1,069,110
1,000 South Miami Health Facility Authority, (Baptist Health),
5.25%, 11/15/33 1,019,880
- -----------------------------------------------------------------------------------------------------------
$ 2,088,990
- -----------------------------------------------------------------------------------------------------------
INSURED-ELECTRIC UTILITIES -- 5.6%
$ 1,500 Deltona, Utility System Revenue, (MBIA), 5.00%, 10/1/33 $ 1,532,175
500 Puerto Rico Electric Power Authority, (FSA), Variable Rate,
7/1/29(1)(2) 550,980
- -----------------------------------------------------------------------------------------------------------
$ 2,083,155
- -----------------------------------------------------------------------------------------------------------
INSURED-ESCROWED / PREREFUNDED -- 6.1%
$ 1,025 Dade County, Professional Sports Franchise Facility, (MBIA),
Escrowed to Maturity, 5.25%, 10/1/30 $ 1,119,689
1,000 Polk County, Transportation Improvements, Prerefunded to
12/1/10, (FSA), 5.375%, 12/1/25 1,140,590
- -----------------------------------------------------------------------------------------------------------
$ 2,260,279
- -----------------------------------------------------------------------------------------------------------
INSURED-GENERAL OBLIGATIONS -- 14.2%
$ 1,345 Florida Board of Education Capital Outlay, (Public Education),
(MBIA), 5.00%, 6/1/32 $ 1,368,672
2,000 Florida Board of Education Capital Outlay, (Public Education),
(MBIA), 5.00%, 6/1/32 2,035,200
1,520 Florida Municipal Loan Council Revenue, (MBIA),
0.00%, 4/1/23 611,861
1,520 Florida Municipal Loan Council Revenue, (MBIA),
0.00%, 4/1/24 575,882
655 Puerto Rico, (FSA), 5.125%, 7/1/30 678,488
- -----------------------------------------------------------------------------------------------------------
$ 5,270,103
- -----------------------------------------------------------------------------------------------------------
INSURED-HOSPITAL -- 21.6%
$ 1,000 Coral Gables Health Facilities Authority, (Baptist Health
System of South Florida), (FSA), 5.00%, 8/15/29 $ 1,018,290
1,500 Jacksonville Economic Development Commission,
(Mayo Clinic), (MBIA), 5.50%, 11/15/36 1,610,325
$ 1,000 Jacksonville Economic Development Commission,
(Mayo Clinic), (MBIA), 5.50%, 11/15/36 $ 1,073,550
1,500 Miami-Dade County, Health Facilities Authority, (Miami
Children's Hospital), (AMBAC), 5.125%, 8/15/26 1,547,955
1,510 Sarasota County, Public Hospital Board, (Sarasota Memorial
Hospital), (MBIA), 5.25%, 7/1/24(3) 1,658,116
1,000 Sarasota County, Public Hospital Board, (Sarasota Memorial
Hospital), (MBIA), 5.50%, 7/1/28 1,114,900
- -----------------------------------------------------------------------------------------------------------
$ 8,023,136
- -----------------------------------------------------------------------------------------------------------
INSURED-LEASE REVENUE / CERTIFICATES OF
PARTICIPATION -- 8.0%
$ 1,605 Port Palm Beach District, (Improvements), (XLCA),
0.00%, 9/1/24 $ 589,163
1,950 Port Palm Beach District, (Improvements), (XLCA),
0.00%, 9/1/25 666,939
1,700 Port Palm Beach District, (Improvements), (XLCA),
0.00%, 9/1/26 540,685
1,000 Puerto Rico Public Building Authority, (XLCA),
5.50%, 7/1/21 1,163,740
- -----------------------------------------------------------------------------------------------------------
$ 2,960,527
- -----------------------------------------------------------------------------------------------------------
INSURED-MISCELLANEOUS -- 16.4%
$ 1,500 Miami-Dade County, (Professional Sports Franchise),
(MBIA), 4.75%, 10/1/30 $ 1,492,230
1,740 Orange County Tourist Development, (AMBAC),
5.125%, 10/1/25 1,814,785
2,750 Village Center Community Development District, (MBIA),
5.00%, 11/1/32 2,803,817
- -----------------------------------------------------------------------------------------------------------
$ 6,110,832
- -----------------------------------------------------------------------------------------------------------
INSURED-SEWER REVENUE -- 2.7%
$ 1,000 Pinellas County, Sewer, (FSA), 5.00%, 10/1/32 $ 1,021,670
- -----------------------------------------------------------------------------------------------------------
$ 1,021,670
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL ASSESSMENT REVENUE -- 7.6%
$ 2,780 Julington Creek, Plantation Community Development District,
(MBIA), 5.00%, 5/1/29 $ 2,835,294
- -----------------------------------------------------------------------------------------------------------
$ 2,835,294
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE -- 35.9%
$ 1,000 Bay County, Sales Tax, (AMBAC), 5.125%, 9/1/27 $ 1,037,030
1,250 Bay County, Sales Tax, (AMBAC), 5.125%, 9/1/32 1,289,000
1,000 Dade County, Special Obligation Residual Certificates,
(AMBAC), Variable Rate, 10/1/35(2)(4) 1,026,610
</Table>
See notes to financial statements
18
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE (CONTINUED)
$ 1,500 Jacksonville Capital Improvements, (AMBAC),
5.00%, 10/1/30 $ 1,526,220
4,000 Jacksonville Transportation, (MBIA), 5.00%, 10/1/31 4,060,160
1,275 Jacksonville, Excise Tax, (FGIC), 5.125%, 10/1/27 1,322,417
225 Miami-Dade County, Special Obligation, (MBIA),
5.00%, 10/1/37 227,045
750 Orange County Tourist Development, (AMBAC),
Variable Rate, 10/1/30(2)(4) 820,628
1,000 Orange County, Sales Tax, (FGIC), 5.125%, 1/1/23 1,059,230
440 Puerto Rico Infrastructure Financing Authority, (AMBAC),
Variable Rate, 7/1/28(2)(4) 470,171
1,120 Sunrise Public Facility, (MBIA), 0.00%, 10/1/20 533,792
- -----------------------------------------------------------------------------------------------------------
$ 13,372,303
- -----------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 7.7%
$ 1,500 Florida Turnpike Authority, Water & Sewer Revenue,
(Department of Transportation), (FGIC), 4.50%, 7/1/27 $ 1,459,275
330 Puerto Rico Highway and Transportation Authority, (FSA),
Variable Rate, 7/1/32(2)(4) 356,486
940 Puerto Rico Highway and Transportation Authority, (MBIA),
Variable Rate, 7/1/36(2)(4) 1,037,704
- -----------------------------------------------------------------------------------------------------------
$ 2,853,465
- -----------------------------------------------------------------------------------------------------------
INSURED-UTILITY -- 4.2%
$ 1,550 Daytona Beach, Utility System Revenue, (AMBAC),
5.00%, 11/15/32 $ 1,577,885
- -----------------------------------------------------------------------------------------------------------
$ 1,577,885
- -----------------------------------------------------------------------------------------------------------
INSURED-WATER AND SEWER -- 14.2%
$ 2,000 Marco Island Utility System, (MBIA), 5.00%, 10/1/27 $ 2,056,200
1,000 Marion County Utility System, (MBIA), 5.00%, 12/1/33 1,021,700
1,000 Sunrise Utility System, (AMBAC), 5.00%, 10/1/28 1,035,200
1,000 Sunrise Utility System, (AMBAC), 5.50%, 10/1/18 1,159,980
- -----------------------------------------------------------------------------------------------------------
$ 5,273,080
- -----------------------------------------------------------------------------------------------------------
INSURED-WATER REVENUE -- 1.4%
$ 500 Tampa Bay Water Utility System, (FGIC),
Variable Rate, 10/1/27(1)(2) $ 501,295
- -----------------------------------------------------------------------------------------------------------
$ 501,295
- -----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 1.6%
$ 250 Puerto Rico Highway and Transportation Authority,
5.125%, 7/1/39 $ 254,690
350 Puerto Rico Highway and Transportation Authority,
5.125%, 7/1/43 355,751
- -----------------------------------------------------------------------------------------------------------
$ 610,441
- -----------------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 158.2%
(IDENTIFIED COST $57,137,949) $ 58,859,535
- -----------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- 2.3% $ 853,770
- -----------------------------------------------------------------------------------------------------------
AUCTION PREFERRED SHARES PLUS CUMULATIVE
UNPAID DIVIDENDS -- (60.5)% $ (22,501,845)
- -----------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
COMMON SHARES -- 100.0% $ 37,211,460
- -----------------------------------------------------------------------------------------------------------
</Table>
AMBAC - AMBAC Financial Group, Inc.
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 Florida 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
September 30, 2004, 92.0% of the securities in the portfolio of investments are
backed by bond insurance of various financial institutions and financial
guaranty assurance agencies. The aggregate percentage insured by an individual
financial institution ranged from 5.0% to 48.9% of total investments.
(1) Security has been issued as an inverse floater bond.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
2004, the aggregate value of the securities is $4,763,874 or 12.8% of the
Fund's net assets.
(3) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
(4) Security has been issued as a leveraged inverse floater bond.
See notes to financial statements
19
<Page>
INSURED MASSACHUSETTS MUNICIPAL BOND FUND as of September 30, 2004
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 157.9%
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
HOSPITAL -- 10.2%
$ 1,500 Massachusetts HEFA, (Partners Healthcare System),
5.75%, 7/1/32 $ 1,617,765
1,000 Massachusetts HEFA, (South Shore Hospital),
5.75%, 7/1/29 1,028,310
- -----------------------------------------------------------------------------------------------------------
$ 2,646,075
- -----------------------------------------------------------------------------------------------------------
INSURED-ESCROWED / PREREFUNDED -- 9.1%
$ 3,000 Massachusetts College Building Authority, (MBIA),
Escrowed to Maturity, 0.00%, 5/1/26 $ 1,013,730
1,000 Puerto Rico, (FGIC), Prerefunded to 7/1/12,
Variable Rate, 7/1/32(1)(2) 1,349,470
- -----------------------------------------------------------------------------------------------------------
$ 2,363,200
- -----------------------------------------------------------------------------------------------------------
INSURED-GENERAL OBLIGATIONS -- 18.7%
$ 1,500 Martha's Vineyard, (AMBAC), 5.00%, 5/1/32(3) $ 1,532,700
2,000 Massachusetts, (MBIA), 5.25%, 8/1/28 2,200,420
1,020 Maynard, (MBIA), 5.50%, 2/1/22 1,136,749
- -----------------------------------------------------------------------------------------------------------
$ 4,869,869
- -----------------------------------------------------------------------------------------------------------
INSURED-HOSPITAL -- 11.6%
$ 1,750 Massachusetts HEFA, (Harvard Pilgrim Health), (FSA),
5.00%, 7/1/28 $ 1,762,302
1,210 Massachusetts HEFA, (New England Medical Center ), (FGIC),
5.00%, 5/15/25 1,245,078
- -----------------------------------------------------------------------------------------------------------
$ 3,007,380
- -----------------------------------------------------------------------------------------------------------
INSURED-LEASE REVENUE / CERTIFICATES OF
PARTICIPATION -- 15.9%
$ 1,750 Massachusetts Development Finance Agency,
(SRBC Project), (MBIA), 5.125%, 2/1/34 $ 1,793,085
1,000 Plymouth County Correctional Facility, (AMBAC),
5.00%, 4/1/22 1,040,320
1,000 Puerto Rico Public Building Authority, (CIFG),
Variable Rate, 7/1/36(1)(2) 1,302,960
- -----------------------------------------------------------------------------------------------------------
$ 4,136,365
- -----------------------------------------------------------------------------------------------------------
INSURED-MISCELLANEOUS -- 12.0%
$ 2,100 Massachusetts Development Finance Agency, (WGBH
Educational Foundation), (AMBAC), 5.375%, 1/1/42 $ 2,225,685
800 Puerto Rico Municipal Finance Agency, (FSA),
Variable Rate, 8/1/27(1)(2) 883,008
- -----------------------------------------------------------------------------------------------------------
$ 3,108,693
- -----------------------------------------------------------------------------------------------------------
INSURED-PRIVATE EDUCATION -- 20.4%
$ 1,000 Massachusetts Development Finance Agency,
(Boston University), (XLCA), 6.00%, 5/15/59 $ 1,208,890
1,500 Massachusetts Development Finance Agency,
(Franklin W. Olin College), (XLCA), 5.25%, 7/1/33 1,557,990
1,000 Massachusetts IFA, (College of the Holy Cross),
(MBIA), 5.00%, 9/1/23 1,033,250
1,500 Massachusetts IFA, (Tufts University), (MBIA),
4.75%, 2/15/28 1,501,335
- -----------------------------------------------------------------------------------------------------------
$ 5,301,465
- -----------------------------------------------------------------------------------------------------------
INSURED-PUBLIC EDUCATION -- 17.5%
$ 700 Massachusetts College Building Authority, (XLCA),
5.50%, 5/1/39 $ 791,819
1,000 Massachusetts HEFA, (University of Massachusetts),
(FGIC), 5.125%, 10/1/34 1,030,090
1,150 Massachusetts HEFA, (Worcester State College), (AMBAC),
5.00%, 11/1/32 1,175,818
1,500 University of Massachusetts Building Authority, (AMBAC),
5.125%, 11/1/34 1,550,550
- -----------------------------------------------------------------------------------------------------------
$ 4,548,277
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE -- 4.1%
$ 1,000 Massachusetts State Special Obligation--Convention Center,
(FGIC), 5.25%, 1/1/29 $ 1,053,470
- -----------------------------------------------------------------------------------------------------------
$ 1,053,470
- -----------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 14.6%
$ 5,700 Massachusetts Turnpike Authority, (MBIA), 0.00%, 1/1/28 $ 1,731,603
1,250 Massachusetts Turnpike Authority, Metropolitan Highway
System, (AMBAC), 5.00%, 1/1/39 1,259,375
415 Massachusetts Turnpike Authority, Metropolitan Highway
System, (MBIA), Variable Rate, 1/1/37(1)(2) 425,578
335 Puerto Rico Highway and Transportation Authority, (MBIA),
Variable Rate, 7/1/36(1)(2) 369,820
- -----------------------------------------------------------------------------------------------------------
$ 3,786,376
- -----------------------------------------------------------------------------------------------------------
INSURED-WATER AND SEWER -- 9.8%
$ 2,500 Massachusetts Water Resource Authority, (FSA),
5.00%, 8/1/32 $ 2,541,800
- -----------------------------------------------------------------------------------------------------------
$ 2,541,800
- -----------------------------------------------------------------------------------------------------------
PRIVATE EDUCATION -- 9.3%
$ 500 Massachusetts Development Finance Agency,
(Massachusetts College of Pharmacy), 5.75%, 7/1/33 $ 517,805
750 Massachusetts Development Finance Agency,
(Middlesex School), 5.00%, 9/1/33 759,120
</Table>
See notes to financial statements
20
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
PRIVATE EDUCATION (CONTINUED)
$ 600 Massachusetts Development Finance Agency,
(Western New England College), 6.125%, 12/1/32 $ 630,414
500 Massachusetts HEFA, (Boston College), 5.125%, 6/1/24 522,125
- -----------------------------------------------------------------------------------------------------------
$ 2,429,464
- -----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 4.7%
$ 1,200 Puerto Rico Highway and Transportation Authority,
5.125%, 7/1/43 $ 1,219,716
- -----------------------------------------------------------------------------------------------------------
$ 1,219,716
- -----------------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 157.9%
(IDENTIFIED COST $39,277,400) $ 41,012,150
- -----------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- 1.8% $ 469,974
- -----------------------------------------------------------------------------------------------------------
AUCTION PREFERRED SHARES PLUS CUMULATIVE
UNPAID DIVIDENDS -- (59.7)% $ (15,500,000)
- -----------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
COMMON SHARES -- 100.0% $ 25,982,124
- -----------------------------------------------------------------------------------------------------------
</Table>
AMBAC - AMBAC Financial Group, Inc.
CIFG - CDC IXIS Financial Guaranty North America, Inc.
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 Massachusetts
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 September 30, 2004, 84.7% 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 an
individual financial institution ranged from 3.2% to 27.3% of total investments.
(1) Security has been issued as a leveraged inverse floater bond.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
2004, the aggregate value of the securities is $4,330,836 or 16.7% of the
Fund's net assets.
(3) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
21
<Page>
INSURED MICHIGAN MUNICIPAL BOND FUND as of September 30, 2004
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 157.5%
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 5.7%
$ 1,250 Michigan Strategic Fund, (Detroit Edison Pollution Control),
5.45%, 9/1/29 $ 1,285,525
- -----------------------------------------------------------------------------------------------------------
$ 1,285,525
- -----------------------------------------------------------------------------------------------------------
HOSPITAL -- 22.7%
$ 1,000 Michigan Hospital Finance Authority, (McLaren
Obligated Group), 4.50%, 10/15/21 $ 969,290
1,000 Michigan Hospital Finance Authority, (Oakwood
Hospital), 5.75%, 4/1/32 1,038,310
1,500 Michigan Hospital Finance Authority, (Sparrow
Obligation Group), 5.625%, 11/15/36 1,523,340
1,500 Michigan Hospital Finance Authority, (Trinity
Health), 5.375%, 12/1/30 1,542,810
- -----------------------------------------------------------------------------------------------------------
$ 5,073,750
- -----------------------------------------------------------------------------------------------------------
INSURED-ELECTRIC UTILITIES -- 2.3%
$ 500 Michigan Strategic Fund Resource Recovery,
(Detroit Edison Co.), (XLCA), 5.25%, 12/15/32 $ 517,480
- -----------------------------------------------------------------------------------------------------------
$ 517,480
- -----------------------------------------------------------------------------------------------------------
INSURED-ESCROWED / PREREFUNDED -- 5.3%
$ 1,150 Michigan Hospital Finance Authority, (St. John Health
System), (AMBAC), Escrowed to Maturity,
5.00%, 5/15/28 $ 1,192,216
- -----------------------------------------------------------------------------------------------------------
$ 1,192,216
- -----------------------------------------------------------------------------------------------------------
INSURED-GENERAL OBLIGATIONS -- 38.9%
$ 1,550 Detroit School District, (School Bond Loan Fund),
(FSA), 5.125%, 5/1/31 $ 1,594,361
1,960 Grand Rapids and Kent County Joint Building
Authority, (Devos Place), (MBIA), 0.00%, 12/1/27 595,272
4,000 Grand Rapids and Kent County Joint Building Authority,
(MBIA), 0.00%, 12/1/30 1,020,120
750 Greenville Public Schools, (MBIA), 5.00%, 5/1/25 770,925
1,000 Melvindle-Northern Allen Park School District,
(Building and Site), (FSA), 5.00%, 5/1/28 1,022,990
1,330 Okemos Public School District, (MBIA), 0.00%, 5/1/19 690,988
1,095 Puerto Rico, (FGIC), Variable Rate, 7/1/32(1)(2) 1,477,670
1,500 Reed City Public Schools, (FSA), 5.00%, 5/1/29 1,538,430
- -----------------------------------------------------------------------------------------------------------
$ 8,710,756
- -----------------------------------------------------------------------------------------------------------
INSURED-HOSPITAL -- 9.6%
$ 500 Michigan Hospital Finance Authority, Mid-Michigan
Obligation Group, (AMBAC), 5.00%, 4/15/32 $ 506,790
1,590 Royal Oak Hospital Finance Authority Revenue, (William
Beaumont Hospital), (MBIA), 5.25%, 11/15/35 1,638,463
- -----------------------------------------------------------------------------------------------------------
$ 2,145,253
- -----------------------------------------------------------------------------------------------------------
INSURED-LEASE REVENUE / CERTIFICATES OF
PARTICIPATION -- 13.8%
$ 1,750 Michigan House of Representatives, (AMBAC),
0.00%, 8/15/22 $ 744,362
2,615 Michigan House of Representatives, (AMBAC),
0.00%, 8/15/23 1,040,979
1,000 Puerto Rico Public Building Authority, (CIFG),
Variable Rate, 7/1/36(1)(2) 1,302,960
- -----------------------------------------------------------------------------------------------------------
$ 3,088,301
- -----------------------------------------------------------------------------------------------------------
INSURED-PUBLIC EDUCATION -- 10.4%
$ 1,500 Central Michigan University, (AMBAC),
5.05%, 10/1/32(3) $ 1,539,840
750 Lake Superior University, (AMBAC), 5.125%, 11/15/26 776,783
- -----------------------------------------------------------------------------------------------------------
$ 2,316,623
- -----------------------------------------------------------------------------------------------------------
INSURED-SEWER REVENUE -- 5.7%
$ 1,250 Detroit Sewer Disposal, (FGIC), 5.125%, 7/1/31 $ 1,282,375
- -----------------------------------------------------------------------------------------------------------
$ 1,282,375
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX -- 4.6%
$ 1,000 Ypsilanti Community Utilities Authority, (San Sewer
System), (FGIC), 5.00%, 5/1/32 $ 1,017,770
- -----------------------------------------------------------------------------------------------------------
$ 1,017,770
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE -- 15.9%
$ 500 Detroit Downtown Development, (MBIA),
4.75%, 7/1/25 $ 502,610
1,500 Lansing Building Authority, (MBIA), 5.00%, 6/1/29 1,535,400
1,500 Wayne Charter County, (Airport Hotel-Detroit
Metropolitan Airport), (MBIA), 5.00%, 12/1/30 1,529,625
- -----------------------------------------------------------------------------------------------------------
$ 3,567,635
- -----------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 4.6%
$ 1,000 Michigan Trunk Line, (FSA), 5.00%, 11/1/25 $ 1,029,710
- -----------------------------------------------------------------------------------------------------------
$ 1,029,710
- -----------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
22
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
INSURED-UTILITY -- 7.0%
$ 1,000 Lansing Board Water Supply, Steam and Eletctric
Utility, (FSA), 5.00%, 7/1/25 $ 1,036,880
510 Lansing Board Water Supply, Steam and Eletctric Utility,
(FSA), 5.00%, 7/1/26 525,453
- -----------------------------------------------------------------------------------------------------------
$ 1,562,333
- -----------------------------------------------------------------------------------------------------------
INSURED-WATER REVENUE -- 11.0%
$ 1,600 Detroit Water Supply System, (FGIC), 5.00%, 7/1/30 $ 1,626,928
800 Detroit Water Supply System, (MBIA), Variable Rate,
7/1/34(1)(2) 845,832
- -----------------------------------------------------------------------------------------------------------
$ 2,472,760
- -----------------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 157.5%
(IDENTIFIED COST $33,729,275) $ 35,262,487
- -----------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- 2.8% $ 634,263
- -----------------------------------------------------------------------------------------------------------
AUCTION PREFERRED SHARES PLUS CUMULATIVE
UNPAID DIVIDENDS -- (60.3)% $ (13,501,071)
- -----------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
COMMON SHARES -- 100.0% $ 22,395,679
- -----------------------------------------------------------------------------------------------------------
</Table>
AMBAC - AMBAC Financial Group, Inc.
CIFG - CDC IXIS Financial Guaranty North America, Inc.
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 Michigan municipalities.
The ability of the issuers of the debt securities to meet their obligations may
be affected by economic developments in a specific industry or municipality. In
order to reduce the risk associated with such economic developments, at
September 30, 2004, 86.9% 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 an individual
financial institution ranged from 1.6% to 27.4% of total investments.
(1) Security has been issued as a leveraged inverse floater bond.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
2004, the aggregate value of the securities is $3,626,462 or 16.2% of the
Fund's net assets.
(3) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
23
<Page>
INSURED NEW JERSEY MUNICIPAL BOND FUND as of September 30, 2004
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 157.0%
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
EDUCATION -- 3.3%
$ 1,250 New Jersey Educational Facilities Authority, (Stevens
Institute of Technology), 5.25%, 7/1/32 $ 1,273,162
- -----------------------------------------------------------------------------------------------------------
$ 1,273,162
- -----------------------------------------------------------------------------------------------------------
HOSPITAL -- 2.9%
$ 500 Camden County Improvement Authority,
(Cooper Health), 5.75%, 2/15/34 $ 504,270
610 New Jersey Health Care Facilities Financing Authority,
(Capital Health System), 5.375%, 7/1/33 613,751
- -----------------------------------------------------------------------------------------------------------
$ 1,118,021
- -----------------------------------------------------------------------------------------------------------
INSURED-ESCROWED / PREREFUNDED -- 5.5%
$ 1,550 Puerto Rico, (FGIC), Prerefunded to 7/1/12,
Variable Rate, 7/1/32(1)(2) $ 2,091,679
- -----------------------------------------------------------------------------------------------------------
$ 2,091,679
- -----------------------------------------------------------------------------------------------------------
INSURED-GENERAL OBLIGATIONS -- 22.1%
$ 2,260 Bayonne, (FSA), 0.00%, 7/1/22 $ 971,122
2,415 Bayonne, (FSA), 0.00%, 7/1/23 978,703
1,500 Bordentown Regional School District Board of
Education, (FGIC), 5.00%, 1/15/30(3) 1,543,140
265 Florence Township Fire District No. 1, (MBIA),
5.125%, 7/15/28 276,896
170 Florence Township Fire District No.1, (MBIA),
5.125%, 7/15/29 177,332
5,500 Irvington Township, (FSA), 0.00%, 7/15/26 1,868,955
1,500 Jersey City, (FSA), 5.25%, 9/1/23 1,612,065
1,000 Washington Township and Mercer County Board of
Education, (FGIC), 5.00%, 1/1/27 1,029,640
- -----------------------------------------------------------------------------------------------------------
$ 8,457,853
- -----------------------------------------------------------------------------------------------------------
INSURED-HOSPITAL -- 10.5%
$ 2,750 New Jersey Health Care Facilities, (Englewood Hospital),
(MBIA), 5.00%, 8/1/31 $ 2,806,100
1,200 New Jersey Health Care Facilities, (Jersey City Medical
Center), (AMBAC), 5.00%, 8/1/41 1,218,732
- -----------------------------------------------------------------------------------------------------------
$ 4,024,832
- -----------------------------------------------------------------------------------------------------------
INSURED-INDUSTRIAL DEVELOPMENT REVENUE -- 8.4%
$ 3,170 Lafayette Yard, Community Development Corporation,
(Hotel and Conference Center), (FGIC), 5.00%, 4/1/35 $ 3,222,051
- -----------------------------------------------------------------------------------------------------------
$ 3,222,051
- -----------------------------------------------------------------------------------------------------------
INSURED-LEASE REVENUE / CERTIFICATES OF
PARTICIPATION -- 14.6%
$ 10,000 Garden State New Jersey Preservation Trust, (FSA),
0.00%, 11/1/28 $ 3,001,100
1,250 Middlesex County, (MBIA), 5.00%, 8/1/31 1,277,125
1,000 Puerto Rico Public Building Authority, (CIFG), Variable
Rate, 7/1/36(1)(2) 1,302,960
- -----------------------------------------------------------------------------------------------------------
$ 5,581,185
- -----------------------------------------------------------------------------------------------------------
INSURED-MISCELLANEOUS -- 2.7%
$ 950 Puerto Rico Municipal Finance Agency, (FSA), Variable
Rate, 8/1/27(1)(2) $ 1,048,572
- -----------------------------------------------------------------------------------------------------------
$ 1,048,572
- -----------------------------------------------------------------------------------------------------------
INSURED-PRIVATE EDUCATION -- 2.7%
$ 1,000 New Jersey Educational Facilities Authority, (Kean
University), (FGIC), 5.00%, 7/1/28 $ 1,029,790
- -----------------------------------------------------------------------------------------------------------
$ 1,029,790
- -----------------------------------------------------------------------------------------------------------
INSURED-PUBLIC EDUCATION -- 26.8%
$ 1,400 Monmouth, (Brookdale Community College), (AMBAC),
5.00%, 8/1/29 $ 1,427,930
1,000 New Jersey Educational Facilities Authority, (Rowan
University), (FGIC), 5.00%, 7/1/27 1,029,910
1,600 New Jersey Educational Facilities Authority, (Rowan
University), (FGIC), 5.00%, 7/1/33 1,637,552
1,500 New Jersey Educational Facilities Authority, (Rowan
University), (FGIC), 5.125%, 7/1/30 1,559,940
4,490 University of New Jersey Medicine and Dentistry,
(AMBAC), 5.00%, 4/15/32 4,606,650
- -----------------------------------------------------------------------------------------------------------
$ 10,261,982
- -----------------------------------------------------------------------------------------------------------
INSURED-SEWER REVENUE -- 6.5%
$ 900 Long Branch Sewer Authority, (FGIC), 4.75%, 6/1/23 $ 934,524
2,350 Passaic Valley Sewer Commissioners, (FGIC),
2.50%, 12/1/32 1,554,314
- -----------------------------------------------------------------------------------------------------------
$ 2,488,838
- -----------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
24
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE -- 2.2%
$ 750 New Jersey EDA, (Motor Vehicle Surcharges), (MBIA),
5.25%, 7/1/26 $ 824,708
- -----------------------------------------------------------------------------------------------------------
$ 824,708
- -----------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 22.5%
$ 780 Delaware River and Bay Authority, (MBIA),
5.00%, 1/1/33 $ 800,904
800 Newark Housing Authority, (Newark Marine Terminal),
(MBIA), 5.00%, 1/1/23 838,280
1,500 Newark Housing Authority, (Newark Marine Terminal),
(MBIA), 5.00%, 1/1/37 1,531,305
1,290 Port Authority of New York and New Jersey, (FSA),
Variable Rate, 11/1/27(1)(2) 1,413,027
1,000 Puerto Rico Highway and Transportation Authority,
(MBIA), 5.00%, 7/1/33 1,028,850
950 South Jersey Transportation Authority, (AMBAC),
5.00%, 11/1/29 972,430
2,000 South Jersey Transportation Authority, (FGIC),
5.00%, 11/1/33 2,058,200
- -----------------------------------------------------------------------------------------------------------
$ 8,642,996
- -----------------------------------------------------------------------------------------------------------
INSURED-WATER AND SEWER -- 4.5%
$ 4,500 Middlesex County Improvements Authority Utilities
System, (Perth Amboy), (AMBAC), 0.00%, 9/1/24 $ 1,723,995
- -----------------------------------------------------------------------------------------------------------
$ 1,723,995
- -----------------------------------------------------------------------------------------------------------
INSURED-WATER REVENUE -- 4.7%
$ 1,800 Bayonne Municipal Utilities Authority, Water and Sewer
Revenue, (XLCA), 4.75%, 4/1/33 $ 1,801,872
- -----------------------------------------------------------------------------------------------------------
$ 1,801,872
- -----------------------------------------------------------------------------------------------------------
LEASE REVENUE / CERTIFICATES OF PARTICIPATION -- 4.0%
$ 1,500 New Jersey EDA, (School Facilities), 5.00%, 6/15/26 $ 1,540,920
- -----------------------------------------------------------------------------------------------------------
$ 1,540,920
- -----------------------------------------------------------------------------------------------------------
SENIOR LIVING / LIFE CARE -- 1.5%
$ 600 New Jersey EDA, (Fellowship Village), 5.50%, 1/1/25 $ 585,282
- -----------------------------------------------------------------------------------------------------------
$ 585,282
- -----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 11.6%
$ 300 Delaware River Joint Toll Bridge Commission,
5.00%, 7/1/24 $ 310,293
2,250 Port Authority of New York and New Jersey,
5.00%, 9/1/38 2,286,855
1,825 South Jersey Port Authority, (Marine Terminal),
5.10%, 1/1/33 1,861,810
- -----------------------------------------------------------------------------------------------------------
$ 4,458,958
- -----------------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 157.0%
(IDENTIFIED COST $57,443,552) $ 60,176,696
- -----------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- 1.7% $ 652,427
- -----------------------------------------------------------------------------------------------------------
AUCTION PREFERRED SHARES PLUS CUMULATIVE
UNPAID DIVIDENDS -- (58.7)% $ (22,502,793)
- -----------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
COMMON SHARES -- 100.0% $ 38,326,330
- -----------------------------------------------------------------------------------------------------------
</Table>
AMBAC - AMBAC Financial Group, Inc.
CIFG - CDC IXIS Financial Guaranty North America, Inc.
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 New Jersey
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 September 30, 2004, 85.1% 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 an
individual financial institution ranged from 2.2% to 29.4% of total investments.
(1) Security has been issued as a leveraged inverse floater bond.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
2004, the aggregate value of the securities is $5,856,238 or 15.3% of the
Fund's net assets.
(3) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
25
<Page>
INSURED NEW YORK MUNICIPAL BOND FUND II as of September 30, 2004
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 155.6%
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
GENERAL OBLIGATIONS -- 5.9%
$ 500 New York, 5.25%, 8/15/26 $ 524,120
1,650 New York, NY, 5.25%, 1/15/28 1,713,789
- -----------------------------------------------------------------------------------------------------------
$ 2,237,909
- -----------------------------------------------------------------------------------------------------------
HOSPITAL -- 2.0%
- -----------------------------------------------------------------------------------------------------------
$ 750 Suffolk County Industrial Development Agency,
(Huntington Hospital), 5.875%, 11/1/32 $ 773,400
- -----------------------------------------------------------------------------------------------------------
$ 773,400
- -----------------------------------------------------------------------------------------------------------
INSURED-ELECTRIC UTILITIES -- 14.0%
$ 6,800 Long Island Power Authority Electric Systems Revenue,
(FSA), 0.00%, 6/1/22 $ 3,041,844
2,250 Long Island Power Authority, (NY Electric System),
(AMBAC), 5.00%, 9/1/34 2,300,085
- -----------------------------------------------------------------------------------------------------------
$ 5,341,929
- -----------------------------------------------------------------------------------------------------------
INSURED-ESCROWED / PREREFUNDED -- 3.7%
$ 580 New York City Trust Cultural Resources, (Museum of History),
Prerefunded to 7/1/09, (AMBAC), Variable Rate,
7/1/29(1)(2) $ 735,852
500 Puerto Rico, (FGIC), Prerefunded to 7/1/12, Variable Rate,
7/1/32(1)(2) 674,735
- -----------------------------------------------------------------------------------------------------------
$ 1,410,587
- -----------------------------------------------------------------------------------------------------------
INSURED-GENERAL OBLIGATIONS -- 4.1%
$ 1,500 Sachem School District, (MBIA), 5.00%, 6/15/27 $ 1,552,890
- -----------------------------------------------------------------------------------------------------------
$ 1,552,890
- -----------------------------------------------------------------------------------------------------------
INSURED-HOSPITAL -- 11.9%
$ 1,250 New York City Health and Hospital Corp., (Health
Systems), (AMBAC), 5.00%, 2/15/23 $ 1,305,125
6,125 New York Dormitory Authority, (Memorial Sloan-Kettering
Cancer Center), (MBIA), 0.00%, 7/1/26 2,134,624
3,365 New York Dormitory Authority, (Memorial Sloan-Kettering
Center), (MBIA), 0.00%, 7/1/27 1,104,898
- -----------------------------------------------------------------------------------------------------------
$ 4,544,647
- -----------------------------------------------------------------------------------------------------------
INSURED-LEASE REVENUE / CERTIFICATES OF
PARTICIPATION -- 11.5%
$ 3,000 New York Urban Development Corp., (Personal Income Tax),
(FGIC), 5.00%, 3/15/33 $ 3,065,310
1,000 Puerto Rico Public Building Authority, (CIFG), Variable
Rate, 7/1/36(1)(2) 1,302,960
- -----------------------------------------------------------------------------------------------------------
$ 4,368,270
- -----------------------------------------------------------------------------------------------------------
INSURED-MISCELLANEOUS -- 5.4%
$ 2,000 New York City Cultural Resource Trust, (Museum of
Modern Art), (AMBAC), 5.125%, 7/1/31 $ 2,065,700
- -----------------------------------------------------------------------------------------------------------
$ 2,065,700
- -----------------------------------------------------------------------------------------------------------
INSURED-PRIVATE EDUCATION -- 26.6%
$ 1,000 New York City Industrial Development Agency,
(New York University), (AMBAC), 5.00%, 7/1/31 $ 1,019,140
2,500 New York Dormitory Authority, (Brooklyn Law School),
(XLCA), 5.125%, 7/1/30 2,579,875
2,265 New York Dormitory Authority, (FIT Student Housing Corp.),
(FGIC), 5.00%, 7/1/29 2,327,333
1,500 New York Dormitory Authority, (Fordham University),
(FGIC), 5.00%, 7/1/32 1,530,315
1,000 New York Dormitory Authority, (New York University),
(AMBAC), 5.00%, 7/1/31 1,019,140
500 New York Dormitory Authority, (Skidmore College),
(FGIC), 5.00%, 7/1/33 512,180
1,125 New York Dormitory Authority, (University of Rochester),
(MBIA), 5.00%, 7/1/27 1,147,151
- -----------------------------------------------------------------------------------------------------------
$ 10,135,134
- -----------------------------------------------------------------------------------------------------------
INSURED-PUBLIC EDUCATION -- 6.0%
$ 2,245 New York Dormitory Authority, (School Districts Financing
Program), (MBIA), 5.00%, 10/1/30 $ 2,296,253
- -----------------------------------------------------------------------------------------------------------
$ 2,296,253
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE -- 6.7%
$ 2,500 New York City Transitional Finance Authority, (MBIA),
4.75%, 5/1/23 $ 2,543,450
- -----------------------------------------------------------------------------------------------------------
$ 2,543,450
- -----------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
26
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 24.2%
$ 1,000 Metropolitan Transportation Authority, (FGIC),
5.00%, 11/15/31 $ 1,020,060
2,000 Metropolitan Transportation Authority, (FGIC),
5.25%, 11/15/31 2,097,840
835 Port Authority of New York and New Jersey,
(FSA), Variable Rate, 11/1/27(1)(2) 914,634
1,000 Puerto Rico Highway and Transportation Authority,
(AMBAC), Variable Rate, 7/1/28(1)(2) 1,074,330
2,000 Puerto Rico Highway and Transportation Authority, (MBIA),
5.00%, 7/1/33 2,057,700
2,000 Triborough Bridge and Tunnel Authority, (MBIA),
5.00%, 11/15/32 2,042,060
- -----------------------------------------------------------------------------------------------------------
$ 9,206,624
- -----------------------------------------------------------------------------------------------------------
INSURED-WATER AND SEWER -- 14.5%
$ 3,000 New York City Municipal Water Finance Authority, (AMBAC),
5.00%, 6/15/38(3) $ 3,053,850
2,400 Niagara Falls, Public Water Authority and Sewer System,
(MBIA), 5.00%, 7/15/34 2,452,056
- -----------------------------------------------------------------------------------------------------------
$ 5,505,906
- -----------------------------------------------------------------------------------------------------------
INSURED-WATER REVENUE -- 2.7%
$ 1,000 Buffalo Municipal Water Finance Authority, (FSA),
5.125%, 7/1/32 $ 1,029,570
- -----------------------------------------------------------------------------------------------------------
$ 1,029,570
- -----------------------------------------------------------------------------------------------------------
OTHER REVENUE -- 1.6%
$ 500 Puerto Rico Infrastructure Financing Authority, Variable Rate,
10/1/32(1)(2) $ 627,090
- -----------------------------------------------------------------------------------------------------------
$ 627,090
- -----------------------------------------------------------------------------------------------------------
PRIVATE EDUCATION -- 4.1%
$ 1,000 Dutchess County, Industrial Development Agency,
(Marist College), 5.00%, 7/1/22 $ 1,028,850
500 Rensselaer County Industrial Development Agency,
(Rensselaer Polytech Institute), 5.125%, 8/1/27 512,415
- -----------------------------------------------------------------------------------------------------------
$ 1,541,265
- -----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 10.7%
$ 1,500 Port Authority of New York and New Jersey,
5.00%, 9/1/38 $ 1,524,570
2,500 Triborough Bridge and Tunnel Authority, 5.125%, 1/1/31 2,566,800
- -----------------------------------------------------------------------------------------------------------
$ 4,091,370
- -----------------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 155.6%
(IDENTIFIED COST $57,024,545) $ 59,271,994
- -----------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- 3.5% $ 1,318,509
- -----------------------------------------------------------------------------------------------------------
AUCTION PREFERRED SHARES PLUS CUMULATIVE
UNPAID DIVIDENDS -- (59.1)% $ (22,501,862)
- -----------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
COMMON SHARES-- 100.0% $ 38,088,641
- -----------------------------------------------------------------------------------------------------------
</Table>
AMBAC - AMBAC Financial Group, Inc.
CIFG - CDC IXIS Financial Guaranty North America, Inc.
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 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
September 30, 2004, 84.4% 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 an individual
financial institution ranged from 2.2% to 29.2% of total investments.
(1) Security has been issued as a leveraged inverse floater bond.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
2004, the aggregate value of the securities is $5,329,601 or 14.0% of the
Fund's net assets.
(3) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
27
<Page>
INSURED OHIO MUNICIPAL BOND FUND as of September 30, 2004
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 156.5%
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 2.8%
$ 1,000 Puerto Rico Electric Power Authority, 5.125%, 7/1/29 $ 1,030,140
- -----------------------------------------------------------------------------------------------------------
$ 1,030,140
- -----------------------------------------------------------------------------------------------------------
GENERAL OBLIGATIONS -- 4.0%
$ 1,415 Granville School District, 5.00%, 12/1/24 $ 1,463,549
- -----------------------------------------------------------------------------------------------------------
$ 1,463,549
- -----------------------------------------------------------------------------------------------------------
HOSPITAL -- 2.5%
$ 900 Cuyahoga County, (Cleveland Clinic Health System),
5.50%, 1/1/29 $ 929,898
- -----------------------------------------------------------------------------------------------------------
$ 929,898
- -----------------------------------------------------------------------------------------------------------
INSURED-ELECTRIC UTILITIES -- 10.0%
$ 4,000 Ohio Municipal Electric Generation Agency, (MBIA),
0.00%, 2/15/25 $ 1,459,480
1,775 Ohio Municipal Electric Generation Agency, (MBIA),
0.00%, 2/15/26 606,180
5,000 Ohio Municipal Electric Generation Agency, (MBIA),
0.00%, 2/15/27 1,609,750
- -----------------------------------------------------------------------------------------------------------
$ 3,675,410
- -----------------------------------------------------------------------------------------------------------
INSURED-ESCROWED / PREREFUNDED -- 2.0%
$ 665 Puerto Rico Public Buildings Authority, Government
Facilities Revenue, (XLCA), Prerefunded to 7/1/12,
5.25%, 7/1/36 $ 746,502
- -----------------------------------------------------------------------------------------------------------
$ 746,502
- -----------------------------------------------------------------------------------------------------------
INSURED-GENERAL OBLIGATIONS -- 55.9%
$ 1,500 Ashtabula School District, (Construction Improvements),
(FGIC), 5.00%, 12/1/30(1) $ 1,532,700
2,000 Cincinnati School District, (School Improvements),
(FSA), 5.00%, 12/1/22 2,101,800
1,000 Cleveland, Municipal School District, (FSA),
5.00%, 12/1/27 1,028,830
1,500 Columbus School District, (FSA), 5.00%, 12/1/32 1,540,350
2,500 Cuyahoga Community College District, (AMBAC),
5.00%, 12/1/32 2,556,300
2,500 Olentangy School District, (School Facility Construction
and Improvements), (MBIA), 5.00%, 12/1/30 2,554,500
2,400 Plain School District, (FGIC), 0.00%, 12/1/27 719,112
1,400 Powell, (FGIC), 5.50%, 12/1/32 1,513,708
$ 2,500 Springboro Community School District, (MBIA),
5.00%, 12/1/32 $ 2,564,625
750 Tecumseh School District, (FGIC), 4.75%, 12/1/31 750,855
2,600 Trotwood-Madison School District, (School Improvements),
(FGIC), 5.00%, 12/1/30 2,656,680
1,000 Zanesville School District, (School Improvements),
(MBIA), 5.05%, 12/1/29 1,035,170
- -----------------------------------------------------------------------------------------------------------
$ 20,554,630
- -----------------------------------------------------------------------------------------------------------
INSURED-HOSPITAL -- 7.0%
$ 1,000 Hamilton County, (Cincinnati Childrens Hospital), (FGIC),
5.00%, 5/15/32 $ 1,018,770
1,500 Hamilton County, (Cincinnati Childrens Hospital), (FGIC),
5.125%, 5/15/28 1,554,105
- -----------------------------------------------------------------------------------------------------------
$ 2,572,875
- -----------------------------------------------------------------------------------------------------------
INSURED-LEASE REVENUE / CERTIFICATES OF
PARTICIPATION -- 11.0%
$ 1,400 Cleveland, (Cleveland Stadium), (AMBAC),
5.25%, 11/15/27 $ 1,464,652
1,000 Puerto Rico Public Building Authority, (CIFG), Variable
Rate, 7/1/36(2)(3) 1,302,960
235 Puerto Rico Public Buildings Authority, Government Facilities
Revenue, (XLCA), 5.25%, 7/1/36 246,207
1,000 Summit County, (Civic Theater Project), (AMBAC),
5.00%, 12/1/33 1,018,320
- -----------------------------------------------------------------------------------------------------------
$ 4,032,139
- -----------------------------------------------------------------------------------------------------------
INSURED-MISCELLANEOUS -- 0.9%
$ 280 Puerto Rico Municipal Finance Agency, (FSA),
Variable Rate, 8/1/27(2)(3) $ 309,053
- -----------------------------------------------------------------------------------------------------------
$ 309,053
- -----------------------------------------------------------------------------------------------------------
INSURED-PUBLIC EDUCATION -- 16.4%
$ 3,000 Cincinnati Technical and Community College, (AMBAC),
5.00%, 10/1/28 $ 3,084,510
1,170 Ohio University, (FSA), 5.25%, 12/1/23 1,259,400
500 University of Akron, (FGIC), Variable Rate, 1/1/29(3)(4) 648,325
1,000 University of Cincinnati, (AMBAC), 5.00%, 6/1/31 1,021,110
- -----------------------------------------------------------------------------------------------------------
$ 6,013,345
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE -- 15.7%
$ 4,315 Hamilton County, Sales Tax, (AMBAC), 0.00%, 12/1/22 $ 1,836,550
5,000 Hamilton County, Sales Tax, (AMBAC), 0.00%, 12/1/23 1,993,450
</Table>
See notes to financial statements
28
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE (CONTINUED)
$ 1,000 Hamilton County, Sales Tax, (AMBAC), 0.00%, 12/1/24 $ 374,890
875 Puerto Rico Infrastructure Financing Authority, (AMBAC),
Variable Rate, 7/1/28(3)(4) 914,996
615 Puerto Rico Infrastructure Financing Authority, (AMBAC),
Variable Rate, 7/1/28(2)(3) 657,171
- -----------------------------------------------------------------------------------------------------------
$ 5,777,057
- -----------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 15.7%
- -----------------------------------------------------------------------------------------------------------
$ 4,750 Cleveland Airport System, (FSA), 5.00%, 1/1/31 $ 4,822,248
885 Puerto Rico Highway and Transportation Authority, (AMBAC),
Variable Rate, 7/1/28(2)(3) 950,782
- -----------------------------------------------------------------------------------------------------------
$ 5,773,030
- -----------------------------------------------------------------------------------------------------------
POOLED LOANS -- 4.6%
$ 1,500 Cleveland-Cuyahoga County Port Authority,
(Garfield Heights), 5.25%, 5/15/23 $ 1,482,360
190 Rickenbacker Port Authority Capital Funding, (Oasbo),
5.375%, 1/1/32 198,637
- -----------------------------------------------------------------------------------------------------------
$ 1,680,997
- -----------------------------------------------------------------------------------------------------------
PRIVATE EDUCATION -- 8.0%
$ 1,000 Ohio Higher Educational Facilities Authority, (Oberlin
College), 5.00%, 10/1/33 $ 1,019,240
1,000 Ohio Higher Educational Facilities Authority, (Oberlin
College), Variable Rate, 10/1/29(3)(4) 1,030,540
850 Ohio Higher Educational Facilities Commission, (John Carroll
University), 5.25%, 11/15/33 884,323
- -----------------------------------------------------------------------------------------------------------
$ 2,934,103
- -----------------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 156.5%
(IDENTIFIED COST $55,590,179) $ 57,492,728
- -----------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- 3.1% $ 1,131,748
- -----------------------------------------------------------------------------------------------------------
AUCTION PREFERRED SHARES PLUS CUMULATIVE
UNPAID DIVIDENDS -- (59.6)% $ (21,878,594)
- -----------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
COMMON SHARES-- 100.0% $ 36,745,882
- -----------------------------------------------------------------------------------------------------------
</Table>
AMBAC - AMBAC Financial Group, Inc.
CIFG - CDC IXIS Financial Guaranty North America, Inc.
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 Ohio 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
September 30, 2004, 86.0% of the securities in the portfolio of investments are
backed by bond insurance of various financial institutions and financial
guaranty assurance agencies. The aggregate percentage insured by an individual
financial institution ranged from 1.7% to 27.6% of total investments.
(1) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
(2) Security has been issued as a leveraged inverse floater bond.
(3) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
2004, the aggregate value of the securities is $5,813,827 or 15.8% of the
Fund's net assets.
(4) Security has been issued as an inverse floater bond.
See notes to financial statements
29
<Page>
INSURED PENNSYLVANIA MUNICIPAL BOND FUND as of September 30, 2004
PORTFOLIO OF INVESTMENTS
TAX-EXEMPT INVESTMENTS -- 158.9%
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
ELECTRIC UTILITIES -- 0.8%
$ 325 Puerto Rico Electric Power Authority,
Variable Rate, 7/1/29(1)(2) $ 344,591
- -----------------------------------------------------------------------------------------------------------
$ 344,591
- -----------------------------------------------------------------------------------------------------------
HOSPITAL -- 8.1%
$ 750 Lancaster County Hospital Authority, 5.50%, 3/15/26 $ 764,475
350 Lebanon County Health Facility Authority, (Good Samaritan
Hospital), 6.00%, 11/15/35 357,486
1,500 Lehigh County General Purpose Authority, (Lehigh Valley
Health Network), 5.25%, 7/1/32 1,507,215
750 Pennsylvania HEFA, (UPMC Health System),
6.00%, 1/15/31 792,713
- -----------------------------------------------------------------------------------------------------------
$ 3,421,889
- -----------------------------------------------------------------------------------------------------------
INSURED-ELECTRIC UTILITIES -- 4.6%
$ 400 Puerto Rico Electric Power Authority, (FSA), Variable
Rate, 7/1/29(2)(3) $ 461,176
1,400 Puerto Rico Electric Power Authority, (FSA), 5.125%, 7/1/26 1,474,326
- -----------------------------------------------------------------------------------------------------------
$ 1,935,502
- -----------------------------------------------------------------------------------------------------------
INSURED-ESCROWED / PREREFUNDED -- 2.4%
$ 1,000 Pennsylvania Turnpike Commision, Oil Franchise Tax,
(AMBAC), Escrowed to Maturity, 4.75%, 12/1/27 $ 1,018,600
- -----------------------------------------------------------------------------------------------------------
$ 1,018,600
- -----------------------------------------------------------------------------------------------------------
INSURED-GAS UTILITIES -- 5.4%
$ 1,355 Philadelphia Natural Gas Works, (FSA),
5.125%, 8/1/31 $ 1,390,474
875 Philadelphia Natural Gas Works, (FSA),
Variable Rate, 7/1/28(1) 895,029
- -----------------------------------------------------------------------------------------------------------
$ 2,285,503
- -----------------------------------------------------------------------------------------------------------
INSURED-GENERAL OBLIGATIONS -- 41.9%
$ 250 Allegheny County, (FGIC), 5.25%, 11/1/21 $ 271,225
1,650 Armstrong County, (MBIA), 5.40%, 6/1/31 1,756,524
4,300 Butler School District, (FSA), 5.00%, 4/1/31 4,399,588
4,845 Canon McMillan School District, (FGIC), 0.00%, 12/1/33 1,058,875
500 Canon McMillan School District, (FGIC), 5.25%, 12/1/34 522,410
1,000 Gateway, School District Alleghany County, (FGIC),
5.00%, 10/15/32 1,021,650
2,555 McKeesport School District, (MBIA), 0.00%, 10/1/21 1,136,822
$ 2,000 Pennridge School District, (MBIA), 5.00%, 2/15/29 $ 2,045,900
500 Philadelphia, (FSA), 5.00%, 9/15/31 507,845
300 Philadelphia, (FSA), 5.25%, 9/15/25 318,471
585 Philadelphia, (FSA), Variable Rate, 9/15/31(2)(3) 612,530
1,000 Pine-Richland School District, (FSA), 5.00%, 9/1/29 1,018,390
400 Puerto Rico, (FGIC), Variable Rate, 7/1/32(2)(3) 539,788
2,500 Upper Clair Township School District, (FSA),
5.00%, 7/15/32 2,545,025
- -----------------------------------------------------------------------------------------------------------
$ 17,755,043
- -----------------------------------------------------------------------------------------------------------
INSURED-HOSPITAL -- 6.1%
$ 1,500 Southcentral Pennsylvania General Authority, (York
Hospital/Wellspan Health), (MBIA), 5.25%, 5/15/31 $ 1,551,300
1,000 Washington County Hospital Authority, (Washington
Hospital), (AMBAC), 5.125%, 7/1/28 1,020,630
- -----------------------------------------------------------------------------------------------------------
$ 2,571,930
- -----------------------------------------------------------------------------------------------------------
INSURED-INDUSTRIAL DEVELOPMENT REVENUE -- 4.1%
$ 1,700 Allegheny County IDA, (MBIA), 5.00%, 11/1/29 $ 1,735,632
- -----------------------------------------------------------------------------------------------------------
$ 1,735,632
- -----------------------------------------------------------------------------------------------------------
INSURED-LEASE REVENUE / CERTIFICATES OF
PARTICIPATION -- 7.4%
$ 1,300 Philadelphia Authority for Industrial Development Lease
Revenue, (FSA), 5.125%, 10/1/26 $ 1,345,084
1,700 Philadelphia Authority for Industrial Development Lease
Revenue, (FSA), 5.25%, 10/1/30 1,769,241
- -----------------------------------------------------------------------------------------------------------
$ 3,114,325
- -----------------------------------------------------------------------------------------------------------
INSURED-PRIVATE EDUCATION -- 17.6%
$ 1,000 Chester County IDA Educational Facility, (Westtown School),
(AMBAC), 5.00%, 1/1/31 $ 1,017,260
3,365 Delaware County, (Villanova University), (MBIA),
5.00%, 12/1/28 3,413,557
3,000 Pennsylvania HEFA, (Temple University), (MBIA),
5.00%, 4/1/29(4) 3,045,360
- -----------------------------------------------------------------------------------------------------------
$ 7,476,177
- -----------------------------------------------------------------------------------------------------------
INSURED-PUBLIC EDUCATION -- 8.3%
$ 2,400 Lycoming County Authority, (Pennsylvania College of
Technology), (AMBAC), 5.25%, 5/1/32 $ 2,506,968
1,000 Pennsylvania HEFA, (Clarion University Foundation),
(XLCA), 5.00%, 7/1/33 1,015,870
- -----------------------------------------------------------------------------------------------------------
$ 3,522,838
- -----------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
30
<Page>
<Table>
<Caption>
PRINCIPAL AMOUNT
(000'S OMITTED) SECURITY VALUE
- -----------------------------------------------------------------------------------------------------------
INSURED-SPECIAL TAX REVENUE -- 10.4%
$ 4,350 Pittsburgh and Allegheny County Public Auditorium,
(AMBAC), 5.00%, 2/1/29 $ 4,418,991
- -----------------------------------------------------------------------------------------------------------
$ 4,418,991
- -----------------------------------------------------------------------------------------------------------
INSURED-TRANSPORTATION -- 22.0%
$ 2,000 Allegheny County Port Authority, (FGIC), 5.00%, 3/1/25 $ 2,061,780
1,000 Allegheny County Port Authority, (FGIC), 5.00%, 3/1/29 1,019,510
1,500 Pennsylvania Turnpike Commission Registration Fee,
(AMBAC), 5.00%, 7/15/31 1,532,535
3,750 Pennsylvania Turnpike Commission, (AMBAC),
5.00%, 7/15/41 3,793,613
815 Puerto Rico Highway and Transportation Authority,
(MBIA), Variable Rate, 7/1/36(2)(3) 899,711
- -----------------------------------------------------------------------------------------------------------
$ 9,307,149
- -----------------------------------------------------------------------------------------------------------
INSURED-WATER AND SEWER -- 14.5%
$ 1,555 Erie Sewer Authority, (AMBAC), 0.00%, 12/1/25 $ 534,360
2,155 Erie Sewer Authority, (AMBAC), 0.00%, 12/1/25 740,544
1,920 Erie Sewer Authority, (AMBAC), 0.00%, 12/1/26 620,582
2,500 Pennsylvania University Sewer Authority, (MBIA),
5.00%, 11/1/26 2,560,550
1,000 Philadelphia Water & Wastewater, (FGIC), Variable Rate,
11/1/31(2)(3) 1,056,820
580 Pittsburgh Water and Sewer Authority, (AMBAC),
Variable Rate, 12/1/27(2)(3) 641,439
- -----------------------------------------------------------------------------------------------------------
$ 6,154,295
- -----------------------------------------------------------------------------------------------------------
TRANSPORTATION -- 5.3%
$ 1,400 Delaware River Joint Toll Bridge Commission,
5.00%, 7/1/28 $ 1,422,022
800 Puerto Rico Highway and Transportation Authority,
5.125%, 7/1/43 813,144
- -----------------------------------------------------------------------------------------------------------
$ 2,235,166
- -----------------------------------------------------------------------------------------------------------
TOTAL TAX-EXEMPT INVESTMENTS -- 158.9%
(IDENTIFIED COST $65,541,147) $ 67,297,631
- -----------------------------------------------------------------------------------------------------------
OTHER ASSETS, LESS LIABILITIES -- 2.5% $ 1,054,616
- -----------------------------------------------------------------------------------------------------------
AUCTION PREFERRED SHARES PLUS CUMULATIVE
UNPAID DIVIDENDS -- (61.4)% $ (26,000,000)
- -----------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO
COMMON SHARES -- 100.0% $ 42,352,247
- -----------------------------------------------------------------------------------------------------------
</Table>
AMBAC - AMBAC Financial Group, Inc.
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 Pennsylvania
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 September 30, 2004, 91.1% 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 an
individual financial institution ranged from 1.5% to 27.0% of total investments.
(1) Security has been issued as an inverse floater bond.
(2) Security exempt from registration under Rule 144A of the Securities Act of
1933. These securities may be sold in transactions exempt from
registration, normally to qualified institutional buyers. At September 30,
2004, the aggregate value of the securities is $4,556,055 or 10.8% of the
Fund's net assets.
(3) Security has been issued as a leveraged inverse floater bond.
(4) Security (or a portion thereof) has been segregated to cover margin
requirements on open financial futures contracts.
See notes to financial statements
31
<Page>
EATON VANCE INSURED MUNICIPAL BOND FUNDS as of September 30, 2004
FINANCIAL STATEMENTS
STATEMENTS OF ASSETS AND LIABILITIES
AS OF SEPTEMBER 30, 2004
<Table>
<Caption>
INSURED INSURED INSURED
MUNICIPAL FUND II CALIFORNIA FUND II FLORIDA FUND
- --------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments --
Identified cost $ 226,809,767 $ 85,114,128 $ 57,137,949
Unrealized appreciation 7,525,499 2,088,870 1,721,586
- --------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS, AT VALUE $ 234,335,266 $ 87,202,998 $ 58,859,535
- --------------------------------------------------------------------------------------------------------------------------------
Cash $ -- $ 1,437,428 $ --
Receivable from the Transfer Agent -- 24,024 16,773
Interest receivable 3,264,744 1,010,809 1,139,979
Receivable for daily variation margin on open
financial futures contracts 203,125 81,250 53,625
Prepaid expenses 33,830 -- --
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 237,836,965 $ 89,756,509 $ 60,069,912
- --------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Due to bank $ 1,183,720 $ -- $ 315,862
Accrued expenses 57,040 41,706 40,745
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 1,240,760 $ 41,706 $ 356,607
- --------------------------------------------------------------------------------------------------------------------------------
Auction preferred shares at liquidation value plus
cumulative unpaid dividends 87,539,187 33,759,746 22,501,845
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 149,057,018 $ 55,955,057 $ 37,211,460
- --------------------------------------------------------------------------------------------------------------------------------
SOURCES OF NET ASSETS
Common Shares, $0.01 par value, unlimited number
of shares authorized $ 99,161 $ 38,555 $ 25,635
Additional paid-in capital 140,606,199 54,650,147 36,336,339
Accumulated net realized gain (loss) (computed
on the basis of identified cost) 101,748 (954,948) (899,763)
Accumulated undistributed net investment income 1,566,379 456,720 241,693
Net unrealized appreciation (computed on the
basis of identified cost) 6,683,531 1,764,583 1,507,556
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 149,057,018 $ 55,955,057 $ 37,211,460
- --------------------------------------------------------------------------------------------------------------------------------
AUCTION PREFERRED SHARES ISSUED AND OUTSTANDING
(LIQUIDATION PREFERENCE OF $25,000 PER SHARE)
3,500 1,350 900
- --------------------------------------------------------------------------------------------------------------------------------
COMMON SHARES OUTSTANDING
9,916,105 3,855,544 2,563,484
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER COMMON SHARE
NET ASSETS APPLICABLE TO COMMON SHARES
DIVIDED BY COMMON SHARES ISSUED AND OUTSTANDING $ 15.03 $ 14.51 $ 14.52
- --------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
32
<Page>
<Table>
<Caption>
INSURED INSURED INSURED
MASSACHUSETTS FUND MICHIGAN FUND NEW JERSEY FUND
- ----------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments --
Identified cost $ 39,277,400 $ 33,729,275 $ 57,443,552
Unrealized appreciation 1,734,750 1,533,212 2,733,144
- ----------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS, AT VALUE $ 41,012,150 $ 35,262,487 $ 60,176,696
- ----------------------------------------------------------------------------------------------------------------------------------
Cash $ -- $ 64,830 $ --
Receivable from the Transfer Agent 4,299 2,583 4,104
Interest receivable 556,516 568,713 788,967
Receivable for daily variation margin on open
financial futures contracts 32,500 34,531 40,625
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 41,605,465 $ 35,933,144 $ 61,010,392
- ----------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Due to bank $ 86,339 $ -- $ 142,053
Accrued expenses 37,002 36,394 39,216
- ----------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 123,341 $ 36,394 $ 181,269
- ----------------------------------------------------------------------------------------------------------------------------------
Auction preferred shares at liquidation value plus
cumulative unpaid dividends 15,500,000 13,501,071 22,502,793
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 25,982,124 $ 22,395,679 $ 38,326,330
- ----------------------------------------------------------------------------------------------------------------------------------
SOURCES OF NET ASSETS
Common Shares, $0.01 par value, unlimited number
of shares authorized $ 17,472 $ 15,090 $ 25,576
Additional paid-in capital 24,747,251 21,371,031 36,245,454
Accumulated net realized loss (computed on
the basis of identified cost) (657,399) (556,618) (934,961)
Accumulated undistributed net investment income 291,640 207,270 446,605
Net unrealized appreciation (computed on the
basis of identified cost) 1,583,160 1,358,906 2,543,656
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 25,982,124 $ 22,395,679 $ 38,326,330
- ----------------------------------------------------------------------------------------------------------------------------------
AUCTION PREFERRED SHARES ISSUED AND OUTSTANDING
(LIQUIDATION PREFERENCE OF $25,000 PER SHARE)
620 540 900
- ----------------------------------------------------------------------------------------------------------------------------------
COMMON SHARES OUTSTANDING
1,747,195 1,509,044 2,557,596
- ----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER COMMON SHARE
NET ASSETS APPLICABLE TO COMMON SHARES DIVIDED BY COMMON
SHARES ISSUED AND OUTSTANDING $ 14.87 $ 14.84 $ 14.99
- ----------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
33
<Page>
<Table>
<Caption>
INSURED INSURED INSURED
NEW YORK FUND II OHIO FUND PENNSYLVANIA FUND
- ---------------------------------------------------------------------------------------------------------------------------------
ASSETS
Investments --
Identified cost $ 57,024,545 $ 55,590,179 $ 65,541,147
Unrealized appreciation 2,247,449 1,902,549 1,756,484
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENTS, AT VALUE $ 59,271,994 $ 57,492,728 $ 67,297,631
- ---------------------------------------------------------------------------------------------------------------------------------
Cash $ 505,038 $ 295,299 $ 71,984
Receivable from the Transfer Agent -- 6,045 2,690
Interest receivable 793,493 820,560 952,706
Receivable for daily variation margin on
open financial futures contracts 54,844 50,781 61,344
Prepaid expenses 439 -- --
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS $ 60,625,808 $ 58,665,413 $ 68,386,355
- ---------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
Payable to affiliate for Trustees' fees $ -- $ -- $ 75
Accrued expenses 35,305 40,937 34,033
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES $ 35,305 $ 40,937 $ 34,108
- ---------------------------------------------------------------------------------------------------------------------------------
Auction preferred shares at liquidation value plus
cumulative unpaid dividends 22,501,862 21,878,594 26,000,000
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 38,088,641 $ 36,745,882 $ 42,352,247
- ---------------------------------------------------------------------------------------------------------------------------------
SOURCES OF NET ASSETS
Common Shares, $0.01 par value, unlimited
number of shares authorized $ 25,539 $ 25,092 $ 29,397
Additional paid-in capital 36,190,165 35,558,119 41,664,298
Accumulated net realized loss (computed on
the basis of identified cost) (450,730) (645,737) (1,160,706)
Accumulated undistributed net investment income 303,550 142,718 307,611
Net unrealized appreciation (computed on the
basis of identified cost) 2,020,117 1,665,690 1,511,647
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES $ 38,088,641 $ 36,745,882 $ 42,352,247
- ---------------------------------------------------------------------------------------------------------------------------------
AUCTION PREFERRED SHARES ISSUED AND OUTSTANDING
(LIQUIDATION PREFERENCE OF $25,000 PER SHARE)
900 875 1,040
- ---------------------------------------------------------------------------------------------------------------------------------
COMMON SHARES OUTSTANDING
2,553,906 2,509,226 2,939,752
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE PER COMMON SHARE
NET ASSETS APPLICABLE TO COMMON SHARES DIVIDED BY COMMON
SHARES ISSUED AND OUTSTANDING $ 14.91 $ 14.64 $ 14.41
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
34
<Page>
STATEMENTS OF OPERATIONS
FOR THE YEAR ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
INSURED INSURED INSURED
MUNICIPAL FUND II CALIFORNIA FUND II FLORIDA FUND
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 12,966,594 $ 4,689,506 $ 3,140,813
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME $ 12,966,594 $ 4,689,506 $ 3,140,813
- ---------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Investment adviser fee $ 1,281,462 $ 494,512 $ 328,560
Trustees' fees and expenses 7,994 6,158 1,530
Legal and accounting services 41,423 39,832 37,024
Printing and postage 21,327 7,453 5,690
Custodian fee 117,333 44,425 31,964
Transfer and dividend disbursing agent 119,363 48,019 34,067
Preferred shares remarketing agent fee 187,886 84,605 56,404
Miscellaneous 29,907 22,387 19,874
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES $ 1,806,695 $ 747,391 $ 515,113
- ---------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ 7,368 $ 6,210 $ 2,742
Reduction of investment adviser fee 349,490 134,867 89,607
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 356,858 $ 141,077 $ 92,349
- ---------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES $ 1,449,837 $ 606,314 $ 422,764
- ---------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 11,516,757 $ 4,083,192 $ 2,718,049
- ---------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 3,128,364 $ 359,677 $ 37,600
Financial futures contracts (4,078,495) (1,575,255) (1,101,036)
- ---------------------------------------------------------------------------------------------------------------------------------
NET REALIZED LOSS $ (950,131) $ (1,215,578) $ (1,063,436)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 2,906,357 $ 805,105 $ 827,356
Financial futures contracts 1,337,429 327,182 230,068
- ---------------------------------------------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ 4,243,786 $ 1,132,287 $ 1,057,424
- ---------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) $ 3,293,655 $ (83,291) $ (6,012)
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income $ (797,793) $ (291,894) $ (196,442)
From net realized gain (171,657) (14,985) (16,866)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO PREFERRED SHAREHOLDERS $ (969,450) $ (306,879) $ (213,308)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 13,840,962 $ 3,693,022 $ 2,498,729
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
35
<Page>
<Table>
<Caption>
INSURED INSURED INSURED
MASSACHUSETTS FUND MICHIGAN FUND NEW JERSEY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 2,251,389 $ 1,945,243 $ 3,280,972
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME $ 2,251,389 $ 1,945,243 $ 3,280,972
- ---------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Investment adviser fee $ 225,727 $ 195,467 $ 331,927
Trustees' fees and expenses 1,530 153 1,529
Legal and accounting services 37,114 30,499 31,616
Printing and postage 3,940 3,490 4,029
Custodian fee 27,122 25,403 35,126
Transfer and dividend disbursing agent 25,576 25,999 35,863
Preferred shares remarketing agent fee 38,855 33,540 55,964
Miscellaneous 18,364 19,422 23,903
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES $ 378,228 $ 333,973 $ 519,957
- ---------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ 1,068 $ 1,775 $ 2,658
Reduction of investment adviser fee 61,562 53,309 90,526
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 62,630 $ 55,084 $ 93,184
- ---------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES $ 315,598 $ 278,889 $ 426,773
- ---------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 1,935,791 $ 1,666,354 $ 2,854,199
- ---------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) --
Investment transactions (identified cost basis) $ (120,767) $ 8,066 $ (115,507)
Financial futures contracts (707,361) (500,919) (1,006,191)
- ---------------------------------------------------------------------------------------------------------------------------------
NET REALIZED LOSS $ (828,128) $ (492,853) $ (1,121,698)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 1,232,336 $ 863,516 $ 1,783,307
Financial futures contracts 206,321 13,663 257,901
- ---------------------------------------------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ 1,438,657 $ 877,179 $ 2,041,208
- ---------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN $ 610,529 $ 384,326 $ 919,510
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income $ (120,070) $ (134,802) $ (171,798)
From net realized gain (28,935) -- (38,781)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO PREFERRED SHAREHOLDERS $ (149,005) $ (134,802) $ (210,579)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,397,315 $ 1,915,878 $ 3,563,130
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
36
<Page>
<Table>
<Caption>
INSURED INSURED INSURED
NEW YORK FUND II OHIO FUND PENNSYLVANIA FUND
- ---------------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
Interest $ 3,185,844 $ 3,062,921 $ 3,613,648
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME $ 3,185,844 $ 3,062,921 $ 3,613,648
- ---------------------------------------------------------------------------------------------------------------------------------
EXPENSES
Investment adviser fee $ 331,401 $ 319,329 $ 377,313
Trustees' fees and expenses 1,529 1,530 1,604
Legal and accounting services 31,641 36,742 31,579
Printing and postage 5,752 7,008 5,270
Custodian fee 36,950 32,894 35,283
Transfer and dividend disbursing agent 38,018 39,568 43,577
Preferred shares remarketing agent fee 56,404 54,687 64,027
Miscellaneous 19,071 18,782 20,555
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES $ 520,766 $ 510,540 $ 579,208
- ---------------------------------------------------------------------------------------------------------------------------------
Deduct --
Reduction of custodian fee $ 3,227 $ 3,380 $ 2,355
Reduction of investment adviser fee 90,382 87,090 102,904
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSE REDUCTIONS $ 93,609 $ 90,470 $ 105,259
- ---------------------------------------------------------------------------------------------------------------------------------
NET EXPENSES $ 427,157 $ 420,070 $ 473,949
- ---------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME $ 2,758,687 $ 2,642,851 $ 3,139,699
- ---------------------------------------------------------------------------------------------------------------------------------
REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) --
Investment transactions (identified cost basis) $ 416,319 $ (22,912) $ (205,640)
Financial futures contracts (898,747) (883,389) (1,188,389)
Increase from payment by affiliate 10,000 -- --
Net loss realized on the disposal of an investment
in violation of restrictions (10,000) -- --
- ---------------------------------------------------------------------------------------------------------------------------------
NET REALIZED LOSS $ (482,428) $ (906,301) $ (1,394,029)
- ---------------------------------------------------------------------------------------------------------------------------------
Change in unrealized appreciation (depreciation) --
Investments (identified cost basis) $ 1,023,444 $ 977,622 $ 941,814
Financial futures contracts 25,973 (15,217) 255,600
- ---------------------------------------------------------------------------------------------------------------------------------
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION) $ 1,049,417 $ 962,405 $ 1,197,414
- ---------------------------------------------------------------------------------------------------------------------------------
NET REALIZED AND UNREALIZED GAIN (LOSS) $ 566,989 $ 56,104 $ (196,615)
- ---------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO PREFERRED SHAREHOLDERS
From net investment income $ (161,738) $ (215,359) $ (243,715)
From net realized gain (40,869) (6,904) (32,614)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO PREFERRED SHAREHOLDERS $ (202,607) $ (222,263) $ (276,329)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 3,123,069 $ 2,476,692 $ 2,666,755
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
37
<Page>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE YEAR ENDED SEPTEMBER 30, 2004
<Table>
<Caption>
INSURED INSURED INSURED
INCREASE (DECREASE) IN NET ASSETS MUNICIPAL FUND II CALIFORNIA FUND II FLORIDA FUND
- ---------------------------------------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 11,516,757 $ 4,083,192 $ 2,718,049
Net realized loss from investments and financial futures
contracts transactions (950,131) (1,215,578) (1,063,436)
Net change in unrealized appreciation (depreciation) from
investments and financial futures contracts 4,243,786 1,132,287 1,057,424
Distributions to preferred shareholders
From net investment income (797,793) (291,894) (196,442)
From net realized gain (171,657) (14,985) (16,866)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 13,840,962 $ 3,693,022 $ 2,498,729
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders --
From net investment income $ (9,917,512) $ (3,652,192) $ (2,380,578)
From net realized gain (1,566,389) (231,517) (203,870)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (11,483,901) $ (3,883,709) $ (2,584,448)
- ---------------------------------------------------------------------------------------------------------------------------------
Capital share transactions --
Reinvestment of distributions to common shareholders $ 126,364 $ 62,350 $ 111,072
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS $ 126,364 $ 62,350 $ 111,072
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS $ 2,483,425 $ (128,337) $ 25,353
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES
At beginning of year $ 146,573,593 $ 56,083,394 $ 37,186,107
- ---------------------------------------------------------------------------------------------------------------------------------
AT END OF YEAR $ 149,057,018 $ 55,955,057 $ 37,211,460
- ---------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME INCLUDED IN
NET ASSETS APPLICABLE TO COMMON SHARES
AT END OF YEAR $ 1,566,379 $ 456,720 $ 241,693
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
38
<Page>
<Table>
<Caption>
INSURED INSURED INSURED
INCREASE (DECREASE) IN NET ASSETS MASSACHUSETTS FUND MICHIGAN FUND NEW JERSEY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 1,935,791 $ 1,666,354 $ 2,854,199
Net realized loss from investments and
financial futures contracts (828,128) (492,853) (1,121,698)
Net change in unrealized appreciation (depreciation) from
investments and financial futures contracts 1,438,657 877,179 2,041,208
Distributions to preferred shareholders
From net investment income (120,070) (134,802) (171,798)
From net realized gain (28,935) -- (38,781)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,397,315 $ 1,915,878 $ 3,563,130
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders --
From net investment income $ (1,654,712) $ (1,429,865) $ (2,453,611)
From net realized gain (392,319) -- (525,716)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (2,047,031) $ (1,429,865) $ (2,979,327)
- ---------------------------------------------------------------------------------------------------------------------------------
Capital share transactions --
Reinvestment of distributions to common shareholders $ 46,328 $ 16,409 $ 55,739
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS $ 46,328 $ 16,409 $ 55,739
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 396,612 $ 502,422 $ 639,542
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES
At beginning of year $ 25,585,512 $ 21,893,257 $ 37,686,788
- ---------------------------------------------------------------------------------------------------------------------------------
AT END OF YEAR $ 25,982,124 $ 22,395,679 $ 38,326,330
- ---------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME INCLUDED IN
NET ASSETS APPLICABLE TO COMMON SHARES
AT END OF YEAR $ 291,640 $ 207,270 $ 446,605
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
39
<Page>
<Table>
<Caption>
INSURED INSURED INSURED
INCREASE (DECREASE) IN NET ASSETS NEW YORK FUND II OHIO FUND PENNSYLVANIA FUND
- ---------------------------------------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 2,758,687 $ 2,642,851 $ 3,139,699
Net realized loss from investments and financial futures
contracts transactions (482,428) (906,301) (1,394,029)
Net change in unrealized appreciation (depreciation) from
investments and financial futures contracts 1,049,417 962,405 1,197,414
Distributions to preferred shareholders
From net investment income (161,738) (215,359) (243,715)
From net realized gain (40,869) (6,904) (32,614)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 3,123,069 $ 2,476,692 $ 2,666,755
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders --
From net investment income $ (2,459,266) $ (2,330,988) $ (2,755,136)
From net realized gain (563,836) (82,913) (412,505)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (3,023,102) $ (2,413,901) $ (3,167,641)
- ---------------------------------------------------------------------------------------------------------------------------------
Capital share transactions --
Reinvestment of distributions to common shareholders $ 4,566 $ 73,548 $ 31,524
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CAPITAL SHARE TRANSACTIONS $ 4,566 $ 73,548 $ 31,524
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE (DECREASE) IN NET ASSETS $ 104,533 $ 136,339 $ (469,362)
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES
At beginning of year $ 37,984,108 $ 36,609,543 $ 42,821,609
- ---------------------------------------------------------------------------------------------------------------------------------
AT END OF YEAR $ 38,088,641 $ 36,745,882 $ 42,352,247
- ---------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME INCLUDED IN
NET ASSETS APPLICABLE TO COMMON SHARES
AT END OF YEAR $ 303,550 $ 142,718 $ 307,611
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
40
<Page>
FOR THE PERIOD ENDED SEPTEMBER 30, 2003(1)
<Table>
<Caption>
INSURED INSURED INSURED
INCREASE (DECREASE) IN NET ASSETS MUNICIPAL FUND II CALIFORNIA FUND II FLORIDA FUND
- ---------------------------------------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 8,636,479 $ 3,140,922 $ 1,987,583
Net realized gain from investments and
financial futures contracts transactions 2,695,195 475,791 369,619
Net change in unrealized appreciation (depreciation) from
investments and financial futures contracts 2,439,745 632,296 450,132
Distributions to preferred shareholders
from net investment income (701,821) (192,472) (152,002)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 13,069,598 $ 4,056,537 $ 2,655,332
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders --
From net investment income $ (7,076,834) $ (2,599,597) $ (1,720,498)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (7,076,834) $ (2,599,597) $ (1,720,498)
- ---------------------------------------------------------------------------------------------------------------------------------
Capital share transactions --
Proceeds from sale of common shares(2) $ 141,787,289 $ 55,073,394 $ 36,321,367
Reinvestment of distributions to common shareholders 43,049 363 200,519
Offering costs and preferred shares underwriting discounts (1,349,509) (547,303) (370,613)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 140,480,829 $ 54,526,454 $ 36,151,273
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 146,473,593 $ 55,983,394 $ 37,086,107
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES
At beginning of year $ 100,000 $ 100,000 $ 100,000
- ---------------------------------------------------------------------------------------------------------------------------------
AT END OF YEAR $ 146,573,593 $ 56,083,394 $ 37,186,107
- ---------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME INCLUDED IN
NET ASSETS APPLICABLE TO COMMON SHARES
AT END OF YEAR $ 811,569 $ 334,279 $ 108,559
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) For the period from the start of business, November 29, 2002, to September
30, 2003.
(2) Proceeds from the sale of shares net of sales load paid of $6,681,076,
$2,595,081 and $1,711,478 for Insured Municipal Fund II, Insured California
Fund II and Insured Florida Fund, respectively.
See notes to financial statements
41
<Page>
<Table>
<Caption>
INSURED INSURED INSURED
INCREASE (DECREASE) IN NET ASSETS MASSACHUSETTS FUND MICHIGAN FUND NEW JERSEY FUND
- ---------------------------------------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 1,418,804 $ 1,230,007 $ 2,087,813
Net realized gain (loss) from investments and
financial futures contracts 579,251 (83,806) 748,013
Net change in unrealized appreciation (depreciation)
from investments and financial futures contracts 144,503 481,727 502,448
Distributions to preferred shareholders
from net investment income (99,094) (86,751) (143,861)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 2,043,464 $ 1,541,177 $ 3,194,413
- ---------------------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders --
From net investment income $ (1,176,983) $ (1,017,632) $ (1,723,590)
- ---------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (1,176,983) $ (1,017,632) $ (1,723,590)
- ---------------------------------------------------------------------------------------------------------------------------------
Capital share transactions --
Proceeds from sale of common shares(2) $ 24,879,202 $ 21,497,628 $ 36,480,532
Reinvestment of distributions to common shareholders 8,903 8,225 8,074
Offering costs and preferred shares underwriting discounts (269,074) (236,141) (372,641)
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 24,619,031 $ 21,269,712 $ 36,115,965
- ---------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 25,485,512 $ 21,793,257 $ 37,586,788
- ---------------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES
At beginning of year $ 100,000 $ 100,000 $ 100,000
- ---------------------------------------------------------------------------------------------------------------------------------
AT END OF YEAR $ 25,585,512 $ 21,893,257 $ 37,686,788
- ---------------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME INCLUDED IN
NET ASSETS APPLICABLE TO COMMON SHARES
AT END OF YEAR $ 137,386 $ 116,639 $ 218,635
- ---------------------------------------------------------------------------------------------------------------------------------
</Table>
(1) For the period from the start of business, November 29, 2002, to September
30, 2003.
(2) Proceeds from sale of shares net of sales load paid of $1,172,318,
$1,012,977 and $1,718,978 for Insured Massachusetts Fund, Insured Michigan
Fund and Insured New Jersey Fund, respectively.
See notes to financial statements
42
<Page>
<Table>
<Caption>
INSURED INSURED INSURED
INCREASE (DECREASE) IN NET ASSETS NEW YORK FUND II OHIO FUND PENNSYLVANIA FUND
- ---------------------------------------------------------------------------------------------------------------------------
From operations --
Net investment income $ 2,077,120 $ 1,922,881 $ 2,350,395
Net realized gain from investments and
financial futures contracts transactions 619,801 311,341 668,618
Net change in unrealized appreciation (depreciation)
from investments and financial futures contracts 970,700 703,285 314,233
Distributions to preferred shareholders
from net investment income (143,577) (147,817) (175,228)
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM OPERATIONS $ 3,524,044 $ 2,789,690 $ 3,158,018
- ---------------------------------------------------------------------------------------------------------------------------
Distributions to common shareholders --
From net investment income $ (1,752,264) $ (1,689,925) $ (1,999,243)
- ---------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (1,752,264) $ (1,689,925) $ (1,999,243)
- ---------------------------------------------------------------------------------------------------------------------------
Capital share transactions --
Proceeds from sale of common shares(2) $ 36,480,718 $ 35,761,589 $ 41,979,857
Reinvestment of distributions to common shareholders 4,010 15,937 6,307
Offering costs and preferred shares underwriting discounts (372,400) (367,748) (423,330)
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS FROM CAPITAL TRANSACTIONS $ 36,112,328 $ 35,409,778 $ 41,562,834
- ---------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS $ 37,884,108 $ 36,509,543 $ 42,721,609
- ---------------------------------------------------------------------------------------------------------------------------
NET ASSETS APPLICABLE TO COMMON SHARES
At beginning of year $ 100,000 $ 100,000 $ 100,000
- ---------------------------------------------------------------------------------------------------------------------------
AT END OF YEAR $ 37,984,108 $ 36,609,543 $ 42,821,609
- ---------------------------------------------------------------------------------------------------------------------------
ACCUMULATED UNDISTRIBUTED
NET INVESTMENT INCOME INCLUDED IN
NET ASSETS APPLICABLE TO COMMON SHARES
AT END OF YEAR $ 174,093 $ 68,227 $ 171,562
- ---------------------------------------------------------------------------------------------------------------------------
</Table>
(1) For the period from the start of business, November 29, 2002, to September
30, 2003.
(2) Proceeds from the sale of shares net of sales load paid of $1,718,987,
$1,685,101 and $1,978,108 for Insured New York Fund II, Insured Ohio Fund
and Insured Pennsylvania Fund, respectively.
See notes to financial statements
43
<Page>
FINANCIAL HIGHLIGHTS
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED MUNICIPAL FUND II
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year (Common shares) $ 14.790 $ 14.325(3)
- -------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 1.162 $ 0.879
Net realized and unrealized gain 0.334 0.508
Distributions to preferred shareholders
From net investment income (0.080) (0.071)
From net realized gain (0.017) --
- -------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 1.399 $ 1.316
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income $ (1.001) $ (0.714)
From net realized gain (0.158) --
- -------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (1.159) $ (0.714)
- -------------------------------------------------------------------------------------------------------
PREFERRED AND COMMON SHARES OFFERING COSTS CHARGED TO PAID-IN CAPITAL $ -- $ (0.048)
- -------------------------------------------------------------------------------------------------------
PREFERRED SHARES UNDERWRITING DISCOUNTS $ -- $ (0.089)
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR (COMMON SHARES) $ 15.030 $ 14.790
- -------------------------------------------------------------------------------------------------------
MARKET VALUE -- END OF YEAR (COMMON SHARES) $ 14.820 $ 14.000
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON NET ASSET VALUE 10.00%(4) 8.46%(5)
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON MARKET VALUE 14.59%(4) 2.67%(5)
- -------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
44
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED MUNICIPAL FUND II
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+ ++
Net assets applicable to common shares, end of year (000's omitted) $ 149,057 $ 146,574
Ratios (As a percentage of average net assets applicable to common shares):
Net expenses(6) 1.00% 0.86%(7)
Net expenses after custodian fee reduction(6) 1.00% 0.84%(7)
Net investment income(6) 7.92% 7.14%(7)
Portfolio Turnover 34% 79%
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions 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% 1.09%(7)
Expenses after custodian fee reduction(6) 1.24% 1.07%(7)
Net investment income(6) 7.68% 6.91%(7)
Net investment income per share $ 1.127 $ 0.851
- -----------------------------------------------------------------------------------------------------------------
++ 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 0.63% 0.57%(7)
Net expenses after custodian fee reduction 0.62% 0.56%(7)
Net investment income 4.94% 4.72%(7)
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions not been taken, the ratios and net investment income per share would
have been as follows:
Ratios (As a percentage of average total net assets):
Expenses 0.78% 0.72%(7)
Expenses after custodian fee reduction 0.77% 0.71%(7)
Net investment income 4.79% 4.57%(7)
- -----------------------------------------------------------------------------------------------------------------
Senior Securities:
Total preferred shares outstanding 3,500 3,500
Asset coverage per preferred share(8) $ 67,599 $ 66,893
Involuntary liquidation preference per preferred share(9) $ 25,000 $ 25,000
Approximate market value per preferred share(9) $ 25,000 $ 25,000
- -----------------------------------------------------------------------------------------------------------------
</Table>
(1) Computed using average common shares outstanding.
(2) For the period from the start of business, November 29, 2002, to September
30, 2003.
(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) 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.
(5) 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.
(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
45
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED CALIFORNIA FUND II
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year (Common shares) $ 14.560 $ 14.325(3)
- -------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 1.060 $ 0.822
Net realized and unrealized gain (loss) (0.022) 0.281
Distributions to preferred shareholders
From net investment income (0.076) (0.050)
From net realized gain (0.004) --
- -------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 0.958 $ 1.053
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income $ (0.948) $ (0.675)
From net realized gain (0.060) --
- -------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (1.008) $ (0.675)
- -------------------------------------------------------------------------------------------------------
PREFERRED AND COMMON SHARES OFFERING COSTS CHARGED TO PAID-IN CAPITAL $ -- $ (0.054)
- -------------------------------------------------------------------------------------------------------
PREFERRED SHARES UNDERWRITING DISCOUNTS $ -- $ (0.089)
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR (COMMON SHARES) $ 14.510 $ 14.560
- -------------------------------------------------------------------------------------------------------
MARKET VALUE -- END OF YEAR (COMMON SHARES) $ 14.580 $ 13.800
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON NET ASSET VALUE 6.84%(4) 6.62%(5)
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON MARKET VALUE 13.27%(4) 1.06%(5)
- -------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
46
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED CALIFORNIA FUND II
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+ ++
Net assets applicable to common shares, end of year (000's omitted) $ 55,955 $ 56,083
Ratios (As a percentage of average net assets applicable to common shares):
Net expenses(6) 1.09% 0.98%(7)
Net expenses after custodian fee reduction(6) 1.08% 0.96%(7)
Net investment income(6) 7.27% 6.75%(7)
Portfolio Turnover 13% 36%
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions 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) 1.33% 1.22%(7)
Expenses after custodian fee reduction(6) 1.32% 1.20%(7)
Net investment income(6) 7.03% 6.51%(7)
Net investment income per share $ 1.025 $ 0.793
- -----------------------------------------------------------------------------------------------------------------
++ 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 0.68% 0.64%(7)
Net expenses after custodian fee reduction 0.67% 0.63%(7)
Net investment income 4.54% 4.46%(7)
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions not been taken, the ratios would have been as follows:
Ratios (As a percentage of average total net assets):
Expenses 0.83% 0.80%(7)
Expenses after custodian fee reduction 0.82% 0.79%(7)
Net investment income 4.39% 4.30%(7)
- -----------------------------------------------------------------------------------------------------------------
Senior Securities:
Total preferred shares outstanding 1,350 1,350
Asset coverage per preferred share(8) $ 66,455 $ 66,545
Involuntary liquidation preference per preferred share(9) $ 25,000 $ 25,000
Approximate market value per preferred share(9) $ 25,000 $ 25,000
- -----------------------------------------------------------------------------------------------------------------
</Table>
(1) Computed using average shares outstanding.
(2) For the period from the start of business, November 29, 2002, to September
30, 2003.
(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) Returns are historical and are calculated by determining the percentage
change in net asset value or maket value with all distributions reinvested.
Total return is not computed on an annualized basis.
(5) 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.
(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
47
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED FLORIDA FUND
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year (Common shares) $ 14.550 $ 14.325(3)
- -------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 1.062 $ 0.788
Net realized and unrealized gain 0.002(4) 0.319
Distributions to preferred shareholders
From net investment income (0.077) (0.060)
From net realized gain (0.007) --
- -------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 0.980 $ 1.047
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income $ (0.930) $ (0.675)
From net realized gain (0.080) --
- -------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (1.010) $ (0.675)
- -------------------------------------------------------------------------------------------------------
PREFERRED AND COMMON SHARES OFFERING COSTS CHARGED TO PAID-IN CAPITAL $ -- $ (0.058)
- -------------------------------------------------------------------------------------------------------
PREFERRED SHARES UNDERWRITING DISCOUNTS $ -- $ (0.089)
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD (COMMON SHARES) $ 14.520 $ 14.550
- -------------------------------------------------------------------------------------------------------
MARKET VALUE -- END OF PERIOD (COMMON SHARES) $ 14.750 $ 14.100
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON NET ASSET VALUE 7.12%(5) 6.37%(6)
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON MARKET VALUE 12.29%(5) 3.08%(6)
- -------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
48
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED FLORIDA FUND
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+ ++
Net assets applicable to common shares, end of year (000's omitted) $ 37,211 $ 37,186
Ratios (As a percentage of average net assets applicable to common shares):
Net expenses(7) 1.14% 1.04%(8)
Net expenses after custodian fee reduction(7) 1.14% 0.98%(8)
Net investment income(7) 7.30% 6.45%(8)
Portfolio Turnover 19% 29%
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions 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(7) 1.38% 1.29%(8)
Expenses after custodian fee reduction(7) 1.38% 1.23%(8)
Net investment income(7) 7.06% 6.20%(8)
Net investment income per share $ 1.027 $ 0.757
- -----------------------------------------------------------------------------------------------------------------
++ 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 0.71% 0.69%(8)
Net expenses after custodian fee reduction 0.71% 0.65%(8)
Net investment income 4.55% 4.25%(8)
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and / or a reimbursement of expenses by the Adviser. Had such
actions not been taken, the ratios would have been as follows:
Ratios (As a percentage of average total net assets):
Expenses 0.86% 0.86%(8)
Expenses after custodian fee reduction 0.86% 0.82%(8)
Net investment income 4.40% 4.08%(8)
- -----------------------------------------------------------------------------------------------------------------
Senior Securities:
Total preferred shares outstanding 900 900
Asset coverage per preferred share(9) $ 66,348 $ 66,319
Involuntary liquidation preference per preferred share(10) $ 25,000 $ 25,000
Approximate market value per preferred share(10) $ 25,000 $ 25,000
- -----------------------------------------------------------------------------------------------------------------
</Table>
(1) Computed using average common shares outstanding.
(2) For the period from the start of business, November 29, 2002, to September
30, 2003.
(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) The per share amount does not reflect the actual net realized and
unrealized gain/loss for the period because of the timing of reinvested
shares of the Fund and the amount of per share realized gains and losses at
such time.
(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) 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.
(7) 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.
(8) Annualized.
(9) 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.
(10) Plus accumulated and unpaid dividends.
See notes to financial statements
49
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED MASSACHUSETTS FUND
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of period (Common shares) $ 14.670 $ 14.325(3)
- -------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 1.109 $ 0.823
Net realized and unrealized gain 0.350 0.411
Distributions to preferred shareholders
From net investment income (0.069) (0.058)
From net realized gain (0.017) --
- -------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 1.373 $ 1.176
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income $ (0.948) $ (0.675)
From net realized gain (0.225) --
- -------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (1.173) $ (0.675)
- -------------------------------------------------------------------------------------------------------
PREFERRED AND COMMON SHARES OFFERING COSTS CHARGED TO PAID-IN CAPITAL $ -- $ (0.066)
- -------------------------------------------------------------------------------------------------------
PREFERRED SHARES UNDERWRITING DISCOUNTS $ -- $ (0.090)
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD (COMMON SHARES) $ 14.870 $ 14.670
- -------------------------------------------------------------------------------------------------------
MARKET VALUE -- END OF PERIOD (COMMON SHARES) $ 15.570 $ 14.450
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON NET ASSET VALUE 9.74%(4) 7.22%(5)
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON MARKET VALUE 16.66%(4) 5.61%(5)
- -------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
50
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED MASSACHUSETTS FUND
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+ ++
Net assets applicable to common shares, end of period (000's omitted) $ 25,982 $ 25,586
Ratios (As a percentage of average net assets applicable to common shares):
Net expenses(6) 1.24% 1.10%(7)
Net expenses after custodian fee reduction(6) 1.24% 1.06%(7)
Net investment income(6) 7.58% 6.73%(7)
Portfolio Turnover 39% 81%
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions 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) 1.48% 1.36%(7)
Expenses after custodian fee reduction(6) 1.48% 1.32%(7)
Net investment income(6) 7.34% 6.47%(7)
Net investment income per share $ 1.074 $ 0.791
- -----------------------------------------------------------------------------------------------------------------
++ 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 0.77% 0.73%(7)
Net expenses after custodian fee reduction 0.77% 0.70%(7)
Net investment income 4.72% 4.42%(7)
+ The operating expenses of the Fund reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions not been taken, the ratios would have been as follows:
Ratios (As a percentage of average total net assets):
Expenses 0.92% 0.90%(7)
Expenses after custodian fee reduction 0.92% 0.87%(7)
Net investment income 4.57% 4.25%(7)
- -----------------------------------------------------------------------------------------------------------------
Senior Securities:
Total preferred shares outstanding 620 620
Asset coverage per preferred share(8) $ 66,907 $ 66,270
Involuntary liquidation preference per preferred share(9) $ 25,000 $ 25,000
Approximate market value per preferred share(9) $ 25,000 $ 25,000
- -----------------------------------------------------------------------------------------------------------------
</Table>
(1) Computed using average common shares outstanding.
(2) For the period from the start of business, November 29, 2002 to September
30, 2003.
(3) Net asset value at the 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) 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.
(5) 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 annaulized 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
51
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED MICHIGAN FUND
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year (Common shares) $ 14.520 $ 14.325(3)
- -------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 1.105 $ 0.824
Net realized and unrealized gain 0.252 0.262
Distribution to preferred shareholders from net investment income (0.089) (0.058)
- -------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 1.268 $ 1.028
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS TO COMMON SHAREHOLDERS
FROM NET INVESTMENT INCOME $ (0.948) $ (0.675)
- -------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (0.948) $ (0.675)
- -------------------------------------------------------------------------------------------------------
PREFERRED AND COMMON SHARES OFFERING COSTS CHARGED TO PAID-IN CAPITAL $ -- $ (0.068)
- -------------------------------------------------------------------------------------------------------
PREFERRED SHARES UNDERWRITING DISCOUNTS $ -- $ (0.090)
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD (COMMON SHARES) $ 14.840 $ 14.520
- -------------------------------------------------------------------------------------------------------
MARKET VALUE -- END OF PERIOD (COMMON SHARES) $ 15.490 $ 14.410
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON NET ASSET VALUE 8.96%(4) 6.12%(5)
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON MARKET VALUE 14.60%(4) 5.31%(5)
- -------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
52
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED MICHIGAN FUND
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+ ++
Net assets applicable to common shares, end of year (000's omitted) $ 22,396 $ 21,893
Ratios (As a percentage of average net assets applicable to common shares):
Net expenses(6) 1.28% 1.14%(7)
Net expenses after custodian fee reduction(6) 1.27% 1.09%(7)
Net investment income(6) 7.56% 6.75%(7)
Portfolio Turnover 8% 79%
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions 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) 1.52% 1.41%(7)
Expenses after custodian fee reduction(6) 1.51% 1.36%(7)
Net investment income(6) 7.32% 6.48%(7)
Net investment income per share $ 1.070 $ 0.792
- -----------------------------------------------------------------------------------------------------------------
++ 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 0.79% 0.75%(7)
Net expenses after custodian fee reduction 0.78% 0.71%(7)
Net investment income 4.69% 4.42%(7)
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions not been taken, the ratios would have been as follows:
Ratios (As a percentage of average total net assets):
Expenses 0.94% 0.93%(7)
Expenses after custodian fee reduction 0.93% 0.89%(7)
Net investment income 4.54% 4.25%(7)
- -----------------------------------------------------------------------------------------------------------------
Senior Securities:
Total preferred shares outstanding 540 540
Asset coverage per preferred share(8) $ 66,475 $ 65,543
Involuntary liquidation preference per preferred share(9) $ 25,000 $ 25,000
Approximate market value per preferred share(9) $ 25,000 $ 25,000
- -----------------------------------------------------------------------------------------------------------------
</Table>
(1) Computed using average common shares outstanding.
(2) For the period from the start of business, November 29, 2002, to September
30, 2003.
(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) 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.
(5) Total investment return on net asset value is calculated assuming a
purchase at the offering 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.
(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 number by
the number of preferred shares outstanding.
(9) Plus accumulated and unpaid dividends.
See notes to financial statements
53
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED NEW JERSEY FUND
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year (Common shares) $ 14.760 $ 14.325(3)
- -------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 1.117 $ 0.826
Net realized and unrealized gain 0.361 0.489
Distributions to preferred shareholders
From net investment income (0.067) (0.058)
From net realized gain (0.015) --
- -------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 1.396 $ 1.257
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income $ (0.960) $ (0.675)
From net realized gain (0.206) --
- -------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (1.166) $ (0.675)
- -------------------------------------------------------------------------------------------------------
PREFERRED AND COMMON SHARES OFFERING COSTS CHARGED TO PAID-IN CAPITAL $ -- $ (0.058)
- -------------------------------------------------------------------------------------------------------
PREFERRED SHARES UNDERWRITING DISCOUNTS $ -- $ (0.089)
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF YEAR (COMMON SHARES) $ 14.990 $ 14.760
- -------------------------------------------------------------------------------------------------------
MARKET VALUE -- END OF YEAR (COMMON SHARES) $ 15.490 $ 14.520
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON NET ASSET VALUE 9.83%(4) 7.89%(5)
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON MARKET VALUE 15.37%(4) 6.14%(5)
- -------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
54
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED NEW JERSEY FUND
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+ ++
Net assets applicable to common shares, end of year (000's omitted) $ 38,326 $ 37,687
Ratios (As a percentage of average net assets applicable to common shares):
Net expenses(6) 1.13% 1.03%(7)
Net expenses after custodian fee reduction(6) 1.13% 0.99%(7)
Net investment income(6) 7.54% 6.69%(7)
Portfolio Turnover 22% 68%
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions 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) 1.37% 1.28%(7)
Expenses after custodian fee reduction(6) 1.37% 1.24%(7)
Net investment income(6) 7.30% 6.44%(7)
Net investment income per share $ 1.081 $ 0.795
- -----------------------------------------------------------------------------------------------------------------
++ 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 0.71% 0.69%(7)
Net expenses after custodian fee reduction 0.71% 0.66%(7)
Net investment income 4.73% 4.43%(7)
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
action not been taken, the ratios would have been as follows:
Ratios (As a percentage of average total net assets):
Expenses 0.86% 0.85%(7)
Expenses after custodian fee reduction 0.86% 0.82%(7)
Net investment income 4.58% 4.26%(7)
- -----------------------------------------------------------------------------------------------------------------
Senior Securities:
Total preferred shares outstanding 900 900
Asset coverage per preferred share(8) $ 67,588 $ 66,875
Involuntary liquidation preference per preferred share(9) $ 25,000 $ 25,000
Approximate market value per preferred share(9) $ 25,000 $ 25,000
- -----------------------------------------------------------------------------------------------------------------
</Table>
(1) Computed using average common shares outstanding.
(2) For the period from the start of business, November 29, 2002, to September
30, 2003.
(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) 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.
(5) 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.
(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 or preferred shares outstanding.
(9) Plus accumulated and unpaid dividends.
See notes to financial statements
55
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED NEW YORK FUND II
------------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------------
2004(1) 2003(1)(2)
- -------------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year (Common shares) $ 14.870 $ 14.325(3)
- -------------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 1.080 $ 0.818
Net realized and unrealized gain 0.223 0.617
Distributions to preferred shareholders
From net investment income (0.063) (0.057)
From net realized gain (0.016) --
- -------------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 1.224 $ 1.378
- -------------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income $ (0.963) $ (0.686)
From net realized gain (0.221) --
- -------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (1.184) $ (0.686)
- -------------------------------------------------------------------------------------------------------------
PREFERRED AND COMMON SHARES OFFERING COSTS CHARGED TO PAID-IN CAPITAL $ -- $ (0.058)
- -------------------------------------------------------------------------------------------------------------
PREFERRED SHARES UNDERWRITING DISCOUNTS $ -- $ (0.089)
- -------------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD (COMMON SHARES) $ 14.910 $ 14.870
- -------------------------------------------------------------------------------------------------------------
MARKET VALUE -- END OF PERIOD (COMMON SHARES) $ 14.460 $ 13.710
- -------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON NET ASSET VALUE 8.75%(4)(10) 8.87%(5)
- -------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON MARKET VALUE 14.39%(4)(10) 0.38%(5)
- -------------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
56
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED NEW YORK FUND II
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+ ++
Net assets applicable to common shares, end of year (000's omitted) $ 38,089 $ 37,984
Ratios (As a percentage of average net assets applicable to common shares):
Net expenses(6) 1.14% 1.03%(7)
Net expenses after custodian fee reduction(6) 1.13% 0.98%(7)
Net investment income(6) 7.31% 6.65%(7)
Portfolio Turnover 28% 66%
+ The operating expenses of the Fund reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions 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) 1.38% 1.28%(7)
Expenses after custodian fee reduction(6) 1.37% 1.23%(7)
Net investment income(6) 7.07% 6.40%(7)
Net investment income per share $ 1.045 $ 0.787
- -----------------------------------------------------------------------------------------------------------------
++ 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 0.71% 0.68%(7)
Net expenses after custodian fee reduction 0.71% 0.65%(7)
Net investment income 4.58% 4.40%(7)
+ The operating expenses of the Fund reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions not been taken, the ratios would have been as follows:
Ratios (As a percentage of average total net assets):
Expenses 0.86% 0.85%(7)
Expenses after custodian fee reduction 0.86% 0.82%(7)
Net investment income 4.43% 4.23%(7)
- -----------------------------------------------------------------------------------------------------------------
Senior Securities:
Total preferred shares outstanding 900 900
Asset coverage per preferred share(8) $ 67,323 $ 67,209
Involuntary liquidation preference per preferred share(9) $ 25,000 $ 25,000
Approximate market value per preferred share(9) $ 25,000 $ 25,000
- -----------------------------------------------------------------------------------------------------------------
</Table>
(1) Computed using average common shares outstanding.
(2) For the period from the start of business, November 29, 2002, to September
30, 2003.
(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) 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.
(5) 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.
(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.
(10) During the year ended September 30, 2004, the investment adviser reimbursed
the Fund for a net loss realized on the disposal of an investment in
violation of restrictions. The reimbursement was less than $0.01 per common
share and had no effect on total investment return on net asset value and
total investment return on market value for the year ended September 30,
2004.
See notes to financial statements
57
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED OHIO FUND
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year (Common shares) $ 14.620 $ 14.325(3)
- -------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 1.054 $ 0.776
Net realized and unrealized gain 0.018 0.402
Distributions to preferred shareholders
From net investment income (0.086) (0.060)
From net realized gain (0.003) --
- -------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 0.983 $ 1.118
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income $ (0.930) $ (0.675)
From net realized gain (0.033) --
- -------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (0.963) $ (0.675)
- -------------------------------------------------------------------------------------------------------
PREFERRED AND COMMON SHARES OFFERING COSTS CHARGED TO PAID-IN CAPITAL $ -- $ (0.060)
- -------------------------------------------------------------------------------------------------------
PREFERRED SHARES UNDERWRITING DISCOUNTS $ -- $ (0.088)
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD (COMMON SHARES) $ 14.640 $ 14.620
- -------------------------------------------------------------------------------------------------------
MARKET VALUE -- END OF PERIOD (COMMON SHARES) $ 15.200 $ 14.430
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON NET ASSET VALUE 6.94%(4) 6.85%(5)
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON MARKET VALUE 12.49%(4) 5.46%(5)
- -------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
58
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED OHIO FUND
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+ ++
Net assets applicable to common shares, end of year (000's omitted) $ 36,746 $ 36,610
Ratios (As a percentage of average net assets applicable to common shares):
Net expenses(6) 1.17% 1.05%(7)
Net expenses after custodian fee reduction(6) 1.16% 0.99%(7)
Net investment income(6) 7.30% 6.38%(7)
Portfolio Turnover 25% 32%
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions 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) 1.41% 1.30%(7)
Expenses after custodian fee reduction(6) 1.40% 1.24%(7)
Net investment income(6) 7.06% 6.13%(7)
Net investment income per share $ 1.019 $ 0.746
- -----------------------------------------------------------------------------------------------------------------
++ 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 0.73% 0.69%(7)
Net expenses after custodian fee reduction 0.72% 0.65%(7)
Net investment income 4.55% 4.21%(7)
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions not been taken, the ratios would have been as follows:
Ratios (As a percentage of average total net assets):
Expenses 0.88% 0.86%(7)
Expenses after custodian fee reduction 0.87% 0.82%(7)
Net investment income 4.40% 4.04%(7)
- -----------------------------------------------------------------------------------------------------------------
Senior Securities:
Total preferred shares outstanding 875 875
Asset coverage per preferred share(7) $ 66,999 $ 66,841
Involuntary liquidation preference per preferred share(8) $ 25,000 $ 25,000
Approximate market value per preferred share(8) $ 25,000 $ 25,000
- -----------------------------------------------------------------------------------------------------------------
</Table>
(1) Computed using average common shares outstanding.
(2) For the period from the start of business, November 29, 2002, to September
30, 2003.
(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) Returns are historical and are calculated by determining the percentage
change in net asset value or maket value with all distributions reinvested.
Total return is not computed on an annualized basis.
(5) 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
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 current maket 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.
(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
59
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED PENNSYLVANIA FUND
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -------------------------------------------------------------------------------------------------------
Net asset value -- Beginning of year (Common shares) $ 14.580 $ 14.325(3)
- -------------------------------------------------------------------------------------------------------
INCOME (LOSS) FROM OPERATIONS
Net investment income $ 1.068 $ 0.811
Net realized and unrealized gain (loss) (0.066) 0.331
Distributions to preferred shareholders
From net investment income (0.083) (0.060)
From net realized gain (0.011) --
- -------------------------------------------------------------------------------------------------------
TOTAL INCOME FROM OPERATIONS $ 0.908 $ 1.082
- -------------------------------------------------------------------------------------------------------
LESS DISTRIBUTIONS TO COMMON SHAREHOLDERS
From net investment income $ (0.938) $ (0.681)
From net realized gain (0.140) --
- -------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS TO COMMON SHAREHOLDERS $ (1.078) $ (0.681)
- -------------------------------------------------------------------------------------------------------
PREFERRED AND COMMON SHARES OFFERING COSTS CHARGED TO PAID-IN CAPITAL $ -- $ (0.056)
- -------------------------------------------------------------------------------------------------------
PREFERRED SHARES UNDERWRITING DISCOUNTS $ -- $ (0.090)
- -------------------------------------------------------------------------------------------------------
NET ASSET VALUE -- END OF PERIOD (COMMON SHARES) $ 14.410 $ 14.580
- -------------------------------------------------------------------------------------------------------
MARKET VALUE -- END OF PERIOD (COMMON SHARES) $ 14.980 $ 14.330
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON NET ASSET VALUE 6.43%(4) 6.63%(5)
- -------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT RETURN ON MARKET VALUE 12.57%(4) 4.80%(5)
- -------------------------------------------------------------------------------------------------------
</Table>
See notes to financial statements
60
<Page>
SELECTED DATA FOR A COMMON SHARE OUTSTANDING DURING THE PERIODS STATED
<Table>
<Caption>
INSURED PENNSYLVANIA FUND
------------------------------
YEAR ENDED SEPTEMBER 30,
------------------------------
2004(1) 2003(1)(2)
- -----------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA+ ++
Net assets applicable to common shares, end of year (000's omitted) $ 42,352 $ 42,822
Ratios (As a percentage of average net assets applicable to common shares):
Net expenses(6) 1.12% 1.03%(7)
Net expenses after custodian fee reduction(6) 1.11% 0.97%(7)
Net investment income(6) 7.37% 6.64%(7)
Portfolio Turnover 17% 34%
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions 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) 1.36% 1.28%(7)
Expenses after custodian fee reduction(6) 1.35% 1.22%(7)
Net investment income(6) 7.13% 6.39%(7)
Net investment income per share $ 1.033 $ 0.780
- -----------------------------------------------------------------------------------------------------------------
++ 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 0.69% 0.68%(7)
Net expenses after custodian fee reduction 0.69% 0.64%(7)
Net investment income 4.58% 4.37%(7)
+ The operating expenses of the Fund may reflect a reduction of the investment
adviser fee and/or a reimbursement of expenses by the Adviser. Had such
actions not been taken, the ratios would have been as follows:
Ratios (As a percentage of average total net assets):
Expenses 0.84% 0.84%(7)
Expenses after custodian fee reduction 0.84% 0.80%(7)
Net investment income 4.43% 4.20%(7)
- -----------------------------------------------------------------------------------------------------------------
Senior Securities:
Total preferred shares outstanding 1,040 1,040
Asset coverage per preferred share(8) $ 65,723 $ 66,178
Involuntary liquidation preference per preferred share(9) $ 25,000 $ 25,000
Approximate market value per preferred share(9) $ 25,000 $ 25,000
- -----------------------------------------------------------------------------------------------------------------
</Table>
(1) Computed using average common shares outstanding.
(2) For the period from the start of business, November 29, 2002, to September
30, 2003.
(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) 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.
(5) 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 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.
(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
61
<Page>
EATON VANCE INSURED MUNICIPAL BOND FUNDS as of September 30, 2004
NOTES TO FINANCIAL STATEMENTS
1 SIGNIFICANT ACCOUNTING POLICIES
Eaton Vance Insured Municipal Bond Fund II (Insured Municipal Fund II), Eaton
Vance Insured California Municipal Bond Fund II (Insured California Fund II),
Eaton Vance Insured Florida Municipal Bond Fund (Insured Florida Fund), Eaton
Vance Insured Massachusetts Municipal Bond Fund (Insured Massachusetts Fund),
Eaton Vance Insured Michigan Municipal Bond Fund (Insured Michigan Fund),
Eaton Vance Insured New Jersey Municipal Bond Fund (Insured New Jersey Fund),
Eaton Vance Insured New York Municipal Bond Fund II (Insured New York Fund
II), Eaton Vance Insured Ohio Municipal Bond Fund (Insured Ohio Fund), and
Eaton Vance Insured Pennsylvania Municipal Bond Fund (Insured Pennsylvania
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. Each of the
Funds was organized under the laws of the Commonwealth of Massachusetts by an
Agreement and Declaration of Trust dated October 3, 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. Taxable obligations, if any, for
which price quotations are readily available are normally valued at the mean
between the bid and asked prices. Futures contracts and options on 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 value. Investments for
which valuations or market quotations are not readily available 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,
2004, the Funds, for federal income tax purposes, had a capital loss
carryover which will reduce 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 Funds of any liability for
federal income or excise tax. The amounts and expiration dates of the capital
loss carryovers are as follows:
<Table>
<Caption>
FUND AMOUNT EXPIRES
------------------------------------------------------------
Insured Michigan Fund $ 113,378 September 30, 2012
Insured Ohio Fund 37,328 September 30, 2012
</Table>
Additionally, at September 30, 2004, Insured Municipal Fund II, Insured
California Fund II, Insured Florida Fund, Insured Massachusetts Fund, Insured
Michigan Fund, Insured New Jersey Fund, Insured New York Fund II, Insured
Ohio Fund, and Insured Pennsylvania Fund had net capital losses of $854,540,
$1,310,426, $1,128,423, $816,432, $631,302, $1,125,725, $694,063, $884,190,
and $1,415,291 respectively, attributable to security transactions incurred
after October 31, 2003. These are treated as arising on the first day of each
Fund's taxable year ending September 30, 2005.
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,
62
<Page>
which are exempt from regular federal income taxes when received by each
Fund, as exempt-interest dividends.
E ORGANIZATION AND OFFERING COSTS -- Costs incurred by each Fund in
connection with its organization have been expensed. Costs incurred by each
Fund 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 OPTIONS ON FINANCIAL FUTURES CONTRACTS -- Upon the purchase of a put option
on a financial futures contract by a Fund, the premium paid is recorded as an
investment, the value of which is marked-to-market daily. When a purchased
option expires, a Fund will realize a loss in the amount of the cost of the
option. When a Fund enters into a closing sale transaction, a Fund will
realize a gain or loss depending on whether the sales proceeds from the
closing sale transaction are greater or less than the cost of the option.
When a Fund exercises a put option, settlement is made in cash. The risk
associated with purchasing put options is limited to the premium originally
paid.
H USE OF ESTIMATES -- The preparation of the 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 INDEMNIFICATIONS -- Under each Fund's organizational documents, its
officers and Trustees may be indemnified against certain liabilities and
expenses arising out of the performance of their duties to each Fund and
shareholders are indemnified against personal liability for the obligations
of each Fund. Additionally, in the normal course of business, each Fund
enters into agreements with service providers that may contain
indemnification clauses. Each Fund's maximum exposure under these
arrangements is unknown as this would involve future claims that may be made
against each Fund that have not yet occurred.
J 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 credit balances used to
reduce the Funds' custodian fees are reported as a reduction of total
expenses in the Statement of Operations.
2 AUCTION PREFERRED SHARES (APS)
Each Fund issued Auction Preferred Shares on January 15, 2003 in a public
offering. The underwriting discounts and other offering costs were recorded
as a reduction of 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 generally have been reset every seven
days thereafter by an auction unless a special dividend period has been set.
Initially, the Insured Municipal Fund II elected an Initial Dividend Period
for Series B of 360 days. Effective January 9, 2004, a special dividend
period was set on the Series B shares of the Insured Municipal Fund II. The
dividend rate, which matures on January 7, 2005, is 1.06%. Series A and
Series B are identical in all respects except for the dates of reset for the
dividend rates. Auction Preferred Shares issued and outstanding as of
September 30, 2004 and dividend rate ranges for the year ended September 30,
2004 are as indicated below:
<Table>
<Caption>
PREFERRED SHARES DIVIDENDS RATE
FUND ISSUED AND OUTSTANDING RANGES
------------------------------------------------------------------------------
Insured Municipal II Fund Series A 1,750 0.45% - 1.75%
Insured Municipal II Fund Series B 1,750 1.06% - 1.35%
Insured California Fund II 1,350 0.40% - 1.50%
Insured Florida Fund 900 0.45% - 1.30%
Insured Massachusetts Fund 620 0.45% - 1.75%
Insured Michigan Fund 540 0.60% - 1.45%
Insured New Jersey Fund 900 0.40% - 2.00%
Insured New York Fund II 900 0.45% - 1.51%
Insured Ohio Fund 875 0.75% - 1.75%
Insured Pennsylvania Fund 1,040 0.82% - 1.75%
</Table>
63
<Page>
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
Trust'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 APS. Distributions are
recorded on the ex-dividend date. Distributions of realized capital gains, if
any, are made at least annually. Distributions to preferred shareholders are
recorded daily and are payable at the end of each dividend period. Each
dividend payment period for the APS is generally seven days. Effective
January 9, 2004, the Series B shares of the Insured Municipal Fund II set a
special dividend period of 366 days. The Insured Municipal Fund II Series B
pays accumulated dividends on the first business day of each month. Final
payment will be made on January 10, 2005. The applicable dividend rates for
Auction Preferred Shares on September 30, 2004 are listed below. For the year
ended September 30, 2004, the amount of dividends each Fund paid to Auction
Preferred shareholders and average APS dividend rates for such period were as
follows:
<Table>
<Caption>
DIVIDENDS PAID
TO PREFERRED
SHAREHOLDERS FROM AVERAGE
NET INVESTMENT APS
APS INCOME AND DIVIDEND
DIVIDEND RATES REALIZED GAIN FOR RATES FOR
AS OF THE YEAR ENDED THE YEAR ENDED
SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
FUND 2004 2004 2004
----------------------------------------------------------------------------------------
Insured Municipal Fund II
Series A 0.89% 425,901 0.97%
Insured Municipal Fund II
Series B 1.06% 543,549 1.24%
Insured California Fund II 1.10% 306,879 0.91%
Insured Florida Fund 1.00% 213,308 0.95%
Insured Massachusetts Fund 1.40% 149,005 0.96%
Insured Michigan Fund 1.45% 134,802 1.00%
Insured New Jersey Fund 1.51% 210,579 0.94%
Insured New York Fund II 1.51% 202,607 0.90%
Insured Ohio Fund 1.50% 222,263 1.02%
Insured Pennsylvania Fund 1.45% 276,329 1.06%
</Table>
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 difference in method for accreting market discount and
amortizing premiums.
The tax character of distributions paid for the years ended September 30,
2004 and for the period from the start of business, November 29, 2002 to
September 30, 2003 was as follows:
<Table>
<Caption>
INSURED INSURED INSURED
MUNICIPAL II CALIFORNIA II FLORIDA
------------------------------------------------------------------------------------
YEAR ENDED 9/30/04
Distributions declared from:
Tax-exempt income $ 10,715,305 $ 3,944,086 $ 2,577,020
Ordinary income $ 1,738,046 $ 76,309 $ 88,904
Long-term capital gain -- $ 170,193 $ 131,832
PERIOD ENDED 9/30/03
Distributions declared from:
Tax-exempt income $ 7,778,655 $ 2,792,069 $ 1,872,500
</Table>
64
<Page>
<Table>
<Caption>
INSURED INSURED INSURED
MASSACHUSETTS MICHIGAN NEW JERSEY
------------------------------------------------------------------------------------
YEAR ENDED 9/30/04
Distributions declared from:
Tax-exempt income $ 1,774,782 $ 1,564,667 $ 2,625,409
Ordinary income $ 244,245 -- $ 349,671
Long-term capital gain $ 177,009 -- $ 214,826
PERIOD ENDED 9/30/03
Distributions declared from:
Tax-exempt income $ 1,276,077 $ 1,104,383 $ 1,867,451
</Table>
<Table>
<Caption>
INSURED INSURED INSURED
NEW YORK II OHIO PENNSYLVANIA
------------------------------------------------------------------------------------
YEAR ENDED 9/30/04
Distributions declared from:
Tax-exempt income $ 2,621,004 $ 2,546,347 $ 2,998,851
Ordinary income $ 514,935 $ 43,959 $ 309,085
Long-term capital gain $ 89,770 $ 45,858 $ 136,034
PERIOD ENDED 9/30/03
Distributions declared from:
Tax-exempt income $ 1,895,841 $ 1,837,742 $ 2,174,471
</Table>
During the year ended September 30, 2004, the following amounts were
reclassified due to differences between book and tax accounting for
amortization and accretion on debt securities, market discount on disposal of
securities, and capital losses:
<Table>
<Caption>
INSURED INSURED INSURED
MUNICIPAL II CALIFORNIA II FLORIDA
------------------------------------------------------------------------------------
Increase (decrease):
Paid in capital $ (1,833) $ (102) $ (371)
Accumulated net realized
gain/(loss) on investments $ 48,475 $ 16,767 $ 8,266
Accumulated
undistributed income $ (46,642) $ (16,665) $ (7,895)
</Table>
<Table>
<Caption>
INSURED INSURED INSURED
MASSACHUSETTS MICHIGAN NEW JERSEY
------------------------------------------------------------------------------------
Increase (decrease):
Paid in capital $ (636) -- $ (674)
Accumulated net realized
gain/(loss) on investments $ 7,391 $ 11,056 $ 1,494
Accumulated
undistributed income $ (6,755) $ (11,056) $ (820)
</Table>
<Table>
<Caption>
INSURED INSURED INSURED
NEW YORK II OHIO PENNSYLVANIA
------------------------------------------------------------------------------------
Increase (decrease):
Paid in capital $ (1,190) $ (115) $ (663)
Accumulated net realized
gain/(loss) on investments $ 9,416 $ 22,128 $ 5,462
Accumulated
undistributed income $ (8,226) $ (22,013) $ (4,799)
</Table>
These changes had no effect on the net assets or net asset value per share of
the Funds.
As of September 30, 2004, the components of distributable earnings
(accumulated losses) on a tax basis were as follows:
<Table>
<Caption>
INSURED INSURED INSURED
MUNICIPAL II CALIFORNIA II FLORIDA
------------------------------------------------------------------------------------
Undistributed Income $ 1,637,028 $ 466,403 $ 243,538
Capital loss carryforward -- -- --
Unrealized gain $ 6,766,389 $ 1,795,774 $ 1,522,186
Other temporary differences $ (51,759) $ (995,822) $ (916,238)
</Table>
<Table>
<Caption>
INSURED INSURED INSURED
MASSACHUSETTS MICHIGAN NEW JERSEY
------------------------------------------------------------------------------------
Undistributed Income $ 291,640 $ 208,342 $ 449,398
Capital loss carryforward -- $ (113,378) --
Unrealized gain $ 1,590,603 $ 1,372,662 $ 2,544,932
Other temporary differences $ (664,842) $ (458,068) $ (939,030)
</Table>
<Table>
<Caption>
INSURED INSURED INSURED
NEW YORK II OHIO PENNSYLVANIA
------------------------------------------------------------------------------------
Undistributed Income $ 305,412 $ 146,312 $ 310,301
Capital loss carryforward -- $ (37,328) --
Unrealized gain $ 2,036,118 $ 1,704,612 $ 1,521,395
Other temporary differences $ (468,593) $ (650,925) $ (1,173,144)
</Table>
4 INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES
The investment adviser fee, computed at an annual rate of 0.55% 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 year ended September 30, 2004,
the fee was equivalent to 0.55% of each Fund's average weekly gross assets
and amounted to
65
<Page>
$1,281,462, $494,512, $328,560, $225,727, $195,467, $331,927, $331,401,
$319,329 and $377,313 for Insured Municipal Fund II, Insured California Fund
II, Insured Florida Fund, Insured Massachusetts Fund, Insured Michigan Fund,
Insured New Jersey Fund, Insured New York Fund II, Insured Ohio Fund and
Insured Pennsylvania Fund, respectively. EVM also serves as the administrator
of the Funds, but currently receives no compensation.
In addition, EVM has contractually agreed to reimburse the Fund for fees and
other expenses in the amount of 0.15% of average weekly total assets of each
Fund during the first five full years of each Fund's operations, 0.10% of
average weekly total assets of each Fund in year six, and 0.05% in year
seven. For the year ended September 30, 2004, EVM contractually waived
$349,490, $134,867, $89,607, $61,562, $53,309, $90,526, $90,382, $87,090 and
$102,904 for Insured Municipal Fund II, Insured California Fund II, Insured
Florida Fund, Insured Massachusetts Fund, Insured Michigan Fund, Insured New
Jersey Fund, Insured New York Fund II, Insured Ohio Fund and Insured
Pennsylvania Fund, respectively.
EVM made a voluntary reimbursement to the Eaton Vance Insured New York
Municipal Bond Fund II of $10,000 to compensate the Fund for a realized loss
incurred from the sale of an investment security in violation of the Fund's
investment restrictions.
Certain officers and one Trustee of each Fund are officers of the above
organization.
During the year ended September 30, 2004, certain Funds engaged in purchase
and sale transactions with other Funds that also utilize EVM or Boston
Management and Research, a wholly-owned subsidiary of EVM, as an investment
adviser. These purchase and sale transactions complied with Rule 17a-7 under
the Investment Company Act of 1940 and amounted to:
<Table>
<Caption>
FUND PURCHASES SALES
------------------------------------------------------------------
Insured Florida -- $ 512,305
Insured Massachusetts -- $ 1,226,682
</Table>
5 INVESTMENTS
Purchases and sales of investments, other than U.S. Government securities and
short-term obligations, for the year ended September 30, 2004 were as
follows:
<Table>
INSURED MUNICIPAL FUND II
Purchases $ 79,558,626
Sales 88,318,549
INSURED CALIFORNIA FUND II
Purchases $ 11,631,911
Sales 15,079,073
INSURED FLORIDA FUND
Purchases $ 11,151,362
Sales 11,678,450
INSURED MASSACHUSETTS FUND
Purchases $ 15,954,104
Sales 17,881,783
INSURED MICHIGAN FUND
Purchases $ 2,922,313
Sales 3,871,241
INSURED NEW JERSEY FUND
Purchases $ 13,441,706
Sales 15,346,393
INSURED NEW YORK FUND II
Purchases $ 16,782,850
Sales 19,010,459
INSURED OHIO FUND
Purchases $ 14,268,587
Sales 15,863,229
INSURED PENNSYLVANIA FUND
Purchases $ 11,635,018
Sales 13,099,740
</Table>
66
<Page>
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 September 30, 2004, as computed for Federal
income tax purposes, were as follows:
<Table>
INSURED MUNICIPAL FUND II
AGGREGATE COST $ 226,726,909
------------------------------------------------------------------
Gross unrealized appreciation $ 8,786,440
Gross unrealized depreciation (1,178,083)
------------------------------------------------------------------
NET UNREALIZED APPRECIATION $ 7,608,357
------------------------------------------------------------------
INSURED CALIFORNIA FUND II
AGGREGATE COST $ 85,082,937
------------------------------------------------------------------
Gross unrealized appreciation $ 2,120,061
Gross unrealized depreciation --
------------------------------------------------------------------
NET UNREALIZED APPRECIATION $ 2,120,061
------------------------------------------------------------------
INSURED FLORIDA FUND
AGGREGATE COST $ 57,123,319
------------------------------------------------------------------
Gross unrealized appreciation $ 1,736,216
Gross unrealized depreciation --
------------------------------------------------------------------
NET UNREALIZED APPRECIATION $ 1,736,216
------------------------------------------------------------------
INSURED MASSACHUSETTS FUND
AGGREGATE COST $ 39,269,957
------------------------------------------------------------------
Gross unrealized appreciation $ 1,763,546
Gross unrealized depreciation (21,353)
------------------------------------------------------------------
NET UNREALIZED APPRECIATION $ 1,742,193
------------------------------------------------------------------
INSURED MICHIGAN FUND
AGGREGATE COST $ 33,715,519
------------------------------------------------------------------
Gross unrealized appreciation $ 1,546,968
Gross unrealized depreciation --
------------------------------------------------------------------
NET UNREALIZED APPRECIATION $ 1,546,968
------------------------------------------------------------------
INSURED NEW JERSEY FUND
AGGREGATE COST $ 57,442,276
------------------------------------------------------------------
Gross unrealized appreciation $ 2,744,158
Gross unrealized depreciation (9,738)
------------------------------------------------------------------
NET UNREALIZED APPRECIATION $ 2,734,420
------------------------------------------------------------------
INSURED NEW YORK FUND II
AGGREGATE COST $ 57,008,544
------------------------------------------------------------------
Gross unrealized appreciation $ 2,263,450
Gross unrealized depreciation --
------------------------------------------------------------------
NET UNREALIZED APPRECIATION $ 2,263,450
------------------------------------------------------------------
INSURED OHIO FUND
AGGREGATE COST $ 55,551,257
------------------------------------------------------------------
Gross unrealized appreciation $ 1,965,451
Gross unrealized depreciation (23,980)
------------------------------------------------------------------
NET UNREALIZED APPRECIATION $ 1,941,471
------------------------------------------------------------------
INSURED PENNSYLVANIA FUND
AGGREGATE COST $ 65,531,399
------------------------------------------------------------------
Gross unrealized appreciation $ 1,766,232
Gross unrealized depreciation --
------------------------------------------------------------------
NET UNREALIZED APPRECIATION $ 1,766,232
------------------------------------------------------------------
</Table>
7 SHARES OF BENEFICIAL INTEREST
The Declaration of Trust permits the Funds to issue an unlimited number of
full and fractional $0.01 par value common shares. Transactions in common
shares were as follows:
<Table>
<Caption>
INSURED MUNICIPAL FUND II
---------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------
2004 2003(1)
------------------------------------------------------------------------------------
Sales -- 9,897,891
------------------------------------------------------------------------------------
Shares issued pursuant to the
Fund's dividend reinvestment plan 8,524 3,023
------------------------------------------------------------------------------------
NET INCREASE 8,524 9,900,914
------------------------------------------------------------------------------------
</Table>
67
<Page>
<Table>
<Caption>
INSURED CALIFORNIA FUND II
---------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------
2004 2003(1)
------------------------------------------------------------------------------------
Sales -- 3,844,564
------------------------------------------------------------------------------------
Shares issued pursuant to the
Fund's dividend reinvestment plan 4,287 26
------------------------------------------------------------------------------------
NET INCREASE 4,287 3,844,590
------------------------------------------------------------------------------------
<Caption>
INSURED FLORIDA FUND
---------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------
2004 2003(1)
------------------------------------------------------------------------------------
Sales -- 2,535,523
------------------------------------------------------------------------------------
Shares issued pursuant to the
Fund's dividend reinvestment plan 7,561 13,733
------------------------------------------------------------------------------------
NET INCREASE 7,561 2,549,256
------------------------------------------------------------------------------------
<Caption>
INSURED MASSACHUSETTS FUND
---------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------
2004 2003(1)
------------------------------------------------------------------------------------
Sales -- 1,736,767
------------------------------------------------------------------------------------
Shares issued pursuant to the
Fund's dividend reinvestment plan 3,155 606
------------------------------------------------------------------------------------
NET INCREASE 3,155 1,737,373
------------------------------------------------------------------------------------
<Caption>
INSURED MICHIGAN FUND
---------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------
2004 2003(1)
------------------------------------------------------------------------------------
Sales -- 1,500,707
------------------------------------------------------------------------------------
Shares issued pursuant to the
Fund's dividend reinvestment plan 1,114 556
------------------------------------------------------------------------------------
NET INCREASE 1,114 1,501,263
------------------------------------------------------------------------------------
<Caption>
INSURED NEW JERSEY FUND
---------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------
2004 2003(1)
------------------------------------------------------------------------------------
Sales -- 2,546,634
------------------------------------------------------------------------------------
Shares issued pursuant to the
Fund's dividend reinvestment plan 3,742 553
------------------------------------------------------------------------------------
NET INCREASE 3,742 2,547,187
------------------------------------------------------------------------------------
<Caption>
INSURED NEW YORK FUND II
---------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------
2004 2003(1)
------------------------------------------------------------------------------------
Sales -- 2,546,647
------------------------------------------------------------------------------------
Shares issued pursuant to the
Fund's dividend reinvestment plan 303 289
------------------------------------------------------------------------------------
NET INCREASE 303 2,546,936
------------------------------------------------------------------------------------
<Caption>
INSURED OHIO FUND
---------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------
2004 2003(1)
------------------------------------------------------------------------------------
Sales -- 2,496,446
------------------------------------------------------------------------------------
Shares issued pursuant to the
Fund's dividend reinvestment plan 5,040 1,073
------------------------------------------------------------------------------------
NET INCREASE 5,040 2,497,519
------------------------------------------------------------------------------------
<Caption>
INSURED PENNSYLVANIA FUND
---------------------------------
YEAR ENDED SEPTEMBER 30,
---------------------------------
2004 2003(1)
------------------------------------------------------------------------------------
Sales -- 2,930,531
------------------------------------------------------------------------------------
Shares issued pursuant to the
Fund's dividend reinvestment plan 2,128 426
------------------------------------------------------------------------------------
NET INCREASE 2,128 2,930,957
------------------------------------------------------------------------------------
</Table>
(1) For the period from the start of business, November 29, 2002, to
September 30, 2003.
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.
68
<Page>
A summary of obligations under these financial instruments at September 30,
2004 is as follows:
FUTURES CONTRACTS
<Table>
<Caption>
EXPIRATION AGGREGATE NET UNREALIZED
FUND DATE CONTRACTS POSITION COST VALUE DEPRECIATION
--------------------------------------------------------------------------------------------------------------------------------
Insured
Municipal II 12/04 500 U.S. Treasury Bond Short $ (55,267,407) $ (56,109,375) $ (841,968)
--------------------------------------------------------------------------------------------------------------------------------
Insured
California II 12/04 200 U.S. Treasury Bond Short $ (22,119,463) $ (22,443,750) $ (324,287)
--------------------------------------------------------------------------------------------------------------------------------
Insured
Florida 12/04 132 U.S. Treasury Bond Short $ (14,598,845) $ (14,812,875) $ (214,030)
--------------------------------------------------------------------------------------------------------------------------------
Insured
Massachusetts 12/04 80 U.S. Treasury Bond Short $ (8,825,910) $ (8,977,500) $ (151,590)
--------------------------------------------------------------------------------------------------------------------------------
Insured
Michigan 12/04 85 U.S. Treasury Bond Short $ (9,364,288) $ (9,538,594) $ (174,306)
--------------------------------------------------------------------------------------------------------------------------------
Insured
New Jersey 12/04 100 U.S. Treasury Bond Short $ (11,032,387) $ (11,221,875) $ (189,488)
--------------------------------------------------------------------------------------------------------------------------------
Insured
New York II 12/04 135 U.S. Treasury Bond Short $ (14,922,199) $ (15,149,531) $ (227,332)
--------------------------------------------------------------------------------------------------------------------------------
Insured
Ohio 12/04 125 U.S. Treasury Bond Short $ (13,790,485) $ (14,027,344) $ (236,859)
--------------------------------------------------------------------------------------------------------------------------------
Insured
Pennsylvania 12/04 151 U.S. Treasury Bond Short $ (16,700,194) $ (16,945,031) $ (244,837)
--------------------------------------------------------------------------------------------------------------------------------
</Table>
At September 30, 2004, each Fund had sufficient cash and/or securities to
cover margin requirements on open future contracts.
9 OVERDRAFT ADVANCES
Pursuant to the custodian agreement between the Funds and Investors Bank &
Trust (the Bank), the Bank may in its discretion advance funds to the Funds
to make properly authorized payments. When such payments result in an
overdraft by the Funds, the Funds are obligated to repay the Bank at the
current rate of interest charged by the Bank for secured loans (currently, a
rate above the federal funds rate). This obligation is payable on demand to
the Bank. At September 30, 2004, the Insured Municipal Fund II, the Insured
Florida Fund, the Insured Massachusetts Fund and the Insured New Jersey Fund
had payments due to the Bank pursuant to the foregoing arrangement of
$1,183,720, $315,862, $86,339 and $142,053, respectively.
10 ANNUAL MEETING OF SHAREHOLDERS (UNAUDITED)
Each Fund held its Annual Meeting of Shareholders on July 23, 2004. The
following action was taken by the shareholders of each Fund:
Item 1: The election of James B. Hawkes and Samuel L. Hayes, III as Class II
Trustees of the Fund for a three-year term expiring in 2007. Mr. Hayes was
designated the Nominee to be elected by APS shareholders:
<Table>
<Caption>
NOMINEE FOR NOMINEE FOR
CLASS II TRUSTEE CLASS II TRUSTEE
ELECTED BY APS ELECTED BY ALL
SHAREHOLDERS: SHAREHOLDERS
FUND SAMUEL L. HAYES, III JAMES B. HAWKES
---------------------------------------------------------------------------------
Insured Municipal Fund II
For 3,500 8,292,491
Withheld 0 53,208
---------------------------------------------------------------------------------
Insured California Fund II
For 1,263 3,141,957
Withheld 0 6,111
---------------------------------------------------------------------------------
Insured Florida Fund
For 828 2,033,100
Withheld 1 15,837
---------------------------------------------------------------------------------
Insured Massachusetts Fund
For 620 1,499,861
Withheld 0 13,265
---------------------------------------------------------------------------------
Insured Michigan Fund
For 366 1,352,686
Withheld 0 12,292
---------------------------------------------------------------------------------
Insured New Jersey Fund
For 816 2,237,926
Withheld 0 7,525
---------------------------------------------------------------------------------
Insured New York Fund II
For 810 2,127,167
Withheld 0 42,138
---------------------------------------------------------------------------------
Insured Ohio Fund
For 864 1,931,250
Withheld 0 17,366
---------------------------------------------------------------------------------
Insured Pennsylvania Fund
For 943 2,571,100
Withheld 0 32,401
---------------------------------------------------------------------------------
</Table>
69
<Page>
EATON VANCE INSURED MUNICIPAL BOND FUNDS as of September 30, 2004
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE TRUSTEES AND SHAREHOLDERS OF EATON VANCE INSURED MUNICIPAL BOND FUND II,
EATON VANCE INSURED CALIFORNIA MUNICIPAL BOND FUND II, EATON VANCE INSURED
FLORIDA MUNICIPAL BOND FUND, EATON VANCE INSURED MASSACHUSETTS MUNICIPAL BOND
FUND, EATON VANCE INSURED MICHIGAN MUNICIPAL BOND FUND, EATON VANCE INSURED NEW
JERSEY MUNICIPAL BOND FUND, EATON VANCE INSURED NEW YORK MUNICIPAL BOND FUND II,
EATON VANCE INSURED OHIO MUNICIPAL BOND FUND, AND EATON VANCE INSURED
PENNSYLVANIA MUNICIPAL BOND FUND :
We have audited the accompanying statements of assets and liabilities, including
the portfolios of investments, of Eaton Vance Insured Municipal Bond Fund II,
Eaton Vance Insured California Municipal Bond Fund II, Eaton Vance Insured
Florida Municipal Bond Fund, Eaton Vance Insured Massachusetts Municipal Bond
Fund, Eaton Vance Insured Michigan Municipal Bond Fund, Eaton Vance Insured New
Jersey Municipal Bond Fund, Eaton Vance Insured New York Municipal Bond Fund II,
Eaton Vance Insured Ohio Municipal Bond Fund, and Eaton Vance Insured
Pennsylvania Municipal Bond Fund (the "Funds") as of September 30, 2004, and the
related statements of operations for the year then ended and the statements of
changes in net assets and financial highlights for the year then ended and for
the period from the start of business, November 29, 2002 to September 30, 2003.
These financial statements and financial highlights are the responsibility of
the Funds' management. Our responsibility is to express an opinion on these
financial statements and financial highlights based on our audits.
We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements and financial highlights are free of material misstatement.
Our procedures included confirmation of securities held as of September 30, 2004
by correspondence with the custodian and brokers; where replies were not
received from brokers, we performed other auditing procedures. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such financial statements and financial highlights, referred to
above, present fairly, in all material respects, the financial position of Eaton
Vance Insured Municipal Bond Fund II, Eaton Vance Insured California Municipal
Bond Fund II, Eaton Vance Insured Florida Municipal Bond Fund, Eaton Vance
Insured Massachusetts Municipal Bond Fund, Eaton Vance Insured Michigan
Municipal Bond Fund, Eaton Vance Insured New Jersey Municipal Bond Fund, Eaton
Vance Insured New York Municipal Bond Fund II, Eaton Vance Insured Ohio
Municipal Bond Fund, and Eaton Vance Insured Pennsylvania Municipal Bond Fund at
September 30, 2004, the results of their operations, the changes in their net
assets and their financial highlights for the year then ended and for the period
from the start of business, November 29, 2002 to September 30, 2004, in
conformity with accounting principles generally accepted in the United States of
America.
DELOITTE & TOUCHE LLP
Boston, Massachusetts
November 17, 2004
70
<Page>
EATON VANCE INSURED MUNICIPAL BOND FUNDS as of September 30, 2004
FEDERAL TAX INFORMATION (Unaudited)
The Form 1099-DIV you receive in January 2005 will show the tax status of all
distributions paid to your account in calendar 2004. Shareholders are advised to
consult their own tax adviser with respect to the tax consequences of their
investment in the Fund. As required by the Internal Revenue Code regulations,
shareholders must be notified within 60 days of the Fund's fiscal year end
regarding exempt-interest dividends and capital gains dividends.
EXEMPT-INTEREST DIVIDENDS -- The Funds designate the following amounts of
dividends from net investment income as an exempt-interest dividend.
<Table>
Insured Municipal Bond Fund II 100.00%
Insured California Municipal Bond Fund II 100.00%
Insured Florida Municipal Bond Fund 100.00%
Insured Massachusetts Municipal Bond Fund 100.00%
Insured Michigan Municipal Bond Fund 100.00%
Insured New Jersey Municipal Bond Fund 100.00%
Insured New York Municipal Bond Fund II 100.00%
Insured Ohio Municipal Bond Fund 100.00%
Insured Pennsylvania Municipal Bond Fund 100.00%
</Table>
CAPITAL GAINS DIVIDENDS -- The Funds designate the following amounts as capital
gain dividends.
<Table>
Insured Municipal Bond Fund II --
Insured California Municipal Bond Fund II $ 170,193
Insured Florida Municipal Bond Fund $ 131,832
Insured Massachusetts Municipal Bond Fund $ 177,009
Insured Michigan Municipal Bond Fund --
Insured New Jersey Municipal Bond Fund $ 214,826
Insured New York Municipal Bond Fund II $ 89,770
Insured Ohio Municipal Bond Fund $ 45,858
Insured Pennsylvania Municipal Bond Fund $ 136,034
</Table>
71
<Page>
EATON VANCE INSURED MUNICIPAL BOND FUNDS
MANAGEMENT AND ORGANIZATION
FUND MANAGEMENT. The Trustees and officers of Eaton Vance Insured Municipal Bond
Fund II (EIV), Eaton Vance Insured California Municipal Bond Fund II (EIA),
Eaton Vance Insured Florida Municipal Bond Fund (EIF), Eaton Vance Insured
Massachusetts Municipal Bond Fund (MAB), Eaton Vance Insured Michigan Municipal
Bond Fund (MIW), Eaton Vance Insured New Jersey Municipal Bond Fund (EMJ), Eaton
Vance Insured New York Municipal Bond Fund II (NYH), Eaton Vance Insured Ohio
Municipal Bond Fund (EIO), and Eaton Vance Pennsylvania Municipal Bond Fund
(EIP), (the Funds) are listed below. Except as indicated, each individual has
held the office shown or other offices in the same company for the last five
years. The "noninterested Trustees" consist of those Trustees who are not
"interested persons" of the Funds, as that term is defined under the 1940 Act.
The business address of each Trustee and officer is The Eaton Vance Building,
255 State Street, Boston, Massachusetts 02109. As used below, "EVC" refers to
Eaton Vance Corp., "EV" refers to Eaton Vance, Inc., "EVM" refers to Eaton Vance
Management, "BMR" refers to Boston Management and Research and "EVD" refers to
Eaton Vance Distributors, Inc. EVC and EV are the corporate parent and trustee,
respectively, of EVM and BMR. EVD is the Funds' principal underwriter and a
wholly-owned subsidiary of EVM.
<Table>
<Caption>
TERM OF NUMBER OF PORTFOLIOS
POSITION(S) OFFICE AND IN FUND COMPLEX
NAME AND WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY
DATE OF BIRTH FUNDS SERVICE DURING PAST FIVE YEARS TRUSTEE(1) OTHER DIRECTORSHIPS HELD
- ----------------------------------------------------------------------------------------------------------------------------------
INTERESTED
TRUSTEE
James B. Hawkes Trustee Until 2007. 3 Chairman, President and 195 Director of EVC
11/9/41 and Vice years. Trustee Chief Executive Officer of
President since 2002. BMR, EVC, EVM and EV;
Director of EV; Vice
President and Director of
EVD. Trustee and/or officer
of 195 registered investment
companies in the Eaton Vance
Fund Complex. Mr.Hawkes is
an interested person because
of his positions with BMR,
EVM, EVC and EV, which are
affiliates of the Funds.
NONINTERESTED
TRUSTEE(S)
Samuel L. Hayes, Trustee(A) Until 2007. 3 Jacob H. Schiff Professor of 195 Director of Tiffany & Co.
III years. Trustee Investment Banking Emeritus, (specialty retailer) and
2/23/35 since 2002. Harvard University Graduate Telect, Inc.
School of Business (telecommunication
Administration. services company)
William H. Park Trustee Until 2006. 3 President and Chief 195 None
9/19/47 years. Trustee Executive Officer, Prizm
since 2003. Capital Management, LLC
(investment management firm)
(since 2002). Executive Vice
President and Chief
Financial Officer, United
Asset Management Corporation
(a holding company owning
institutional investment
management firms)
(1982-2001).
Ronald A. Trustee Until 2005. 3 Professor of Law, Georgetown 195 None
Pearlman years. Trustee University Law Center (since
7/10/40 since 2003. 1999). Tax Partner,
Covington & Burling,
Washington, DC (1991-2000).
Norton H. Reamer Trustee (A) Until 2005. 3 President, Chief Executive 195 None
9/21/35 years. Trustee Officer and a Director of
since 2002. Asset Management Finance
Corp. (a specialty finance
company serving the
investment management
industry) (since
October 2003). President,
Unicorn Corporation (an
investment and financial
advisory services company)
(since September 2000).
Formerly, Chairman, Hellman,
Jordan Management Co., Inc.
(an investment management
company) (2000-2003).
Formerly, Advisory Director
of Berkshire Capital
Corporation (investment
banking firm) (2002-2003).
Formerly Chairman of the
Board, United Asset
Management Corporation (a
holding company owning
institutional investment
management firms) and
Chairman, President and
Director, UAM Funds (mutual
funds) (1980-2000).
</Table>
72
<Page>
<Table>
<Caption>
TERM OF NUMBER OF PORTFOLIOS
POSITION(S) OFFICE AND IN FUND COMPLEX
NAME AND WITH THE LENGTH OF PRINCIPAL OCCUPATION(S) OVERSEEN BY
DATE OF BIRTH FUNDS SERVICE DURING PAST FIVE YEARS TRUSTEE(1) OTHER DIRECTORSHIPS HELD
- ----------------------------------------------------------------------------------------------------------------------------------
NONINTERESTED
TRUSTEE(S)
(CONTINUED)
Lynn A. Stout Trustee Until 2005. 3 Professor of Law, University 195 None
9/14/57 years. Trustee of California at Los Angeles
since 2002. School of Law (since July
2001). Formerly, Professor of
Law, Georgetown University
Law Center.
</Table>
PRINCIPAL OFFICERS WHO ARE NOT TRUSTEES
<Table>
<Caption>
TERM OF
POSITION(S) OFFICE AND
NAME AND WITH THE LENGTH OF PRINCIPAL OCCUPATION(S)
DATE OF BIRTH FUNDS SERVICE DURING PAST FIVE YEARS
- ----------------------------------------------------------------------------------------------------------------------------------
Thomas J. Fetter President Since 2002 Vice President of EVM and BMR. Officer of 124
8/20/43 registered investment companies managed by EVM or BMR.
William H. Ahern, Jr. Vice President of Vice President of MIW Vice President of EVM and BMR. Officer of 78 registered
7/28/59 MIW and EIV since 2002; of EIV since investment companies managed by EVM or BMR.
2004
Craig R. Brandon Vice President of EIF Since 2004 Vice President of EVM and BMR. Officer of 44
12/31/66 registered investment companies managed by EVM or BMR.
Cynthia J. Clemson Vice President Vice President of EIA, Vice President of EVM and BMR. Officer of 84
3/2/63 EIF and EIP since 2002; registered investment companies managed by EVM or BMR.
of EIV, MAB, MIW, EMJ,
NYH and EIO since 2004
Robert B. MacIntosh Vice President Since 2002 Vice President of EVM and BMR. Officer of 124
1/22/57 registered investment companies managed by EVM or BMR.
Alan R. Dynner Secretary Since 2002 Vice President, Secretary and Chief Legal Officer of
10/10/40 BMR, EVM, EVD, EV and EVC. Officer of 195 registered
investment companies managed by EVM or BMR.
James L. O'Connor Treasurer Since 2002 Vice President of BMR, EVM and EVD. Officer of 116
4/1/45 registered investment companies managed by EVM or BMR.
Paul M. O'Neil Chief Compliance Since 2004 Vice President of BMR and EVM. Officer of 195
7/11/53 Officer registered investment companies managed by EVM and BMR.
</Table>
(1) Includes both master and feeder funds in a master-feeder structure.
(A) APS Trustee.
73
<Page>
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.
74
<Page>
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, nondiversified,
management investment company and has no employees.
NUMBER OF SHAREHOLDERS
As of September 30, 2004, our records indicate that there are 36, 12, 8, 6, 10,
10, 21, 24 and 57 registered shareholders for Insured Municipal Fund II, Insured
California Fund II, Insured Florida Fund, Insured Massachusetts Fund, Insured
Michigan Fund, Insured New Jersey Fund, Insured New York Fund II, Insured Ohio
Fund and Insured Pennsylvania Fund, respectively, and approximately 4,900,
1,700, 1,300, 2,200, 1,000, 2,600, 1,300, 1,500 and 1,900 shareholders owning
the Fund shares in street name, such as through brokers, banks, and financial
intermediaries for Insured Municipal Fund II, Insured California Fund II,
Insured Florida Fund, Insured Massachusetts Fund, Insured Michigan Fund, Insured
New Jersey Fund, Insured New York Fund II, Insured Ohio Fund and Insured
Pennsylvania 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 II EIV
Insured California Fund II EIA
Insured Florida Fund EIF
Insured Massachusetts Fund MAB
Insured Michigan Fund MIW
Insured New Jersey Fund EMJ
Insured New York Fund II NYH
Insured Ohio Fund EIO
Insured Pennsylvania Fund EIP
75
<Page>
This Page Intentionally Left Blank
<Page>
This Page Intentionally Left Blank
<Page>
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
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
DELOITTE & TOUCHE LLP
200 Berkeley Street
Boston, MA 02116-5022
EATON VANCE INSURED MUNICIPAL BOND FUNDS
THE EATON VANCE BUILDING
255 STATE STREET
BOSTON, MA 02109
<Page>
1557-11/04 8IMBIISRC
<Page>
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer.
The registrant undertakes to provide a copy of such code of ethics to any person
upon request, without charge, by calling 1-800-262-1122.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated William H. Park, Samuel L. Hayes, III and
Norton H. Reamer, each an independent trustee, as its audit committee financial
experts. Mr. Park is a certified public accountant who is the President and
Chief Executive Officer of Prizm Capital Management, LLC (investment management
firm). Previously, he served as Executive Vice President and Chief Financial
Officer of United Asset Management Corporation ("UAM") (a holding company owning
institutional investment management firms). Mr. Hayes is the Jacob H. Schiff
Professor of Investment Banking Emeritus of the Harvard University Graduate
School of Business Administration. Mr. Reamer is the President, Chief Executive
Officer and a Director of Asset Management Finance Corp. (a specialty finance
company serving the investment management industry) and is President of Unicorn
Corporation (an investment and financial advisory services company). Formerly,
Mr. Reamer was Chairman of Hellman, Jordan Management Co., Inc. (an investment
management company) and Advisory Director of Berkshire Capital Corporation (an
investment banking firm), Chairman of the Board of UAM and Chairman, President
and Director of the UAM Funds (mutual funds).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) -(d)
The following table presents the aggregate fees billed to the registrant for the
registrant's fiscal years ended September 30, 2003 and September 30, 2004 by the
registrant's principal accountant for professional services rendered for the
audit of the registrant's annual financial statements and fees billed for other
services rendered by the principal accountant during such period.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
Audit Fees $ 25,132 $ 28,263
Audit-Related Fees(1) 3,500 3,600
Tax Fees(2) 5,400 6,100
All Other Fees(3) 0 0
-----------------------------
Total $ 34,032 $ 37,963
=============================
</Table>
(1) Audit-related fees consist of the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit of financial statements and are not reported under the category of
audit fees.
(2) Tax fees consist of the aggregate fees billed for professional services
rendered by the principal accountant relating to tax compliance, tax
advice, and tax planning.
<Page>
(3) All other fees consist of the aggregate fees billed for products and
services provided by the principal accountant other than audit,
audit-related, and tax services.
During the fiscal year ended September 30, 2004, $35,000 was billed by D&T, the
principal accountant for certain of the Series, for work done in connection with
its Rule 17Ad-13 examination of Eaton Vance Management's assertion that it has
maintained an effective internal control structure over the sub-transfer agent
and registrar functions, such services being pre-approved in accordance with
Rule 2-01(c) (7) (ii) of Regulation S-X.
(e)(1) The registrant's audit committee has adopted policies and procedures
relating to the pre-approval of services provided by the registrant's principal
accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a
framework intended to assist the audit committee in the proper discharge of its
pre-approval responsibilities. As a general matter, the Pre-Approval Policies
(i) specify certain types of audit, audit-related, tax, and other services
determined to be pre-approved by the audit committee; and (ii) delineate
specific procedures governing the mechanics of the pre-approval process,
including the approval and monitoring of audit and non-audit service fees.
Unless a service is specifically pre-approved under the Pre-Approval Policies,
it must be separately pre-approved by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services
pre-approved therein must be reviewed and ratified by the registrant's audit
committee at least annually. The registrant's audit committee maintains full
responsibility for the appointment, compensation, and oversight of the work of
the registrant's principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the
registrant's audit committee pursuant to the "de minimis exception" set forth in
Rule 2-01(c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees
for audit-related, tax, and other services) billed for services rendered to the
registrant by its principal accountant for the registrant's last two fiscal
years; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax,
and other services) billed for services rendered to the Eaton Vance organization
for the registrant's last two fiscal years.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
REGISTRANT $ 8,900 $ 9,700
EATON VANCE(1) $ 448,295 $ 329,084
</Table>
(1) Eaton Vance Management, a subsidiary of Eaton Vance Corp., acts as the
registrant's investment adviser and administrator.
(h) The registrant's audit committee has considered whether the provision by the
registrant's principal accountant of non-audit services to the registrant's
investment adviser and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant that
were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is
compatible with maintaining the principal accountant's independence.
<Page>
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of
1934, as amended. Norton H. Reamer (Chair), Samuel L. Hayes, III, William H.
Park and Lynn A. Stout are the members of the registrant's audit committee.
ITEM 6. SCHEDULE OF INVESTMENTS
Please see schedule of investments contained in the Report to Stockholders
included under Item 1 of this Form N-CSR.
<Page>
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
The Board of Trustees of the Trust has adopted a proxy voting policy and
procedure (the "Fund Policy"), pursuant to which the Trustees have delegated
proxy voting responsibility to the Fund's investment adviser and adopted the
investment adviser's proxy voting policies and procedures (the "Policies") which
are described below. The Trustees will review the Fund's proxy voting records
from time to time and will annually consider approving the Policies for the
upcoming year. In the event that a conflict of interest arises between the
Fund's shareholders and the investment adviser, the administrator, or any of
their affiliates or any affiliate of the Fund, the investment adviser will
generally refrain from voting the proxies related to the companies giving rise
to such conflict until it consults with the Board of the Fund except as
contemplated under the Fund Policy. The Board's Special Committee will instruct
the investment adviser on the appropriate course of action.
The Policies are designed to promote accountability of a company's management to
its shareholders and to align the interests of management with those
shareholders. The investment adviser will generally support company management
on proposals relating to environmental and social policy issues and on matters
regarding the state of organization of the company. On all other matters, the
investment adviser will take management's proposals under advisement but will
consider each matter in light of the guidelines set forth in the Policies.
Except in the instance of routine matters related to corporate administration
which are not expected to have a significant economic impact on the company or
its shareholders (on which the investment adviser will routinely vote with
management), the investment adviser will review each matter on a case-by-case
basis and reserves the right to deviate from the Policies guidelines when it
believes the situation warrants such a deviation. The Policy includes voting
guidelines for matters relating to, among other things, the election of
directors, approval of independent auditors, executive compensation, corporate
structure and anti-takeover defenses. The investment adviser may abstain from
voting from time to time where it determines that the costs associated with
voting a proxy outweighs the benefits derived from exercising the right to vote.
In addition, the investment adviser will monitor situations that may result in a
conflict of interest between the Fund's shareholders and the investment adviser,
the administrator, or any of their affiliates or any affiliate of the Fund by
maintaining a list of significant existing and prospective corporate clients.
The investment adviser's personnel responsible for reviewing and voting proxies
on behalf of the Fund will report any proxy received or expected to be received
from a company included on that list to the investment adviser's general counsel
or chief equity investment officer. The general counsel or chief equity
investment officer will determine if a conflict exists. If a conflict does
exist, the proxy will either be voted strictly in accordance with the Policy or
the investment adviser will seek instruction on how to vote from the Board.
Effective August 31, 2004, information on how the Fund voted proxies relating to
portfolio securities during the 12 month period ended June 30, 2004 is available
(1) without charge, upon request, by calling 1-800-262-1122, and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
<Page>
Not Applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Effective February 9, 2004, the Governance Committee of the Board of Trustees
formalized the procedures by which a Fund's shareholders may recommend nominees
to the registrant's Board of Trustees. The Governance Committee shall, when
identifying candidates for the position of Independent Trustee, consider any
such candidate recommended by a shareholder of a Fund if such recommendation
contains sufficient background information concerning the candidate, and is
received in a sufficiently timely manner (and in any event no later than the
date specified for receipt of shareholder proposals in any applicable proxy
statement with respect to a Fund). Shareholders shall be directed to address any
such recommendations to the attention of the Governance Committee, c/o the
Secretary of the Fund.
ITEM 10. 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 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 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 period that has materially affected, or is
reasonably likely to materially affect the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
SIGNATURES
<Page>
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 MUNICIPAL BOND FUND II
By: /s/ Thomas J. Fetter
--------------------------------------------
Thomas J. Fetter
President
Date: November 17, 2004
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/ James L. O'Connor
-------------------------------------
James L. O'Connor
Treasurer
Date: November 17, 2004
By: /s/ Thomas J. Fetter
------------------------------------------
Thomas J. Fetter
President
Date: November 17, 2004
<Page>
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer.
The registrant undertakes to provide a copy of such code of ethics to any person
upon request, without charge, by calling 1-800-262-1122.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated William H. Park, Samuel L. Hayes, III and
Norton H. Reamer, each an independent trustee, as its audit committee financial
experts. Mr. Park is a certified public accountant who is the President and
Chief Executive Officer of Prizm Capital Management, LLC (investment management
firm). Previously, he served as Executive Vice President and Chief Financial
Officer of United Asset Management Corporation ("UAM") (a holding company owning
institutional investment management firms). Mr. Hayes is the Jacob H. Schiff
Professor of Investment Banking Emeritus of the Harvard University Graduate
School of Business Administration. Mr. Reamer is the President, Chief Executive
Officer and a Director of Asset Management Finance Corp. (a specialty finance
company serving the investment management industry) and is President of Unicorn
Corporation (an investment and financial advisory services company). Formerly,
Mr. Reamer was Chairman of Hellman, Jordan Management Co., Inc. (an investment
management company) and Advisory Director of Berkshire Capital Corporation (an
investment banking firm), Chairman of the Board of UAM and Chairman, President
and Director of the UAM Funds (mutual funds).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) -(d)
The following table presents the aggregate fees billed to the registrant for the
registrant's fiscal years ended September 30, 2003 and September 30, 2004 by the
registrant's principal accountant for professional services rendered for the
audit of the registrant's annual financial statements and fees billed for other
services rendered by the principal accountant during such period.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
Audit Fees $ 19,055 $ 24,679
Audit-Related Fees(1) 3,500 3,600
Tax Fees(2) 5,400 6,100
All Other Fees(3) 0 0
-----------------------------
Total $ 27,955 $ 34,379
=============================
</Table>
(1) Audit-related fees consist of the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit of financial statements and are not reported under the category of
audit fees and specifically include fees for the performance of certain
agreed-upon procedures relating to the registrant's auction preferred
shares.
<Page>
(2) Tax fees consist of the aggregate fees billed for professional services
rendered by the principal accountant relating to tax compliance, tax
advice, and tax planning.
(3) All other fees consist of the aggregate fees billed for products and
services provided by the principal accountant other than audit,
audit-related, and tax services.
(e)(1) The registrant's audit committee has adopted policies and procedures
relating to the pre-approval of services provided by the registrant's principal
accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a
framework intended to assist the audit committee in the proper discharge of its
pre-approval responsibilities. As a general matter, the Pre-Approval Policies
(i) specify certain types of audit, audit-related, tax, and other services
determined to be pre-approved by the audit committee; and (ii) delineate
specific procedures governing the mechanics of the pre-approval process,
including the approval and monitoring of audit and non-audit service fees.
Unless a service is specifically pre-approved under the Pre-Approval Policies,
it must be separately pre-approved by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services
pre-approved therein must be reviewed and ratified by the registrant's audit
committee at least annually. The registrant's audit committee maintains full
responsibility for the appointment, compensation, and oversight of the work of
the registrant's principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the
registrant's audit committee pursuant to the "de minimis exception" set forth in
Rule 2-01(c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees
for audit-related, tax, and other services) billed for services rendered to the
registrant by its principal accountant for the registrant's last two fiscal
years; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax,
and other services) billed for services rendered to the Eaton Vance organization
for the registrant's last two fiscal years.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
REGISTRANT $ 8,900 $ 9,700
EATON VANCE(1) $ 448,295 $ 329,084
</Table>
(1) Eaton Vance Management, a subsidiary of Eaton Vance Corp., acts as the
registrant's investment adviser and administrator.
(h) The registrant's audit committee has considered whether the provision by the
registrant's principal accountant of non-audit services to the registrant's
investment adviser and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant that
were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is
compatible with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
<Page>
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of
1934, as amended. Norton H. Reamer (Chair), Samuel L. Hayes, III, William H.
Park and Lynn A. Stout are the members of the registrant's audit committee.
ITEM 6. SCHEDULE OF INVESTMENTS
Please see schedule of investments contained in the Report to Stockholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
The Board of Trustees of the Trust has adopted a proxy voting policy and
procedure (the "Fund Policy"), pursuant to which the Trustees have delegated
proxy voting responsibility to the Fund's investment adviser and adopted the
investment adviser's proxy voting policies and procedures (the "Policies") which
are described below. The Trustees will review the Fund's proxy voting records
from time to time and will annually consider approving the Policies for the
upcoming year. In the event that a conflict of interest arises between the
Fund's shareholders and the investment adviser, the administrator, or any of
their affiliates or any affiliate of the Fund, the investment adviser will
generally refrain from voting the proxies related to the companies giving rise
to such conflict until it consults with the Board of the Fund except as
contemplated under the Fund Policy. The Board's Special Committee will instruct
the investment adviser on the appropriate course of action.
The Policies are designed to promote accountability of a company's management to
its shareholders and to align the interests of management with those
shareholders. The investment adviser will generally support company management
on proposals relating to environmental and social policy issues and on matters
regarding the state of organization of the company. On all other matters, the
investment adviser will take management's proposals under advisement but will
consider each matter in light of the guidelines set forth in the Policies.
Except in the instance of routine matters related to corporate administration
which are not expected to have a significant economic impact on the company or
its shareholders (on which the investment adviser will routinely vote with
management), the investment adviser will review each matter on a case-by-case
basis and reserves the right to deviate from the Policies guidelines when it
believes the situation warrants such a deviation. The Policy includes voting
guidelines for matters relating to, among other things, the election of
directors, approval of independent auditors, executive compensation, corporate
structure and anti-takeover defenses. The investment adviser may abstain from
voting from time to time where it determines that the costs associated with
voting a proxy outweighs the benefits derived from exercising the right to vote.
In addition, the investment adviser will monitor situations that may result in a
conflict of interest between the Fund's shareholders and the investment adviser,
the administrator, or any of their affiliates or any affiliate of the Fund by
maintaining a list of significant existing and prospective corporate clients.
<Page>
The investment adviser's personnel responsible for reviewing and voting proxies
on behalf of the Fund will report any proxy received or expected to be received
from a company included on that list to the investment adviser's general counsel
or chief equity investment officer. The general counsel or chief equity
investment officer will determine if a conflict exists. If a conflict does
exist, the proxy will either be voted strictly in accordance with the Policy or
the investment adviser will seek instruction on how to vote from the Board.
Effective August 31, 2004, information on how the Fund voted proxies relating to
portfolio securities during the 12 month period ended June 30, 2004 is available
(1) without charge, upon request, by calling 1-800-262-1122, and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Effective February 9, 2004, the Governance Committee of the Board of Trustees
formalized the procedures by which a Fund's shareholders may recommend nominees
to the registrant's Board of Trustees. The Governance Committee shall, when
identifying candidates for the position of Independent Trustee, consider any
such candidate recommended by a shareholder of a Fund if such recommendation
contains sufficient background information concerning the candidate, and is
received in a sufficiently timely manner (and in any event no later than the
date specified for receipt of shareholder proposals in any applicable proxy
statement with respect to a Fund). Shareholders shall be directed to address any
such recommendations to the attention of the Governance Committee, c/o the
Secretary of the Fund.
ITEM 10. 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 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 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 period that has materially affected, or is
reasonably likely to materially affect the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS
<Page>
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
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/ Thomas J. Fetter
--------------------
Thomas J. Fetter
President
Date: November 17, 2004
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/ James L. O'Connor
---------------------
James L. O'Connor
Treasurer
Date: November 17, 2004
By: /s/ Thomas J. Fetter
--------------------
Thomas J. Fetter
President
Date: November 17, 2004
<Page>
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer.
The registrant undertakes to provide a copy of such code of ethics to any person
upon request, without charge, by calling 1-800-262-1122.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated William H. Park, Samuel L. Hayes, III and
Norton H. Reamer, each an independent trustee, as its audit committee financial
experts. Mr. Park is a certified public accountant who is the President and
Chief Executive Officer of Prizm Capital Management, LLC (investment management
firm). Previously, he served as Executive Vice President and Chief Financial
Officer of United Asset Management Corporation ("UAM") (a holding company owning
institutional investment management firms). Mr. Hayes is the Jacob H. Schiff
Professor of Investment Banking Emeritus of the Harvard University Graduate
School of Business Administration. Mr. Reamer is the President, Chief Executive
Officer and a Director of Asset Management Finance Corp. (a specialty finance
company serving the investment management industry) and is President of Unicorn
Corporation (an investment and financial advisory services company). Formerly,
Mr. Reamer was Chairman of Hellman, Jordan Management Co., Inc. (an investment
management company) and Advisory Director of Berkshire Capital Corporation (an
investment banking firm), Chairman of the Board of UAM and Chairman, President
and Director of the UAM Funds (mutual funds).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) -(d)
The following table presents the aggregate fees billed to the registrant for the
registrant's fiscal years ended September 30, 2003 and September 30, 2004 by the
registrant's principal accountant for professional services rendered for the
audit of the registrant's annual financial statements and fees billed for other
services rendered by the principal accountant during such period.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
Audit Fees $ 16,171 $ 21,898
Audit-Related Fees(1) 3,500 3,600
Tax Fees(2) 5,400 6,100
All Other Fees(3) 0 0
-----------------------------
Total $ 25,071 $ 31,598
=============================
</Table>
(1) Audit-related fees consist of the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit of financial statements and are not reported under the category of
audit fees and specifically include fees for the performance of certain
agreed-upon procedures relating to the registrant's auction preferred
shares.
<Page>
(2) Tax fees consist of the aggregate fees billed for professional services
rendered by the principal accountant relating to tax compliance, tax
advice, and tax planning.
(3) All other fees consist of the aggregate fees billed for products and
services provided by the principal accountant other than audit,
audit-related, and tax services.
(e)(1) The registrant's audit committee has adopted policies and procedures
relating to the pre-approval of services provided by the registrant's principal
accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a
framework intended to assist the audit committee in the proper discharge of its
pre-approval responsibilities. As a general matter, the Pre-Approval Policies
(i) specify certain types of audit, audit-related, tax, and other services
determined to be pre-approved by the audit committee; and (ii) delineate
specific procedures governing the mechanics of the pre-approval process,
including the approval and monitoring of audit and non-audit service fees.
Unless a service is specifically pre-approved under the Pre-Approval Policies,
it must be separately pre-approved by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services
pre-approved therein must be reviewed and ratified by the registrant's audit
committee at least annually. The registrant's audit committee maintains full
responsibility for the appointment, compensation, and oversight of the work of
the registrant's principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the
registrant's audit committee pursuant to the "de minimis exception" set forth in
Rule 2-01(c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees
for audit-related, tax, and other services) billed for services rendered to the
registrant by its principal accountant for the registrant's last two fiscal
years; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax,
and other services) billed for services rendered to the Eaton Vance organization
for the registrant's last two fiscal years.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
REGISTRANT $ 8,900 $ 9,700
EATON VANCE(1) $ 448,295 $ 329,084
</Table>
(1) Eaton Vance Management, a subsidiary of Eaton Vance Corp., acts as the
registrant's investment adviser and administrator.
(h) The registrant's audit committee has considered whether the provision by the
registrant's principal accountant of non-audit services to the registrant's
investment adviser and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant that
were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is
compatible with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of
1934, as amended. Norton H. Reamer
<Page>
(Chair), Samuel L. Hayes, III, William H. Park and Lynn A. Stout are the members
of the registrant's audit committee.
ITEM 6. SCHEDULE OF INVESTMENTS
Please see schedule of investments contained in the Report to Stockholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
The Board of Trustees of the Trust has adopted a proxy voting policy and
procedure (the "Fund Policy"), pursuant to which the Trustees have delegated
proxy voting responsibility to the Fund's investment adviser and adopted the
investment adviser's proxy voting policies and procedures (the "Policies") which
are described below. The Trustees will review the Fund's proxy voting records
from time to time and will annually consider approving the Policies for the
upcoming year. In the event that a conflict of interest arises between the
Fund's shareholders and the investment adviser, the administrator, or any of
their affiliates or any affiliate of the Fund, the investment adviser will
generally refrain from voting the proxies related to the companies giving rise
to such conflict until it consults with the Board of the Fund except as
contemplated under the Fund Policy. The Board's Special Committee will instruct
the investment adviser on the appropriate course of action.
The Policies are designed to promote accountability of a company's management to
its shareholders and to align the interests of management with those
shareholders. The investment adviser will generally support company management
on proposals relating to environmental and social policy issues and on matters
regarding the state of organization of the company. On all other matters, the
investment adviser will take management's proposals under advisement but will
consider each matter in light of the guidelines set forth in the Policies.
Except in the instance of routine matters related to corporate administration
which are not expected to have a significant economic impact on the company or
its shareholders (on which the investment adviser will routinely vote with
management), the investment adviser will review each matter on a case-by-case
basis and reserves the right to deviate from the Policies guidelines when it
believes the situation warrants such a deviation. The Policy includes voting
guidelines for matters relating to, among other things, the election of
directors, approval of independent auditors, executive compensation, corporate
structure and anti-takeover defenses. The investment adviser may abstain from
voting from time to time where it determines that the costs associated with
voting a proxy outweighs the benefits derived from exercising the right to vote.
In addition, the investment adviser will monitor situations that may result in a
conflict of interest between the Fund's shareholders and the investment adviser,
the administrator, or any of their affiliates or any affiliate of the Fund by
maintaining a list of significant existing and prospective corporate clients.
The investment adviser's personnel responsible for reviewing and voting proxies
on behalf of the Fund will report any proxy received or expected to be received
from a company included on that list to the
<Page>
investment adviser's general counsel or chief equity investment officer. The
general counsel or chief equity investment officer will determine if a conflict
exists. If a conflict does exist, the proxy will either be voted strictly in
accordance with the Policy or the investment adviser will seek instruction on
how to vote from the Board.
Effective August 31, 2004, information on how the Fund voted proxies relating to
portfolio securities during the 12 month period ended June 30, 2004 is available
(1) without charge, upon request, by calling 1-800-262-1122, and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Effective February 9, 2004, the Governance Committee of the Board of Trustees
formalized the procedures by which a Fund's shareholders may recommend nominees
to the registrant's Board of Trustees. The Governance Committee shall, when
identifying candidates for the position of Independent Trustee, consider any
such candidate recommended by a shareholder of a Fund if such recommendation
contains sufficient background information concerning the candidate, and is
received in a sufficiently timely manner (and in any event no later than the
date specified for receipt of shareholder proposals in any applicable proxy
statement with respect to a Fund). Shareholders shall be directed to address any
such recommendations to the attention of the Governance Committee, c/o the
Secretary of the Fund.
ITEM 10. 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 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 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 period that has materially affected, or is
reasonably likely to materially affect the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
<Page>
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
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 FLORIDA MUNICIPAL BOND FUND
By: /s/ Thomas J. Fetter
--------------------
Thomas J. Fetter
President
Date: November 17, 2004
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/ James L. O'Connor
---------------------
James L. O'Connor
Treasurer
Date: November 17, 2004
By: /s/ Thomas J. Fetter
--------------------
Thomas J. Fetter
President
Date: November 17, 2004
<Page>
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer.
The registrant undertakes to provide a copy of such code of ethics to any person
upon request, without charge, by calling 1-800-262-1122.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated William H. Park, Samuel L. Hayes, III and
Norton H. Reamer, each an independent trustee, as its audit committee financial
experts. Mr. Park is a certified public accountant who is the President and
Chief Executive Officer of Prizm Capital Management, LLC (investment management
firm). Previously, he served as Executive Vice President and Chief Financial
Officer of United Asset Management Corporation ("UAM") (a holding company owning
institutional investment management firms). Mr. Hayes is the Jacob H. Schiff
Professor of Investment Banking Emeritus of the Harvard University Graduate
School of Business Administration. Mr. Reamer is the President, Chief Executive
Officer and a Director of Asset Management Finance Corp. (a specialty finance
company serving the investment management industry) and is President of Unicorn
Corporation (an investment and financial advisory services company). Formerly,
Mr. Reamer was Chairman of Hellman, Jordan Management Co., Inc. (an investment
management company) and Advisory Director of Berkshire Capital Corporation (an
investment banking firm), Chairman of the Board of UAM and Chairman, President
and Director of the UAM Funds (mutual funds).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) -(d)
The following table presents the aggregate fees billed to the registrant for the
registrant's fiscal years ended September 30, 2003 and September 30, 2004 by the
registrant's principal accountant for professional services rendered for the
audit of the registrant's annual financial statements and fees billed for other
services rendered by the principal accountant during such period.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
Audit Fees $ 13,596 $ 21,898
Audit-Related Fees(1) 3,500 3,600
Tax Fees(2) 5,400 6,100
All Other Fees(3) 0 0
-----------------------------
Total $ 22,496 $ 31,598
=============================
</Table>
(1) Audit-related fees consist of the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit of financial statements and are not reported under the category of
audit fees and specifically include fees for the performance of certain
agreed-upon procedures relating to the registrant's auction preferred
shares.
<Page>
(2) Tax fees consist of the aggregate fees billed for professional services
rendered by the principal accountant relating to tax compliance, tax
advice, and tax planning.
(3) All other fees consist of the aggregate fees billed for products and
services provided by the principal accountant other than audit,
audit-related, and tax services.
(e)(1) The registrant's audit committee has adopted policies and procedures
relating to the pre-approval of services provided by the registrant's principal
accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a
framework intended to assist the audit committee in the proper discharge of its
pre-approval responsibilities. As a general matter, the Pre-Approval Policies
(i) specify certain types of audit, audit-related, tax, and other services
determined to be pre-approved by the audit committee; and (ii) delineate
specific procedures governing the mechanics of the pre-approval process,
including the approval and monitoring of audit and non-audit service fees.
Unless a service is specifically pre-approved under the Pre-Approval Policies,
it must be separately pre-approved by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services
pre-approved therein must be reviewed and ratified by the registrant's audit
committee at least annually. The registrant's audit committee maintains full
responsibility for the appointment, compensation, and oversight of the work of
the registrant's principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the
registrant's audit committee pursuant to the "de minimis exception" set forth in
Rule 2-01(c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees
for audit-related, tax, and other services) billed for services rendered to the
registrant by its principal accountant for the registrant's last two fiscal
years; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax,
and other services) billed for services rendered to the Eaton Vance organization
for the registrant's last two fiscal years.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
REGISTRANT $ 8,900 $ 9,700
EATON VANCE(1) $ 448,295 $ 329,084
</Table>
(1) Eaton Vance Management, a subsidiary of Eaton Vance Corp., acts as the
registrant's investment adviser and administrator.
(h) The registrant's audit committee has considered whether the provision by the
registrant's principal accountant of non-audit services to the registrant's
investment adviser and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant that
were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is
compatible with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of
1934, as amended. Norton H. Reamer
<Page>
(Chair), Samuel L. Hayes, III, William H. Park and Lynn A. Stout are the members
of the registrant's audit committee.
ITEM 6. SCHEDULE OF INVESTMENTS
Please see schedule of investments contained in the Report to Stockholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
The Board of Trustees of the Trust has adopted a proxy voting policy and
procedure (the "Fund Policy"), pursuant to which the Trustees have delegated
proxy voting responsibility to the Fund's investment adviser and adopted the
investment adviser's proxy voting policies and procedures (the "Policies") which
are described below. The Trustees will review the Fund's proxy voting records
from time to time and will annually consider approving the Policies for the
upcoming year. In the event that a conflict of interest arises between the
Fund's shareholders and the investment adviser, the administrator, or any of
their affiliates or any affiliate of the Fund, the investment adviser will
generally refrain from voting the proxies related to the companies giving rise
to such conflict until it consults with the Board of the Fund except as
contemplated under the Fund Policy. The Board's Special Committee will instruct
the investment adviser on the appropriate course of action.
The Policies are designed to promote accountability of a company's management to
its shareholders and to align the interests of management with those
shareholders. The investment adviser will generally support company management
on proposals relating to environmental and social policy issues and on matters
regarding the state of organization of the company. On all other matters, the
investment adviser will take management's proposals under advisement but will
consider each matter in light of the guidelines set forth in the Policies.
Except in the instance of routine matters related to corporate administration
which are not expected to have a significant economic impact on the company or
its shareholders (on which the investment adviser will routinely vote with
management), the investment adviser will review each matter on a case-by-case
basis and reserves the right to deviate from the Policies guidelines when it
believes the situation warrants such a deviation. The Policy includes voting
guidelines for matters relating to, among other things, the election of
directors, approval of independent auditors, executive compensation, corporate
structure and anti-takeover defenses. The investment adviser may abstain from
voting from time to time where it determines that the costs associated with
voting a proxy outweighs the benefits derived from exercising the right to vote.
In addition, the investment adviser will monitor situations that may result in a
conflict of interest between the Fund's shareholders and the investment adviser,
the administrator, or any of their affiliates or any affiliate of the Fund by
maintaining a list of significant existing and prospective corporate clients.
The investment adviser's personnel responsible for reviewing and voting proxies
on behalf of the Fund will report any proxy received or expected to be received
from a company included on that list to the
<Page>
investment adviser's general counsel or chief equity investment officer. The
general counsel or chief equity investment officer will determine if a conflict
exists. If a conflict does exist, the proxy will either be voted strictly in
accordance with the Policy or the investment adviser will seek instruction on
how to vote from the Board.
Effective August 31, 2004, information on how the Fund voted proxies relating to
portfolio securities during the 12 month period ended June 30, 2004 is available
(1) without charge, upon request, by calling 1-800-262-1122, and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Effective February 9, 2004, the Governance Committee of the Board of Trustees
formalized the procedures by which a Fund's shareholders may recommend nominees
to the registrant's Board of Trustees. The Governance Committee shall, when
identifying candidates for the position of Independent Trustee, consider any
such candidate recommended by a shareholder of a Fund if such recommendation
contains sufficient background information concerning the candidate, and is
received in a sufficiently timely manner (and in any event no later than the
date specified for receipt of shareholder proposals in any applicable proxy
statement with respect to a Fund). Shareholders shall be directed to address any
such recommendations to the attention of the Governance Committee, c/o the
Secretary of the Fund.
ITEM 10. 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 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 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 period that has materially affected, or is
reasonably likely to materially affect the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
<Page>
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
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 MASSACHUSETTS MUNICIPAL BOND FUND
By: /s/ Thomas J. Fetter
--------------------
Thomas J. Fetter
President
Date: November 17, 2004
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/ James L. O'Connor
---------------------
James L. O'Connor
Treasurer
Date: November 17, 2004
By: /s/ Thomas J. Fetter
--------------------
Thomas J. Fetter
President
Date: November 17, 2004
<Page>
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer.
The registrant undertakes to provide a copy of such code of ethics to any person
upon request, without charge, by calling 1-800-262-1122.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated William H. Park, Samuel L. Hayes, III and
Norton H. Reamer, each an independent trustee, as its audit committee financial
experts. Mr. Park is a certified public accountant who is the President and
Chief Executive Officer of Prizm Capital Management, LLC (investment management
firm). Previously, he served as Executive Vice President and Chief Financial
Officer of United Asset Management Corporation ("UAM") (a holding company owning
institutional investment management firms). Mr. Hayes is the Jacob H. Schiff
Professor of Investment Banking Emeritus of the Harvard University Graduate
School of Business Administration. Mr. Reamer is the President, Chief Executive
Officer and a Director of Asset Management Finance Corp. (a specialty finance
company serving the investment management industry) and is President of Unicorn
Corporation (an investment and financial advisory services company). Formerly,
Mr. Reamer was Chairman of Hellman, Jordan Management Co., Inc. (an investment
management company) and Advisory Director of Berkshire Capital Corporation (an
investment banking firm), Chairman of the Board of UAM and Chairman, President
and Director of the UAM Funds (mutual funds).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) -(d)
The following table presents the aggregate fees billed to the registrant for the
registrant's fiscal years ended September 30, 2003 and September 30, 2004 by the
registrant's principal accountant for professional services rendered for the
audit of the registrant's annual financial statements and fees billed for other
services rendered by the principal accountant during such period.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
Audit Fees $ 13,557 $ 17,654
Audit-Related Fees(1) 3,500 3,600
Tax Fees(2) 5,400 6,100
All Other Fees(3) 0 0
-----------------------------
Total $ 22,457 $ 27,354
=============================
</Table>
(1) Audit-related fees consist of the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit of financial statements and are not reported under the category of
audit fees and specifically include fees for the performance of certain
agreed-upon procedures relating to the registrant's auction preferred
shares.
(2) Tax fees consist of the aggregate fees billed for professional services
rendered by the principal accountant relating to tax compliance, tax
advice, and tax planning.
(3) All other fees consist of the aggregate fees billed for products and
services provided by the principal accountant other than audit,
audit-related, and tax services.
(e)(1) The registrant's audit committee has adopted policies and procedures
relating to the pre-approval of services provided by the registrant's principal
accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a
framework intended to assist the audit committee in the proper discharge of its
pre-approval
<Page>
responsibilities. As a general matter, the Pre-Approval Policies (i) specify
certain types of audit, audit-related, tax, and other services determined to be
pre-approved by the audit committee; and (ii) delineate specific procedures
governing the mechanics of the pre-approval process, including the approval and
monitoring of audit and non-audit service fees. Unless a service is specifically
pre-approved under the Pre-Approval Policies, it must be separately pre-approved
by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services
pre-approved therein must be reviewed and ratified by the registrant's audit
committee at least annually. The registrant's audit committee maintains full
responsibility for the appointment, compensation, and oversight of the work of
the registrant's principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the
registrant's audit committee pursuant to the "de minimis exception" set forth in
Rule 2-01(c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees
for audit-related, tax, and other services) billed for services rendered to the
registrant by its principal accountant for the registrant's last two fiscal
years; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax,
and other services) billed for services rendered to the Eaton Vance organization
for the registrant's last two fiscal years.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
REGISTRANT $ 8,900 $ 9,700
EATON VANCE(1) $ 448,295 $ 329,084
</Table>
(1) Eaton Vance Management, a subsidiary of Eaton Vance Corp., acts as the
registrant's investment adviser and administrator.
(h) The registrant's audit committee has considered whether the provision by the
registrant's principal accountant of non-audit services to the registrant's
investment adviser and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant that
were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is
compatible with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of
1934, as amended. Norton H. Reamer (Chair), Samuel L. Hayes, III, William H.
Park and Lynn A. Stout are the members of the registrant's audit committee.
ITEM 6. SCHEDULE OF INVESTMENTS
Please see schedule of investments contained in the Report to Stockholders
included under Item 1 of this Form N-CSR.
<Page>
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
The Board of Trustees of the Trust has adopted a proxy voting policy and
procedure (the "Fund Policy"), pursuant to which the Trustees have delegated
proxy voting responsibility to the Fund's investment adviser and adopted the
investment adviser's proxy voting policies and procedures (the "Policies") which
are described below. The Trustees will review the Fund's proxy voting records
from time to time and will annually consider approving the Policies for the
upcoming year. In the event that a conflict of interest arises between the
Fund's shareholders and the investment adviser, the administrator, or any of
their affiliates or any affiliate of the Fund, the investment adviser will
generally refrain from voting the proxies related to the companies giving rise
to such conflict until it consults with the Board of the Fund except as
contemplated under the Fund Policy. The Board's Special Committee will instruct
the investment adviser on the appropriate course of action.
The Policies are designed to promote accountability of a company's management to
its shareholders and to align the interests of management with those
shareholders. The investment adviser will generally support company management
on proposals relating to environmental and social policy issues and on matters
regarding the state of organization of the company. On all other matters, the
investment adviser will take management's proposals under advisement but will
consider each matter in light of the guidelines set forth in the Policies.
Except in the instance of routine matters related to corporate administration
which are not expected to have a significant economic impact on the company or
its shareholders (on which the investment adviser will routinely vote with
management), the investment adviser will review each matter on a case-by-case
basis and reserves the right to deviate from the Policies guidelines when it
believes the situation warrants such a deviation. The Policy includes voting
guidelines for matters relating to, among other things, the election of
directors, approval of independent auditors, executive compensation, corporate
structure and anti-takeover defenses. The investment adviser may abstain from
voting from time to time where it determines that the costs associated with
voting a proxy outweighs the benefits derived from exercising the right to vote.
In addition, the investment adviser will monitor situations that may result in a
conflict of interest between the Fund's shareholders and the investment adviser,
the administrator, or any of their affiliates or any affiliate of the Fund by
maintaining a list of significant existing and prospective corporate clients.
The investment adviser's personnel responsible for reviewing and voting proxies
on behalf of the Fund will report any proxy received or expected to be received
from a company included on that list to the investment adviser's general counsel
or chief equity investment officer. The general counsel or chief equity
investment officer will determine if a conflict exists. If a conflict does
exist, the proxy will either be voted strictly in accordance with the Policy or
the investment adviser will seek instruction on how to vote from the Board.
Effective August 31, 2004, information on how the Fund voted proxies relating to
portfolio securities during the 12 month period ended June 30, 2004 is available
(1) without charge, upon request, by calling 1-800-262-1122, and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Effective February 9, 2004, the Governance Committee of the Board of Trustees
formalized the procedures by which a Fund's shareholders may recommend nominees
to the registrant's Board of Trustees. The Governance Committee shall, when
identifying candidates for the position of Independent Trustee, consider any
such
<Page>
candidate recommended by a shareholder of a Fund if such recommendation contains
sufficient background information concerning the candidate, and is received in a
sufficiently timely manner (and in any event no later than the date specified
for receipt of shareholder proposals in any applicable proxy statement with
respect to a Fund). Shareholders shall be directed to address any such
recommendations to the attention of the Governance Committee, c/o the Secretary
of the Fund.
ITEM 10. 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 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 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 period that has materially affected, or is
reasonably likely to materially affect the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
<Page>
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.
INSURED MICHIGAN MUNICIPAL BOND FUND
By: /s/Thomas J. Fetter
-------------------------
Thomas J. Fetter
President
Date: November 17, 2004
-----------------
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/James L. O'Connor
----------------------
James L. O'Connor
Treasurer
Date: November 17, 2004
-----------------
By: /s/Thomas J. Fetter
---------------------
Thomas J. Fetter
President
Date: November 17, 2004
-----------------
<Page>
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer.
The registrant undertakes to provide a copy of such code of ethics to any person
upon request, without charge, by calling 1-800-262-1122.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated William H. Park, Samuel L. Hayes, III and
Norton H. Reamer, each an independent trustee, as its audit committee financial
experts. Mr. Park is a certified public accountant who is the President and
Chief Executive Officer of Prizm Capital Management, LLC (investment management
firm). Previously, he served as Executive Vice President and Chief Financial
Officer of United Asset Management Corporation ("UAM") (a holding company owning
institutional investment management firms). Mr. Hayes is the Jacob H. Schiff
Professor of Investment Banking Emeritus of the Harvard University Graduate
School of Business Administration. Mr. Reamer is the President, Chief Executive
Officer and a Director of Asset Management Finance Corp. (a specialty finance
company serving the investment management industry) and is President of Unicorn
Corporation (an investment and financial advisory services company). Formerly,
Mr. Reamer was Chairman of Hellman, Jordan Management Co., Inc. (an investment
management company) and Advisory Director of Berkshire Capital Corporation (an
investment banking firm), Chairman of the Board of UAM and Chairman, President
and Director of the UAM Funds (mutual funds).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) -(d)
The following table presents the aggregate fees billed to the registrant for the
registrant's fiscal years ended September 30, 2003 and September 30, 2004 by the
registrant's principal accountant for professional services rendered for the
audit of the registrant's annual financial statements and fees billed for other
services rendered by the principal accountant during such period.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
Audit Fees $ 16,171 $ 20,435.20
Audit-Related Fees(1) 3,500 3,600
Tax Fees(2) 5,400 6,100
All Other Fees(3) 0 0
-----------------------------
Total $ 25,071 $ 27,354.20
=============================
</Table>
(1) Audit-related fees consist of the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit of financial statements and are not reported under the category of
audit fees.
(2) Tax fees consist of the aggregate fees billed for professional services
rendered by the principal accountant relating to tax compliance, tax
advice, and tax planning.
(3) All other fees consist of the aggregate fees billed for products and
services provided by the principal accountant other than audit,
audit-related, and tax services.
During the fiscal year ended September 30, 2004, $35,000 was billed by D&T, the
principal accountant for certain of the Series, for work done in connection with
its Rule 17Ad-13 examination of Eaton Vance Management's assertion that it has
maintained an effective internal control structure over the sub-transfer agent
and registrar functions, such services being pre-approved in accordance with
Rule 2-01(c) (7) (ii) of Regulation S-X.
<Page>
(e)(1) The registrant's audit committee has adopted policies and procedures
relating to the pre-approval of services provided by the registrant's principal
accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a
framework intended to assist the audit committee in the proper discharge of its
pre-approval responsibilities. As a general matter, the Pre-Approval Policies
(i) specify certain types of audit, audit-related, tax, and other services
determined to be pre-approved by the audit committee; and (ii) delineate
specific procedures governing the mechanics of the pre-approval process,
including the approval and monitoring of audit and non-audit service fees.
Unless a service is specifically pre-approved under the Pre-Approval Policies,
it must be separately pre-approved by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services
pre-approved therein must be reviewed and ratified by the registrant's audit
committee at least annually. The registrant's audit committee maintains full
responsibility for the appointment, compensation, and oversight of the work of
the registrant's principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the
registrant's audit committee pursuant to the "de minimis exception" set forth in
Rule 2-01(c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees
for audit-related, tax, and other services) billed for services rendered to the
registrant by its principal accountant for the registrant's last two fiscal
years; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax,
and other services) billed for services rendered to the Eaton Vance organization
for the registrant's last two fiscal years.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
REGISTRANT $ 8,900 $ 9,700
EATON VANCE(1) $ 448,295 $ 329,084
</Table>
(1) Eaton Vance Management, a subsidiary of Eaton Vance Corp., acts as the
registrant's investment adviser and administrator.
(h) The registrant's audit committee has considered whether the provision by the
registrant's principal accountant of non-audit services to the registrant's
investment adviser and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant that
were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is
compatible with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of
1934, as amended. Norton H. Reamer (Chair), Samuel L. Hayes, III, William H.
Park and Lynn A. Stout are the members of the registrant's audit committee.
ITEM 6. SCHEDULE OF INVESTMENTS
Please see schedule of investments contained in the Report to Stockholders
included under Item 1 of this Form N-CSR.
<Page>
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
The Board of Trustees of the Trust has adopted a proxy voting policy and
procedure (the "Fund Policy"), pursuant to which the Trustees have delegated
proxy voting responsibility to the Fund's investment adviser and adopted the
investment adviser's proxy voting policies and procedures (the "Policies") which
are described below. The Trustees will review the Fund's proxy voting records
from time to time and will annually consider approving the Policies for the
upcoming year. In the event that a conflict of interest arises between the
Fund's shareholders and the investment adviser, the administrator, or any of
their affiliates or any affiliate of the Fund, the investment adviser will
generally refrain from voting the proxies related to the companies giving rise
to such conflict until it consults with the Board of the Fund except as
contemplated under the Fund Policy. The Board's Special Committee will instruct
the investment adviser on the appropriate course of action.
The Policies are designed to promote accountability of a company's management to
its shareholders and to align the interests of management with those
shareholders. The investment adviser will generally support company management
on proposals relating to environmental and social policy issues and on matters
regarding the state of organization of the company. On all other matters, the
investment adviser will take management's proposals under advisement but will
consider each matter in light of the guidelines set forth in the Policies.
Except in the instance of routine matters related to corporate administration
which are not expected to have a significant economic impact on the company or
its shareholders (on which the investment adviser will routinely vote with
management), the investment adviser will review each matter on a case-by-case
basis and reserves the right to deviate from the Policies guidelines when it
believes the situation warrants such a deviation. The Policy includes voting
guidelines for matters relating to, among other things, the election of
directors, approval of independent auditors, executive compensation, corporate
structure and anti-takeover defenses. The investment adviser may abstain from
voting from time to time where it determines that the costs associated with
voting a proxy outweighs the benefits derived from exercising the right to vote.
In addition, the investment adviser will monitor situations that may result in a
conflict of interest between the Fund's shareholders and the investment adviser,
the administrator, or any of their affiliates or any affiliate of the Fund by
maintaining a list of significant existing and prospective corporate clients.
The investment adviser's personnel responsible for reviewing and voting proxies
on behalf of the Fund will report any proxy received or expected to be received
from a company included on that list to the investment adviser's general counsel
or chief equity investment officer. The general counsel or chief equity
investment officer will determine if a conflict exists. If a conflict does
exist, the proxy will either be voted strictly in accordance with the Policy or
the investment adviser will seek instruction on how to vote from the Board.
Effective August 31, 2004, information on how the Fund voted proxies relating to
portfolio securities during the 12 month period ended June 30, 2004 is available
(1) without charge, upon request, by calling 1-800-262-1122, and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Effective February 9, 2004, the Governance Committee of the Board of Trustees
formalized the procedures by which a Fund's shareholders may recommend nominees
to the registrant's Board of Trustees. The Governance Committee shall, when
identifying candidates for the position of Independent Trustee, consider any
such
<Page>
candidate recommended by a shareholder of a Fund if such recommendation contains
sufficient background information concerning the candidate, and is received in a
sufficiently timely manner (and in any event no later than the date specified
for receipt of shareholder proposals in any applicable proxy statement with
respect to a Fund). Shareholders shall be directed to address any such
recommendations to the attention of the Governance Committee, c/o the Secretary
of the Fund.
ITEM 10. 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 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 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 period that has materially affected, or is
reasonably likely to materially affect the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
<Page>
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.
INSURED NEW JERSEY MUNICIPAL BOND FUND
By: /s/Thomas J. Fetter
------------------------
Thomas J. Fetter
President
Date: November 17, 2004
-----------------
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/James L. O'Connor
---------------------
James L. O'Connor
Treasurer
Date: November 17, 2004
-----------------
By: /s/Thomas J. Fetter
------------------------
Thomas J. Fetter
President
Date: November 17, 2004
-----------------
<Page>
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer.
The registrant undertakes to provide a copy of such code of ethics to any person
upon request, without charge, by calling 1-800-262-1122.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated William H. Park, Samuel L. Hayes, III and
Norton H. Reamer, each an independent trustee, as its audit committee financial
experts. Mr. Park is a certified public accountant who is the President and
Chief Executive Officer of Prizm Capital Management, LLC (investment management
firm). Previously, he served as Executive Vice President and Chief Financial
Officer of United Asset Management Corporation ("UAM") (a holding company owning
institutional investment management firms). Mr. Hayes is the Jacob H. Schiff
Professor of Investment Banking Emeritus of the Harvard University Graduate
School of Business Administration. Mr. Reamer is the President, Chief Executive
Officer and a Director of Asset Management Finance Corp. (a specialty finance
company serving the investment management industry) and is President of Unicorn
Corporation (an investment and financial advisory services company). Formerly,
Mr. Reamer was Chairman of Hellman, Jordan Management Co., Inc. (an investment
management company) and Advisory Director of Berkshire Capital Corporation (an
investment banking firm), Chairman of the Board of UAM and Chairman, President
and Director of the UAM Funds (mutual funds).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) -(d)
The following table presents the aggregate fees billed to the registrant for the
registrant's fiscal years ended September 30, 2003 and September 30, 2004 by the
registrant's principal accountant for professional services rendered for the
audit of the registrant's annual financial statements and fees billed for other
services rendered by the principal accountant during such period.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
Audit Fees $ 16,171 $ 20,435
Audit-Related Fees(1) 3,500 3,600
Tax Fees(2) 5,400 6,100
All Other Fees(3) 0 0
-----------------------------
Total $ 25,071 $ 30,135
=============================
</Table>
(1) Audit-related fees consist of the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit of financial statements and are not reported under the category of
audit fees.
(2) Tax fees consist of the aggregate fees billed for professional services
rendered by the principal accountant relating to tax compliance, tax
advice, and tax planning.
<Page>
(3) All other fees consist of the aggregate fees billed for products and
services provided by the principal accountant other than audit,
audit-related, and tax services.
During the fiscal year ended September 30, 2004, $35,000 was billed by D&T, the
principal accountant for certain of the Series, for work done in connection with
its Rule 17Ad-13 examination of Eaton Vance Management's assertion that it has
maintained an effective internal control structure over the sub-transfer agent
and registrar functions, such services being pre-approved in accordance with
Rule 2-01(c) (7) (ii) of Regulation S-X.
(e)(1) The registrant's audit committee has adopted policies and procedures
relating to the pre-approval of services provided by the registrant's principal
accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a
framework intended to assist the audit committee in the proper discharge of its
pre-approval responsibilities. As a general matter, the Pre-Approval Policies
(i) specify certain types of audit, audit-related, tax, and other services
determined to be pre-approved by the audit committee; and (ii) delineate
specific procedures governing the mechanics of the pre-approval process,
including the approval and monitoring of audit and non-audit service fees.
Unless a service is specifically pre-approved under the Pre-Approval Policies,
it must be separately pre-approved by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services
pre-approved therein must be reviewed and ratified by the registrant's audit
committee at least annually. The registrant's audit committee maintains full
responsibility for the appointment, compensation, and oversight of the work of
the registrant's principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the
registrant's audit committee pursuant to the "de minimis exception" set forth in
Rule 2-01(c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees
for audit-related, tax, and other services) billed for services rendered to the
registrant by its principal accountant for the registrant's last two fiscal
years; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax,
and other services) billed for services rendered to the Eaton Vance organization
for the registrant's last two fiscal years.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
REGISTRANT $ 8,900 $ 9,700
EATON VANCE(1) $ 448,295 $ 329,084
</Table>
(1) Eaton Vance Management, a subsidiary of Eaton Vance Corp., acts as the
registrant's investment adviser and administrator.
(h) The registrant's audit committee has considered whether the provision by the
registrant's principal accountant of non-audit services to the registrant's
investment adviser and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant that
were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is
compatible with maintaining the principal accountant's independence.
<Page>
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of
1934, as amended. Norton H. Reamer (Chair), Samuel L. Hayes, III, William H.
Park and Lynn A. Stout are the members of the registrant's audit committee.
ITEM 6. SCHEDULE OF INVESTMENTS
Please see schedule of investments contained in the Report to Stockholders
included under Item 1 of this Form N-CSR.
<Page>
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
The Board of Trustees of the Trust has adopted a proxy voting policy and
procedure (the "Fund Policy"), pursuant to which the Trustees have delegated
proxy voting responsibility to the Fund's investment adviser and adopted the
investment adviser's proxy voting policies and procedures (the "Policies") which
are described below. The Trustees will review the Fund's proxy voting records
from time to time and will annually consider approving the Policies for the
upcoming year. In the event that a conflict of interest arises between the
Fund's shareholders and the investment adviser, the administrator, or any of
their affiliates or any affiliate of the Fund, the investment adviser will
generally refrain from voting the proxies related to the companies giving rise
to such conflict until it consults with the Board of the Fund except as
contemplated under the Fund Policy. The Board's Special Committee will instruct
the investment adviser on the appropriate course of action.
The Policies are designed to promote accountability of a company's management to
its shareholders and to align the interests of management with those
shareholders. The investment adviser will generally support company management
on proposals relating to environmental and social policy issues and on matters
regarding the state of organization of the company. On all other matters, the
investment adviser will take management's proposals under advisement but will
consider each matter in light of the guidelines set forth in the Policies.
Except in the instance of routine matters related to corporate administration
which are not expected to have a significant economic impact on the company or
its shareholders (on which the investment adviser will routinely vote with
management), the investment adviser will review each matter on a case-by-case
basis and reserves the right to deviate from the Policies guidelines when it
believes the situation warrants such a deviation. The Policy includes voting
guidelines for matters relating to, among other things, the election of
directors, approval of independent auditors, executive compensation, corporate
structure and anti-takeover defenses. The investment adviser may abstain from
voting from time to time where it determines that the costs associated with
voting a proxy outweighs the benefits derived from exercising the right to vote.
In addition, the investment adviser will monitor situations that may result in a
conflict of interest between the Fund's shareholders and the investment adviser,
the administrator, or any of their affiliates or any affiliate of the Fund by
maintaining a list of significant existing and prospective corporate clients.
The investment adviser's personnel responsible for reviewing and voting proxies
on behalf of the Fund will report any proxy received or expected to be received
from a company included on that list to the investment adviser's general counsel
or chief equity investment officer. The general counsel or chief equity
investment officer will determine if a conflict exists. If a conflict does
exist, the proxy will either be voted strictly in accordance with the Policy or
the investment adviser will seek instruction on how to vote from the Board.
Effective August 31, 2004, information on how the Fund voted proxies relating to
portfolio securities during the 12 month period ended June 30, 2004 is available
(1) without charge, upon request, by calling 1-800-262-1122, and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
<Page>
Not Applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Effective February 9, 2004, the Governance Committee of the Board of Trustees
formalized the procedures by which a Fund's shareholders may recommend nominees
to the registrant's Board of Trustees. The Governance Committee shall, when
identifying candidates for the position of Independent Trustee, consider any
such candidate recommended by a shareholder of a Fund if such recommendation
contains sufficient background information concerning the candidate, and is
received in a sufficiently timely manner (and in any event no later than the
date specified for receipt of shareholder proposals in any applicable proxy
statement with respect to a Fund). Shareholders shall be directed to address any
such recommendations to the attention of the Governance Committee, c/o the
Secretary of the Fund.
ITEM 10. 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 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 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 period that has materially affected, or is
reasonably likely to materially affect the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
<Page>
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 NEW YORK MUNICIPAL BOND FUND II
By: /s/ Thomas J. Fetter
--------------------------------------------
Thomas J. Fetter
President
Date: November 17, 2004
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/ James L. O'Connor
--------------------------------------
James L. O'Connor
Treasurer
Date: November 17, 2004
By: /s/ Thomas J. Fetter
------------------------------------------
Thomas J. Fetter
President
Date: November 17, 2004
<Page>
ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer.
The registrant undertakes to provide a copy of such code of ethics to any person
upon request, without charge, by calling 1-800-262-1122.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated William H. Park, Samuel L. Hayes, III and
Norton H. Reamer, each an independent trustee, as its audit committee financial
experts. Mr. Park is a certified public accountant who is the President and
Chief Executive Officer of Prizm Capital Management, LLC (investment management
firm). Previously, he served as Executive Vice President and Chief Financial
Officer of United Asset Management Corporation ("UAM") (a holding company owning
institutional investment management firms). Mr. Hayes is the Jacob H. Schiff
Professor of Investment Banking Emeritus of the Harvard University Graduate
School of Business Administration. Mr. Reamer is the President, Chief Executive
Officer and a Director of Asset Management Finance Corp. (a specialty finance
company serving the investment management industry) and is President of Unicorn
Corporation (an investment and financial advisory services company). Formerly,
Mr. Reamer was Chairman of Hellman, Jordan Management Co., Inc. (an investment
management company) and Advisory Director of Berkshire Capital Corporation (an
investment banking firm), Chairman of the Board of UAM and Chairman, President
and Director of the UAM Funds (mutual funds).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) -(d)
The following table presents the aggregate fees billed to the registrant for the
registrant's fiscal years ended September 30, 2003 and September 30, 2004 by the
registrant's principal accountant for professional services rendered for the
audit of the registrant's annual financial statements and fees billed for other
services rendered by the principal accountant during such period.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
Audit Fees $ 16,171 $ 21,898
Audit-Related Fees(1) 3,500 3,600
Tax Fees(2) 5,400 6,100
All Other Fees(3) 0 0
-----------------------------
Total $ 25,071 $ 31,598
=============================
</Table>
(1) Audit-related fees consist of the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit of financial statements and are not reported under the category of
audit fees and specifically include fees for the performance of certain
agreed-upon procedures relating to the registrant's auction preferred
shares.
<Page>
(2) Tax fees consist of the aggregate fees billed for professional services
rendered by the principal accountant relating to tax compliance, tax
advice, and tax planning.
(3) All other fees consist of the aggregate fees billed for products and
services provided by the principal accountant other than audit,
audit-related, and tax services.
(e)(1) The registrant's audit committee has adopted policies and procedures
relating to the pre-approval of services provided by the registrant's principal
accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a
framework intended to assist the audit committee in the proper discharge of its
pre-approval responsibilities. As a general matter, the Pre-Approval Policies
(i) specify certain types of audit, audit-related, tax, and other services
determined to be pre-approved by the audit committee; and (ii) delineate
specific procedures governing the mechanics of the pre-approval process,
including the approval and monitoring of audit and non-audit service fees.
Unless a service is specifically pre-approved under the Pre-Approval Policies,
it must be separately pre-approved by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services
pre-approved therein must be reviewed and ratified by the registrant's audit
committee at least annually. The registrant's audit committee maintains full
responsibility for the appointment, compensation, and oversight of the work of
the registrant's principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the
registrant's audit committee pursuant to the "de minimis exception" set forth in
Rule 2-01(c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees
for audit-related, tax, and other services) billed for services rendered to the
registrant by its principal accountant for the registrant's last two fiscal
years; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax,
and other services) billed for services rendered to the Eaton Vance organization
for the registrant's last two fiscal years.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
REGISTRANT $ 8,900 $ 9,700
EATON VANCE(1) $ 448,295 $ 329,084
</Table>
(1) Eaton Vance Management, a subsidiary of Eaton Vance Corp., acts as the
registrant's investment adviser and administrator.
(h) The registrant's audit committee has considered whether the provision by the
registrant's principal accountant of non-audit services to the registrant's
investment adviser and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant that
were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is
compatible with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of
1934, as amended. Norton H. Reamer
<Page>
(Chair), Samuel L. Hayes, III, William H. Park and Lynn A. Stout are the members
of the registrant's audit committee.
ITEM 6. SCHEDULE OF INVESTMENTS
Please see schedule of investments contained in the Report to Stockholders
included under Item 1 of this Form N-CSR.
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
The Board of Trustees of the Trust has adopted a proxy voting policy and
procedure (the "Fund Policy"), pursuant to which the Trustees have delegated
proxy voting responsibility to the Fund's investment adviser and adopted the
investment adviser's proxy voting policies and procedures (the "Policies") which
are described below. The Trustees will review the Fund's proxy voting records
from time to time and will annually consider approving the Policies for the
upcoming year. In the event that a conflict of interest arises between the
Fund's shareholders and the investment adviser, the administrator, or any of
their affiliates or any affiliate of the Fund, the investment adviser will
generally refrain from voting the proxies related to the companies giving rise
to such conflict until it consults with the Board of the Fund except as
contemplated under the Fund Policy. The Board's Special Committee will instruct
the investment adviser on the appropriate course of action.
The Policies are designed to promote accountability of a company's management to
its shareholders and to align the interests of management with those
shareholders. The investment adviser will generally support company management
on proposals relating to environmental and social policy issues and on matters
regarding the state of organization of the company. On all other matters, the
investment adviser will take management's proposals under advisement but will
consider each matter in light of the guidelines set forth in the Policies.
Except in the instance of routine matters related to corporate administration
which are not expected to have a significant economic impact on the company or
its shareholders (on which the investment adviser will routinely vote with
management), the investment adviser will review each matter on a case-by-case
basis and reserves the right to deviate from the Policies guidelines when it
believes the situation warrants such a deviation. The Policy includes voting
guidelines for matters relating to, among other things, the election of
directors, approval of independent auditors, executive compensation, corporate
structure and anti-takeover defenses. The investment adviser may abstain from
voting from time to time where it determines that the costs associated with
voting a proxy outweighs the benefits derived from exercising the right to vote.
In addition, the investment adviser will monitor situations that may result in a
conflict of interest between the Fund's shareholders and the investment adviser,
the administrator, or any of their affiliates or any affiliate of the Fund by
maintaining a list of significant existing and prospective corporate clients.
The investment adviser's personnel responsible for reviewing and voting proxies
on behalf of the Fund will report any proxy received or expected to be received
from a company included on that list to the
<Page>
investment adviser's general counsel or chief equity investment officer. The
general counsel or chief equity investment officer will determine if a conflict
exists. If a conflict does exist, the proxy will either be voted strictly in
accordance with the Policy or the investment adviser will seek instruction on
how to vote from the Board.
Effective August 31, 2004, information on how the Fund voted proxies relating to
portfolio securities during the 12 month period ended June 30, 2004 is available
(1) without charge, upon request, by calling 1-800-262-1122, and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not Applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Effective February 9, 2004, the Governance Committee of the Board of Trustees
formalized the procedures by which a Fund's shareholders may recommend nominees
to the registrant's Board of Trustees. The Governance Committee shall, when
identifying candidates for the position of Independent Trustee, consider any
such candidate recommended by a shareholder of a Fund if such recommendation
contains sufficient background information concerning the candidate, and is
received in a sufficiently timely manner (and in any event no later than the
date specified for receipt of shareholder proposals in any applicable proxy
statement with respect to a Fund). Shareholders shall be directed to address any
such recommendations to the attention of the Governance Committee, c/o the
Secretary of the Fund.
ITEM 10. 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 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 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 period that has materially affected, or is
reasonably likely to materially affect the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
<Page>
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 OHIO MUNICIPAL BOND FUND
By: /s/ Thomas J. Fetter
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Thomas J. Fetter
President
Date: November 17, 2004
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/ James L. O'Connor
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James L. O'Connor
Treasurer
Date: November 17, 2004
By: /s/ Thomas J. Fetter
--------------------
Thomas J. Fetter
President
Date: November 17, 2004
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ITEM 2. CODE OF ETHICS
The registrant has adopted a code of ethics applicable to its Principal
Executive Officer, Principal Financial Officer and Principal Accounting Officer.
The registrant undertakes to provide a copy of such code of ethics to any person
upon request, without charge, by calling 1-800-262-1122.
ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT
The registrant's Board has designated William H. Park, Samuel L. Hayes, III and
Norton H. Reamer, each an independent trustee, as its audit committee financial
experts. Mr. Park is a certified public accountant who is the President and
Chief Executive Officer of Prizm Capital Management, LLC (investment management
firm). Previously, he served as Executive Vice President and Chief Financial
Officer of United Asset Management Corporation ("UAM") (a holding company owning
institutional investment management firms). Mr. Hayes is the Jacob H. Schiff
Professor of Investment Banking Emeritus of the Harvard University Graduate
School of Business Administration. Mr. Reamer is the President, Chief Executive
Officer and a Director of Asset Management Finance Corp. (a specialty finance
company serving the investment management industry) and is President of Unicorn
Corporation (an investment and financial advisory services company). Formerly,
Mr. Reamer was Chairman of Hellman, Jordan Management Co., Inc. (an investment
management company) and Advisory Director of Berkshire Capital Corporation (an
investment banking firm), Chairman of the Board of UAM and Chairman, President
and Director of the UAM Funds (mutual funds).
ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES
(a) -(d)
The following table presents the aggregate fees billed to the registrant for the
registrant's fiscal years ended September 30, 2003 and September 30, 2004 by the
registrant's principal accountant for professional services rendered for the
audit of the registrant's annual financial statements and fees billed for other
services rendered by the principal accountant during such period.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
Audit Fees $ 16,132 $ 44,846.20
Audit-Related Fees(1) 3,500 4,950
Tax Fees(2) 5,400 6,100
All Other Fees(3) 0 0
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Total $ 25,032 $ 55,896.20
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</Table>
(1) Audit-related fees consist of the aggregate fees billed for assurance and
related services that are reasonably related to the performance of the
audit of financial statements and are not reported under the category of
audit fees.
(2) Tax fees consist of the aggregate fees billed for professional services
rendered by the principal accountant relating to tax compliance, tax
advice, and tax planning.
(3) All other fees consist of the aggregate fees billed for products and
services provided by the principal accountant other than audit,
audit-related, and tax services.
During the fiscal year ended September 30, 2004, $35,000 was billed by D&T, the
principal accountant for certain of the Series, for work done in connection with
its Rule 17Ad-13 examination of Eaton Vance Management's assertion that it has
maintained an effective internal control structure over the sub-transfer agent
and registrar functions, such services being pre-approved in accordance with
Rule 2-01(c) (7) (ii) of Regulation S-X.
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(e)(1) The registrant's audit committee has adopted policies and procedures
relating to the pre-approval of services provided by the registrant's principal
accountant (the "Pre-Approval Policies"). The Pre-Approval Policies establish a
framework intended to assist the audit committee in the proper discharge of its
pre-approval responsibilities. As a general matter, the Pre-Approval Policies
(i) specify certain types of audit, audit-related, tax, and other services
determined to be pre-approved by the audit committee; and (ii) delineate
specific procedures governing the mechanics of the pre-approval process,
including the approval and monitoring of audit and non-audit service fees.
Unless a service is specifically pre-approved under the Pre-Approval Policies,
it must be separately pre-approved by the audit committee.
The Pre-Approval Policies and the types of audit and non-audit services
pre-approved therein must be reviewed and ratified by the registrant's audit
committee at least annually. The registrant's audit committee maintains full
responsibility for the appointment, compensation, and oversight of the work of
the registrant's principal accountant.
(e)(2) No services described in paragraphs (b)-(d) above were approved by the
registrant's audit committee pursuant to the "de minimis exception" set forth in
Rule 2-01(c)(7)(i)(C) of Regulation S-X.
(f) Not applicable.
(g) The following table presents (i) the aggregate non-audit fees (i.e., fees
for audit-related, tax, and other services) billed for services rendered to the
registrant by its principal accountant for the registrant's last two fiscal
years; and (ii) the aggregate non-audit fees (i.e., fees for audit-related, tax,
and other services) billed for services rendered to the Eaton Vance organization
for the registrant's last two fiscal years.
<Table>
<Caption>
FISCAL YEAR ENDED 9/30/03 9/30/04
- --------------------------------------------------------------------------------
REGISTRANT $ 8,900 $ 11,050
EATON VANCE(1) $ 448,295 $ 329,084
</Table>
(1) Eaton Vance Management, a subsidiary of Eaton Vance Corp., acts as the
registrant's investment adviser and administrator.
(h) The registrant's audit committee has considered whether the provision by the
registrant's principal accountant of non-audit services to the registrant's
investment adviser and any entity controlling, controlled by, or under common
control with the adviser that provides ongoing services to the registrant that
were not pre-approved pursuant to Rule 2-01(c)(7)(ii) of Regulation S-X is
compatible with maintaining the principal accountant's independence.
ITEM 5. AUDIT COMMITTEE OF LISTED REGISTRANTS
The registrant has a separately-designated standing audit committee established
in accordance with Section 3(a)(58)(A) of the Securities and Exchange Act of
1934, as amended. Norton H. Reamer (Chair), Samuel L. Hayes, III, William H.
Park and Lynn A. Stout are the members of the registrant's audit committee.
ITEM 6. SCHEDULE OF INVESTMENTS
Please see schedule of investments contained in the Report to Stockholders
included under Item 1 of this Form N-CSR.
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ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES
The Board of Trustees of the Trust has adopted a proxy voting policy and
procedure (the "Fund Policy"), pursuant to which the Trustees have delegated
proxy voting responsibility to the Fund's investment adviser and adopted the
investment adviser's proxy voting policies and procedures (the "Policies") which
are described below. The Trustees will review the Fund's proxy voting records
from time to time and will annually consider approving the Policies for the
upcoming year. In the event that a conflict of interest arises between the
Fund's shareholders and the investment adviser, the administrator, or any of
their affiliates or any affiliate of the Fund, the investment adviser will
generally refrain from voting the proxies related to the companies giving rise
to such conflict until it consults with the Board of the Fund except as
contemplated under the Fund Policy. The Board's Special Committee will instruct
the investment adviser on the appropriate course of action.
The Policies are designed to promote accountability of a company's management to
its shareholders and to align the interests of management with those
shareholders. The investment adviser will generally support company management
on proposals relating to environmental and social policy issues and on matters
regarding the state of organization of the company. On all other matters, the
investment adviser will take management's proposals under advisement but will
consider each matter in light of the guidelines set forth in the Policies.
Except in the instance of routine matters related to corporate administration
which are not expected to have a significant economic impact on the company or
its shareholders (on which the investment adviser will routinely vote with
management), the investment adviser will review each matter on a case-by-case
basis and reserves the right to deviate from the Policies guidelines when it
believes the situation warrants such a deviation. The Policy includes voting
guidelines for matters relating to, among other things, the election of
directors, approval of independent auditors, executive compensation, corporate
structure and anti-takeover defenses. The investment adviser may abstain from
voting from time to time where it determines that the costs associated with
voting a proxy outweighs the benefits derived from exercising the right to vote.
In addition, the investment adviser will monitor situations that may result in a
conflict of interest between the Fund's shareholders and the investment adviser,
the administrator, or any of their affiliates or any affiliate of the Fund by
maintaining a list of significant existing and prospective corporate clients.
The investment adviser's personnel responsible for reviewing and voting proxies
on behalf of the Fund will report any proxy received or expected to be received
from a company included on that list to the investment adviser's general counsel
or chief equity investment officer. The general counsel or chief equity
investment officer will determine if a conflict exists. If a conflict does
exist, the proxy will either be voted strictly in accordance with the Policy or
the investment adviser will seek instruction on how to vote from the Board.
Effective August 31, 2004, information on how the Fund voted proxies relating to
portfolio securities during the 12 month period ended June 30, 2004 is available
(1) without charge, upon request, by calling 1-800-262-1122, and (2) on the
Securities and Exchange Commission's website at http://www.sec.gov.
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANY AND AFFILIATED PURCHASERS.
Not applicable.
ITEM 9. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Effective February 9, 2004, the Governance Committee of the Board of Trustees
formalized the procedures by which a Fund's shareholders may recommend nominees
to the registrant's Board of Trustees. The Governance Committee shall, when
identifying candidates for the position of Independent Trustee, consider any
such
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candidate recommended by a shareholder of a Fund if such recommendation contains
sufficient background information concerning the candidate, and is received in a
sufficiently timely manner (and in any event no later than the date specified
for receipt of shareholder proposals in any applicable proxy statement with
respect to a Fund). Shareholders shall be directed to address any such
recommendations to the attention of the Governance Committee, c/o the Secretary
of the Fund.
ITEM 10. 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 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 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 period that has materially affected, or is
reasonably likely to materially affect the registrant's internal control over
financial reporting.
ITEM 11. EXHIBITS
(a)(1) Registrant's Code of Ethics - Not applicable (please see Item 2).
(a)(2)(i) Treasurer's Section 302 certification.
(a)(2)(ii) President's Section 302 certification.
(b) Combined Section 906 certification.
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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.
INSURED PENNSYLVANIA MUNICIPAL BOND FUND
By: /s/Thomas J. Fetter
------------------------
Thomas J. Fetter
President
Date: November 17, 2004
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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/James L. O'Connor
---------------------
James L. O'Connor
Treasurer
Date: November 17, 2004
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By: /s/Thomas J. Fetter
------------------------
Thomas J. Fetter
President
Date: November 17, 2004
-----------------