UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM N-Q

 

 

QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES

 

Investment Company Act File Number

 

811-09153

 

 

 

 

 

 

Eaton Vance Michigan Municipal Income Trust

(Exact Name of Registrant as Specified in Charter)

 

 

 

The Eaton Vance Building,
255 State Street, Boston, Massachusetts

 

02109

(Address of Principal Executive Offices)

 

(Zip code)

 

 

 

Maureen A. Gemma
Eaton Vance Management, 255 State Street, Boston, Massachusetts 02109

(Name and Address of Agent for Service)

 

Registrant’s Telephone Number, Including Area Code:

 

(617) 482-8260

 

 

 

Date of Fiscal Year End:

 

November 30

 

 

 

Date of Reporting Period:

 

August 31, 2008

 

 

 


 

Item 1. Schedule of Investments

 


 

Eaton Vance Michigan Municipal Income Trust

 

as of August 31, 2008

 

PORTFOLIO OF INVESTMENTS (Unaudited)

 

Tax-Exempt Investments — 163.4%

 

Principal 
Amount 
(000’s omitted)

 

Security

 

Value

 

Education — 6.7%

 

 

 

$

1,250

 

Michigan Higher Education Facilities Authority, (Creative Studies), 5.90%, 12/1/27

 

$

1,384,575

 

540

 

Michigan Higher Education Facilities Authority, (Hillsdale College), 5.00%, 3/1/35

 

522,293

 

 

 

 

 

$

1,906,868

 

Electric Utilities — 5.9%

 

 

 

$

1,250

 

Michigan Strategic Fund, (Detroit Edison Pollution Control), 5.45%, 9/1/29

 

$

1,243,812

 

435

 

Puerto Rico Electric Power Authority, 5.00%, 7/1/25

 

428,645

 

 

 

 

 

$

1,672,457

 

Escrowed/Prerefunded — 17.5%

 

 

 

$

500

 

Kent Hospital Finance Authority, (Spectrum Health), Prerefunded to 7/15/11, 5.50%, 1/15/31

 

$

545,150

 

560

 

Macomb County Hospital Finance Authority, (Mount Clemens General Hospital), Prerefunded to 11/15/13, 5.875%, 11/15/34

 

630,918

 

750

 

Michigan Hospital Finance Authority, (Ascension Health Care), Prerefunded to 11/15/09, 6.125%, 11/15/26

 

793,523

 

750

 

Michigan Hospital Finance Authority, (Sparrow Obligation Group), Prerefunded to 11/15/11, 5.625%, 11/15/36

 

825,600

 

1,000

 

Puerto Rico Electric Power Authority, Prerefunded to 7/1/12, 5.25%, 7/1/31

 

1,109,320

 

1,000

 

White Cloud Public Schools, Prerefunded to 5/1/11, 5.125%, 5/1/31

 

1,072,640

 

 

 

 

 

$

4,977,151

 

General Obligations — 8.4%

 

 

 

$

500

 

East Grand Rapids Public School District, 5.00%, 5/1/25

 

$

515,805

 

1,000

 

Manistee Area Public Schools, 5.00%, 5/1/24

 

1,029,580

 

345

 

Puerto Rico Public Buildings Authority, (Commonwealth Guaranteed), 5.25%, 7/1/29

 

345,145

 

500

 

Wayne Charter County, 5.70%, 8/1/38

 

503,740

 

 

 

 

 

$

2,394,270

 

Health Care-Miscellaneous — 0.3%

 

 

 

$

100

 

Puerto Rico Infrastructure Financing Authority, (Mepsi Campus Project), 6.50%, 10/1/37

 

$

94,227

 

 

 

 

 

$

94,227

 

Hospital — 28.7%

 

 

 

$

500

 

Allegan Hospital Finance Authority, (Allegan General Hospital), 7.00%, 11/15/21

 

$

514,470

 

185

 

Gaylord Hospital Finance Authority, (Otsego Memorial Hospital Association), 6.20%, 1/1/25

 

174,252

 

125

 

Gaylord Hospital Finance Authority, (Otsego Memorial Hospital Association), 6.50%, 1/1/37

 

117,839

 

275

 

Kent Hospital Finance Authority, (Spectrum Health), 5.50%, 1/15/47

 

294,110

 

500

 

Mecosta County, (Michigan General Hospital), 6.00%, 5/15/18

 

493,985

 

1,000

 

Michigan Hospital Finance Authority, (Central Michigan Community Hospital), 6.25%, 10/1/27

 

1,000,250

 

750

 

Michigan Hospital Finance Authority, (Henry Ford Health System), 5.00%, 11/15/38

 

673,702

 

1,000

 

Michigan Hospital Finance Authority, (Henry Ford Health System), 5.25%, 11/15/46

 

918,320

 

1,080

 

Michigan Hospital Finance Authority, (McLaren Healthcare), 5.00%, 8/1/35

 

973,793

 

750

 

Michigan Hospital Finance Authority, (Memorial Healthcare Center), 5.875%, 11/15/21

 

761,295

 

1,000

 

Michigan Hospital Finance Authority, (Trinity Health), 6.00%, 12/1/27

 

1,035,350

 

425

 

Monroe County Hospital Finance Authority, (Mercy Memorial Hospital Corp.), 5.375%, 6/1/26

 

349,269

 

800

 

Saginaw Hospital Finance Authority, (Covenant Medical Center), 6.50%, 7/1/30

 

841,624

 

 

 

 

 

$

8,148,259

 

Housing — 2.9%

 

 

 

$

1,000

 

Michigan State Housing Development Authority, (Williams Pavilion), (AMT), 4.90%, 4/20/48

 

$

819,100

 

 

 

 

 

$

819,100

 

 

1


 

Industrial Development Revenue — 6.8%

 

 

 

$

1,000

 

Detroit Local Development Finance Authority, (Chrysler Corp.), 5.375%, 5/1/21

 

$

798,970

 

800

 

Dickinson County Electronic Development Corp., (International Paper Co.), 5.75%, 6/1/16

 

792,776

 

625

 

Puerto Rico Port Authority, (American Airlines), (AMT), 6.25%, 6/1/26

 

351,312

 

 

 

 

 

$

1,943,058

 

Insured-Electric Utilities — 8.2%

 

 

 

$

1,000

 

Michigan Strategic Fund, (Detroit Edison Co.), (MBIA), (AMT), 5.55%, 9/1/29

 

$

904,680

 

500

 

Michigan Strategic Fund, (Detroit Edison Co.), (XLCA), 5.25%, 12/15/32

 

450,550

 

220

 

Puerto Rico Electric Power Authority, (FGIC), 5.25%, 7/1/30

 

221,124

 

750

 

Puerto Rico Electric Power Authority, (FGIC), 5.25%, 7/1/34

 

746,790

 

 

 

 

 

$

2,323,144

 

Insured-Escrowed/Prerefunded — 15.0%

 

 

 

$

1,000

 

Central Montcalm Public Schools, (MBIA), Prerefunded to 5/1/09, 6.00%, 5/1/29

 

$

1,028,950

 

1,000

 

Detroit Sewer Disposal, (FGIC), Prerefunded to 7/1/11, 5.125%, 7/1/31

 

1,075,890

 

2,000

 

Novi Building Authority, (FSA), Prerefunded to 10/1/10, 5.50%, 10/1/25

 

2,153,740

 

 

 

 

 

$

4,258,580

 

Insured-General Obligations — 13.1%

 

 

 

$

650

 

Detroit City School District, (FGIC), 4.75%, 5/1/28

 

$

629,759

 

750

 

Detroit City School District, (FSA), 5.25%, 5/1/32

 

807,368

 

200

 

Eaton Rapids Public Schools, (MBIA), 4.75%, 5/1/25

 

200,158

 

700

 

Puerto Rico, (FSA), Variable Rate, 9.32%, 7/1/27 (1)(2)

 

831,194

 

1,250

 

Van Dyke Public Schools, (FSA), 5.00%, 5/1/38

 

1,256,587

 

 

 

 

 

$

3,725,066

 

Insured-Hospital — 7.2%

 

 

 

$

1,000

 

Royal Oak Hospital Finance Authority, (William Beaumont Hospital), (MBIA), 5.25%, 11/15/35

 

$

1,001,380

 

1,000

 

Saginaw Hospital Finance Authority, (Covenant Medical Center), (MBIA), 5.50%, 7/1/24

 

1,026,980

 

 

 

 

 

$

2,028,360

 

Insured-Lease Revenue/Certificates of Participation — 5.2%

 

 

 

$

4,300

 

Michigan State Building Authority, (FGIC), 0.00%, 10/15/30

 

$

1,180,264

 

1,000

 

Michigan State Building Authority, (FGIC), (FSA), 0.00%, 10/15/29

 

304,370

 

 

 

 

 

$

1,484,634

 

Insured-Special Tax Revenue — 11.5%

 

 

 

$

5,160

 

Puerto Rico Sales Tax Financing, (AMBAC), 0.00%, 8/1/54

 

$

369,404

 

1,225

 

Puerto Rico Sales Tax Financing, (MBIA), 0.00%, 8/1/44

 

160,426

 

2,430

 

Puerto Rico Sales Tax Financing, (MBIA), 0.00%, 8/1/45

 

299,862

 

1,470

 

Puerto Rico Sales Tax Financing, (MBIA), 0.00%, 8/1/46

 

170,520

 

2,250

 

Wayne Charter County, (Airport Hotel-Detroit Metropolitan Airport), (MBIA), 5.00%, 12/1/30

 

2,253,240

 

 

 

 

 

$

3,253,452

 

Insured-Student Loan — 6.1%

 

 

 

$

1,000

 

Michigan Higher Education Student Loan Authority, (AMBAC), (AMT), 5.00%, 3/1/31

 

$

811,790

 

1,000

 

Michigan Higher Education Student Loan Authority, (AMBAC), (AMT), 5.50%, 6/1/25 (3)

 

908,200

 

 

 

 

 

$

1,719,990

 

Insured-Transportation — 6.6%

 

 

 

$

1,000

 

Wayne Charter County Airport, (AGC), (AMT), 5.375%, 12/1/32

 

$

971,540

 

1,000

 

Wayne Charter County Airport, (MBIA), (AMT), 5.00%, 12/1/28

 

905,300

 

 

 

 

 

$

1,876,840

 

Insured-Water and Sewer — 5.6%

 

 

 

$

1,650

 

Detroit Water Supply System, (FGIC), 5.00%, 7/1/30

 

$

1,600,814

 

 

 

 

 

$

1,600,814

 

Lease Revenue/Certificates of Participation — 0.9%

 

 

 

$

250

 

Puerto Rico, (Guaynabo Municipal Government Center Lease), 5.625%, 7/1/22

 

$

250,070

 

 

 

 

 

$

250,070

 

 

2


 

Other Revenue — 1.5%

 

 

 

$

500

 

Michigan Tobacco Settlement Finance Authority, 6.00%, 6/1/48

 

$

416,865

 

 

 

 

 

$

416,865

 

Transportation — 5.3%

 

 

 

$

1,500

 

Kent County Airport Facility, 5.00%, 1/1/25(4)

 

$

1,507,223

 

 

 

 

 

$

1,507,223

 

Total Tax-Exempt Investments — 163.4%
(identified cost $46,944,410)

 

$

46,400,428

 

Other Assets, Less Liabilities — (1.8)%

 

$

(499,849

)

Auction Preferred Shares Plus Cumulative Unpaid Dividends — (61.6)%

 

$

(17,505,378

)

Net Assets Applicable to Common Shares — 100.0%

 

$

28,395,201

 

 

AGC

—

Assured Guaranty Corp.

 

 

 

AMBAC

—

AMBAC Financial Group, Inc.

 

 

 

AMT

—

Interest earned from these securities may be considered a tax preference item for purposes of the Federal Alternative Minimum Tax.

 

 

 

FGIC

—

Financial Guaranty Insurance Company

 

 

 

FSA

—

Financial Security Assurance, Inc.

 

 

 

MBIA

—

Municipal Bond Insurance Association

 

 

 

XLCA

—

XL Capital Assurance, Inc.

 

 

 

 

The Trust invests primarily in debt securities issued by Michigan municipalities. In addition, 11.6% of the Trust’s total investments at August 31, 2008 were invested in municipal obligations issued by Puerto Rico. 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 August 31, 2008, 47.9% of total investments are backed by bond insurance of various financial institutions and financial guaranty assurance agencies. The aggregate percentage insured by an individual financial institution ranged from 1.0% to 17.1% of total investments.

 

(1)

 

Security has been issued as a leveraged inverse floater bond. The stated interest rate represents the rate in effect at August 31, 2008.

 

 

 

(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 August 31, 2008, the aggregate value of these securities is $831,194 or 2.9% of the Trust’s net assets applicable to common shares.

 

 

 

(3)

 

Security (or a portion thereof) has been segregated to cover margin requirements on open financial futures contracts.

 

 

 

(4)

 

Security represents the underlying municipal obligation of an inverse floating rate obligation held by the Trust.

 

 

 

 

3


 

A summary of financial instruments at August 31, 2008 is as follows:

 

Futures Contracts

 

Expiration 
Date

 

Contracts

 

Position

 

Aggregate 
Cost

 

Value

 

Net Unrealized
Appreciation

 

12/08

 

12 U.S. Treasury Bond

 

Short

 

(1,412,958

)

$

(1,407,750

)

$

5,208

 

 

Interest Rate Swaps

 

Counterparty

 

Notional
Amount

 

Annual 
Fixed Rate 
Paid By Trust

 

Floating 
Rate 
Paid To Trust

 

Effective Date/ 
Termination 
Date

 

Net Unrealized
Depreciation

 

Merrill Lynch Capital Services, Inc.

 

$

400,000

 

5.065

%

3-month USD-
LIBOR-BBA

 

April 1, 2009 /
April 1, 2039

 

$

(10,833

)

Morgan Stanley Capital Services, Inc.

 

275,000

 

5.428

 

3-month USD-
LIBOR-BBA

 

September 10, 2008 /
September 10, 2038

 

(26,430

)

 

 

 

 

 

 

 

 

 

 

$

(37,263

)

 

The effective date represents the date on which the Trust and the counterparty to the interest rate swap contract begin interest payment accruals.

 

At August 31, 2008, the Trust had sufficient cash and/or securities to cover commitments under these contracts.

 

The cost and unrealized appreciation (depreciation) of investments of the Trust at August 31, 2008, as determined on a federal income tax basis, were as follows:

 

Aggregate cost

 

$

45,805,365

 

Gross unrealized appreciation

 

$

1,668,792

 

Gross unrealized depreciation

 

(2,198,729

)

Net unrealized depreciation

 

$

(529,937

)

 

The Trust adopted Financial Accounting Standards Board Statement of Financial Accounting Standards No. 157 (FAS 157), “Fair Value Measurements”, effective December 1, 2007. FAS 157 established a three-tier hierarchy to prioritize the assumptions, referred to as inputs, used in valuation techniques to measure fair value. The three-tier hierarchy of inputs is summarized in the three broad levels listed below.

 

·                  Level 1 — quoted prices in active markets for identical investments

·                  Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)

·                  Level 3 — significant unobservable inputs (including a fund’s own assumptions in determining the fair value of investments)

 

At August 31, 2008, the inputs used in valuing the Trust’s investments, which are carried at value, were as follows:

 

Valuation Inputs

 

Investment in 
Securities

 

Other Financial 
Instruments*

 

Level 1 Quoted Prices

 

$

—

 

$

5,208

 

Level 2 Other Significant Observable Inputs

 

46,400,428

 

(37,263

)

Level 3 Significant Unobservable Inputs

 

—

 

—

 

Total

 

$

46,400,428

 

$

(32,055

)

 

* Other financial instruments include futures and interest rate swap contracts not reflected in the Portfolio of Investments, which are valued at the unrealized appreciation (depreciation) on the instrument.

 

The Trust held no investments or other financial instruments as of November 30, 2007 whose fair value was determined using Level 3 inputs.

 

Municipal bonds and taxable obligations, if any, are generally valued on the basis of valuations furnished by a pricing vendor, as derived from such vendor’s pricing models.  Inputs to the models may include, but are not limited to, reported trades, executable bid and asked prices, broker/dealer quotations, benchmark curves or information pertaining to the issuer.  The pricing vendor may use a matrix approach, which considers information regarding securities with similar characteristics to determine the valuation for a security. Financial futures contracts and options on financial futures contracts listed on commodity exchanges are valued based on the closing price on the primary exchange on which such contracts trade. Interest rate swaps are normally valued using valuations provided by a pricing vendor.  Such vendor valuations are based on the present value of fixed and projected floating rate cash flows over the term of the swap contract.  Future cash flows are discounted to their present value using swap curves provided by electronic data services or by broker/dealers. Short-term obligations, maturing in sixty days or less, are valued at amortized cost, which approximates market value.

 

4


 

Item 2. Controls and Procedures

 

(a) It is the conclusion of the registrant’s principal executive officer and principal financial officer that the effectiveness of the registrant’s current disclosure controls and procedures (such disclosure controls and procedures having been evaluated within 90 days of the date of this filing) provide reasonable assurance that the information required to be disclosed by the registrant 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 fiscal quarter for which the report is being filed that have materially affected, or are reasonably likely to materially affect the registrant’s internal control over financial reporting.

 


 

Signatures

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Eaton Vance Michigan Municipal Income Trust

 

By:

 

/s/ Cynthia J. Clemson

 

 

Cynthia J. Clemson

 

 

President

 

 

 

Date:

 

October 23, 2008

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

By:

 

/s/ Cynthia J. Clemson

 

 

Cynthia J. Clemson

 

 

President

 

 

 

Date:

 

October 23, 2008

 

 

 

By:

 

/s/ Barbara E. Campbell

 

 

Barbara E. Campbell

 

 

Treasurer

 

 

 

Date:

 

October 23, 2008