<PAGE>
As filed with the Securities and Exchange Commission
on January 5, 2001
Securities Act File No.
________________________________________________________________________________
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-14
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 / x /
-------
Pre-Effective Amendment No. /____/ Post-Effective Amendment No. /____/
SCUDDER MUNICIPAL TRUST
(Exact Name of Registrant as Specified in Charter)
Two International Place, Boston, MA 02110-4103
(Address of Principal Executive Offices) (Zip Code)
John Millette
Scudder Kemper Investments, Inc.
Two International Place
Boston, MA 02110-4103
(Name and Address of Agent for Service)
(617) 295-1000
(Registrant's Area Code and Telephone Number)
with copies to:
Caroline Pearson, Esq. Joseph R. Fleming, Esq.
Scudder Kemper Investments, Inc. Dechert
Two International Place Ten Post Office Square - South
Boston, MA 02110-4103 Boston, MA 02109-4603
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement is declared effective.
Title of Securities Being Registered:
Shares of Beneficial Interest ($.01 par value)
of Scudder Managed Municipal Bonds, a series of the Registrant
________________________________________________________________________________
It is proposed that this filing will become effective on February 4, 2001
pursuant to Rule 488 under the Securities Act of 1933.
________________________________________________________________________________
No filing fee is required because the Registrant has previously registered an
indefinite number of its shares under the Securities Act of 1933, as amended,
pursuant to Rule 24f-2 under the Investment Company Act of 1940, as amended.
<PAGE>
PART A
INFORMATION REQUIRED IN THE PROXY STATEMENT/PROSPECTUS
<PAGE>
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS OF
KEMPER OHIO TAX-FREE INCOME FUND
Please take notice that a Special Meeting of Shareholders (the
"Meeting") of Kemper Ohio Tax-Free Income Fund (the "Fund"), a series of Kemper
State Tax-Free Income Series (the "Trust"), will be held at the offices of
Scudder Kemper Investments, Inc., 13th Floor, Two International Place, Boston,
MA 02110-4103, on May 24, 2001, at 4:00 p.m., Eastern time, for the following
purposes:
Proposal 1: To elect Trustees of the Trust.
Proposal 2: To approve an Agreement and Plan of Reorganization for
the Fund (the "Plan"). Under the Plan, (i) all or
substantially all of the assets and all of the
liabilities of the Fund would be transferred to Scudder
Managed Municipal Bonds, (ii) each shareholder of the
Fund would receive shares of Scudder Managed Municipal
Bonds of a corresponding class to those held by the
shareholder in the Fund in an amount equal to the value
of their holdings in the Fund, and (iii) the Fund would
then be terminated.
Proposal 3: To ratify the selection of Ernst & Young LLP as the
independent auditors for the Fund for the Fund's current
fiscal year.
The persons named as proxies will vote in their discretion on any
other business that may properly come before the Meeting or any adjournments or
postponements thereof.
Holders of record of shares of the Fund at the close of business on
March 5, 2001 are entitled to vote at the Meeting and at any adjournments or
postponements thereof.
In the event that the necessary quorum to transact business or the
vote required to approve any Proposal is not obtained at the Meeting, the
persons named as proxies may propose one or more adjournments of the Meeting in
accordance with applicable law to permit further solicitation of proxies. Any
such adjournment as to a matter will require the affirmative vote of the holders
of a majority of the Trust's (for a trust-wide vote) or the Fund's (for a fund-
wide vote) shares present in person or by proxy at the Meeting. The persons
named as proxies will vote FOR any such adjournment those proxies which they are
entitled to vote in favor of that Proposal and will vote AGAINST any such
adjournment those proxies to be voted against that Proposal.
By Order of the Board,
/s/ Philip J. Collora
Philip J. Collora
Secretary
March 6, 2001
IMPORTANT -- WE URGE YOU TO SIGN AND DATE THE ENCLOSED PROXY CARD(S) AND RETURN
IT IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE (OR TO TAKE ADVANTAGE OF
THE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES DESCRIBED ON THE PROXY CARD(S)).
YOUR PROMPT RETURN OF THE ENCLOSED PROXY CARD(S) (OR YOUR VOTING BY OTHER
AVAILABLE MEANS) MAY SAVE THE NECESSITY AND EXPENSE OF FURTHER SOLICITATIONS.
IF YOU WISH TO ATTEND THE MEETING AND VOTE YOUR SHARES IN PERSON AT THAT TIME,
YOU WILL STILL BE ABLE TO DO SO.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
INTRODUCTION......................................................................................... __
PROPOSAL 1: ELECTION OF TRUSTEES.................................................................... __
PROPOSAL 2: APPROVAL OF AGREEMENT AND PLAN OF
REORGANIZATION.......................................................................... __
SYNOPSIS................................................................................ __
PRINCIPAL RISK FACTORS.................................................................. __
THE PROPOSED TRANSACTION................................................................ __
PROPOSAL 3: RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT
AUDITORS................................................................................ __
ADDITIONAL INFORMATION............................................................................... __
</TABLE>
<PAGE>
PROXY STATEMENT/PROSPECTUS
March [ ], 2001
Relating to the acquisition of the assets of
KEMPER OHIO TAX-FREE INCOME FUND,
a separate series of
KEMPER STATE TAX-FREE INCOME SERIES (the "Acquired Trust")
222 South Riverside Plaza
Chicago, Illinois 60606
(800) [ ]
--------------------------
by and in exchange for shares of beneficial interest of
SCUDDER MANAGED MUNICIPAL BONDS,
a separate series of
SCUDDER MUNICIPAL TRUST (the "Acquiring Trust")
Two International Place
Boston, Massachusetts 02110-4103
(800) [ ]
--------------------------
INTRODUCTION
This Proxy Statement/Prospectus is being furnished to shareholders of
Kemper Ohio Tax-Free Income Fund (the "Fund") in connection with three
proposals. Proposal 1 describes the election of Trustees and Proposal 3
proposes the ratification of the selection of the Fund's auditors.
In Proposal 2, shareholders are asked to vote on an Agreement and Plan of
Reorganization (the "Plan") pursuant to which all or substantially all of the
assets of the Fund would be acquired by Scudder Managed Municipal Bonds, a fund
with similar investment characteristics and managed by the same investment
manager as the Fund, in exchange for shares of beneficial interest of Scudder
Managed Municipal Bonds and the assumption by Scudder Managed Municipal Bonds of
all of the liabilities of the Fund, as described more fully below (the
"Reorganization"). Shares of Scudder Managed Municipal Bonds received would
then be distributed to the shareholders of the Fund in complete liquidation of
the Fund. As a result of the Reorganization, shareholders of the Fund will
become shareholders of Scudder Managed Municipal Bonds and will receive shares
of Scudder Managed Municipal Bonds in an amount equal to the value of their
holdings in the Fund as of the close of business on the business day preceding
the closing of the Reorganization (the "Valuation Date"). The closing of the
Reorganization (the "Closing") is contingent upon shareholder approval of the
Plan. A copy of the Plan is attached as Exhibit A. The Reorganization is
expected to occur on or about June 11, 2001.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES NOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROXY
STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
Proposals 1 and 2 arise out of a restructuring program proposed by Scudder
Kemper Investments, Inc. ("Scudder Kemper" or the "Investment Manager"), the
investment manager of both the Fund and Scudder Managed Municipal Bonds,
described in more detail below. The restructuring program is designed to
respond to changing industry conditions and investor needs. Scudder Kemper
seeks to consolidate its fund line-up and offer all of the open-end funds it
advises under the "Scudder" name. In
-1-
<PAGE>
addition, Scudder Kemper anticipates changing its name to "Zurich Scudder
Investments, Inc." Scudder Kemper believes that the combination of its open-end,
directly-distributed funds (the "Scudder Funds") with the funds in the Kemper
Family of Funds (the "Kemper Funds") will permit it to streamline its
administrative infrastructure and focus its distribution efforts. The
restructuring program will not result in any reduction in the services currently
offered to Kemper Funds shareholders.
In the descriptions of the Proposals below, the word "fund" is sometimes
used to mean an investment company or series thereof in general, and not the
Fund whose proxy statement this is. In addition, for simplicity, actions are
described in this Proxy Statement/Prospectus as being taken by either the Fund
or Scudder Managed Municipal Bonds (which are collectively referred to as the
"Funds" and each referred to as a "Fund"), although all actions are actually
taken either by the Acquired Trust or the Acquiring Trust (together with the
Acquired Trust, the "Trusts"), on behalf of the applicable Fund.
This Proxy Statement/Prospectus sets forth concisely the information about
Scudder Managed Municipal Bonds that a prospective investor should know before
investing and should be retained for future reference. For a more detailed
discussion of the investment objective, policies, restrictions and risks of
Scudder Managed Municipal Bonds, see Scudder Managed Municipal Bonds' prospectus
dated December 29, 2000, as supplemented from time to time, which is included in
the materials you received with this document and incorporated herein by
reference (meaning that it is legally part of this document). For a more
detailed discussion of the investment objective, policies, restrictions and
risks of the Fund, see the Fund's prospectus dated January 1, 2001, as
supplemented from time to time, which is also incorporated herein by reference
and a copy of which may be obtained upon request and without charge by calling
or writing the Fund at the telephone number or address listed above.
Also incorporated herein by reference is Scudder Managed Municipal Bonds'
statement of additional information dated December 29, 2000, as supplemented
from time to time, which may be obtained upon request and without charge by
calling or writing Scudder Managed Municipal Bonds at the telephone number or
address listed above. A Statement of Additional Information, dated March [ ],
2001 containing additional information about the Reorganization has been filed
with the Securities and Exchange Commission (the "SEC" or the "Commission") and
is incorporated by reference into this Proxy Statement/Prospectus. A copy of
this Statement of Additional Information is available upon request and without
charge by calling or writing Scudder Managed Municipal Bonds at the telephone
number or address listed above. Shareholder inquiries regarding Scudder Managed
Municipal Bonds may be made by calling (800) [ ] and shareholder inquiries
regarding the Fund may be made by calling (800) [ ]. The information contained
in this document concerning each Fund has been provided by, and is included
herein in reliance upon, that Fund.
Scudder Managed Municipal Bonds is a diversified series of shares of
beneficial interest of the Acquiring Trust, while the Fund is a non-diversified
series of shares of beneficial interest of the Acquired Trust. The Acquiring
Trust and the Acquired Trust are open-end management investment companies
organized as Massachusetts business trusts.
The Board of Trustees that oversees the Fund is soliciting proxies from
shareholders of the Fund for the Special Meeting of Shareholders to be held on
May 24, 2001, at Scudder Kemper's offices, 13th Floor, Two International Place,
Boston, MA 02110-4103 at 4:00 p.m. (Eastern time), and at any and all
adjournments or postponements thereof (the "Meeting"). This Proxy
Statement/Prospectus, the Notice of Special Meeting and the proxy card(s) are
first being mailed to shareholders on or about March 6, 2001 or as soon as
practicable thereafter.
The Board of Trustees unanimously recommends that shareholders vote FOR the
nominees listed in Proposal 1, and FOR Proposals 2 and 3.
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<PAGE>
PROPOSAL 1: ELECTION OF TRUSTEES
At the Meeting, shareholders will be asked to elect eleven individuals to
constitute the Board of Trustees of the Acquired Trust. Shareholders are being
asked to elect these individuals to the Board of Trustees in case the Plan, as
described under Proposal 2, is not approved by shareholders. However, if the
Plan is approved, the current Board of Trustees of the Acquiring Trust will
oversee the operations of the combined fund (see "Synopsis - Other Differences
Between the Funds" under Proposal 2).
As discussed further below, Scudder Kemper commenced an initiative to
restructure and streamline the management and operations of the funds it
advises. In connection with that initiative, the Independent Trustees (as
defined below) of the two separate boards of Kemper Funds proposed to
consolidate into a single board. The eleven individuals who have been nominated
for election as Trustees of the Acquired Trust were nominated after careful
consideration by the present Board of Trustees. The nominees are listed below.
Seven of the nominees are currently Trustees of the Acquired Trust and three of
the nominees are currently trustees or directors of other Kemper Funds. One of
the nominees, although not currently a trustee or director of any Kemper Fund,
is a senior executive officer of Scudder Kemper. These eleven nominees are also
being nominated for election as trustees or directors of most of the other
Kemper Funds. The proposed slate of nominees reflects an effort to consolidate
the two separate boards who have historically supervised different Kemper Funds.
The proposed consolidation is expected to provide administrative efficiencies to
both the Funds and Scudder Kemper.
The persons named as proxies on the enclosed proxy card(s) will vote for
the election of the nominees named below unless authority to vote for any or all
of the nominees is withheld in the proxy. Each Trustee so elected will serve as
a Trustee commencing on July 1, 2001 and until the next meeting of shareholders,
if any, called for the purpose of electing Trustees and until the election and
qualification of a successor or until such Trustee sooner dies, resigns or is
removed as provided in the governing documents of the Acquired Trust. Each of
the nominees has indicated that he or she is willing to serve as a Trustee. If
any or all of the nominees should become unavailable for election due to events
not now known or anticipated, the persons named as proxies will vote for such
other nominee or nominees as the current Trustees may recommend. The following
tables present information about the nominees and the Trustees not standing for
re-election. Each nominee's or Trustee's date of birth is in parentheses after
his or her name. Unless otherwise noted, (i) each of the nominees and Trustees
has engaged in the principal occupation(s) noted in the following tables for at
least the most recent five years, although not necessarily in the same capacity,
and (ii) the address of each nominee is c/o Scudder Kemper Investments, Inc.,
222 South Riverside Plaza, Chicago, Illinois 60606.
Nominees for Election as Trustees:
--------------------------------------------------------------------------------
Year First
Became a
Name (Date of Birth), Principal Occupation and Affiliations Board
Member
--------------------------------------------------------------------------------
John W. Ballantine (2/16/46),/(1)/ Retired; formerly, First
Chicago NBD Corporation/The First National Bank of
Chicago: 1996-1998 Executive Vice President and Chief Risk
Management Officer; 1995-1996 Executive Vice President and 1999
Head of International Banking; Director, First One Brook
Bancshares, Inc., Oak Brook Bank and Tokheim Corporation.
--------------------------------------------------------------------------------
-3-
<PAGE>
--------------------------------------------------------------------------------
Lewis A. Burnham (1/8/33),/(1)/ Retired; formerly, Partner,
Business Resources Group; formerly, Executive Vice 1983
President, Anchor Glass Container Corporation.
--------------------------------------------------------------------------------
Linda C. Coughlin (1/1/52),*/(2)/ Managing Director, 2000
Scudder Kemper.
--------------------------------------------------------------------------------
Donald L. Dunaway (3/8/37),/(1)/ Retired; formerly,
Executive Vice President, A.O. Smith Corporation 1983
(diversified manufacturer).
--------------------------------------------------------------------------------
James R. Edgar (7/22/46),/(3)/ Distinguished Fellow,
University of Illinois Institute of Government and Public
Affairs; Director, Kemper Insurance Companies (not Nominee
affiliated with the Kemper Funds); formerly, Governor,
State of Illinois.
--------------------------------------------------------------------------------
William F. Glavin (8/30/58),* Managing Director, Scudder Nominee
Kemper.
--------------------------------------------------------------------------------
Robert B. Hoffman (12/11/36),/(1)/ Retired; formerly,
Chairman, Harnischfeger Industries, Inc. (machinery for
the mining and paper industries); formerly, Vice Chairman
and Chief Financial Officer, Monsanto Company 1983
(agricultural, pharmaceutical and nutritional/food
products); formerly, Vice President, Head of International
Operations, FMC Corporation (manufacturer of machinery and
chemicals); Director, Harnischfeger Industries, Inc.
--------------------------------------------------------------------------------
Shirley D. Peterson (9/3/41),/(1)/ Retired; formerly,
President, Hood College; formerly, Partner, Steptoe &
Johnson (attorneys); prior thereto, Commissioner, Internal 1995
Revenue Service; prior thereto, Assistant Attorney General
(Tax), U.S. Department of Justice; Director, Bethlehem
Steel Corp.
--------------------------------------------------------------------------------
Fred B. Renwick (2/1/30),/(3)/ Professor of Finance, New
York University, Stern School of Business; Director, the
Wartburg Foundation; Chairman, Investment Committee of
Morehouse College Board of Trustees; Director, American Nominiee
Bible Society Investment Committee; previously member of
the Investment Committee of Atlanta University Board of
Trustees; formerly Director of Board of Pensions
Evangelical Lutheran Church in America.
--------------------------------------------------------------------------------
William P. Sommers (7/22/33),/(1)/ Consultant and Director,
SRI Consulting; prior thereto, President and Chief
Executive Officer, SRI International (research and
development); prior thereto, Executive Vice President,
Iameter (medical information and educational service 1983
provider); prior thereto, Senior Vice President and
Director, Booz, Allen & Hamilton Inc.
--------------------------------------------------------------------------------
-4-
<PAGE>
--------------------------------------------------------------------------------
(management consulting firm); Director, PSI Inc., Evergreen
Solar, Inc. and Litton Industries.
--------------------------------------------------------------------------------
John G. Weithers (8/8/33),/(3)/ Formerly, Chairman of the
Board and Chief Executive Officer, Chicago Stock Exchange; Nominee
Director, Federal Life Insurance Company; President of the
Members of the Corporation and Trustee, DePaul University.
--------------------------------------------------------------------------------
* Interested person of the Acquired Trust, as defined in the Investment
Company Act of 1940, as amended (the "1940 Act").
/(1)/ Messrs. Ballantine, Burnham, Dunaway, Hoffman, Sommers and Ms. Peterson
serve as board members of 26 investment companies, with 45 portfolios
managed by Scudder Kemper.
/(2)/ Ms. Coughlin serves as a board member of 52 investment companies with 97
portfolios managed by Scudder Kemper.
/(3)/ Messrs. Edgar, Renwick and Weithers serve as board members of 16
investment companies with 58 portfolios managed by Scudder Kemper.
Trustees Not Standing for Re-Election:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------
Present Office with the Acquired Trust;
Principal Occupation or Employment
Name (Date of Birth) and Directorships
-------------------- -----------------
-----------------------------------------------------------------------------------------------
<S> <C>
Donald R. Jones (1/17/30) Trustee; Retired; Director, Motorola, Inc.
(manufacturer of electronic equipment and
components); formerly, Executive Vice
President and Chief Financial Officer,
Motorola, Inc.
Thomas W. Littauer (4/26/55)* Chairman, Trustee and Vice President; Managing
Director, Scudder Kemper; formerly, Head of
Broker Dealer Division of Putnam Investment
Management; formerly, President of Client
Management Services for Fidelity Investments.
-----------------------------------------------------------------------------------------------
</TABLE>
* Interested person of the Acquired Trust, as defined in the 1940 Act.
Appendix 1 lists the number of shares of each series of the Acquired Trust
owned directly or beneficially by the Trustees and by the nominees for election.
Responsibilities of the Board of Trustees -- Board and Committee Meetings
The primary responsibility of the Board is to represent the interests of
the shareholders of the Fund and to provide oversight of the management of the
Fund. The board that is proposed for election at this Meeting is comprised of
two individuals who are considered "interested" Trustees, and nine individuals
who have no affiliation with Scudder Kemper and who are not considered
"interested" Trustees (the "Independent Trustees"). The SEC has recently
proposed a rule that would require a majority of the board members of a fund to
be "independent" if the fund were to take advantage of certain exemptive rules
under the 1940 Act. If the proposed Board of Trustees is approved by
shareholders, more
-5-
<PAGE>
than 75% will be Independent Trustees. The Independent Trustees have been
selected and nominated solely by the current Independent Trustees of the
Acquired Trust.
The Trustees meet multiple times during the year to review the investment
performance of the Fund and other operational matters, including policies and
procedures designed to assure compliance with regulatory and other requirements.
Furthermore, the Independent Trustees review the fees paid to the Investment
Manager and its affiliates for investment advisory services and other
administrative and shareholder services. The Trustees have adopted specific
policies and guidelines that, among other things, seek to further enhance the
effectiveness of the Independent Trustees in performing their duties. Many of
these are similar to those suggested in the Investment Company Institute's 1999
Report of the Advisory Group on Best Practices for Fund Directors (the "Advisory
Group Report"). For example, the Independent Trustees select independent legal
counsel to work with them in reviewing fees, advisory and other contracts and
overseeing fund matters, and regularly meet privately with their counsel.
Currently, the Board of Trustees has an Audit Committee and a Nominating
and Governance Committee, the responsibilities of which are described below. In
addition, the Board has a Valuation Committee and a Contract Renewal Committee.
During calendar year 2000, the Board of Trustees met eight times. Each then
current Trustee attended 75% or more of the respective meetings of the Board and
the Committees (if a member thereof) held during calendar year 2000.
Audit Committee
The Audit Committee makes recommendations regarding the selection of
independent auditors for the Fund, confers with the independent auditors
regarding the Fund's financial statements, the results of audits and related
matters, and performs such other tasks as the full Board of Trustees deems
necessary or appropriate. As suggested by the Advisory Group Report, the Audit
Committee is comprised of only Independent Trustees, receives annual
representations from the auditors as to their independence, and has a written
charter that delineates the committee's duties and powers. Currently, the
members of the Audit Committee are Donald L. Dunaway (Chairman), Robert B.
Hoffman and Donald R. Jones. The Audit Committee held five meetings during
calendar year 2000.
Nominating and Governance Committee
The Board of Trustees has a Nominating and Governance Committee, comprised
of only Independent Trustees, that seeks and reviews candidates for
consideration as nominees for membership on the Board and oversees the
administration of the Acquired Trust's Governance Procedures and Guidelines.
The Nominating and Governance Committee has a written charter that delineates
the committee's duties and powers. Shareholders wishing to submit the name of a
candidate for consideration by the committee should submit their
recommendation(s) to the Secretary of the Fund. Currently, the members of the
Nominating and Governance Committee are Lewis A. Burnham (Chairman), John W.
Ballantine, Shirley D. Peterson and William P. Sommers. The Nominating and
Governance Committee held one meeting during calendar year 2000.
-6-
<PAGE>
Officers
The following persons are officers of the Acquired Trust:
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------
Name (Date of Birth) Present Office with the Year First Became an Officer/1/
-------------------- Acquired Trust; Principal ------------------------------
Occupation or Employment
------------------------
-----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Mark S. Casady (9/21/60) President; Managing Director, 1998
Scudder Kemper; formerly,
Institutional Sales Manager of an
unaffiliated mutual fund distributor.
-----------------------------------------------------------------------------------------------------------
Philip J. Collora (11/15/45) Vice President and Secretary; 1989
Attorney, Senior Vice President,
Scudder Kemper.
-----------------------------------------------------------------------------------------------------------
Thomas W. Littauer (4/26/55) Vice President, Chairman and 1998
Trustee; Managing Director,
Scudder Kemper; formerly, Head of
Broker Dealer Division of an
unaffiliated investment
management firm during 1997;
prior thereto, President of
Client Management Services of an
unaffiliated investment
management firm from 1991 to 1996.
-----------------------------------------------------------------------------------------------------------
Kathryn L. Quirk (12/3/52) Vice President; Managing 1998
Director, Scudder Kemper.
-----------------------------------------------------------------------------------------------------------
Eleanor R. Brennan (3/3/64) Vice President; Senior Vice 2000
President, Scudder Kemper.
-----------------------------------------------------------------------------------------------------------
Ashton P. Goodfield (10/3/63) Vice President; Senior Vice 2000
President, Scudder Kemper.
-----------------------------------------------------------------------------------------------------------
Linda J. Wondrack (9/12/64) Vice President; Senior Vice 1998
President, Scudder Kemper.
-----------------------------------------------------------------------------------------------------------
John R. Hebble (6/27/58) Treasurer; Senior Vice President, 1998
Scudder Kemper.
-----------------------------------------------------------------------------------------------------------
Brenda Lyons (2/21/63) Assistant Treasurer; Senior Vice 1998
President, Scudder Kemper.
-----------------------------------------------------------------------------------------------------------
Caroline Pearson (4/1/62) Assistant Secretary; Senior Vice 1998
President, Scudder Kemper;
formerly, Associate, Dechert
Price & Rhoads (law firm) from
1989-1997.
-----------------------------------------------------------------------------------------------------------
Maureen E. Kane (2/14/62) Assistant Secretary; Vice 1998
President, Scudder Kemper;
-----------------------------------------------------------------------------------------------------------
</TABLE>
-----------------------
/1/ The President, Treasurer and Secretary each holds office until the first
meeting of Trustees in each calendar year and until his or her successor
has been duly elected and qualified, and all other officers hold offices as
the Trustees permit in accordance with the By-laws of the Acquired Trust.
-7-
<PAGE>
--------------------------------------------------------------------------------
formerly, Assistant Vice
President of an unaffiliated
investment management firm; prior
thereto, Associate Staff Attorney
of an unaffiliated investment
management firm, and Associate,
Peabody & Arnold (law firm).
--------------------------------------------------------------------------------
Compensation of Trustees and Officers
The Fund pays the Independent Trustees a monthly retainer and an attendance
fee, plus expenses, for each Board meeting and committee meeting attended. As
reflected below, the Trustees currently serve as board members of various other
Kemper Funds. Scudder Kemper supervises the Fund's investments, pays the
compensation and expenses of its personnel who serve as Trustees and officers on
behalf of the Fund and receives a management fee for its services. Several of
the officers and Trustees are also officers, directors, employees or
stockholders of Scudder Kemper and participate in the fees paid to that firm,
although the Fund makes no direct payments to them.
To facilitate the restructuring of the boards of the Kemper Funds, certain
Independent Trustees agreed not to stand for re-election. Independent Trustees
of the Acquired Trust are not entitled to benefits under any pension or
retirement plan. However, the Board of each Kemper Fund determined that,
particularly given the benefits that would accrue to the Kemper Funds from the
restructuring of the boards, it was appropriate to provide the four Independent
Trustees who were not standing for re-election for various Kemper Funds a one-
time benefit. The cost of such benefit is being allocated among all the Kemper
Funds, with Scudder Kemper agreeing to bear one-half of the cost of such
benefit, given that Scudder Kemper also benefits from administrative
efficiencies of a consolidated board. Mr. Jones, an Independent Trustee of the
Acquired Trust who is not standing for re-election, will receive such a one-time
benefit. The amount received on behalf of each fund for which he serves as a
trustee ranges from $1,071 to $8,078.
The following Compensation Table provides in tabular form the following
data:
Column (1) All Trustees who receive compensation from the Fund.
Column (2) Aggregate compensation received by each Trustee from the Fund
during calendar year 2000.
Column (3) Total compensation received by each Trustee from funds advised
by Scudder Kemper (collectively, the "Fund Complex") during calendar year 2000.
Compensation Table
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
Aggregate Compensation Total Compensation From
Name of Trustee from Fund Fund Complex/(2)(3)/
<S> <C> <C>
---------------------------------------------------------------------------------------------
John W. Ballantine $ [ ] $ [ ]
---------------------------------------------------------------------------------------------
Lewis A. Burnham $ [ ] $ [ ]
---------------------------------------------------------------------------------------------
Donald L. Dunaway/(1)/ $ [ ] $ [ ]
---------------------------------------------------------------------------------------------
Robert B. Hoffman $ [ ] $ [ ]
---------------------------------------------------------------------------------------------
</TABLE>
-8-
<PAGE>
<TABLE>
<S> <C> <C>
---------------------------------------------------------------------------------------------
Donald R. Jones $ [ ] $ [ ]
---------------------------------------------------------------------------------------------
Shirley D. Peterson $ [ ] $ [ ]
---------------------------------------------------------------------------------------------
William P. Sommers $ [ ] $ [ ]
---------------------------------------------------------------------------------------------
</TABLE>
/(1)/ Includes deferred fees. Pursuant to deferred compensation agreements
with the Acquired Trust, deferred amounts accrue interest monthly at a rate
equal to the yield of Zurich Money Funds -- Zurich Money Market Fund. Total
deferred fees (including interest thereon) payable from the Fund to Mr. Dunaway
are $_______.
/(2)/ Includes compensation for service on the boards of [ ] Kemper
trusts/corporations comprised of [ ] funds. Each trustee currently serves on
the boards of [ ] Kemper trusts/corporations comprised of [ ] funds.
/(3)/ Aggregate compensation does not reflect amounts paid to the Trustees for
special meetings in connection with the Scudder Kemper restructuring initiative.
Such amounts totaled [$_______, $_______, $_______, $_______, $_______, $_______
and $_______ for Messrs. Ballantine, Burnham, Dunaway, Hoffman, Jones, Sommers
and Ms. Peterson,] respectively.
The Board of Trustees unanimously recommends
that the shareholders of the Fund vote FOR each nominee.
PROPOSAL 2: APPROVAL OF AGREEMENT
AND PLAN OF REORGANIZATION
I. SYNOPSIS
Introduction
The Board of Trustees, including all of the Independent Trustees, approved
the Plan at a meeting held on November 29, 2000. Subject to its approval by the
shareholders of the Fund, the Plan provides for (a) the transfer of all or
substantially all of the assets and all of the liabilities of the Fund to
Scudder Managed Municipal Bonds in exchange for Class A, Class B and Class C
shares of Scudder Managed Municipal Bonds; (b) the distribution of such shares
to the shareholders of the Fund in complete liquidation of the Fund; and (c) the
termination of the Fund. As a result of the Reorganization, each shareholder of
the Fund will become a shareholder of Scudder Managed Municipal Bonds, a fund
with similar investment characteristics and managed by the same investment
manager as the Fund. Immediately after the Reorganization, each shareholder of
the Fund will hold shares of the class of shares of Scudder Managed Municipal
Bonds that corresponds to the class of shares of the Fund held by that
shareholder on the Valuation Date, having an aggregate net asset value equal to
the aggregate net asset value of such shareholder's shares of the Fund on the
Valuation Date.
Scudder Kemper is the investment manager of both Funds. If the
Reorganization is completed, the Fund's shareholders will continue to enjoy all
of the same shareholder privileges as they currently enjoy, such as access to
professional service representatives, exchange privileges and automatic dividend
reinvestment. Services provided to the Class A, Class B and Class C
shareholders of Scudder Managed Municipal Bonds following the Reorganization
will be identical to those currently provided to shareholders of the
corresponding class of the Fund. See "Purchases, Exchanges and Redemptions and
Information."
-9-
<PAGE>
Background of the Reorganization
The Reorganization is part of a broader restructuring program to respond to
changing industry conditions and investor needs. The mutual fund industry has
grown dramatically over the last ten years. During this period of rapid growth,
investment managers expanded the range of fund offerings that are available to
investors in an effort to meet the growing and changing needs and desires of an
increasingly large and dynamic group of investors. With this expansion has come
increased complexity and competition among mutual funds, as well as the
potential for increased confusion among investors. The group of funds advised
by Scudder Kemper has followed this pattern.
As a result, Scudder Kemper has sought ways to restructure and streamline
the management and operations of the funds it advises by consolidating all of
the retail mutual funds that it currently sponsors into a single product line
offered under the "Scudder" name. Scudder Kemper believes, and has advised the
boards, that further reducing the number of funds it advises and adding the
classes of shares currently offered on all Kemper Funds to the Scudder Funds
will benefit fund shareholders. Scudder Kemper has, therefore, proposed the
combination of many Scudder Funds and Kemper Funds that have similar or
compatible investment objectives and policies. Scudder Kemper believes that the
larger funds, along with the fewer number of funds, that result from these
combinations may help to enhance investment performance and increase efficiency
of operations. The restructuring program will not result in any changes in the
shareholder services currently offered to shareholders of the Kemper Funds.
Most of the Scudder Funds have recently adopted a new fee structure for
certain administrative services. Under this fee structure, in exchange for
payment by a fund of a single administrative fee rate, Scudder Kemper provides
or pays for substantially all services that the fund normally requires for its
operations, other than those provided under the fund's investment management
agreement and certain other expenses. This administrative fee enables investors
to determine with greater certainty the expense level that a fund will
experience, and, for the term of the administration agreement, transfers
substantially all of the risk of increased costs to Scudder Kemper. Likewise,
Scudder Kemper receives all of the benefits of economies of scale from increases
in asset size or decreased operating expenses. Scudder Managed Municipal Bonds
has implemented such an administrative fee, as described in "Administrative Fee"
below. As part of the restructuring effort, Scudder Kemper has proposed
extending this administrative fee structure to those funds currently offered
under the Kemper name.
The fund consolidations and the consolidation of the boards currently
overseeing the Kemper Funds (see Proposal 1 above) are expected to have a
positive impact on Scudder Kemper, as well. These changes are likely to result
in reduced costs (and the potential for increased profitability) for Scudder
Kemper in advising or servicing funds.
Reasons for the Proposed Reorganization; Board Approval
Since receiving Scudder Kemper's proposals on May 24, 2000, the Independent
Trustees have conducted a thorough review of all aspects of the proposed
restructuring program. They have been assisted in this regard by their
independent counsel and by independent consultants with special expertise in
financial and mutual fund industry matters. In the course of discussions with
representatives of Scudder Kemper, the Independent Trustees have requested, and
Scudder Kemper has accepted, numerous changes designed to protect and enhance
the interests of shareholders. See "The Proposed Transaction - Board Approval
of the Proposed Transaction" below.
In determining whether to recommend that the shareholders of the Fund
approve the Reorganization, the Board of Trustees considered that:
-10-
<PAGE>
. Given the Fund's relative small size and Scudder Kemper's commitment
to a streamlined family of funds, the Reorganization would allow
shareholders to continue their investment in a comparable fund and
would be effected on a tax-free basis, as opposed to liquidation,
which would be a taxable transaction.
. The combined fund would adopt an investment management fee schedule
that, at all asset levels, is lower than the current rate applicable
to either Fund.
. The fixed fee rate under the Administration Agreement for Class A,
Class B and Class C shares is expected to be less than the estimated
operating expenses such classes would otherwise pay.
. It is a condition of the Reorganization that each Fund receive an
opinion of tax counsel that the transaction would be a tax-free
transaction.
. Although the Fund agreed to pay the estimated costs of the
Reorganization allocated to each class of the Fund's shares,
management has estimated that such allocated costs will be recoverable
from lower overall expense rates within six months of completion of
the Reorganization. Scudder Kemper agreed to pay all of the costs of
the Reorganization that exceed estimated costs.
For these reasons, as more fully described below under "The Proposed
Transaction -- Board Approval of the Proposed Transaction," the Board of
Trustees, including the Independent Trustees, has concluded that:
. the Reorganization is in the best interests of the Fund and its
shareholders; and
. the interests of the existing shareholders of the Fund will not be
diluted as a result of the Reorganization.
Accordingly, the Trustees unanimously recommend approval of the Plan
effecting the Reorganization. If the Plan is not approved, the Fund will
continue in existence unless other action is taken by the Trustees.
Investment Objectives, Policies and Restrictions of the Funds
This Section will help you compare the investment objectives and policies
of the Fund and Scudder Managed Municipal Bonds. Please be aware that this is
only a summary. More complete information may be found in the Funds'
prospectuses.
The investment objectives, policies and restrictions of Scudder Managed
Municipal Bonds and the Fund are compatible. Some significant differences do
exist. The investment objective of Scudder Managed Municipal Bonds is to seek
income exempt from regular federal income tax while actively seeking to reduce
downside risk as compared with other tax-free income funds. The investment
objective of the Fund is to seek a high level of current interest income that is
exempt from Ohio state and federal income taxes. There can be no assurance that
either Fund will achieve its investment objective.
Both the Fund and Scudder Managed Municipal Bonds seek their objective by
normally investing at least 80% of their net assets in municipal securities
whose income is free from regular federal income tax. This policy of the Fund
is non-fundamental while Scudder Managed Municipal Bonds' comparable policy is
fundamental. While Scudder Managed Municipal Bonds invests in municipal
securities of
-11-
<PAGE>
issuers across the U.S. and does not concentrate investments in any particular
state, the Fund invests at least 65% of its total assets in Ohio municipal
securities and other securities that are exempt from Ohio state income taxes.
Scudder Managed Municipal Bonds does not invest in securities issued by tobacco-
producing companies. Each Fund can invest up to 20% of its net assets in
securities whose income is subject to the alternative minimum tax. Shareholders
of Scudder Managed Municipal Bonds may be subject to state and local taxes,
including Ohio state tax, on distributions from such Fund.
Each Fund may buy many types of municipal securities. These may include
revenue bonds (which are backed by revenues from a particular source) and
general obligation bonds (which are typically backed by the issuer's ability to
levy taxes). Each Fund may also (to a limited extent for the Fund) purchase
municipal lease obligations and investments representing an interest in these.
The Investment Manager uses several strategies in seeking to reduce Scudder
Managed Municipal Bonds' downside risk, including (i) typically maintaining a
high level of portfolio quality, (ii) keeping the fund's duration generally
shorter than comparable mutual funds and (iii) primarily focusing on premium
coupon bonds, which have lower volatility in down markets than bonds selling at
a discount.
Scudder Managed Municipal Bonds normally invests at least 65% of its net
assets in municipal securities in the three highest quality ratings of Moody's
Investors Service, Inc., Standard & Poor's Ratings Services or Fitch IBCA, and
may invest up to 10% of its total assets in "high yield" or "junk" bonds rated
as low as B. Normally, at least 90% of the Fund's municipal securities are in
the top four grades of credit quality, and up to 10% of its municipal securities
may be in junk bonds (i.e., those rated BB/Ba and below). Also, although each
Fund is permitted to use various types of derivatives (contracts whose value is
based on, for example, indices, commodities or securities), the Investment
Manager does not intend to use them as principal investments for either Fund,
and might not use them at all. As a temporary defensive measure, each Fund may
shift up to 100% of its assets into investments such as taxable money market
securities. This could prevent losses, but would mean that the Fund would not
be pursuing its objective.
The Funds differ in their manner of security selection. The Investment
Manager looks for securities that appear to offer the best total return
potential, in the case of Scudder Managed Municipal Bonds, and the best income
potential, in the case of the Fund, although for each Fund the Investment
Manager normally prefers securities that cannot be called before maturity (see
"Comparative Considerations" below). In making buy and sell decisions for each
Fund, the Investment Manager typically weighs a number of factors, such as
economic outlook, possible interest rate movements and changes in supply and
demand within the municipal bond market. Although the Investment Manager may
adjust each Fund's dollar-weighted average maturity, it generally intends to
keep the maturity of Scudder Managed Municipal Bonds similar to that of the
Lehman Brothers Municipal Bond Index (13.43 years as of May 31, 2000) and the
effective maturity of the Fund over 15 years.
The Funds' fundamental investment restrictions, as set forth under
"Investment Restrictions" in each Fund's statement of additional information,
are identical, except that, as noted above, (i) Scudder Managed Municipal Bonds'
policy to have at least 80% of its net assets invested in municipal securities
during periods of normal market conditions is fundamental while the Fund's same
policy is non-fundamental; and (ii) unlike, Scudder Managed Municipal Bonds, the
Fund has elected to be classified as a non-diversified series of an open-end
investment company. Fundamental investment restrictions may not be changed
without the approval of Fund shareholders. The Funds' non-fundamental
investment restrictions, as set forth under "Investment Restrictions" in each
Fund's statement of additional information, are identical, except that the Fund
has a stated restriction limiting investments in illiquid securities to no more
than 15% of net assets. Both Funds are, however, subject to such restriction
pursuant to applicable regulation. Non-fundamental investment restrictions may
be changed by a
-12-
<PAGE>
particular Fund's Board without shareholder approval. Investors should refer to
each Fund's statement of additional information for a more detailed description
of that Fund's investment policies and restrictions.
Portfolio Turnover
The portfolio turnover rate for Scudder Managed Municipal Bonds, i.e., the
ratio of the lesser of annual sales or purchases to the monthly average value of
the portfolio (excluding from both the numerator and the denominator securities
with maturities at the time of acquisition of one year or less), for the fiscal
year ended May 31, 2000 was 47%. The portfolio turnover rate for the Fund for
the fiscal year ended August 31, 2000 was 9%. A higher portfolio turnover rate
involves greater brokerage and transaction expenses to a fund and may result in
the realization of net capital gains, which would be taxable to shareholders
when distributed.
Comparative Considerations
The portfolio characteristics of the combined Fund after the Reorganization
will reflect the blended characteristics of the Fund and Scudder Managed
Municipal Bonds. The following characteristics are as of ____, 2000 for both
Funds and also reflect the blended characteristics of both Funds after the
Reorganization as of that same date. In addition to the Reorganization of the
Fund into Scudder Managed Municipal Bonds, Kemper Municipal Bond Fund is also
proposed to be reorganized into Scudder Managed Municipal Bonds. If
shareholders of Kemper Municipal Bond Fund approve the reorganization of their
fund into Scudder Managed Municipal Bonds, it may effect the blended
characteristics of the combined fund.
The Fund currently seeks to concentrate its investments in Ohio state and
local municipal obligations, so that all or a portion of Fund distributions are
exempt from both federal and Ohio state income taxes. Scudder Managed Municipal
Bonds, however, does not focus its investments on municipal bonds of any one
state. Interest from municipal bonds issued by states other than Ohio is not
exempt from Ohio state taxes. Thus, while all or part of the distributions made
by Scudder Managed Municipal Bonds may be exempt from regular federal income
tax, no part of any such distributions will be exempt from Ohio state taxes.
<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------
Tax Avg. Avg. Portfolio Quality(4) % in Ohio % in
Yield(1) Equivalent Maturity Duration Municipal non-Ohio
Yield(2) (Years)(3) (Years)(3) Securities Municipal
Securities
-----------------------------------------------------------
AAA AA A BBB
--------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Fund
Scudder Managed
Municipal Bonds
Pro Forma
(Combined)(5)
--------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The yield provided for the Fund represents the yield for its Class A shares
and the yield provided for Scudder Managed Municipal Bonds represents the yield
for its Class S shares, for the 30 days ended ____________, 2000. The yield is
computed by dividing the net investment income per share earned during a
specified one month or 30-day period by the maximum offering price per share on
the last day of the period. In the case of the Class S shares of Scudder
Managed Municipal Bonds, the maximum offering price was calculated using the up-
front sales charge [and the current expense ratio] applicable to the Fund's
Class A shares. The pro forma yield reflects the Class A shares up-front sales
charge and estimated expense ratio of the combined fund, giving effect to the
Reorganization, and, therefore, is not necessarily indicative of the actual
yield to any particular shareholder. The yield for other classes of shares
would vary.
-13-
<PAGE>
(2) Tax equivalent yield is calculated by dividing that portion of each Fund's
yield that is tax-exempt by 1 minus a stated income tax rate and adding the
quotient to that portion, if any, of the Fund's yield that is not tax-exempt.
The applicable income tax rate is 37.1% (the highest marginal federal income tax
rate) [for each Fund and the combined fund] [and 41.2% (the highest marginal
combined federal and Ohio state income tax rate) for the Fund]. The tax
equivalent yield of other classes of shares would vary.
(3) Both dollar-weighted average maturity and duration reflect the sensitivity
of a Fund to interest rate fluctuations. The average dollar-weighted maturity
of a Fund is the dollar-weighted average of the stated maturities of all debt
instruments held by the Fund. Duration is the weighted present value of
principal and interest payments expressed in years and may more accurately
measure a Fund's sensitivity to incremental changes in interest rates than
average maturity. Other factors being equal (e.g., portfolio quality), a Fund
with a longer maturity and duration reacts more strongly to interest rate
changes than a Fund with a shorter maturity and duration. For example, a Fund
with a duration of five (5) years is expected to experience a price decrease of
roughly five percent (5%) for each percent increase in interest rates while a
comparable Fund with a duration of four (4) years is expected to experience a
price decrease of roughly four percent (4%) for the same change in interest
rates.
(4) Represents the higher of ratings by Moody's [,/and] S&P [and Fitch]. See
Annex A to the Statement of Additional Information for a general description of
Moody's [,/and] S&P's [and Fitch's] ratings of Municipal Obligations.
(5) Reflects the blended characteristics of the Fund and Scudder Managed
Municipal Bonds as of ______________, 2000. Kemper Municipal Bond Fund is also
proposed to be reorganized into Scudder Managed Municipal Bonds. If
shareholders of Kemper Municipal Bond Fund approve their reorganization, the pro
forma characteristics shown in the table above may change.
Performance
The following table shows how the returns of the Fund and Scudder Managed
Municipal Bonds over different periods average out. For context, the table also
includes a broad-based market index (which, unlike the Funds, does not have any
fees or expenses). The performances of both Funds and the index vary over time,
and past performance is not necessarily indicative of future results. All
figures assume reinvestment of dividends and distributions.
Average Annual Total Return
for the Periods Ended December 31, 2000
[Insert Table]
For management's discussion of Scudder Managed Municipal Bonds' performance
for the fiscal year ended May 31, 2000, please refer to Exhibit B.
Investment Manager; Fees and Expenses
Each Fund retains the investment management firm of Scudder Kemper,
pursuant to separate contracts, to manage its daily investment and business
affairs, subject to the policies established by each Fund's Trustees. Scudder
Kemper is a Delaware corporation located at Two International Place, Boston,
Massachusetts 02110-4103.
Pursuant to separate contracts, each Fund pays the Investment Manager a
graduated investment management fee, although the fee rates and breakpoints
differ. The fee is graduated so that increases in a Fund's net assets may
result in a lower annual fee rate and decreases in its net assets may result in
a higher annual fee rate. As of May 31, 2000, Scudder Managed Municipal Bonds
had total net assets of $664,425,993. For the fiscal year ended May 31, 2000,
Scudder Managed Municipal Bonds paid the Investment Manager a fee of 0.52% of
its average daily net assets. As of August 31, 2000, the Fund had total net
assets of $37,806,839. For the fiscal year ended August 31, 2000, the Fund paid
the Investment Manager a fee of 0.55% of its average daily net assets.
Currently the fee schedules for the Fund and Scudder Managed Municipal
Bonds are as follows:
-14-
<PAGE>
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------
Fund Scudder Managed Municipal Bonds
----------------------------------------------------------------------------------------------------
Average Daily Net Assets Fee Rate Average Daily Net Assets Fee Rate
------------------------ -------- ------------------------ --------
<S> <C> <C> <C>
First $250 million 0.550% First $2 billion 0.490%
Next $750 million 0.520% Next $1 billion 0.465%
Next $1.5 billion 0.500% Over $3 billion 0.440%
Next $2.5 billion 0.480%
Next $2.5 billion 0.450%
Next $2.5 billion 0.430%
Next $2.5 billion 0.410%
Over $12.5 billion 0.400%
----------------------------------------------------------------------------------------------------
</TABLE>
Scudder Kemper has proposed that Scudder Managed Municipal Bonds adopt a
lower investment management fee schedule after the Reorganization, as shown in
the table below:
----------------------------------------------------
Combined Fund
----------------------------------------------------
Average Daily Net Assets Fee Rate
------------------------ --------
First $250 million 0.450%
Next $750 million 0.430%
Next $1.5 billion 0.410%
Next $2.5 billion 0.400%
Next $2.5 billion 0.380%
Next $2.5 billion 0.360%
Next $2.5 billion 0.340%
Over $12.5 billion 0.320%
----------------------------------------------------
The effectiveness of the new investment management agreement for Scudder
Managed Municipal Bonds and the Closing are contingent upon each other. Based
upon the Fund's average net assets for the twelve months ended November 30,
2000, the effective advisory fee rate for the Fund was 0.55% of average daily
net assets. Based upon each Fund's average net assets for the twelve months
ended November 30, 2000, the effective advisory fee rate for Scudder Managed
Municipal Bonds after the Reorganization would be 0.41% of average daily net
assets, giving effect to the proposed new investment management agreement.
Administrative Fee
Scudder Managed Municipal Bonds has entered into an administration
agreement with Scudder Kemper (the "Administration Agreement"), pursuant to
which Scudder Kemper provides or pays others to provide substantially all of the
administrative services required by the Class A, Class B and Class C shares of
Scudder Managed Municipal Bonds (other than those provided by Scudder Kemper
under its investment management agreement with that Fund) in exchange for the
payment by Scudder Managed Municipal Bonds of an annual administrative services
fee (the "Administrative Fee") equal to 0.100%, 0.125% and 0.150% of average
daily net assets attributable to the Class A, Class B and Class C shares,
respectively. In addition, Scudder Kemper has agreed to waive an additional
0.005% of the Administrative Fee for Class A shares for a period of one year
following the date of the Closing. The fees for the services provided by Kemper
Distributors, Inc. ("KDI") under its current services agreement and underwriting
and distribution agreement with Scudder Managed Municipal Bonds are not covered
by, and are in addition to, the Administrative Fee. One effect of this
arrangement is to make Scudder Managed Municipal Bonds' future expense ratio
more predictable. On the other hand, the administrative fee rate
-15-
<PAGE>
does not decrease with economies of scale from increases in asset size or
decreased operating expenses. The details of this arrangement (including
expenses that are not covered) are set out below.
Various service providers (the "Service Providers"), some of which are
affiliated with Scudder Kemper, provide certain services to Scudder Managed
Municipal Bonds pursuant to separate agreements. These Service Providers may
differ from current Service Providers of the Fund. Scudder Fund Accounting
Corporation, a subsidiary of Scudder Kemper, computes net asset value for
Scudder Managed Municipal Bonds and maintains its accounting records. Kemper
Service Company, also a subsidiary of Scudder Kemper, is the transfer,
shareholder servicing and dividend-paying agent for the Class A, Class B and
Class C shares of Scudder Managed Municipal Bonds. Scudder Trust Company, an
affiliate of Scudder Kemper, provides subaccounting and recordkeeping services
for shareholder accounts in certain retirement and employee benefit plans. As
custodian, State Street Bank and Trust Company ("State Street") holds the
portfolio securities of Scudder Managed Municipal Bonds, pursuant to a custodian
agreement. Other Service Providers include the independent public accountants
and legal counsel for Scudder Managed Municipal Bonds.
Under the Administration Agreement, each Service Provider provides the
services to Scudder Managed Municipal Bonds described above, except that Scudder
Kemper pays these entities for the provision of their services to Scudder
Managed Municipal Bonds and pays most other fund expenses, including insurance,
registration, printing and postage fees. In return, Scudder Managed Municipal
Bonds pays Scudder Kemper the Administrative Fee.
The Administration Agreement will remain in effect with respect to the
Class A, Class B and Class C shares for an initial term ending September 30,
2003, subject to earlier termination by the trustees that oversee Scudder
Managed Municipal Bonds. The Administration Agreement shall continue in effect
on an annual basis after September 30, 2003, provided that such continuance is
approved at least annually by a majority of the trustees, including the
Independent Trustees, that oversee Scudder Managed Municipal Bonds. The fee
payable by Scudder Managed Municipal Bonds to Scudder Kemper pursuant to the
Administration Agreement is reduced by the amount of any credit received from
Scudder Managed Municipal Bonds' custodian for cash balances.
Certain expenses of Scudder Managed Municipal Bonds are not borne by
Scudder Kemper under the Administration Agreement, such as taxes, brokerage,
interest and extraordinary expenses, and the fees and expenses of the
Independent Trustees (including the fees and expenses of their independent
counsel). Scudder Managed Municipal Bonds continues to pay the fees required by
its investment management agreement with Scudder Kemper. In addition, it pays
the fees under its services agreement and underwriting and distribution services
agreement with KDI, as described in "Distribution and Service Fees" below.
Comparison of Expenses
The tables and examples below are designed to assist you in understanding
the various costs and expenses that you will bear directly or indirectly as an
investor in the Class A, Class B and Class C shares of Scudder Managed Municipal
Bonds, and compares these with the expenses of the Fund. [Insert comparative
statement regarding expenses.] Unless otherwise noted, the information is based
on each Fund's expenses and average daily net assets during the twelve months
ended November 30, 2000 and on a pro forma basis as of that date and for the
twelve month period then ended, assuming the Reorganization had been in effect
for the period.
It is being proposed to shareholders of Kemper Municipal Bond Fund ("Kemper
Municipal"), another fund advised by Scudder Kemper, that Scudder Managed
Municipal Bonds acquire the net assets of
-16-
<PAGE>
Kemper Municipal. The closing of this other acquisition and the Closing are not
contingent upon each other. The Pro Forma-1 column in each table below assumes
that Scudder Managed Municipal Bonds will not acquire the assets of Kemper
Municipal and thus reflects only the acquisition by Scudder Managed Municipal
Bonds of the net assets of the Fund. The Pro Forma-2 column in each table below
assumes that Scudder Managed Municipal Bonds will acquire the net assets of both
Kemper Municipal and the Fund.
Expense Comparison Table
Class A Shares
<TABLE>
<CAPTION>
Scudder
Managed
Municipal Pro Forma-1 Pro Forma-2
Fund Bonds (Combined)(a) (Combined)(a)
---- ----- ------------- -------------
<S> <C> <C> <C> <C>
Shareholder Fees
----------------
Maximum Sales Charge (Load) Imposed on 4.50% 4.50% 4.50% 4.50%
Purchases (as % of offering price)
Maximum Contingent Deferred Sales None None None None
Charge (Load) (as % of redemption
proceeds)(b)
Annual Fund Operating Expenses
------------------------------
(unaudited) (as a % of average net
----------------------------------
assets)
-------
Management Fees 0.55% 0.49%(c) 0.43% 0.41%
Rule 12b-1/ASF Fees 0.22% 0.25% 0.22% 0.22%
Other Expenses 0.32% 0.10%(d) 0.10% 0.10%
----- -------- ----- -----
Total Annual Fund Operating Expenses 1.09% 0.84% 0.75% 0.73%
Expense Waiver -- 0.01%(e) 0.01%(e) 0.01%(e)
-------- -------- --------
Net Annual Fund Operating Expenses -- 0.83% 0.74% 0.72%
Expense Example of Total Operating
----------------------------------
Expenses Assuming Redemption at the
-----------------------------------
End of the Period(f)
--------------------
One Year $ 556 $ 531 $ 522 $ 520
Three Years $ 781 $ 705 $ 678 $ 672
Five Years $1,024 $ 894 $ 847 $ 837
Ten Years $1,719 $1,440 $1,338 $1,315
</TABLE>
-17-
<PAGE>
__________________
Notes to Expense Comparison Table:
----------------------------------
(a) Each Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization. Pro Forma expenses reflect the
implementation of a new investment management agreement for Scudder Managed
Municipal Bonds to be effective upon the Reorganization and the
implementation of Scudder Managed Municipal Bonds' Administration Agreement
and distribution agreement.
(b) Class A shares purchased under the Large Order NAV Purchase Privilege have
a 1% contingent deferred sales charge if sold during the first year after
purchase and 0.50% if sold during the second year after purchase.
(c) Restated to reflect Scudder Managed Municipal Bonds' new investment
management agreement.
(d) Restated to reflect the implementation of Scudder Managed Municipal Bonds'
Administration Agreement.
(e) By contract, Scudder Kemper has agreed to waive 0.005% of the
Administrative Fee for Class A shares for a period of one year following
the Closing.
(f) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same. The expense waiver is
reflected only in the One Year examples.
Expense Comparison Table
Class B Shares
<TABLE>
<CAPTION>
Scudder
Managed
Municipal Pro Forma-1 Pro Forma-2
Fund Bonds (Combined)(a) (Combined)(a)
---- ----- ------------- -------------
<S> <C> <C> <C> <C>
Shareholder Fees
----------------
Maximum Sales Charge (Load) Imposed None None None None
on Purchases (as % of offering
price)
Maximum Contingent Deferred Sales 4.00% 4.00% 4.00% 4.00%
Charge (Load) (as % of redemption
proceeds)(b)
Annual Fund Operating Expenses
------------------------------
(unaudited) (as a % of average net
----------------------------------
assets)
-------
Management Fees 0.55% 0.49%(c) 0.43% 0.41%
Rule 12b-1/ASF Fees 1.00% 1.00% 1.00% 1.00%
Other Expenses 0.36% 0.13%(d) 0.13% 0.13%
----- -------- ----- -----
Total Annual Fund Operating Expenses 1.91% 1.62% 1.56% 1.54%
</TABLE>
-18-
<PAGE>
<TABLE>
Expense Example of Total Operating
----------------------------------
Expenses Assuming Redemption at the
-----------------------------------
End of the Period(e)
--------------------
<S> <C> <C> <C> <C>
One Year $ 594 $ 565 $ 559 $ 557
Three Years $ 900 $ 811 $ 793 $ 786
Five Years $1,232 $1,081 $1,050 $1,039
Ten Years $1,823 $1,521 $1,438 $1,415
Expense Example of Total Operating
----------------------------------
Expenses Assuming No Redemption at
----------------------------------
the End of the Period(e)
------------------------
One Year $ 194 $ 165 $ 159 $ 157
Three Years $ 600 $ 511 $ 493 $ 486
Five Years $1,032 $ 881 $ 850 $ 839
Ten Years $1,823 $1,521 $1,438 $1,415
</TABLE>
Notes to Expense Comparison Table:
----------------------------------
(a) Each Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization. Pro Forma expenses reflect the
implementation of a new investment management agreement for Scudder Managed
Municipal Bonds to be effective upon the Reorganization and the
implementation of Scudder Managed Municipal Bonds' Administration Agreement
and distribution agreement.
(b) Contingent deferred sales charges on Class B shares sold during the first
six years of ownership are 4% in the first year, 3% in the second and third
year, 2% in the fourth and fifth year, and 1% in the sixth year.
(c) Restated to reflect Scudder Managed Municipal Bonds' new investment
management agreement.
(d) Restated to reflect the implementation of Scudder Managed Municipal Bonds'
Administration Agreement.
(e) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same. Assumes conversion to Class
A shares six years after purchase.
-19-
<PAGE>
Expense Comparison Table
Class C Shares
<TABLE>
<CAPTION>
Scudder
Managed
Municipal Pro Forma-1 Pro Forma-2
Fund Bonds (Combined)(a) (Combined)(a)
---- ----- ------------- -------------
Shareholder Fees
----------------
<S> <C> <C> <C> <C>
Maximum Sales Charge (Load) None None None None
Imposed on Purchases (as % of
offering price)
Maximum Contingent Deferred 1.00% 1.00% 1.00% 1.00%
Sales Charge (Load) (as % of
redemption proceeds)(b)
Annual Fund Operating
---------------------
Expenses (unaudited) (as a %
----------------------------
of average net assets)
----------------------
Management Fees 0.55% 0.49%(c) 0.43% 0.41%
Rule 12b-1/ASF Fees 1.00% 1.00% 1.00% 1.00%
Other Expenses 0.37% 0.15%(d) 0.15% 0.15%
------ ------ ----- -----
Total Annual Fund Operating 1.92% 1.64% 1.58% 1.56%
Expenses
Expense Example of Total
------------------------
Operating Expenses Assuming
---------------------------
Redemption at the End of the
----------------------------
Period(e)
------
One Year $ 295 $ 267 $ 261 $ 259
Three Years $ 603 $ 517 $ 499 $ 493
Five Years $1,037 $ 892 $ 860 $ 850
Ten Years $2,243 $1,944 $1,878 $1,856
Expense Example of Total
------------------------
Operating Expenses Assuming
---------------------------
No Redemption at the End of the
-------------------------------
Period(e)
------
One Year $ 195 $ 167 $ 161 $ 159
Three Years $ 603 $ 517 $ 499 $ 493
Five Years $1,037 $ 892 $ 860 $ 850
Ten Years $2,243 $1,994 $1,878 $1,856
</TABLE>
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<PAGE>
___________
Notes to Expense Comparison Table:
----------------------------------
(a) Each Pro Forma column reflects expenses estimated for the Reorganized Fund
subsequent to the Reorganization. Pro Forma expenses reflect the
implementation of a new investment management agreement for Scudder Managed
Municipal Bonds to be effective upon the Reorganization and the
implementation of Scudder Managed Municipal Bonds' Administration Agreement
and distribution agreement.
(b) Contingent deferred sales charge on Class C shares is 1% for shares sold
during the first year after purchase.
(c) Restated to reflect Scudder Managed Municipal Bonds' new investment
management agreement.
(d) Restated to reflect the implementation of Scudder Managed Municipal Bonds'
Administration Agreement.
(e) Expense examples reflect what an investor would pay on a $10,000
investment, assuming a 5% annual return, the reinvestment of all dividends
and total operating expenses remain the same.
Distribution and Services Fees
Pursuant to an underwriting and distribution services agreement with
Scudder Managed Municipal Bonds, KDI, 222 South Riverside Plaza, Chicago,
Illinois 60606, an affiliate of the Investment Manager, will act as the
principal underwriter and distributor of the Class A, Class B and Class C shares
of that Fund and will act as agent of the Fund in the continuing offer of such
shares. Scudder Managed Municipal Bonds has adopted distribution plans on
behalf of the Class A, Class B and Class C shares in accordance with Rule 12b-1
under the 1940 Act that are substantially identical to the existing distribution
plans adopted by the Fund, with one exception. As under the current
distribution plans for the Fund, Scudder Managed Municipal Bonds pays KDI an
asset-based fee at an annual rate of 0.75% of Class B and Class C shares. The
distribution plans for Scudder Managed Municipal Bonds, however, unlike the
distribution plans for the Fund, also authorize the payment to KDI of the 0.25%
services fee with respect to the Class A, Class B and Class C shares pursuant to
the services agreement described below. Neither KDI nor the Trustees of the
Fund believe that the services performed by KDI under the services agreement
have been primarily intended to result in sales of fund shares (i.e.,
"distribution" services) as defined in Rule 12b-1, but rather are post-sale
administrative and other services provided to existing shareholders.
Nonetheless, to avoid legal uncertainties due to the ambiguity of the language
contained in Rule 12b-1 and eliminate any doubt that may arise in the future
regarding whether the services performed by KDI under the services agreement are
"distribution" services, the distribution plans for Scudder Managed Municipal
Bonds authorize the payment of the services fee. The fact that the services fee
is authorized by Scudder Managed Municipal Bonds' distribution plans does not
change the fee rate or affect the nature or quality of the services provided by
KDI.
Pursuant to the services agreement with Scudder Managed Municipal Bonds,
which is substantially identical to the current services agreement with the
Fund, KDI receives a services fee of up to 0.25% per year with respect to the
Class A, Class B and Class C shares of Scudder Managed Municipal Bonds. KDI uses
the services fee to compensate financial services firms ("firms") for providing
personal services and maintenance of accounts for their customers that hold
those classes of shares of Scudder Managed Municipal Bonds, and may retain any
portion of the fee not paid to firms to compensate itself for administrative
functions performed for the Fund. All fee amounts are payable monthly and are
based on the average daily net assets of each Fund attributable to the relevant
class of shares.
Purchases, Exchanges and Redemptions
Both Funds are part of the Scudder Kemper complex of mutual funds. The
procedures for purchases, exchanges, and redemptions of Class A, Class B and
Class C shares of Scudder Managed
-21-
<PAGE>
Municipal Bonds are identical to those of the Fund. Shares of Scudder Managed
Municipal Bonds are exchangeable for shares of the same class of most other
open-end funds advised by Scudder Kemper offering such shares.
Corresponding classes of shares of Scudder Managed Municipal Bonds have
identical sales charges to those of the Fund. Scudder Managed Municipal Bonds
has a maximum initial sales charge of 4.50% on Class A shares. Shareholders who
purchase $1 million or more of Class A shares pay no initial sales charge but
may have to pay a contingent deferred sales charge (a "CDSC") of up to 1% if the
shares are sold within 2 years of the date on which they were purchased. Class
B shares are sold without a front-end sales charge, but may be subject to a CDSC
upon redemption, depending on the length of time the shares are held. The CDSC
begins at 4% for shares sold in the first year, declines to 1% in the sixth year
and is eliminated after the sixth year. After six years, Class B shares
automatically convert to Class A shares. Class C shares are sold without a
front-end sales charge, but may be subject to a CDSC of up to 1% if the shares
are sold within one year of purchase.
Class A, Class B and Class C shares of Scudder Managed Municipal Bonds
received in the Reorganization will be issued at net asset value, without a
sales charge, and no CDSC will be imposed on any shares of the Fund exchanged
for shares of Scudder Managed Municipal Bonds as a result of the Reorganization.
However, following the Reorganization, any CDSC that applies to shares of the
Fund will continue to apply to shares of Scudder Managed Municipal Bonds
received in the Reorganization, using the original purchase date for such shares
to calculate the holding period, rather than the date such shares are received
in the Reorganization.
Services available to shareholders of Class A, Class B and Class C shares
of Scudder Managed Municipal Bonds will be identical to those available to
shareholders of the corresponding classes of the Fund and include the purchase
and redemption of shares through an automated telephone system and over the
Internet, telephone redemptions, and exchanges by telephone to most other
Scudder Kemper funds that offer Class A, Class B and Class C shares, and
reinvestment privileges. Please see the Fund's prospectus for additional
information.
Dividends and Other Distributions
Each Fund intends to declare dividends from its net investment income daily
and distribute them monthly. Each Fund intends to distribute net realized
capital gains after utilization of capital loss carry forwards, if any, in
November or December of each year. An additional distribution may be made if
necessary. Shareholders of each Fund can have their dividends and distributions
automatically invested in additional shares of the same class of that Fund, or a
different fund in the same family of funds, at net asset value and credited to
the shareholder's account on the payment date or, at the shareholder's election,
paid in cash. For retirement plans, reinvestment is the only option.
If the Plan is approved by the Fund's shareholders, the Fund will pay its
shareholders a distribution of all undistributed net investment income and
undistributed realized net capital gains immediately prior to the Closing.
Other Differences Between the Funds.
Charter Documents.
Each of the Aquired Trust and the Acquiring Trust is established as a
Massachusetts business trust pursuant to separate Declarations of Trust.
Although the organizational documents of the Acquired Trust and the Acquiring
Trust are similar, some differences do exist. The more significant differences
are listed below.
. A vote of a majority of the Acquired Trust's outstanding shares is
required to remove a trustee from office; a vote of two-thirds of the Acquiring
Trust's outstanding shares is required to remove a trustee from office.
. A special meeting of Fund shareholers may be called by shareholders
holding at least 25% of the Fund's shares then outstanding (or 10% of the
Acquired Trust's shares if the purpose is to determine the removal of a
Trustee); 10% of Scudder Managed Municipal Bonds' shares then outstanding are
required to call a special meeting of its shareholders.
-22-
<PAGE>
Trustees and Officers.
The Trustees of the Acquired Trust, currently and as proposed under
Proposal 1, are different from those of the Acquiring Trust. As described in
Scudder Managed Municipal Bonds' prospectus that has been included in the
materials that you received with this document, the following individuals
comprise the Board of Trustees of the Acquiring Trust: Henry P. Becton, Jr.,
Linda C. Coughlin, Dawn-Marie Driscoll, Edgar R. Fiedler, Keith R. Fox, Joan E.
Spero, Jean Gleason Stromberg, Jean C. Tempel and Steven Zaleznick. In addition,
the officers of the Acquired Trust and Acquiring Trust are different. (See
Proposal 1 and the Statement of Additional Information for further information.)
Fiscal Year.
The Fund's fiscal year-end is August 31. Scudder Managed Municipal Bonds'
fiscal year-end is May 31.
Auditors.
The Fund's auditors are Ernst & Young LLP. Scudder Managed Municipal Bonds'
auditors are PricewaterhouseCoopers LLP.
Tax Consequences
As a condition to the Reorganization, each Fund will have received an
opinion of Willkie Farr & Gallagher in connection with the Reorganization, to
the effect that, based upon certain facts, assumptions and representations, the
Reorganization will constitute a tax-free reorganization within the meaning of
section 368(a)(1) of the Internal Revenue Code of 1986, as amended (the "Code").
If the Reorganization constitutes a tax-free reorganization, no gain or loss
will be recognized by the Fund or its shareholders as a direct result of the
Reorganization. See "The Proposed Transaction -- Federal Income Tax
Consequences."
* * *
The preceding is only a summary of certain information contained in this
Proxy Statement/Prospectus relating to the Reorganization. This summary is
qualified by reference to the more complete information contained elsewhere in
this Proxy Statement/Prospectus, the prospectuses and statements of additional
information of the Funds, and the Plan. Shareholders should read this entire
Proxy Statement/Prospectus carefully.
II. PRINCIPAL RISK FACTORS
Because of their similar investment objectives, policies and strategies,
the principal risks presented by Scudder Managed Municipal Bonds are similar to
those presented by the Fund. The main risks applicable to each Fund include,
among others, interest rate risk, credit quality risk and management risk (i.e.,
securities selection by the Investment Manager). Interest rate risk is
generally greater for funds investing in fixed income securities with longer
maturities and longer durations (a measure of sensitivity to interest rate
movements). Historically, Scudder Managed Municipal Bonds generally has had a
longer dollar-weighted average maturity than the Fund. The fact that a Fund may
emphasize investments in certain geographic regions or sectors of the municipal
market increases credit risk because any factors affecting these regions or
sectors could affect a large portion of that Fund's securities similarly. These
risks may be higher for the Fund because it is not diversified and invests
primarily in securities issued by
-23-
<PAGE>
a single state, thus intensifying the impact of any economic or other problems
affecting that state. As a result of being non-diversified, the Fund's
investment returns are more likely to be impacted by changes in the market value
and returns of any one portfolio holding as compared to Scudder Managed
Municipal Bonds, which is a diversified fund. Investments in high yield
securities, or "junk bonds," entail relatively greater risk of loss of income
and principal than investments in higher rated securities, and may fluctuate
more in value. This risk may affect both Funds, but may be more pronounced for
the Fund to the extent that it invests in lower quality high-yield bonds than
Scudder Managed Municipal Bonds or may be more pronounced for Scudder Managed
Municipal Bonds to the extent that it invests in junk bonds to a greater extent
than the Fund. Lastly, unlike the Fund, Scudder Managed Municipal Bonds' risk
management strategies could make its long-term performance somewhat lower than
it would have been without such strategies. The Funds are not insured or
guaranteed by the FDIC or any other government agency. Share prices will go up
and down, so be aware that you could lose money.
For a further discussion of the investment techniques and risk factors
applicable to each Fund, see "Investment Objectives, Policies and Restrictions
of the Funds" above, and the prospectuses and statements of additional
information for the Funds.
III. THE PROPOSED TRANSACTION
Description of the Plan
As stated above, the Plan provides for the transfer of all or substantially
all of the assets of the Fund to Scudder Managed Municipal Bonds in exchange for
that number of full and fractional Class A, Class B and Class C shares having an
aggregate net asset value equal to the aggregate net asset value of the shares
of the corresponding classes of the Fund as of the close of business on the
Valuation Date. Scudder Managed Municipal Bonds will assume all of the
liabilities of the Fund. The Fund will distribute the Class A, Class B and
Class C shares received in the exchange to the shareholders of the corresponding
classes of the Fund in complete liquidation of the Fund. The Fund will then be
terminated.
Upon completion of the Reorganization, each shareholder of the Fund will
own that number of full and fractional Class A, Class B and Class C Shares
having an aggregate net asset value equal to the aggregate net asset value of
such shareholder's shares of the corresponding class held in the Fund as of the
close of business on the Valuation Date. Such shares will be held in an account
with Scudder Managed Municipal Bonds identical in all material respects to the
account currently maintained by the Fund for such shareholder. In the interest
of economy and convenience, Class A, Class B and Class C shares issued to the
Fund's shareholders in the Reorganization will be in uncertificated form. If
Class A, Class B or Class C shares of the Fund are represented by certificates
prior to the Closing, such certificates should be returned to the Fund's
shareholder servicing agent. Any Class A, Class B or Class C shares of Scudder
Managed Municipal Bonds distributed in the Reorganization to shareholders in
exchange for certificated shares of the Fund may not be transferred, exchanged
or redeemed without delivery of such certificates.
Until the Closing, shareholders of the Fund will continue to be able to
redeem their shares at the net asset value next determined after receipt by the
Fund's transfer agent of a redemption request in proper form. Redemption and
purchase requests received on or after the Valuation Date by the transfer agent
will be treated as requests received for the redemption or purchase of Class A,
Class B or Class C shares of Scudder Managed Municipal Bonds received by the
shareholder in connection with the Reorganization.
The obligations of each Trust, on behalf of the respective Funds, under the
Plan are subject to various conditions, as stated therein, which includes
Scudder Managed Municipal Bonds' adoption of a
-24-
<PAGE>
new investment management agreement and securities valuation procedures
identical to the Fund's procedures. The Plan also requires that all filings be
made with, and all authority be received from, the SEC and state securities
commissions as may be necessary in the opinion of counsel to permit the parties
to carry out the transactions contemplated by the Plan. Each Fund is in the
process of making the necessary filings. To provide for unforseen events, the
Plan may be terminated: (i) by the mutual agreement of the parties; (ii) by
either party if the Closing has not occurred by _____ __, 2001, unless such date
is extended by mutual agreement of the parties; or (iii) by either party if the
other party has materially breached its obligations under the Plan or made a
material misrepresentation in the Plan or in connection with the Reorganization.
The Plan may also be amended by mutual agreement in writing. However, no
amendment may be made following the shareholder meeting if such amendment would
have the effect of changing the provisions for determining the number of shares
of Scudder Managed Municipal Bonds to be issued to the Fund in the Plan to the
detriment of the Fund's shareholders without their approval. For a complete
description of the terms and conditions of the Reorganization, please refer to
the Plan at Exhibit A.
Board Approval of the Proposed Transaction
As discussed above, the Reorganization is part of a Scudder Kemper
initiative that is intended to restructure and streamline the management and
operations of the funds Scudder Kemper advises. Scudder Kemper first proposed
the Reorganization to the Trustees of the Fund at a meeting held on May 24,
2000, see "Synopsis--Background of the Reorganization" above. This initiative
includes five major components:
(i) A change in branding to offer virtually all funds advised by Scudder
Kemper under the Scudder Investments name, with a concentration on
intermediary distribution;
(ii) The combination of funds with similar investment objectives and
policies, including in particular the combination of the Kemper
Funds with similar Scudder Funds currently offered to the general
public;
(iii) The liquidation of certain small funds which have not achieved
market acceptance and which are unlikely to reach an efficient
operating size;
(iv) The implementation of an administration agreement for the Kemper
Funds similar to that recently adopted by the Scudder Funds
covering, for a single fee rate, substantially all services required
for the operation of the fund (other than those provided under the
fund's investment management agreement) and most expenses; and
(v) The consolidation of certain boards overseeing funds advised by
Scudder Kemper.
The Independent Trustees of the Fund reviewed the potential implications of
these proposals for the Fund as well as the various other funds for which they
serve as board members. They were assisted in this review by their independent
legal counsel and by independent consultants with special expertise in financial
and mutual fund industry matters. Following the May 24 meeting, the Independent
Trustees met in person or by telephone on numerous occasions (including
committee meetings) to review and discuss these proposals, both among themselves
and with representatives of Scudder Kemper, including the "interested" Trustees.
In the course of their review, the Independent Trustees requested and received
substantial additional information and suggested numerous changes to Scudder
Kemper's proposals.
Following the conclusion of this process, the Trustees of the Fund, the
board members of other funds involved and Scudder Kemper reached general
agreement on the elements of a restructuring plan
-25-
<PAGE>
that they believed were in the best interests of shareholders and, where
required, agreed to submit elements of the plan for approval to shareholders of
those funds.
On November 29, 2000, the Board of Trustees, including the Independent
Trustees, unanimously approved the terms of the Reorganization and certain
related proposals. The Trustees have also unanimously agreed to recommend that
the Reorganization be approved by the Fund's shareholders.
In determining whether to recommend that the shareholders of the Fund
approve the Reorganization, the Board of Trustees considered that:
. Given the Fund's relative small size and Scudder Kemper's commitment
to a streamlined family of funds, the Reorganization would allow
shareholders to continue their investment in a comparable fund and
would be effected on a tax-free basis, as opposed to liquidation,
which would be a taxable transaction.
. The combined fund would adopt an investment management fee schedule
that, at all asset levels, is lower than the current rate applicable
to either Fund.
. The fixed fee rate under the Administration Agreement for Class A,
Class B and Class C shares is expected to be less than the estimated
operating expenses such classes would otherwise pay.
. It is a condition of the Reorganization that each Fund receive an
opinion of tax counsel that the transaction would be a tax-free
transaction.
. Although the Fund agreed to pay all of the estimated costs of the
Reorganization allocated to each class of the Fund's shares,
management has estimated that such allocated costs will be recoverable
from lower overall expense rates within six months of completion of
the Reorganization. Scudder Kemper agreed to pay all of the costs of
the Reorganization that exceed estimated costs.
As part of their deliberations, the Trustees considered, among other
things: (a) the fees and expense ratios of the Funds, including comparisons
between the expenses of the Fund and the estimated operating expenses of Scudder
Managed Municipal Bonds after the Reorganization, and between the estimated
operating expenses of Scudder Managed Municipal Bonds and other mutual funds
with similar investment objectives; (b) the terms and conditions of the
Reorganization and whether the Reorganization would result in the dilution of
shareholder interests; (c) the compatibility of the Funds' investment
objectives, policies, restrictions and portfolios; (d) the service features
available to shareholders of each Fund; (e) prospects for Scudder Managed
Municipal Bonds to attract additional assets; and (f) the investment performance
and tax equivalent yield of each Fund.
As part of their analysis, the Trustees considered direct and indirect
costs to shareholders including: (a) the direct costs of the Reorganization to
be borne by existing shareholders; (b) the potential costs of any necessary
rebalancing of the Fund's portfolio; and (c) the potential tax consequences to
shareholders as a result of differences in the Funds' realized or unrealized
capital gains or losses and capital loss carry forwards.
Costs. The anticipated costs of the Reorganization allocable to the Fund
are $10,208, which includes board meeting fees, legal, accounting and other
consultant fees, and proxy solicitation costs. Class A, Class B and Class C
shares of the Fund will each pay 100% of their respective allocated costs of the
Reorganization, which are $5,535 for Class A, $3,328 for Class B and $1,345 for
Class C (except that
-26-
<PAGE>
Scudder Managed Municipal Bonds is bearing the SEC and state registration and
notice fees which are estimated to be $_________]). Scudder Kemper is bearing
any cost overruns.
The estimated costs of the Reorganization borne by the Fund have been
expensed, resulting in a reduction of net asset value per share of $[ ], $[
] and $[ ] for Class A, Class B and Class C shares, respectively. Management
of the Fund expects that reduced operating expenses resulting from the
Reorganization should allow for recovery of the allocated costs of the
Reorganization within six months after the Closing.
Portfolio Transaction Costs. To consider the potential costs of any
necessary rebalancing of the Fund's portfolio as a result of the Reorganization,
the Independent Trustees asked for, and Scudder Kemper provided, an estimate of
the expected turnover of the securities of the Fund, as a percentage of the
assets of the combined fund, as a result of the Reorganization. Scudder Kemper
estimated such turnover at 0%.
Potential Tax Consequences. Although the Reorganizations will be achieved
on a federally tax-free basis (see "The Proposed Transaction -- Federal Income
Tax Consequences" below), there are differences in the Funds' realized or
unrealized capital gains or losses and capital loss carry forwards, which at [
], 200[ ] were as follows (although they may differ at the time of the Closing):
[Charts to be inserted]
As noted above, under the terms of the Plan, shareholders of the Fund will
receive shares of Scudder Managed Municipal Bonds in an amount equal to the
relative net asset value of their Fund shares. The Trustees considered whether
an adjustment in this formula should be made for the above tax differentials.
The Trustees determined that no adjustment should be made because the potential
tax consequences were not material, quantifiable or predictable because of (1)
uncertainties as to the amounts of any actual future realization of capital
gains or losses in view of future changes in portfolio values, (2) the exemption
of some shareholders from federal income taxation, and (3) the differing
consequences of federal and various other income taxation upon a distribution
received by each shareholder whose tax liability (if any) is determined by the
net effect of a multitude of considerations that are individual to the
shareholder. Shareholders should, however, review their own tax situation to
determine what effect, if any, these potential tax differences may have on them.
The Trustees also gave extensive consideration to possible economies of
scale that might be realized by Scudder Kemper in connection with the
Reorganization, as well as the other fund combinations included in Scudder
Kemper's restructuring proposal.
Based on all the foregoing, the Board concluded that the Fund's
participation in the Reorganization would be in the best interests of the Fund
and would not dilute the interests of the Fund's shareholders. The Board of
Trustees, including the Independent Trustees, unanimously recommends that
shareholders of the Fund approve the Reorganization.
Description of the Securities to Be Issued
Scudder Managed Municipal Bonds is a series of the Acquiring Trust, a
Massachusetts business trust established under a Declaration of Trust dated
September 24, 1976, as amended. The Acquiring Trust's authorized capital
consists of an unlimited number of shares of beneficial interest, par value
$0.01 per share. The Trustees of the Acquiring Trust are authorized to divide
the shares of the Acquiring Trust into separate series. Scudder Managed
Municipal Bonds is one of two series of the Acquiring Trust that the board has
created to date. The Trustees of the Acquiring Trust are also authorized to
further divide
-27-
<PAGE>
the shares of the series of the Acquiring Trust into classes. The shares of
Scudder Managed Municipal Bonds are currently divided into five classes, Class
S, Class AARP, Class A, Class B and Class C. Although shareholders of different
classes of a series have an interest in the same portfolio of assets,
shareholders of different classes bear different expense levels because
distribution costs and certain other expenses approved by the Trustees of the
Acquiring Trust are borne directly by the class incurring such expenses.
Each share of each class of Scudder Managed Municipal Bonds represents an
interest in Scudder Managed Municipal Bonds that is equal to and proportionate
with each other share of that class of Scudder Managed Municipal Bonds. Scudder
Managed Municipal Bonds shareholders are entitled to one vote per share held on
matters on which they are entitled to vote. In the areas of shareholder voting
and the powers and conduct of the Trustees, there are no material differences
between the rights of shareholders of the Fund and the rights of shareholders of
Scudder Managed Municipal Bonds.
Federal Income Tax Consequences
The Reorganization is conditioned upon the receipt by each Fund of an
opinion from Willkie Farr & Gallagher substantially to the effect that, based
upon certain facts, assumptions and representations of the parties, for federal
income tax purposes: (i) the transfer to Scudder Managed Municipal Bonds of all
or substantially all of the assets of the Fund in exchange solely for Class A,
Class B and Class C shares and the assumption by Scudder Managed Municipal Bonds
of all of the liabilities of the Fund, followed by the distribution of such
shares to the Fund's shareholders in exchange for their shares of the Fund in
complete liquidation of the Fund, will constitute a "reorganization" within the
meaning of Section 368(a)(1) of the Code, and Scudder Managed Municipal Bonds
and the Fund will each be "a party to a reorganization" within the meaning of
Section 368(b) of the Code; (ii) no gain or loss will be recognized by the Fund
upon the transfer of all or substantially all of its assets to Scudder Managed
Municipal Bonds in exchange solely for Class A, Class B and Class C shares and
the assumption by Scudder Managed Municipal Bonds of all of the liabilities of
the Fund or upon the distribution of the Class A, Class B and Class C shares to
shareholders of the Fund in exchange for their shares of the Fund; (iii) the
basis of the assets of the Fund in the hands of Scudder Managed Municipal Bonds
will be the same as the basis of such assets of the Fund immediately prior to
the transfer; (iv) the holding period of the assets of the Fund in the hands of
Scudder Managed Municipal Bonds will include the period during which such assets
were held by the Fund; (v) no gain or loss will be recognized by Scudder Managed
Municipal Bonds upon the receipt of the assets of the Fund in exchange for Class
A, Class B and Class C shares and the assumption by Scudder Managed Municipal
Bonds of all of the liabilities of the Fund; (vi) no gain or loss will be
recognized by the shareholders of the Fund upon the receipt of the Class A,
Class B and Class C shares solely in exchange for their shares of the Fund as
part of the transaction; (vii) the basis of the Class A, Class B and Class C
shares received by each shareholder of the Fund will be the same as the basis of
the shares of the Fund exchanged therefor; and (viii) the holding period of
Class A, Class B and Class C shares received by each shareholder of the Fund
will include the holding period during which the shares of the Fund exchanged
therefor were held, provided that at the time of the exchange the shares of the
Fund were held as capital assets in the hands of such shareholder of the Fund.
After the Closing, Scudder Managed Municipal Bonds may dispose of certain
securities received by it from the Fund in connection with the Reorganization,
which may result in transaction costs and capital gains.
While the Fund is not aware of any adverse state or local tax consequences
of the proposed Reorganization, it has not requested any ruling or opinion with
respect to such consequences and shareholders may wish to consult their own tax
adviser with respect to such matters. It should be noted,
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<PAGE>
however, that no portion of any distributions made by Scudder Managed Municipal
Bonds will be exempt from Ohio State income taxes.
Legal Matters
Certain legal matters concerning the federal income tax consequences of the
Reorganization will be passed on by Willkie Farr & Gallagher, 787 Seventh
Avenue, New York, New York 10019. Certain legal matters concerning the issuance
of shares of Scudder Managed Municipal Bonds will be passed on by Dechert, Ten
Post Office Square, South, Boston, Massachusetts 02109. It should be noted,
however, that no portion of any distributions made by Scudder Managed Municipal
Bonds will be exempt from Ohio state income taxes.
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<PAGE>
Capitalization
The following table shows on an unaudited basis the capitalization of
Scudder Managed Municipal Bonds and the Fund as of November 30, 2000 and on a
pro forma basis as of that date, giving effect to the Reorganization(1):
<TABLE>
<CAPTION>
Scudder Managed Kemper Municipal Pro Forma Pro Forma
Municipal Bonds Fund Bond Fund Adjustments (Combined)
---------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Net Assets
Class S Shares $ 768,364,686 /3/ $ 768,364,686
Class AARP Shares $ 1,446,292,965 /3/ $ 1,446,292,965
Class A Shares $ 24,673,336 $ 2,459,913,0456 /4/ $ 2,484,586,381
Class B Shares $ 10,715,941 $ 61,127,5641 /5/ $ 71,843,505
Class C Shares $ 2,330,951 $ 8,056,7991 /6/ $ 10,387,750
--------------- ------------ ---------------- ------------- -----------------
Total Net Assets $ 2,214,657,651 $ 37,720,228 $ 2,529,097,4088 $ 4,781,475,287/2/
=============== ============ ================ ============= =================
Shares Outstanding
Class S Shares 87,690,199 87,690,199
Class AARP Shares 165,067,246 165,067,246
Class A Shares 2,482,322 253,434,706 27,711,554 283,628,582
Class B Shares 1,078,679 6,314,141 808,493 8,201,313
Class C Shares 234,615 828,763 122,438 1,185,816
Net Asset Value per Share
Class S Shares $ 8.76 $ 8.76
Class AARP Shares $ 8.76 $ 8.76
Class A Shares $ 9.94 $ 9.71 $ 8.76
Class B Shares $ 9.93 $ 9.68 $ 8.76
Class C Shares $ 9.94 $ 9.72 $ 8.76
</TABLE>
* It is being proposed to shareholders of Kemper Municipal Bond Fund, another
fund advised by Scudder Kemper, that Scudder Managed Municipal Bonds
acquire the net assets of that other fund. The closing of this other
acquisition and the Closing are not contingent upon each other. Pro forma
capitalization reflects the acquisition by Scudder Managed Municipal Bonds
of both this other fund and the Fund.
-30-
<PAGE>
(1) Assumes the Reorganization had been consummated on November 30, 2000, and
is for informational purposes only. No assurance can be given as to how
many shares of Scudder Managed Municipal Bonds will be received by the
shareholders of the Fund and Kemper Municipal Bond Fund on the date the
Reorganization takes place, and the foregoing should not be relied upon to
reflect the number of shares of Scudder Managed Municipal Bonds that
actually will be received on or after such date.
(2) Pro forma (combined) net assets do not reflect expense reductions that
would result from the implementation of Scudder Managed Municipal Bonds'
Administrative Fee.
(3) Represents one-time proxy, legal, accounting and other costs of the
Reorganization to be borne by Scudder Managed Municipal Bonds.
(4) Represents one-time proxy, legal, accounting and other costs of the
Reorganization of $xxxxx and $xxxxx to be borne by the Class A shares of
the Fund and Kemper Municipal Bond Fund, respectively.
(5) Represents one-time proxy, legal, accounting and other costs of the
Reorganization of $xxxxx and $xxxxx to be borne by the Class B shares of
the Fund and Kemper Municipal Bond Fund, respectively.
(6) Represents one-time proxy, legal, accounting and other costs of the
Reorganization of $xxxxx and $xxxxx to be borne by the Class C shares of
the Fund and Kemper Municipal Bond Fund, respectively.
-31-
<PAGE>
The Board of Trustees unanimously recommends that the shareholders of the
Fund vote in favor of this Proposal 2.
PROPOSAL 3: RATIFICATION OR REJECTION OF THE SELECTION OF INDEPENDENT
AUDITORS
The Board of Trustees, including all of the Independent Trustees, has
selected Ernst & Young LLP to act as independent auditors of the Fund for the
Fund's current fiscal year and recommends that shareholders ratify such
selection. However, if the Plan is approved, as described under Proposal 2,
PricewaterhouseCoopers LLP will serve as the independent auditors for the
combined fund. One or more representatives of Ernst & Young LLP are expected to
be present at the Meeting and will have an opportunity to make a statement if
they so desire. Such representatives are expected to be available to respond to
appropriate questions posed by shareholders or management.
The Board of Trustees unanimously recommends that shareholders of the
Fund vote in favor of this Proposal 3.
ADDITIONAL INFORMATION
Information about the Funds
Additional information about the Trusts, the Funds and the Reorganization
has been filed with the SEC and may be obtained without charge by writing to
Scudder Investor Services, Inc., Two International Place, Boston, MA 02110-4103,
or by calling 1-800-[ ].
The Trusts are subject to the informational requirements of the Securities
Exchange Act of 1934, as amended, and the 1940 Act, and in accordance therewith,
file reports, proxy material and other information about each of the Funds with
the SEC. Such reports, proxy material and other information filed by the
Acquiring Trust, and those filed by the Acquired Trust, can be inspected and
copied at the Public Reference Room maintained by the SEC at 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the following SEC Regional Offices:
Northeast Regional Office, 7 World Trade Center, Suite 1300, New York, NY 10048;
Southeast Regional Office, 1401 Brickell Avenue, Suite 200, Miami, FL 33131;
Midwest Regional Office, Citicorp Center, 500 W. Madison Street, Chicago, IL
60661-2511; Central Regional Office, 1801 California Street, Suite 4800, Denver,
CO 80202-2648; and Pacific Regional Office, 5670 Wilshire Boulevard, 11th Floor,
Los Angeles, CA 90036-3648. Copies of such material can also be obtained from
the Public Reference Branch, Office of Consumer Affairs and Information
Services, Securities and Exchange Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549 at prescribed rates. The SEC maintains an Internet World
Wide Web site (at http://www.sec.gov) which contains the prospectuses and
statements of additional information for the Funds, materials that are
incorporated by reference into the prospectuses and statements of additional
information, and other information about the Trusts and the Funds.
General
Proxy Solicitation. Proxy solicitation costs will be considered
Reorganization expenses and will be allocated accordingly. See "The Proposed
Transaction - Board Approval of the Proposed Transaction." In addition to
solicitation by mail, certain officers and representatives of the Acquired
Trust, officers and employees of Scudder Kemper and certain financial services
firms and their representatives, who will receive no extra compensation for
their services, may solicit proxies by telephone, telegram or personally.
-32-
<PAGE>
Any shareholder of the Fund giving a proxy has the power to revoke it by
mail (addressed to the Secretary at the principal executive office of the Fund,
c/o Scudder Kemper Investments, Inc., at the address for the Fund shown at the
beginning of this Proxy Statement/Prospectus) or in person at the Meeting, by
executing a superseding proxy or by submitting a notice of revocation to the
Fund. All properly executed proxies received in time for the Meeting will be
voted as specified in the proxy or, if no specification is made, in favor of
each Proposal.
The presence at any shareholders' meeting, in person or by proxy, of the
holders of at least 30% of the shares of the Acquired Trust (for a trust-wide
vote) or the Fund (for a fund-wide vote) entitled to be cast shall be necessary
and sufficient to constitute a quorum for the transaction of business. In the
event that the necessary quorum to transact business or the vote required to
approve any Proposal is not obtained at the Meeting, the persons named as
proxies may propose one or more adjournments of the Meeting in accordance with
applicable law to permit further solicitation of proxies with respect to that
Proposal. Any such adjournment as to a matter will require the affirmative vote
of the holders of a majority of the Acquired Trust's (for a trust-wide vote) or
the Fund's (for a fund-wide vote) shares present in person or by proxy at the
Meeting. The persons named as proxies will vote in favor of any such adjournment
those proxies which they are entitled to vote in favor of that Proposal and will
vote against any such adjournment those proxies to be voted against that
Proposal. For purposes of determining the presence of a quorum for transacting
business at the Meeting, abstentions and broker "non-votes" will be treated as
shares that are present but which have not been voted. Broker non-votes are
proxies received by the Fund from brokers or nominees when the broker or nominee
has neither received instructions from the beneficial owner or other persons
entitled to vote nor has discretionary power to vote on a particular matter.
Accordingly, shareholders are urged to forward their voting instructions
promptly.
The election of the Trustees under Proposal 1 requires the affirmative vote
of a plurality of the shares of the Acquired Trust voting on such election.
Approval of Proposal 2 requires the affirmative vote of the holders of a
majority of the Fund's shares outstanding and entitled to vote thereon. Approval
of Proposal 3 requires the affirmative vote of a majority of the shares of the
Fund voting at the Meeting. Abstentions and broker non-votes will not be counted
in favor of, but will have no other effect on, Proposals 1 and 3, and will have
the effect of a "no" vote on Proposal 2.
Holders of record of the shares of the Fund at the close of business on
March 5, 2001 will be entitled to one vote per share on all business of the
Meeting. As of February 5, 2001, there were [ ] Class A shares, [ ] Class B
shares and [ ] Class C shares of the Fund outstanding.
[As of December 31, 2000, the officers and Trustees of the Acquiring Trust
as a group owned beneficially less than 1% of the outstanding shares of each
class of Scudder Managed Municipal Bonds.] Appendix 2 hereto sets forth the
beneficial owners of more than 5% of each class of each Fund's shares, as well
as the beneficial owners of more than 5% of the shares of each class of each
other series of the Acquired Trust. To the best of each Fund's knowledge, as of
December 31, 2000, no person owned beneficially more than 5% of any class of
either Fund's outstanding shares or the shares of any other series of the
Acquired Trust, except as stated on Appendix 2.
Shareholder Communications Corporation ("SCC") has been engaged to assist
in the solicitation of proxies, at an estimated cost of $[ ]. As the Meeting
date approaches, certain shareholders of the Fund may receive a telephone call
from a representative of SCC if their votes have not yet been received.
Authorization to permit SCC to execute proxies may be obtained by telephonic or
electronically transmitted instructions from shareholders of the Fund. Proxies
that are obtained telephonically will be recorded in accordance with the
procedures described below. The Trustees believe that these procedures
-33-
<PAGE>
are reasonably designed to ensure that both the identity of the shareholder
casting the vote and the voting instructions of the shareholder are accurately
determined.
In all cases where a telephonic proxy is solicited, the SCC representative
is required to ask for each shareholder's full name and address, or the last
four digits of the shareholder's social security or employer identification
number, or both, and to confirm that the shareholder has received the proxy
materials in the mail. If the shareholder is a corporation or other entity, the
SCC representative is required to ask for the person's title and confirmation
that the person is authorized to direct the voting of the shares. If the
information solicited agrees with the information provided to SCC, then the SCC
representative has the responsibility to explain the process, read the Proposals
on the proxy card(s), and ask for the shareholder's instructions on the
Proposals. Although the SCC representative is permitted to answer questions
about the process, he or she is not permitted to recommend to the shareholder
how to vote, other than to read any recommendation set forth in the Proxy
Statement/Prospectus. SCC will record the shareholder's instructions on the
card. Within 72 hours, the shareholder will be sent a letter or mailgram to
confirm his or her vote and asking the shareholder to call SCC immediately if
his or her instructions are not correctly reflected in the confirmation.
Shareholders may also provide their voting instructions through telephone
touch-tone voting or Internet voting. These options require shareholders to
input a control number which is located on each voting instruction card. After
inputting this number, shareholders will be prompted to provide their voting
instructions on the Proposals. Shareholders will have an opportunity to review
their voting instructions and make any necessary changes before submitting their
voting instructions and terminating their telephone call or Internet link.
Shareholders who vote on the Internet, in addition to confirming their voting
instructions prior to submission, will also receive an e-mail confirming their
instructions.
If a shareholder wishes to participate in the Meeting, but does not wish to
give a proxy by telephone or electronically, the shareholder may still submit
the proxy card(s) originally sent with the Proxy Statement/Prospectus or attend
in person. Should shareholders require additional information regarding the
proxy or replacement proxy card(s), they may contact SCC toll-free at 1-800-[ ].
Any proxy given by a shareholder is revocable until voted at the Meeting.
Shareholder Proposals for Subsequent Meetings. Shareholders wishing to
submit proposals for inclusion in a proxy statement for a shareholder meeting
subsequent to the Meeting, if any, should send their written proposals to the
Secretary of the Acquired Trust, c/o Scudder Kemper Investments, Inc., 222 South
Riverside Plaza, Chicago, Illinois 60606, within a reasonable time before the
solicitation of proxies for such meeting. The timely submission of a proposal
does not guarantee its inclusion.
Other Matters to Come Before the Meeting. The Board is not aware of any
matters that will be presented for action at the Meeting other than the matters
described in this material. Should any other matters requiring a vote of
shareholders arise, the proxy in the accompanying form will confer upon the
person or persons entitled to vote the shares represented by such proxy the
discretionary authority to vote the shares as to any such other matters in
accordance with their best judgment in the interest of the Acquired Trust and/or
the Fund.
PLEASE COMPLETE, SIGN AND RETURN THE ENCLOSED PROXY CARD(S) (OR TAKE ADVANTAGE
OF AVAILABLE ELECTRONIC OR TELEPHONIC VOTING PROCEDURES) PROMPTLY. NO POSTAGE
IS REQUIRED IF MAILED IN THE UNITED STATES.
By Order of the Board,
/s/ Philip J. Collora
Philip J. Collora
Secretary
-34-
<PAGE>
INDEX OF EXHIBITS AND APPENDICES
EXHIBIT A: FORM OF AGREEMENT AND PLAN OF REORGANIZATION......................
EXHIBIT B: MANAGEMENT'S DISCUSSION OF SCUDDER MANAGED MUNICIPAL BONDS'
PERFORMANCE.......................................................
APPENDIX 1: TRUSTEE AND NOMINEE SHAREHOLDINGS.................................
APPENDIX 2: BENEFICIAL OWNERS OF FUND SHARES..................................
-35-
<PAGE>
EXHIBIT A
FORM OF AGREEMENT AND PLAN OF REORGANIZATION
THIS AGREEMENT AND PLAN OF REORGANIZATION (the "Agreement") is made as of
this [ ] day of [ ], 2001, by and among Scudder Municipal Trust (the
"Acquiring Trust"), a Massachusetts business trust, on behalf of Scudder Managed
Municipal Bonds (the "Acquiring Fund"), a separate series of the Acquiring
Trust, Kemper State Tax-Free Income Series (the "Acquired Trust" and, together
with the Acquiring Trust, each a "Trust" and collectively the "Trusts"), a
Massachusetts business trust, on behalf of Kemper Ohio Tax-Free Income Fund (the
"Acquired Fund" and, together with the Acquiring Fund, each a "Fund" and
collectively the "Funds"), a separate series of the Acquired Trust, and Scudder
Kemper Investments, Inc. ("Scudder Kemper"), investment adviser to the Funds
(for purposes of Paragraph 10.2 of the Agreement only). The principal place of
business of the Acquiring Trust is Two International Place, Boston,
Massachusetts 02110-4103. The principal place of business of the Acquired Trust
is 222 South Riverside Plaza, Chicago, Illinois 60606.
This Agreement is intended to be and is adopted as a plan of reorganization
and liquidation within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). The reorganization (the "Reorganization")
will consist of the transfer of all or substantially all of the assets of the
Acquired Fund to the Acquiring Fund in exchange solely for Class A, Class B and
Class C voting shares of beneficial interest ($.01 par value per share) of the
Acquiring Fund (the "Acquiring Fund Shares"), the assumption by the Acquiring
Fund of all of the liabilities of the Acquired Fund and the distribution of the
Acquiring Fund Shares to the Class A, Class B and Class C shareholders of the
Acquired Fund in complete liquidation of the Acquired Fund as provided herein,
all upon the terms and conditions hereinafter set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the covenants and
agreements hereinafter set forth, the parties hereto covenant and agree as
follows:
1. TRANSFER OF ASSETS OF THE ACQUIRED FUND TO THE ACQUIRING FUND IN EXCHANGE
FOR ACQUIRING FUND SHARES, THE ASSUMPTION OF ALL ACQUIRED FUND LIABILITIES
AND THE LIQUIDATION OF THE ACQUIRED FUND
1.1. Subject to the terms and conditions herein set forth and on the basis
of the representations and warranties contained herein, the Acquired Fund agrees
to transfer to the Acquiring Fund all or substantially all of the Acquired
Fund's assets as set forth in section 1.2, and the Acquiring Fund agrees in
exchange therefor (i) to deliver to the Acquired Fund that number of full and
fractional Class A, Class B and Class C Acquiring Fund Shares determined by
dividing the value of the Acquired Fund's assets net of any liabilities of the
Acquired Fund with respect to the Class A, Class B and Class C shares of the
Acquired Fund, computed in the manner and as of the time and date set forth in
section 2.1, by the net asset value of one Acquiring Fund Share of the
corresponding class, computed in the manner and as of the time and date set
forth in section 2.2; and (ii) to assume all of the liabilities of the Acquired
Fund, including, but not limited to, any deferred compensation to the Acquired
Fund board members. All Acquiring Fund Shares delivered to the Acquired Fund
shall be delivered at net asset value without sales load, commission or other
similar fee being imposed. Such transactions shall take place at the closing
provided for in section 3.1 (the "Closing").
<PAGE>
1.2. The assets of the Acquired Fund to be acquired by the Acquiring Fund
(the "Assets") shall consist of all assets, including, without limitation, all
cash, cash equivalents, securities, commodities and futures interests and
dividends or interest or other receivables that are owned by the Acquired Fund
and any deferred or prepaid expenses shown on the unaudited statement of assets
and liabilities of the Acquired Fund prepared as of the effective time of the
Closing in accordance with generally accepted accounting principles ("GAAP")
applied consistently with those of the Acquired Fund's most recent audited
balance sheet. The Assets shall constitute at least 90% of the fair market value
of the net assets, and at least 70% of the fair market value of the gross
assets, held by the Acquired Fund immediately before the Closing (excluding for
these purposes assets used to pay the dividends and other distributions paid
pursuant to section 1.4).
1.3. The Acquired Fund will endeavor to discharge all of its known
liabilities and obligations prior to the Closing Date as defined in section 3.6.
1.4. On or as soon as practicable prior to the Closing Date as defined
in section 3.1, the Acquired Fund will declare and pay to its shareholders of
record one or more dividends and/or other distributions so that it will have
distributed substantially all of its investment company taxable income (computed
without regard to any deduction for dividends paid) and realized net capital
gain, if any, for the current taxable year through the Closing Date.
1.5. Immediately after the transfer of Assets provided for in section
1.1, the Acquired Fund will distribute to the Acquired Fund's shareholders of
record with respect to each class of its shares (the "Acquired Fund
Shareholders"), determined as of the Valuation Time (as defined in section 2.1),
on a pro rata basis within that class, the Acquiring Fund Shares of the same
class received by the Acquired Fund pursuant to section 1.1 and will completely
liquidate. Such distribution and liquidation will be accomplished with respect
to each class of the Acquired Fund by the transfer of the Acquiring Fund Shares
then credited to the account of the Acquired Fund on the books of the Acquiring
Fund to open accounts on the share records of the Acquiring Fund in the names of
the Acquired Fund Shareholders. The Acquiring Fund shall have no obligation to
inquire as to the validity, propriety or correctness of such records, but shall
assume that such transaction is valid, proper and correct. The aggregate net
asset value of Class A, Class B and Class C Acquiring Fund Shares to be so
credited to the Class A, Class B and Class C Acquired Fund Shareholders shall,
with respect to each class, be equal to the aggregate net asset value of the
Acquired Fund shares of the same class owned by such shareholders as of the
Valuation Time. All issued and outstanding shares of the Acquired Fund will
simultaneously be cancelled on the books of the Acquired Fund, although share
certificates representing interests in Class A, Class B and Class C shares of
the Acquired Fund will represent a number of Acquiring Fund Shares after the
Closing Date as determined in accordance with section 2.3. The Acquiring Fund
will not issue certificates representing Acquiring Fund Shares in connection
with such exchange.
1.6. Ownership of Acquiring Fund Shares will be shown on the books of the
Acquiring Fund. Shares of the Acquiring Fund will be issued in the manner
described in the Acquiring Fund's then-current prospectus and statement of
additional information.
1.7. Any reporting responsibility of the Acquired Fund including, without
limitation, the responsibility for filing of regulatory reports, tax returns, or
other documents with the Securities and Exchange Commission (the "Commission"),
any state securities commission, and any federal, state or local tax authorities
or any other relevant regulatory authority, is and shall remain the
responsibility of the Acquired Fund.
<PAGE>
1.8. All books and records of the Acquired Fund, including all books and
records required to be maintained under the Investment Company Act of 1940, as
amended (the "1940 Act"), and the rules and regulations thereunder, shall be
available to the Acquiring Fund from and after the Closing Date and shall be
turned over to the Acquiring Fund as soon as practicable following the Closing
Date.
2. VALUATION
2.1. The value of the Assets shall be computed as of the close of regular
trading on The New York Stock Exchange, Inc. (the "NYSE") on the business day
immediately preceding the Closing Date, as defined in section 3.1 (the
"Valuation Time") after the declaration and payment of any dividends and/or
other distributions on that date, using the valuation procedures set forth in
the Acquiring Trust's Declaration of Trust, as amended, and then-current
prospectus or statement of additional information, copies of which have been
delivered to the Acquired Fund.
2.2. The net asset value of a Class A, Class B or Class C Acquiring Fund
Share shall be the net asset value per share computed with respect to that class
as of the Valuation Time using the valuation procedures referred to in section
2.1. Notwithstanding anything to the contrary contained in this Agreement, in
the event that, as of the Valuation Time, there are no Class A, Class B and/or
Class C Acquiring Fund Shares issued and outstanding, then, for purposes of this
Agreement, the per share net asset value of a Class A, Class B and/or Class C
share, as applicable, shall be equal to the net asset value of one Class S
Acquiring Fund Share.
2.3. The number of the Class A, Class B and Class C Acquiring Fund Shares
to be issued (including fractional shares, if any) in exchange for the Assets
shall be determined with respect to each such class by dividing the value of the
Assets with respect to Class A, Class B and Class C shares of the Acquired Fund,
as the case may be, determined in accordance with section 2.1 by the net asset
value of an Acquiring Fund Share of the same class determined in accordance with
section 2.2.
2.4. All computations of value hereunder shall be made by or under the
direction of each Fund's respective accounting agent, if applicable, in
accordance with its regular practice and the requirements of the 1940 Act and
shall be subject to confirmation by each Fund's respective independent
accountants upon the reasonable request of the other Fund.
3. CLOSING AND CLOSING DATE
3.1. The Closing of the transactions contemplated by this Agreement shall
be June 11, 2001, or such later date as the parties may agree in writing (the
"Closing Date"). All acts taking place at the Closing shall be deemed to take
place simultaneously as of 9:00 a.m., Eastern time, on the Closing Date, unless
otherwise agreed to by the parties. The Closing shall be held at the offices of
Dechert, Ten Post Office Square - South, Boston, MA 02109, or at such other
place and time as the parties may agree.
3.2. The Acquired Fund shall deliver to Acquiring Fund on the Closing Date
a schedule of Assets.
3.3. State Street Bank and Trust Company ("State Street"), custodian for
the Acquired Fund, shall deliver at the Closing a certificate of an authorized
officer stating that (a) the Assets shall have been delivered in proper form to
State Street, custodian for the Acquiring Fund, prior to or on the Closing Date
and (b) all necessary taxes in connection with the delivery of the Assets,
including all applicable federal
<PAGE>
and state stock transfer stamps, if any, have been paid or provision for payment
has been made. The Acquired Fund's portfolio securities represented by a
certificate or other written instrument shall be presented by the custodian for
the Acquired Fund to the custodian for the Acquiring Fund for examination no
later than five business days preceding the Closing Date and transferred and
delivered by the Acquired Fund as of the Closing Date by the Acquired Fund for
the account of Acquiring Fund duly endorsed in proper form for transfer in such
condition as to constitute good delivery thereof. The Acquired Fund's portfolio
securities and instruments deposited with a securities depository, as defined in
Rule 17f-4 under the 1940 Act, shall be delivered as of the Closing Date by book
entry in accordance with the customary practices of such depositories and the
custodian for the Acquiring Fund. The cash to be transferred by the Acquired
Fund shall be delivered by wire transfer of federal funds on the Closing Date.
3.4. Kemper Service Company, as transfer agent for the Acquired Fund, on
behalf of the Acquired Fund, shall deliver at the Closing a certificate of an
authorized officer stating that its records contain the names and addresses of
the Acquired Fund Shareholders and the number and percentage ownership (to three
decimal places) of outstanding Class A, Class B and Class C Acquired Fund shares
owned by each such shareholder immediately prior to the Closing. The Acquiring
Fund shall issue and deliver a confirmation evidencing the Acquiring Fund Shares
to be credited on the Closing Date to the Acquired Fund or provide evidence
satisfactory to the Acquired Fund that such Acquiring Fund Shares have been
credited to the Acquired Fund's account on the books of the Acquiring Fund. At
the Closing, each party shall deliver to the other such bills of sale, checks,
assignments, share certificates, if any, receipts or other documents as such
other party or its counsel may reasonably request to effect the transactions
contemplated by this Agreement.
3.5. In the event that immediately prior to the Valuation Time (a) the
NYSE or another primary trading market for portfolio securities of the Acquiring
Fund or the Acquired Fund shall be closed to trading or trading thereupon shall
be restricted, or (b) trading or the reporting of trading on such Exchange or
elsewhere shall be disrupted so that, in the judgment of the Board members of
either party to this Agreement, accurate appraisal of the value of the net
assets with respect to the Class A, Class B and Class C shares of the Acquiring
Fund or the Acquired Fund is impracticable, the Closing Date shall be postponed
until the first business day after the day when trading shall have been fully
resumed and reporting shall have been restored.
3.6. The liabilities of the Acquired Fund shall include all of the
Acquired Fund's liabilities, debts, obligations, and duties of whatever kind or
nature, whether absolute, accrued, contingent, or otherwise, whether or not
arising in the ordinary course of business, whether or not determinable at the
Closing Date, and whether or not specifically referred to in this Agreement
including but not limited to any deferred compensation to the Acquired Fund's
board members.
4. REPRESENTATIONS AND WARRANTIES
4.1. The Acquired Trust, on behalf of the Acquired Fund, represents and
warrants to the Acquiring Fund as follows:
(a) The Acquired Trust is a voluntary association with transferable
shares commonly referred to as a Massachusetts business trust duly organized and
validly existing under the laws of The Commonwealth of Massachusetts with power
under the Acquired Trust's Declaration of Trust, as amended, to own all of its
properties and assets and to carry on its business as it is now being conducted
and, subject to approval of shareholders of the Acquired Fund, to carry out the
Agreement. The Acquired
<PAGE>
Fund is a separate series of the Acquired Trust duly designated in accordance
with the applicable provisions of the Acquired Trust's Declaration of Trust. The
Acquired Trust and Acquired Fund are qualified to do business in all
jurisdictions in which they are required to be so qualified, except
jurisdictions in which the failure to so qualify would not have material adverse
effect on the Acquired Trust or Acquired Fund. The Acquired Fund has all
material federal, state and local authorizations necessary to own all of the
properties and assets and to carry on its business as now being conducted,
except authorizations which the failure to so obtain would not have a material
adverse effect on the Acquired Fund;
(b) The Acquired Trust is registered with the Commission as an open-
end management investment company under the 1940 Act, and such registration is
in full force and effect and the Acquired Fund is in compliance in all material
respects with the 1940 Act and the rules and regulations thereunder;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquired Fund of
the transactions contemplated herein, except such as have been obtained under
the Securities Act of 1933, as amended (the "1933 Act"), the Securities Exchange
Act of 1934, as amended (the "1934 Act"), and the 1940 Act and such as may be
required by state securities laws;
(d) Other than with respect to contracts entered into in connection
with the portfolio management of the Acquired Fund which shall terminate on or
prior to the Closing Date, the Acquired Trust is not, and the execution,
delivery and performance of this Agreement by the Acquired Trust will not result
(i) in violation of Massachusetts law or of the Acquired Trust's Declaration of
Trust, as amended, or By-Laws, (ii) in a violation or breach of, or constitute a
default under, any material agreement, indenture, instrument, contract, lease or
other undertaking to which the Acquired Fund is a party or by which it is bound,
and the execution, delivery and performance of this Agreement by the Acquired
Fund will not result in the acceleration of any obligation, or the imposition of
any penalty, under any agreement, indenture, instrument, contract, lease,
judgment or decree to which the Acquired Fund is a party or by which it is
bound, or (iii) in the creation or imposition of any lien, charge or encumbrance
on any property or assets of the Acquired Fund;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquired Fund or any properties or
assets held by it. The Acquired Fund knows of no facts which might form the
basis for the institution of such proceedings which would materially and
adversely affect its business and is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate the
transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes
in Net Assets, the Financial Highlights, and the Investment Portfolio of the
Acquired Fund at and for the fiscal year ended August 31, 2000, have been
audited by Ernst & Young LLP, independent auditors, and are in accordance with
GAAP consistently applied, and such statements (a copy of each of which has been
furnished to the Acquiring Fund) present fairly, in all material respects, the
financial position of the Acquired Fund as of such date in accordance with GAAP,
and there are no known contingent liabilities of the Acquired Fund required to
be reflected on a balance sheet (including the notes thereto) in accordance with
GAAP as of such date not disclosed therein;
<PAGE>
(g) Since August 31, 2000, there has not been any material adverse
change in the Acquired Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquired Fund of indebtedness maturing more than one year from
the date such indebtedness was incurred except as otherwise disclosed to and
accepted in writing by the Acquiring Fund. For purposes of this subsection (g),
a decline in net asset value per share of the Acquired Fund due to declines in
market values of securities in the Acquired Fund's portfolio, the discharge of
Acquired Fund liabilities, or the redemption of Acquired Fund shares by Acquired
Fund Shareholders shall not constitute a material adverse change;
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Acquired Fund required by law to have been filed
by such dates (including any extensions) shall have been filed and are or will
be correct in all material respects, and all federal and other taxes shown as
due or required to be shown as due on said returns and reports shall have been
paid or provision shall have been made for the payment thereof, and, to the best
of the Acquired Fund's knowledge, no such return is currently under audit and no
assessment has been asserted with respect to such returns;
(i) For each taxable year of its operation (including the taxable
year ending on the Closing Date), the Acquired Fund has met the requirements of
Subchapter M of the Code for qualification as a regulated investment company and
has elected to be treated as such, has been eligible to and has computed its
federal income tax under Section 852 of the Code, and will have distributed all
of its investment company taxable income and net capital gain (as defined in the
Code) that has accrued through the Closing Date;
(j) All issued and outstanding shares of the Acquired Fund (i) have
been offered and sold in every state and the District of Columbia in compliance
in all material respects with applicable registration requirements of the 1933
Act and state securities laws, (ii) are, and on the Closing Date will be, duly
and validly issued and outstanding, fully paid and non-assessable and not
subject to preemptive or dissenter's rights (recognizing that, under
Massachusetts law, Acquired Fund Shareholders, under certain circumstances,
could be held personally liable for obligations of the Acquired Fund), and (iii)
will be held at the time of the Closing by the persons and in the amounts set
forth in the records of Kemper Service Company, as provided in section 3.4. The
Acquired Fund does not have outstanding any options, warrants or other rights to
subscribe for or purchase any of the Acquired Fund shares, nor is there
outstanding any security convertible into any of the Acquired Fund shares;
(k) At the Closing Date, the Acquired Fund will have good and
marketable title to the Acquired Fund's assets to be transferred to the
Acquiring Fund pursuant to section 1.2 and full right, power, and authority to
sell, assign, transfer and deliver such assets hereunder free of any liens or
other encumbrances, except those liens or encumbrances as to which the Acquiring
Fund has received notice at or prior to the Closing, and upon delivery and
payment for such assets, the Acquiring Fund will acquire good and marketable
title thereto, subject to no restrictions on the full transfer thereof,
including such restrictions as might arise under the 1933 Act and the 1940 Act,
except those restrictions as to which the Acquiring Fund has received notice and
necessary documentation at or prior to the Closing;
(l) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of the Board members of the Acquired Trust (including the
determinations required by Rule 17a-8(a) under the 1940 Act), and, subject to
the approval of the Acquired Fund Shareholders, this Agreement constitutes a
valid and binding obligation of the Acquired Trust, on behalf of the Acquired
Fund, enforceable in accordance with its
<PAGE>
terms, subject, as to enforcement, to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws relating to or affecting
creditors' rights and to general equity principles;
(m) The information to be furnished by the Acquired Fund for use in
applications for orders, registration statements or proxy materials or for use
in any other document filed or to be filed with any federal, state or local
regulatory authority (including the National Association of Securities Dealers,
Inc. (the "NASD")), which may be necessary in connection with the transactions
contemplated hereby, shall be accurate and complete in all material respects and
shall comply in all material respects with federal securities and other laws and
regulations applicable thereto;
(n) The current prospectus and statement of additional information of
the Acquired Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading; and
(o) The proxy statement of the Acquired Fund to be included in the
Registration Statement referred to in section 5.7 (the "Proxy Statement"),
insofar as it relates to the Acquired Fund, will, on the effective date of the
Registration Statement and on the Closing Date, (i) comply in all material
respects with the provisions and Regulations of the 1933 Act, 1934 Act and 1940
Act, as applicable, and (ii) not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which such
statements are made, not materially misleading; provided, however, that the
representations and warranties in this section shall not apply to statements in
or omissions from the Proxy Statement and the Registration Statement made in
reliance upon and in conformity with information that was furnished or should
have been furnished by the Acquiring Fund for use therein.
4.2. The Acquiring Trust, on behalf of the Acquiring Fund, represents and
warrants to the Acquired Fund as follows:
(a) The Acquiring Trust is a voluntary association with transferable
shares commonly referred to as a Massachusetts business trust duly organized and
validly existing under the laws of The Commonwealth of Massachusetts with power
under the Acquiring Trust's Declaration of Trust, as amended, to own all of its
properties and assets and to carry on its business as it is now being conducted
and, subject to the approval of shareholders of the Acquired Fund, to carry out
the Agreement. The Acquiring Fund is a separate series of the Acquiring Trust
duly designated in accordance with the applicable provisions of the Acquiring
Trust's Declaration of Trust. The Acquiring Trust and Acquiring Fund are
qualified to do business in all jurisdictions in which they are required to be
so qualified, except jurisdictions in which the failure to so qualify would not
have material adverse effect on the Acquiring Trust or Acquiring Fund. The
Acquiring Fund has all material federal, state and local authorizations
necessary to own all of the properties and assets and to carry on its business
as now being conducted, except authorizations which the failure to so obtain
would not have a material adverse effect on the Acquiring Fund;
(b) The Acquiring Trust is registered with the Commission as an open-
end management investment company under the 1940 Act, and such registration is
in full force and effect and
<PAGE>
the Acquiring Fund is in compliance in all material respects with the 1940 Act
and the rules and regulations thereunder;
(c) No consent, approval, authorization, or order of any court or
governmental authority is required for the consummation by the Acquiring Fund of
the transactions contemplated herein, except such as have been obtained under
the 1933 Act, the 1934 Act and the 1940 Act and such as may be required by state
securities laws;
(d) The Acquiring Trust is not, and the execution, delivery and
performance of this Agreement by the Acquiring Trust will not result (i) in
violation of Massachusetts law or of the Acquiring Trust's Declaration of Trust,
as amended, or By-Laws, or (ii) in a violation or breach of, or constitute a
default under, any material agreement, indenture, instrument, contract, lease or
other undertaking known to counsel to which the Acquiring Fund is a party or by
which it is bound, and the execution, delivery and performance of this Agreement
by the Acquiring Fund will not result in the acceleration of any obligation, or
the imposition of any penalty, under any agreement, indenture, instrument,
contract, lease, judgment or decree to which the Acquiring Fund is a party or by
which it is bound, or (iii) in the creation or imposition of any lien, charge or
encumbrance on any property or assets of the Acquiring Fund;
(e) No material litigation or administrative proceeding or
investigation of or before any court or governmental body is presently pending
or to its knowledge threatened against the Acquiring Fund or any properties or
assets held by it. The Acquiring Fund knows of no facts which might form the
basis for the institution of such proceedings which would materially and
adversely affect its business and is not a party to or subject to the provisions
of any order, decree or judgment of any court or governmental body which
materially and adversely affects its business or its ability to consummate the
transactions herein contemplated;
(f) The Statements of Assets and Liabilities, Operations, and Changes
in Net Assets, the Financial Highlights, and the Investment Portfolio of the
Acquiring Fund at and for the fiscal year ended May 31, 2000, have been audited
by PricewaterhouseCoopers LLP, independent accountants, and are in accordance
with GAAP consistently applied, and such statements (a copy of each of which has
been furnished to the Acquired Fund) present fairly, in all material respects,
the financial position of the Acquiring Fund as of such date in accordance with
GAAP, and there are no known contingent liabilities of the Acquiring Fund
required to be reflected on a balance sheet (including the notes thereto) in
accordance with GAAP as of such date not disclosed therein;
(g) Since May 31, 2000, there has not been any material adverse
change in the Acquiring Fund's financial condition, assets, liabilities or
business other than changes occurring in the ordinary course of business, or any
incurrence by the Acquiring Fund of indebtedness maturing more than one year
from the date such indebtedness was incurred except as otherwise disclosed to
and accepted in writing by the Acquired Fund. For purposes of this subsection
(g), a decline in net asset value per share of the Acquiring Fund due to
declines in market values of securities in the Acquiring Fund's portfolio, the
discharge of Acquiring Fund liabilities, or the redemption of Acquiring Fund
shares by Acquiring Fund shareholders shall not constitute a material adverse
change;
(h) At the date hereof and at the Closing Date, all federal and other
tax returns and reports of the Acquiring Fund required by law to have been filed
by such dates (including any extensions) shall have been filed and are or will
be correct in all material respects, and all federal and other taxes shown as
due or required to be shown as due on said returns and reports shall have been
paid or provision
<PAGE>
shall have been made for the payment thereof, and, to the best of the Acquiring
Fund's knowledge, no such return is currently under audit and no assessment has
been asserted with respect to such returns;
(i) For each taxable year of its operation, the Acquiring Fund has
met the requirements of Subchapter M of the Code for qualification as a
regulated investment company and has elected to be treated as such, has been
eligible to and has computed its federal income tax under Section 852 of the
Code, and will do so for the taxable year including the Closing Date;
(j) All issued and outstanding shares of the Acquiring Fund (i) have
been offered and sold in every state and the District of Columbia in compliance
in all material respects with applicable registration requirements of the 1933
Act and state securities laws and (ii) are, and on the Closing Date will be,
duly and validly issued and outstanding, fully paid and non-assessable, and not
subject to preemptive or dissenter's rights (recognizing that, under
Massachusetts law, Acquiring Fund Shareholders, under certain circumstances,
could be held personally liable for the obligations of the Acquiring Fund). The
Acquiring Fund does not have outstanding any options, warrants or other rights
to subscribe for or purchase any of the Acquiring Fund shares, nor is there
outstanding any security convertible into any of the Acquiring Fund shares;
(k) The Acquiring Fund Shares to be issued and delivered to the
Acquired Fund, for the account of the Acquired Fund Shareholders, pursuant to
the terms of this Agreement, will at the Closing Date have been duly authorized
and, when so issued and delivered, will be duly and validly issued and
outstanding Acquiring Fund Shares, and will be fully paid and non-assessable
(recognizing that, under Massachusetts law, Acquiring Fund Shareholders, under
certain circumstances, could be held personally liable for the obligations of
the Acquiring Fund);
(l) At the Closing Date, the Acquiring Fund will have good and
marketable title to the Acquiring Fund's assets, free of any liens or other
encumbrances, except those liens or encumbrances as to which the Acquired Fund
has received notice at or prior to the Closing;
(m) The execution, delivery and performance of this Agreement will
have been duly authorized prior to the Closing Date by all necessary action on
the part of the Board members of the Acquiring Trust (including the
determinations required by Rule 17a-8(a) under the 1940 Act) and this Agreement
will constitute a valid and binding obligation of the Acquiring Trust, on behalf
of the Acquiring Fund, enforceable in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws relating to or affecting creditors' rights and to
general equity principles;
(n) The information to be furnished by the Acquiring Fund for use in
applications for orders, registration statements or proxy materials or for use
in any other document filed or to be filed with any federal, state or local
regulatory authority (including the NASD), which may be necessary in connection
with the transactions contemplated hereby, shall be accurate and complete in all
material respects and shall comply in all material respects with federal
securities and other laws and regulations applicable thereto;
(o) The current prospectus and statement of additional information of
the Acquiring Fund conform in all material respects to the applicable
requirements of the 1933 Act and the 1940 Act and the rules and regulations of
the Commission thereunder and do not include any untrue statement of a
<PAGE>
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not materially misleading;
(p) The Proxy Statement to be included in the Registration Statement,
only insofar as it relates to the Acquiring Fund, will, on the effective date of
the Registration Statement and on the Closing Date, (i) comply in all material
respects with the provisions and Regulations of the 1933 Act, 1934 Act, and 1940
Act and (ii) not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which such statements
were made, not materially misleading; provided, however, that the
representations and warranties in this section shall not apply to statements in
or omissions from the Proxy Statement and the Registration Statement made in
reliance upon and in conformity with information that was furnished or should
have been furnished by the Acquired Fund for use therein; and
(q) The Acquiring Fund agrees to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act, the 1940 Act and such
of the state securities laws as may be necessary in order to continue its
operations after the Closing Date.
5. COVENANTS OF THE ACQUIRING FUND AND THE ACQUIRED FUND
5.1. The Acquiring Fund and the Acquired Fund each covenants to operate
its business in the ordinary course between the date hereof and the Closing
Date, it being understood that (a) such ordinary course of business will include
(i) the declaration and payment of customary dividends and other distributions
and (ii) such changes as are contemplated by the Funds' normal operations; and
(b) each Fund shall retain exclusive control of the composition of its portfolio
until the Closing Date. No party shall take any action that would, or reasonably
would be expected to, result in any of its representations and warranties set
forth in this Agreement being or becoming untrue in any material respect. The
Acquired Fund and Acquiring Fund covenant and agree to coordinate the respective
portfolios of the Acquired Fund and Acquiring Fund from the date of the
Agreement up to and including the Closing Date in order that at Closing, when
the Assets are added to the Acquiring Fund's portfolio, the resulting portfolio
will meet the Acquiring Fund's investment objective, policies and restrictions,
as set forth in the Acquiring Fund's Prospectus, a copy of which has been
delivered to the Acquired Fund.
5.2. Upon reasonable notice, the Acquiring Fund's officers and agents
shall have reasonable access to the Acquired Fund's books and records necessary
to maintain current knowledge of the Acquired Fund and to ensure that the
representations and warranties made by the Acquired Fund are accurate.
5.3. The Acquired Fund covenants to call a meeting of the Acquired Fund
Shareholders entitled to vote thereon to consider and act upon this Agreement
and to take all other reasonable action necessary to obtain approval of the
transactions contemplated herein. Such meeting shall be scheduled for no later
than May 24, 2001.
5.4. The Acquired Fund covenants that the Acquiring Fund Shares to be
issued hereunder are not being acquired for the purpose of making any
distribution thereof other than in accordance with the terms of this Agreement.
<PAGE>
5.5. The Acquired Fund covenants that it will assist the Acquiring Fund
in obtaining such information as the Acquiring Fund reasonably requests
concerning the beneficial ownership of the Acquired Fund shares.
5.6. Subject to the provisions of this Agreement, the Acquiring Fund and
the Acquired Fund will each take, or cause to be taken, all actions, and do or
cause to be done, all things reasonably necessary, proper, and/or advisable to
consummate and make effective the transactions contemplated by this Agreement.
5.7. Each Fund covenants to prepare in compliance with the 1933 Act, the
1934 Act and the 1940 Act the Registration Statement on Form N-14 (the
"Registration Statement") in connection with the meeting of the Acquired Fund
Shareholders to consider approval of this Agreement and the transactions
contemplated herein. The Acquiring Fund will file the Registration Statement,
including the Proxy Statement, with the Commission. The Acquired Fund will
provide the Acquiring Fund with information reasonably necessary for the
preparation of a prospectus, which will include the Proxy Statement referred to
in section 4.1(o), all to be included in the Registration Statement, in
compliance in all material respects with the 1933 Act, the 1934 Act and the 1940
Act.
5.8. The Acquired Fund covenants that it will, from time to time, as and
when reasonably requested by the Acquiring Fund, execute and deliver or cause to
be executed and delivered all such assignments and other instruments, and will
take or cause to be taken such further action as the Acquiring Fund may
reasonably deem necessary or desirable in order to vest in and confirm the
Acquiring Fund's title to and possession of all the assets and otherwise to
carry out the intent and purpose of this Agreement.
5.9. The Acquiring Fund covenants to use all reasonable efforts to obtain
the approvals and authorizations required by the 1933 Act and 1940 Act, and such
of the state securities laws as it deems appropriate in order to continue its
operations after the Closing Date and to consummate the transactions
contemplated herein; provided, however, that the Acquiring Fund may take such
actions it reasonably deems advisable after the Closing Date as circumstances
change.
5.10. The Acquiring Fund covenants that it will, from time to time, as and
when reasonably requested by the Acquired Fund, execute and deliver or cause to
be executed and delivered all such assignments, assumption agreements, releases,
and other instruments, and will take or cause to be taken such further action,
as the Acquired Fund may reasonably deem necessary or desirable in order to (i)
vest and confirm to the Acquired Fund title to and possession of all Acquiring
Fund shares to be transferred to the Acquired Fund pursuant to this Agreement
and (ii) assume the liabilities from the Acquired Fund.
5.11. As soon as reasonably practicable after the Closing, the Acquired
Fund shall make a liquidating distribution to its shareholders consisting of the
Acquiring Fund Shares received at the Closing.
5.12. The Acquiring Fund and the Acquired Fund shall each use its
reasonable best efforts to fulfill or obtain the fulfillment of the conditions
precedent to effect the transactions contemplated by this Agreement as promptly
as practicable.
5.13. The intention of the parties is that the transaction will qualify as
a reorganization within the meaning of Section 368(a) of the Code. Neither the
Trusts, the Acquiring Fund nor the Acquired
<PAGE>
Fund shall take any action, or cause any action to be taken (including, without
limitation, the filing of any tax return) that is inconsistent with such
treatment or results in the failure of the transaction to qualify as a
reorganization within the meaning of Section 368(a) of the Code. At or prior to
the Closing Date, the Trusts, the Acquiring Fund and the Acquired Fund will take
such action, or cause such action to be taken, as is reasonably necessary to
enable Willkie Farr & Gallagher to render the tax opinion contemplated herein in
section 8.5.
5.14. At or immediately prior to the Closing, the Acquired Fund may declare
and pay to its stockholders a dividend or other distribution in an amount large
enough so that it will have distributed substantially all (and in any event not
less than 98%) of its investment company taxable income (computed without regard
to any deduction for dividends paid) and realized net capital gain, if any, for
the current taxable year through the Closing Date.
6. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRED FUND
The obligations of the Acquired Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquiring Fund of all the obligations to be performed by it hereunder on or
before the Closing Date, and, in addition thereto, the following further
conditions:
6.1. All representations and warranties of the Acquiring Trust, on behalf
of the Acquiring Fund, contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date; and there
shall be (i) no pending or threatened litigation brought by any person (other
than the Acquired Fund, its adviser or any of their affiliates) against the
Acquiring Fund or its investment adviser(s), Board members or officers arising
out of this Agreement and (ii) no facts known to the Acquiring Fund which the
Acquiring Fund reasonably believes might result in such litigation.
6.2. The Acquiring Fund shall have delivered to the Acquired Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Acquired Trust, on behalf of
the Acquired Fund, and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquiring Fund made in this Agreement are
true and correct on and as of the Closing Date, except as they may be affected
by the transactions contemplated by this Agreement, and as to such other matters
as the Acquired Fund shall reasonably request.
6.3. The Acquired Fund shall have received on the Closing Date an opinion
of Dechert, in a form reasonably satisfactory to the Acquired Fund, and dated as
of the Closing Date, to the effect that:
(a) The Acquiring Trust has been duly formed and is an existing
business trust; (b) the Acquiring Fund has the power to carry on its business as
presently conducted in accordance with the description thereof in the Acquiring
Fund's registration statement under the 1940 Act; (c) the Agreement has been
duly authorized, executed and delivered by the Acquiring Trust, on behalf of the
Acquiring Fund, and constitutes a valid and legally binding obligation of the
Acquiring Trust, on behalf of the Acquiring Fund, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and laws of general applicability relating to or
affecting creditors' rights and to general equity principles; (d) the execution
and delivery of the Agreement did not, and the exchange of the Acquired Fund's
assets for Acquiring Fund Shares pursuant to the Agreement will not, violate the
Acquiring Trust's Declaration of Trust, as amended, or By-laws; and (e) to the
knowledge of
<PAGE>
such counsel, and without any independent investigation, (i) the Acquiring Trust
is not subject to any litigation or other proceedings that might have a
materially adverse effect on the operations of the Acquiring Trust, (ii) the
Acquiring Trust is duly registered as an investment company with the Commission
and is not subject to any stop order; and (iii) all regulatory consents,
authorizations, approvals or filings required to be obtained or made by the
Acquiring Fund under the federal laws of the United States or the laws of The
Commonwealth of Massachusetts for the exchange of the Acquired Fund's assets for
Acquiring Fund Shares, pursuant to the Agreement have been obtained or made.
The delivery of such opinion is conditioned upon receipt by Dechert
of customary representations it shall reasonably request of each of the
Acquiring Trust and the Acquired Trust.
6.4. The Acquiring Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquiring Fund on or before the Closing Date.
6.5. The Acquiring Fund shall have (i) adopted a new investment management
agreement[, (ii)/and entered into an administrative services agreement with
Scudder Kemper and (iii)] adopted security valuation procedures identical to the
Acquired Fund's, each in a form reasonably satisfactory to the Acquired Fund.
7. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND
The obligations of the Acquiring Fund to consummate the transactions
provided for herein shall be subject, at its election, to the performance by the
Acquired Fund of all of the obligations to be performed by it hereunder on or
before the Closing Date and, in addition thereto, the following further
conditions:
7.1. All representations and warranties of the Acquired Trust, on behalf
of the Acquired Fund, contained in this Agreement shall be true and correct in
all material respects as of the date hereof and, except as they may be affected
by the transactions contemplated by this Agreement, as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date; and there
shall be (i) no pending or threatened litigation brought by any person (other
than the Acquiring Fund, its adviser or any of their affiliates) against the
Acquired Fund or its investment adviser(s), Board members or officers arising
out of this Agreement and (ii) no facts known to the Acquired Fund which the
Acquired Fund reasonably believes might result in such litigation.
7.2. The Acquired Fund shall have delivered to the Acquiring Fund a
statement of the Acquired Fund's assets and liabilities as of the Closing Date,
certified by the Treasurer of the Acquired Fund.
7.3. The Acquired Fund shall have delivered to the Acquiring Fund on the
Closing Date a certificate executed in its name by its President or a Vice
President, in a form reasonably satisfactory to the Acquiring Trust, on behalf
of the Acquiring Fund, and dated as of the Closing Date, to the effect that the
representations and warranties of the Acquired Trust with respect to the
Acquired Fund made in this Agreement are true and correct on and as of the
Closing Date, except as they may be affected by the transactions contemplated by
this Agreement, and as to such other matters as the Acquiring Fund shall
reasonably request.
<PAGE>
7.4. The Acquiring Fund shall have received on the Closing Date an opinion
of Dechert, in a form reasonably satisfactory to the Acquiring Fund, and dated
as of the Closing Date, to the effect that:
(a) The Acquired Trust has been duly formed and is an existing
business trust; (b) the Acquired Fund has the power to carry on its business as
presently conducted in accordance with the description thereof in the Acquired
Trust's registration statement under the 1940 Act; (c) the Agreement has been
duly authorized, executed and delivered by the Acquired Trust, on behalf of the
Acquired Fund, and constitutes a valid and legally binding obligation of the
Acquired Trust, on behalf of the Acquired Fund, enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and laws of general applicability relating to or
affecting creditors' rights and to general equity principles; (d) the execution
and delivery of the Agreement did not, and the exchange of the Acquired Fund's
assets for Acquiring Fund Shares pursuant to the Agreement will not, violate the
Acquired Trust's Declaration of Trust, as amended, or By-laws; and (e) to the
knowledge of such counsel, and without any independent investigation, (i) the
Acquired Trust is not subject to any litigation or other proceedings that might
have a materially adverse effect on the operations of the Acquired Trust, (ii)
the Acquired Trust is duly registered as an investment company with the
Commission and is not subject to any stop order, and (iii) all regulatory
consents, authorizations, approvals or filings required to be obtained or made
by the Acquired Fund under the federal laws of the United States or the laws of
The Commonwealth of Massachusetts for the exchange of the Acquired Fund's assets
for Acquiring Fund Shares, pursuant to the Agreement have been obtained or made.
The delivery of such opinion is conditioned upon receipt by Dechert
of customary representations it shall reasonably request of each of the
Acquiring Trust and the Acquired Trust.
7.5. The Acquired Fund shall have performed all of the covenants and
complied with all of the provisions required by this Agreement to be performed
or complied with by the Acquired Fund on or before the Closing Date.
8. FURTHER CONDITIONS PRECEDENT TO OBLIGATIONS OF THE ACQUIRING FUND AND THE
ACQUIRED FUND
If any of the conditions set forth below have not been met on or before the
Closing Date with respect to the Acquired Fund or the Acquiring Fund, the other
party to this Agreement shall, at its option, not be required to consummate the
transactions contemplated by this Agreement:
8.1. This Agreement and the transactions contemplated herein shall have
been approved by the requisite vote of the holders of the outstanding shares of
the Acquired Fund in accordance with the provisions of the Acquired Trust's
Declaration of Trust, as amended, and By-Laws, applicable Massachusetts law and
the 1940 Act, and certified copies of the resolutions evidencing such approval
shall have been delivered to the Acquiring Fund. Notwithstanding anything herein
to the contrary, neither the Acquiring Fund nor the Acquired Fund may waive the
conditions set forth in this section 8.1.
8.2. On the Closing Date, no action, suit or other proceeding shall be
pending or to its knowledge threatened before any court or governmental agency
in which it is sought to restrain or prohibit, or obtain material damages or
other relief in connection with, this Agreement or the transactions contemplated
herein.
<PAGE>
8.3. All consents of other parties and all other consents, orders and
permits of federal, state and local regulatory authorities deemed necessary by
the Acquiring Fund or the Acquired Fund to permit consummation, in all material
respects, of the transactions contemplated hereby shall have been obtained,
except where failure to obtain any such consent, order or permit would not
involve a risk of a material adverse effect on the assets or properties of the
Acquiring Fund or the Acquired Fund, provided that either party hereto may for
itself waive any of such conditions.
8.4. The Registration Statement shall have become effective under the 1933
Act and no stop orders suspending the effectiveness thereof shall have been
issued and, to the best knowledge of the parties hereto, no investigation or
proceeding for that purpose shall have been instituted or be pending, threatened
or contemplated under the 1933 Act.
8.5. The parties shall have received an opinion of Willkie Farr &
Gallagher addressed to each of the Acquiring Fund and the Acquired Fund, in a
form reasonably satisfactory to each such party to this Agreement, substantially
to the effect that, based upon certain facts, assumptions and representations of
the parties, for federal income tax purposes: (i) the transfer to the Acquiring
Fund of all or substantially all of the assets of the Acquired Fund in exchange
solely for Acquiring Fund Shares and the assumption by the Acquiring Fund of all
of the liabilities of the Acquired Fund, followed by the distribution of such
shares to the Acquired Fund Shareholders in exchange for their shares of the
Acquired Fund in complete liquidation of the Acquired Fund, will constitute a
"reorganization" within the meaning of Section 368(a)(1) of the Code, and the
Acquiring Fund and the Acquired Fund will each be "a party to a reorganization"
within the meaning of Section 368(b) of the Code; (ii) no gain or loss will be
recognized by the Acquired Fund upon the transfer of all or substantially all of
its assets to the Acquiring Fund in exchange solely for Acquiring Fund Shares
and the assumption by the Acquiring Fund of all of the liabilities of the
Acquired Fund; (iii) the basis of the assets of the Acquired Fund in the hands
of the Acquiring Fund will be the same as the basis of such assets of the
Acquired Fund immediately prior to the transfer; (iv) the holding period of the
assets of the Acquired Fund in the hands of the Acquiring Fund will include the
period during which such assets were held by the Acquired Fund; (v) no gain or
loss will be recognized by the Acquiring Fund upon the receipt of the assets of
the Acquired Fund in exchange for Acquiring Fund Shares and the assumption by
the Acquiring Fund of all of the liabilities of the Acquired Fund; (vi) no gain
or loss will be recognized by Acquired Fund Shareholders upon the receipt of the
Acquiring Fund Shares solely in exchange for their shares of the Acquired Fund
as part of the transaction; (vii) the basis of the Acquiring Fund Shares
received by Acquired Fund Shareholders will be the same as the basis of the
shares of the Acquired Fund exchanged therefor; and (viii) the holding period of
Acquiring Fund Shares received by Acquired Fund Shareholders will include the
holding period during which the shares of the Acquired Fund exchanged therefor
were held, provided that at the time of the exchange the shares of the Acquired
Fund were held as capital assets in the hands of Acquired Fund Shareholders. The
delivery of such opinion is conditioned upon receipt by Willkie Farr & Gallagher
of representations it shall request of each of the Acquiring Trust and Acquired
Trust. Notwithstanding anything herein to the contrary, neither the Acquiring
Fund nor the Acquired Fund may waive the condition set forth in this section
8.5.
9. INDEMNIFICATION
9.1. The Acquiring Fund agrees to indemnify and hold harmless the Acquired
Fund and each of the Acquired Fund's Board members and officers from and against
any and all losses, claims, damages, liabilities or expenses (including, without
limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Acquired Fund or any of its
Board members or
<PAGE>
officers may become subject, insofar as any such loss, claim, damage, liability
or expense (or actions with respect thereto) arises out of or is based on any
breach by the Acquiring Fund of any of its representations, warranties,
covenants or agreements set forth in this Agreement.
9.2. The Acquired Fund agrees to indemnify and hold harmless the Acquiring
Fund and each of the Acquiring Fund's Board members and officers from and
against any and all losses, claims, damages, liabilities or expenses (including,
without limitation, the payment of reasonable legal fees and reasonable costs of
investigation) to which jointly and severally, the Acquiring Fund or any of its
Board members or officers may become subject, insofar as any such loss, claim,
damage, liability or expense (or actions with respect thereto) arises out of or
is based on any breach by the Acquired Fund of any of its representations,
warranties, covenants or agreements set forth in this Agreement.
10. FEES AND EXPENSES
10.1. Each of the Acquiring Trust, on behalf of the Acquiring Fund, and
the Acquired Trust, on behalf of the Acquired Fund, represents and warrants to
the other that it has no obligations to pay any brokers or finders fees in
connection with the transactions provided for herein.
10.2. The anticipated costs of the Reorganization allocable to the
Acquired Fund are $10,208, which includes board meeting fees, legal, accounting
and other consultant fees, and proxy solicitation costs. Class A, Class B and
Class C shares of the Acquired Fund will each pay 100% of their respective
allocated costs of the Reorganization, which are $5,535 for Class A, $3,328 for
Class B and $1,345 for Class C. Scudder Kemper is bearing any cost overruns and
[the Acquiring Fund is bearing the SEC and state registration and notice fees
which are estimated to be $_________]. Any such expenses which are so borne by
Scudder Kemper will be solely and directly related to the Reorganization within
the meaning of Revenue Ruling 73-54, 1973-1 C.B. 187. [Acquired Fund
Shareholders will pay their own expenses, if any, incurred in connection with
the Reorganization.]
11. ENTIRE AGREEMENT; SURVIVAL OF WARRANTIES
11.1. The Acquiring Fund and the Acquired Fund agree that neither party
has made any representation, warranty or covenant not set forth herein and that
this Agreement constitutes the entire agreement between the parties.
11.2. Except as specified in the next sentence set forth in this section
11.2, the representations, warranties and covenants contained in this Agreement
or in any document delivered pursuant hereto or in connection herewith shall not
survive the consummation of the transactions contemplated hereunder. The
covenants to be performed after the Closing and the obligations of each of the
Acquiring Fund and Acquired Fund in sections 9.1 and 9.2 shall survive the
Closing.
12. TERMINATION
12.1. This Agreement may be terminated and the transactions contemplated
hereby may be abandoned by either party by (i) mutual agreement of the parties,
or (ii) by either party if the Closing shall not have occurred on or before [ ],
2001, unless such date is extended by mutual agreement of the parties, or (iii)
by either party if the other party shall have materially breached its
obligations under this Agreement or made a material and intentional
misrepresentation herein or in connection herewith. In the event of any such
termination, this Agreement shall become void and there shall be no liability
hereunder
<PAGE>
on the part of any party or their respective Board members or officers, except
for any such material breach or intentional misrepresentation, as to each of
which all remedies at law or in equity of the party adversely affected shall
survive.
13. AMENDMENTS
This Agreement may be amended, modified or supplemented in such manner as
may be mutually agreed upon in writing by any authorized officer of the Acquired
Fund and any authorized officer of the Acquiring Fund; provided, however, that
following the meeting of the Acquired Fund Shareholders called by the Acquired
Fund pursuant to section 5.3 of this Agreement, no such amendment may have the
effect of changing the provisions for determining the number of the Acquiring
Fund Shares to be issued to the Acquired Fund Shareholders under this Agreement
to the detriment of such shareholders without their further approval.
14. NOTICES
Any notice, report, statement or demand required or permitted by any
provisions of this Agreement shall be in writing and shall be deemed duly given
if delivered by hand (including by Federal Express or similar express courier)
or transmitted by facsimile or three days after being mailed by prepaid
registered or certified mail, return receipt requested, addressed to the
Acquired Fund, 222 South Riverside Plaza, Chicago, Illinois 60606, with a copy
to Dechert, Ten Post Office Square South, Boston, MA 02109-4603, Attention:
Joseph R. Fleming, Esq., or to the Acquiring Fund, Two International Place,
Boston, Massachusetts 02110-4103, with a copy to Dechert, Ten Post Office Square
South, Boston, MA 02109-4603, Attention: Joseph R. Fleming, Esq., or to any
other address that the Acquired Fund or the Acquiring Fund shall have last
designated by notice to the other party.
15. HEADINGS; COUNTERPARTS; ASSIGNMENT; LIMITATION OF LIABILITY
15.1. The Article and section headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
15.2. This Agreement may be executed in any number of counterparts, each
of which shall be deemed an original.
15.3. This Agreement shall bind and inure to the benefit of the parties
hereto and their respective successors and assigns, but no assignment or
transfer hereof or of any rights or obligations hereunder shall be made by any
party without the written consent of the other party. Nothing herein expressed
or implied is intended or shall be construed to confer upon or give any person,
firm or corporation, other than the parties hereto and the shareholders of the
Acquiring Fund and the Acquired Fund and their respective successors and
assigns, any rights or remedies under or by reason of this Agreement.
15.4. References in this Agreement to each Trust mean and refer to the
Board members of each Trust from time to time serving under its Declaration of
Trust on file with the Secretary of State of The Commonwealth of Massachusetts,
as the same may be amended from time to time, pursuant to which each Trust
conducts its business. It is expressly agreed that the obligations of each Trust
hereunder shall not be binding upon any of the Board members, shareholders,
nominees, officers, agents, or employees of the Trusts or the Funds personally,
but bind only the respective property of the Funds, as provided in each
<PAGE>
Trust's Declaration of Trust. Moreover, no series of either Trust other than the
Funds shall be responsible for the obligations of the Trusts hereunder, and all
persons shall look only to the assets of the Funds to satisfy the obligations of
the Trusts hereunder. The execution and the delivery of this Agreement have been
authorized by each Trust's Board members, on behalf of the applicable Fund, and
this Agreement has been signed by authorized officers of each Fund acting as
such, and neither such authorization by such Board members, nor such execution
and delivery by such officers, shall be deemed to have been made by any of them
individually or to impose any liability on any of them personally, but shall
bind only the respective property of the Funds, as provided in each Trust's
Declaration of Trust.
Notwithstanding anything to the contrary contained in this Agreement, the
obligations, agreements, representations and warranties with respect to each
Fund shall constitute the obligations, agreements, representations and
warranties of that Fund only (the "Obligated Fund"), and in no event shall any
other series of the Trusts or the assets of any such series be held liable with
respect to the breach or other default by the Obligated Fund of its obligations,
agreements, representations and warranties as set forth herein.
15.5. This Agreement shall be governed by, and construed and enforced in
accordance with, the laws of The Commonwealth of Massachusetts, without regard
to its principles of conflicts of laws.
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to
be executed by an authorized officer and its seal to be affixed thereto and
attested by its Secretary or Assistant Secretary.
Attest: SCUDDER MUNICIPAL TRUST
on behalf of Scudder Managed Municipal Bonds
_________________________
Secretary
_______________________________
By:____________________________
Its:___________________________
Attest: KEMPER STATE TAX-FREE INCOME SERIES
on behalf of Kemper Ohio Tax-Free Income Fund
_________________________
Secretary
______________________________
By:___________________________
Its:____________________________
AGREED TO AND ACKNOWLEDGED
ONLY WITH RESPECT TO
PARAGRAPH 10.2 HERETO
SCUDDER KEMPER INVESTMENTS, INC.
_____________________________________
By:__________________________________
Its:_________________________________
<PAGE>
EXHIBIT B
Management's Discussion of Scudder Managed Municipal Bonds' Performance
<PAGE>
Performance Update
--------------------------------------------------------------------------------
May 31, 2000
--------------------------------------------------------------------------------
Growth of a $10,000 Investment
--------------------------------------------------------------------------------
THE ORIGINAL DOCUMENT CONTAINS A LINE CHART HERE
Scudder Managed Lehman Brothers
Municipal Bonds Municipal Bond Index*
'90 10000 10000
'91 11031 11008
'92 12112 12090
'93 13694 13537
'94 13955 13871
'95 15135 15135
'96 15830 15826
'97 17129 17139
'98 18706 18748
'99 19462 19624
'00 19342 19452
Yearly periods ended May 31
--------------------------------------------------------------------------------
Fund Index Comparison
--------------------------------------------------------------------------------
Total Return
Growth of Average
Period ended 5/31/2000 $10,000 Cumulative Annual
--------------------------------------------------------------------------------
Scudder Managed Municipal Bonds
--------------------------------------------------------------------------------
1 year $ 9,938 -.62% -.62%
--------------------------------------------------------------------------------
5 year $ 12,780 27.80% 5.03%
--------------------------------------------------------------------------------
10 year $ 19,342 93.42% 6.82%
--------------------------------------------------------------------------------
Lehman Brothers Municipal Bond Index*
--------------------------------------------------------------------------------
1 year $ 9,912 -.88% -.88%
--------------------------------------------------------------------------------
5 year $ 12,853 28.53% 5.14%
--------------------------------------------------------------------------------
10 year $ 19,452 94.52% 6.87%
--------------------------------------------------------------------------------
1
<PAGE>
* The unmanaged Lehman Brothers Municipal Bond Index is a market value-weighted
measure of the long-term, investment grade tax-exempt bond market consisting
of municipal bonds with a maturity of at least two years. Index returns
assume dividends are reinvested and, unlike Fund returns, do not reflect any
fees or expenses.
All performance is historical, assumes reinvestment of all dividends and
capital gains, and is not indicative of future results. Investment return and
principal value will fluctuate, so an investor's shares, when redeemed, may
be worth more or less than when purchased.
2
<PAGE>
Portfolio Management Discussion
--------------------------------------------------------------------------------
May 31, 2000
Dear Shareholders,
Scudder Managed Municipal Bonds achieved its objectives and distinguished itself
by ranking in the top 2% of similar funds for total return performance during
the 12 months ended May 31, 2000. The fund's most recent fiscal year comprised
one of the most difficult periods for fixed-income investments since 1994,
however, as the Federal Reserve Board Open Market Committee (FOMC) raised
short-term interest rates 175 basis points (1.75%) to 6.50%. Reflecting this
adverse environment, the fund posted a -0.62% total return for the 12 months
ended May 31, 2000. This return placed the fund fourth out of 272 peers as
compiled by Lipper Analytical Services, Inc. The fund's strong competitive
results also placed it in the top 3% of similar funds for the one-, three-, and
five-year periods as shown in the table below.
During the 12-month period, the Federal Reserve's resolve to head off inflation,
coupled with weak investor demand for municipal bond funds, led to negative
returns. Strong U.S. economic growth, the lowest unemployment rate in 30 years,
and brisk consumer spending prompted the Fed to tighten monetary policy.
For the fund, the overriding challenge was to preserve capital. We are pleased
to report that the fund's return outpaced the -3.29% return of similar municipal
bond funds during the 12 months ended May 31, 2000. In addition, Scudder Managed
Municipal Bonds received a
--------------------------------------------------------------------------------
Strong Competitive Results
(Average annual returns for periods ended May 31, 2000)
--------------------------------------------------------------------------------
Scudder Lipper
Managed Average Number of
Municipal Bonds Annual Funds Percentile
Period Return Return Rank Tracked Ranking
--------------------------------------------------------------------------------
1 Year -0.62% -3.29% 4 of 272 Top 2%
--------------------------------------------------------------------------------
3 Years 4.13% 2.93% 6 of 223 Top 3%
--------------------------------------------------------------------------------
5 Years 5.03% 3.99% 13 of 183 Top 2%
--------------------------------------------------------------------------------
10 Years 6.82% 6.22% 10 of 84 Top 12%
--------------------------------------------------------------------------------
Past performance does not guarantee future results.
3
<PAGE>
four-star (above average) rating from Morningstar as of May 31 (see page 2 for
additional information). Please turn to the Performance Update on page 5 for
more information on the fund's long-term progress, including comparisons with
the unmanaged Lehman Brothers Municipal Bond Index.
The Treasury Initiates A Buyback
Contrasting with the pressures on fixed income markets generated by FOMC
interest rate increases, in February the U.S. Treasury announced plans to buy
back some long-term debt and hold fewer debt auctions. This development
generated a welcome rally following five months of negative fixed-income
performance. The Treasury said that it plans to buy back 30-year government
bonds and reduce auctions all along the maturity spectrum.
Intermediate- and long-term bonds typically provide higher yields than
securities maturing in a year or less since they involve more interest-rate
risk. This pattern held true for both Treasuries and municipal bonds in the
autumn and winter of 1999. However, as 2000 began, the Treasury yield curve
inverted, so that by May 31, 2000, one-year Treasury bills offered higher yields
than 30-year bonds. While the municipal yield curve flattened during the period,
it did not invert. Long-term municipal bond yields reached a historically
attractive ratio -- providing nearly all of the yield of comparable-maturity
Treasuries. Long-maturity municipal bonds typically yield about 85% to 90% of a
similar-maturity Treasury.
Extending Maturity to Increase Yield
Scudder Managed Municipal Bonds' goal is to provide a high level of tax-free
income from an actively managed portfolio consisting primarily of
investment-grade municipal bonds. Over the course of the period, higher interest
rates created challenges, but also provided opportunities to reposition the
fund's portfolio to what we believe is a favorable stance over the near term.
Accordingly, our recent portfolio strategy has been to:
4
<PAGE>
1) purchase intermediate-term bonds. Over the period, the fund sold bonds in
the 15-year or longer range when the municipal yield curve was historically
flat, and purchased bonds in the five- to 12-year range. This portion of
the yield curve currently offers the best relative yield and total return
potential given the steepness of the curve.
2) recognize losses on certain bonds in order to offset capital gains in the
fund's portfolio and carry losses forward in the future. This strategy
provides us with additional flexibility to restructure the portfolio as
needed, reducing concern about incurring significant capital gains when
bonds are sold for a profit.
In addition, the fund has maintained its cautious stance on the market with
respect to interest rate risk, increasing its average duration only as much as
its competitive universe. As of May 31, the fund's average duration was 7.35
years. (Duration gives relative weight to both principal and interest payments
through the life of a bond and has replaced average maturity as the standard
measure of interest rate sensitivity among professional investors. Generally,
the shorter the duration, the less sensitive a portfolio will be to changes in
interest rates.)
Longer term, we continue to emphasize call protection when purchasing bonds for
the fund's portfolio. (Generally a bond is called in by its issuer so that it
can be refinanced at a lower prevailing rate.) Our call-protection strategy
provides a more reliable income stream for the fund than would exist if the
portfolio held a significant proportion of bonds that could be called in before
their stated maturities.
Lastly, the fund's overall level of portfolio quality remains high, with over
73% of the fund's portfolio rated AAA or AA, or of equivalent quality. And
diversification remains an important strategy for the fund, allowing us to
spread risk over a large number of sectors, maturities, and geographic areas. As
of May 31, the fund held securities issued in 28 states plus the District of
Columbia, Virgin Islands, and Puerto Rico. The Portfolio Summary on
5
<PAGE>
page 8 provides more information about the fund's holdings, including quality,
maturity, and sector representation.
Our Outlook
Given recent government statistics that suggest U.S. economic growth has begun
to moderate and the fact that the Federal Reserve raised its short-term
interest-rate target in May by 50 basis points, municipal bonds may benefit from
a more stable interest rate environment over the coming months. We believe the
municipal bond market provides attractive value, with yields of longer-maturity
municipals still close to those of Treasuries. In January 2000, the average
municipal bond yield as measured by The Bond Buyer's Revenue Bond Index, reached
6.35%, the highest level since August 1995.
We believe Scudder Managed Municipal Bonds is well positioned to benefit from
historically attractive yields on longer-term municipal bonds. A moderately
growing U.S. economy enhances municipal finances, which should continue to help
bolster municipal credit ratings. And continuing volatility in the equity and
taxable bond markets could prompt more investors to diversify their portfolios
with tax-exempt bonds.
In terms of fund strategy, we will continue to seek competitive returns by
purchasing bonds in the most attractive maturities with the best bond structure
over the coming months. And rather than attempting to make investment decisions
based on short-term market movements, we will search for the most attractively
valued bonds as we seek a high level of tax-free income for our shareholders.
Thank you for investing with Scudder.
Sincerely,
Your Portfolio Management Team
/s/Philip G. Condon /s/Ashton P. Goodfield
------------------- ----------------------
Philip G. Condon Ashton P. Goodfield
6
<PAGE>
APPENDIX 1
Trustee and Nominee Shareholdings
<PAGE>
APPENDIX 2
Beneficial Owners of Fund Shares
<PAGE>
This Proxy Statement/Prospectus is accompanied by Scudder Managed Municipal
Bonds' prospectus offering Class A, Class B and Class C shares dated December
29, 2000, which was previously filed with the Securities and Exchange Commission
(the "Commission") via EDGAR on January 4, 2001 (File No. 811-02671), and is
incorporated by reference herein.
Kemper Ohio Tax-Free Income Fund's prospectus dated January 1, 2001, which
was previously filed with the Commission via EDGAR on December 29, 2000 (File
No. 811-03657), is incorporated by reference herein.
Scudder Managed Municipal Bonds' statement of additional information
offering Class A, Class B and Class C shares dated December 29, 2000, which was
previously filed with the Commission via EDGAR on January 4, 2001 (File No.
811-02671), is incorporated by reference herein.
<PAGE>
PART B
SCUDDER MUNICIPAL TRUST
-----------------------------------------------
Statement of Additional Information
March [ ], 2001
-----------------------------------------------
<TABLE>
<S> <C>
Acquisition of the Assets of By and in Exchange for Shares of
Kemper Ohio Tax-Free Income Fund, a series of Scudder Managed Municipal Bonds, a series of
Kemper State Tax-Free Income Series Scudder Municipal Trust (the "Acquiring Trust")
222 South Riverside Plaza Two International Place
Chicago, IL 60606 Boston, MA 02110-4103
</TABLE>
This Statement of Additional Information is available to the shareholders
of Kemper Ohio Tax-Free Income Fund in connection with a proposed transaction
whereby Scudder Managed Municipal Bonds will acquire all or substantially all of
the assets and all of the liabilities of Kemper Ohio Tax-Free Income Fund in
exchange for shares of the Scudder Managed Municipal Bonds (the
"Reorganization").
This Statement of Additional Information of the Acquiring Trust contains
material which may be of interest to investors but which is not included in the
Proxy Statement/Prospectus of the Acquiring Trust relating to the
Reorganization. This Statement of Additional Information consists of this cover
page and the following documents:
1. Scudder Managed Municipal Bonds' statement of additional information
offering Class A, Class B and Class C shares dated December 29, 2000, which was
previously filed with the Securities and Exchange Commission (the "Commission")
via EDGAR on January 4, 2001 (File No. 811-02671) and is incorporated by
reference herein.
2. Scudder Managed Municipal Bonds' annual report to shareholders for the
fiscal year ended May 31, 2000, which was previously filed with the Commission
via EDGAR on July 26, 2000 (File No. 811-02671) and is incorporated by reference
herein.
3. Kemper Ohio Tax-Free Income Fund's prospectus dated January 1, 2001, which
was previously filed with the Commission via EDGAR on December 29, 2000 (File
No. 811-03657) and is incorporated by reference herein.
4. Kemper Ohio Tax-Free Income Fund's statement of additional information dated
January 1, 2001, which was previously filed with the Commission via EDGAR on
December 29, 2000 (File No. 811-03657) and is incorporated by reference herein.
5. Kemper Ohio Tax-Free Income Fund's annual report to shareholders for the
fiscal year ended August 31, 2000, which was previously filed with the
Commission via EDGAR on October 25, 2000 (File No. 811-03657) and is
incorporated by reference herein.
6. The financial statements and schedules of Scudder Managed Municipal Bonds
and Kemper Ohio Tax-Free Income Fund required by Regulation S-X for the periods
specified in Article 3 thereof, which are filed herein.
<PAGE>
This Statement of Additional Information is not a prospectus. A Proxy
Statement/Prospectus dated March [ ], 2001 relating to the Reorganization may be
obtained by writing Kemper Ohio Tax-Free Income Fund at 222 South Riverside
Drive, Chicago, IL 60606 or by calling [ ] at 1-800-[ ]. This Statement of
Additional Information should be read in conjunction with the Proxy
Statement/Prospectus.
<PAGE>
ANNEX A
Ratings of Municipal Obligations
The six highest ratings of Moody's for municipal bonds are Aaa, Aa, A, Baa,
Ba and B. Bonds rated Aaa are judged by Moody's to be of the best quality. Bonds
rated Aa are judged to be of high quality by all standards. Together with the
Aaa group, they comprise what are generally known as high grade bonds. Together
with securities rated A and Baa, they comprise investment grade securities.
Moody's states that Aa bonds are rated lower than the best bonds because margins
of protection or other elements make long-term risks appear somewhat larger than
for Aaa municipal bonds. Municipal bonds which are rated A by Moody's possess
many favorable investment attributes and are considered "upper medium grade
obligations." Factors giving security to principal and interest of A rated
municipal bonds are considered adequate, but elements may be present which
suggest a susceptibility to impairment sometime in the future. Securities rated
Baa are considered medium grade, with factors giving security to principal and
interest adequate at present but may be unreliable over any period of time. Such
bonds have speculative elements as well as investment grade characteristics.
Securities rated Ba or below by Moody's are considered below investment grade.
Moody's judges municipal bonds rated Ba to have speculative elements, with very
moderate protection of interest and principal payments and thereby not well
safeguarded under any future conditions. Municipal bonds rated B by Moody's
generally lack characteristics of desirable investments. Long-term assurance of
the contract terms of B-rated municipal bonds, such as interest and principal
payments, may be small. Securities rated Ba or below are commonly referred to as
"junk" bonds and as such they carry a high margin of risk.
Moody's ratings for municipal notes and other short-term loans are
designated Moody's Investment Grade (MIG). This distinction is in recognition of
the differences between short-term and long-term credit risk. Loans bearing the
designation MIG1 are of the best quality, enjoying strong protection by
establishing cash flows of funds for their servicing or by established and broad
based access to the market for refinancing, or both. Loans bearing the
designation MIG2 are of high quality, with margins of protection ample although
not as large as in the preceding group.
The six highest ratings of S&P for municipal bonds are AAA (Prime), AA
(High grade), A (Good grade), BBB (Investment grade), BB (Below investment
grade) and B. Bonds rated AAA have the highest rating assigned by S&P to a
municipal obligation. Capacity to pay interest and repay principal is extremely
strong. Bonds rated AA have a very strong capacity to pay interest and repay
principal and differ from the highest rated issues only in a small degree. Bonds
rated A have a strong capacity to pay principal and interest, although they are
somewhat more susceptible to the adverse effects of changes in circumstances and
economic conditions. Bonds rated BBB have an adequate capacity to pay interest
and to repay principal. Adverse economic conditions or changing circumstances
are more likely to lead to a weakened capacity to pay interest and repay
principal for bonds of this category than for bonds of higher rated categories.
Securities rated BB or below by S&P are considered below investment grade. Debt
rated BB by S&P faces major ongoing uncertainties or exposure to adverse
conditions which could lead to inadequate capacity to meet timely interest and
principal payments. Municipal bonds rated B have a greater vulnerability to
default but currently have the capacity to meet interest payments and principal
repayments. Securities rated BB or below are commonly referred to as "junk"
bonds and as such they carry a high margin of risk.
S&P's top ratings for municipal notes are SP1 and SP2. The designation SP1
indicates a very strong capacity to pay principal and interest. A "+" is added
for those issues determined to possess overwhelming safety characteristics. An
SP2 designation indicates a satisfactory capacity to pay principal and interest.
<PAGE>
The six highest ratings of Fitch for municipal bonds are AAA, AA, A, BBB,
BB and B. Bonds rated AAA are considered to be investment grade and of the
highest credit quality. The obligor has an exceptionally strong ability to pay
interest and repay principal, which is unlikely to be affected by reasonably
foreseeable events. Bonds rated AA are considered to be investment grade and of
very high credit quality. The obligor's ability to pay interest and repay
principal is very strong, although not quite as strong as bonds rated AAA.
Because bonds rated in the AAA and AA categories are not significantly
vulnerable to foreseeable future developments, short-term debt of these issuers
is generally rated F1+. Bonds rated A are considered to be investment grade and
of high credit quality. The obligor's ability to pay interest and repay
principal is considered to be strong, but may be more vulnerable to adverse
changes in economic conditions and circumstances than bonds with higher ratings.
Bonds rated BBB are considered to be investment grade and of satisfactory credit
quality. The obligor's ability to pay interest and repay principal is considered
to be adequate. Adverse changes in economic conditions and circumstances,
however, are more likely to have adverse effects on these bonds, and therefore
impair timely payment. The likelihood that the ratings of these bonds will fall
below investment grade is higher than for bonds with higher ratings. Securities
rated BB or below by Fitch are considered below investment grade. Fitch
considers bonds rated BB to be speculative because the issuer's ability to pay
interest and repay principal may be affected over time by adverse economic
changes, although financial alternatives can be identified to assist the issuer
in meeting its obligations. While bonds rated B are currently meeting debt
service requirements, they are considered highly speculative in light of the
issuer's limited margin of safety. Securities rated BB or below are commonly
referred to as "junk" bonds and as such they carry a high margin of risk.
Commercial Paper Ratings
Commercial paper rated A1 or better by S&P has the following
characteristics: Liquidity ratios are adequate to meet cash requirements. Long-
term senior debt is rated "A" or better, although in some cases "BBB" credits
may be allowed. The issuer has access to at least two additional channels of
borrowing. Basic earnings and cash flow have an upward trend with allowance made
for unusual circumstances. Typically, the issuer's industry is well established
and the issuer has a strong position within the industry. The reliability and
quality of management are unquestioned.
The rating Prime-1 is the highest commercial paper rating assigned by
Moody's. Among the factors considered by Moody's in assigning ratings are the
following: (1) evaluation of the management of the issuer; (2) economic
evaluation of the issuer's industry or industries and an appraisal of
speculative-type risks which may be inherent in certain areas; (3) evaluation of
the issuer's products in relation to competition and customer acceptance; (4)
liquidity; (5) amount and quality of long-term debt; (6) trend of earnings over
a period of ten years; (7) financial strength of a parent company and the
relationships which exist with the issuer; and (8) recognition by the management
of obligations which may be present or may arise as a result of public interest
questions and preparations to meet such obligations.
The rating F1 is the highest rating assigned by Fitch. Among the factors
considered by Fitch in assigning this rating are: (1) the issuer's liquidity;
(2) its standing in the industry; (3) the size of its debt; (4) its ability to
service its debt; (5) its profitability; (6) its return on equity; (7) its
alternative sources of financing; and (8) its ability to access the capital
markets. Analysis of the relative strength or weakness of these factors and
others determines whether an issuer's commercial paper is rated F-1.
Relative strength or weakness of the above factors determine how the
issuer's commercial paper is rated within the above categories.
<PAGE>
Recently comparatively short-term obligations have been introduced in the
municipal market. S&P, Moody's and Fitch rate such obligations. While the
factors considered in municipal credit evaluations differ somewhat from those
relevant to corporate credits, the rating designations and definitions used with
respect to such obligations by S&P and Moody's are the same, respectively, as
those used in their corporate commercial paper ratings.
<PAGE>
<TABLE>
<CAPTION>
Scudder
Kemper Managed
Municipal Municipal Pro Forma
Kemper Ohio Tax Bond Bonds Combined
Free Par/Shares Par/Shares Par/Shares Par/Shares
Security Name Amount Amount Amount Amount
--------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-Term Municipal Bond Investments - 0.3%
Alabama
North Alabama, Environmental Improvement Authority,
Pollution Control Revenue, Variable Rate, 4.85%,
12/01/2000 1,100,000.00 1,100,000.00
Alaska
Valdez, AK, Marine Terminal Revenue, Exxon Pipeline Project B,
4.2%, 12/01/2033 500,000.00 750,000.00 1,250,000.00
Kentucky
Kentucky Economic Development Authority Systems (Series C),
Zero Coupon, 10/01/2016 6,500,000.00 6,500,000.00
Louisiana
Louisiana State Offshore Terminal Port Authority Revenue
Series 1992 VRDN, 4.24999932%, 9/01/2008 1,500,000.00 1,500,000.00
Michigan
University of Michigan, Hospital Revenue, Series 1992 A,
Daily Demand Note, 4.2%, 12/01/2019 1,000,000.00 1,000,000.00
New York
Long Island, NY, Power Authority New York Electricity,
Revenue, Series 6, 4%, 5/01/2033 2,900,000.00 2,900,000.00
New York Municipal Water Authority, Series 1994 G, Variable
Rate Demand Note, 3.7499%, 6/15/2024 1,500,000.00 1,500,000.00
Ohio
Ohio State Turnpike Community Revenue, Series A, 5.5%,
2/15/2017 1,000,000.00 1,000,000.00
Pennsylvania
Pennsylvania State Higher Education Facilities Authority
Revenue, 3.85%, 11/02/2029 4,200,000.00 4,200,000.00
Texas
Harris County, TX, Health Facilities Authority Revenue,
St. Lukes Episcopal Hospital, Series A, Daily Demand Note,
4.15%, 2/15/2027 3,000,000.00 3,000,000.00
Harris County, TX, Health Facilities Revenue,
St. Lukes Episcopal Hospital, Series B, 4.15%, 4,100,000.00 4,100,000.00
2/15/2027
North Central, TX, Health Facilities Development Corp.,
Presbyterian Medical Center, Daily Demand Note, Series C,
4.15%, 12/01/2015 1,800,000.00 1,800,000.00
North Central, TX, Health Facilities Development Corp.,
Presbyterian Medical Center, 1995 Series D,
Daily Demand Note, 4.1%, 12/01/2015 1,000,000.00 1,000,000.00
Total Short-Term Municipal Bond Investments (Cost of $1,032,492,
$15,937,840, $12,250,000, and $29,220,332 respectively)
Medium-Term Municipal Bond Investments - 0.3%
District Of Columbia
District of Columbia, Unrefunded Balance, Series B,
6.125%, 06/01/2003 3,905,000.00 3,905,000.00
Texas
Montgomery County, TX, Prerefunded, Capital Appreciation,
Zero Coupon, 09/01/2003 800,000.00 800,000.00
Montgomery County, TX, Prerefunded, Capital Appreciation,
Zero Coupon, 09/01/2004 795,000.00 795,000.00
Montgomery County, TX,Prerefunded, Capital Appreciation,
Zero Coupon, 09/01/2005 685,000.00 685,000.00
Montgomery County, TX, Unrefunded Balance, Capital Appreciation,
Zero Coupon, 09/01/2003 2,675,000.00 2,675,000.00
Montgomery County, TX, Unrefunded Balance, Capital Appreciation,
Zero Coupon, 09/01/2004 2,680,000.00 2,680,000.00
Montgomery County, TX, Unrefunded Balance, Capital Appreciation,
Zero Coupon, 09/01/2005 2,790,000.00 2,790,000.00
West Virginia
West Virginia ST Hospital Fin Authority, 6.75%, 09/01/2030 3,000,000.00 3,000,000.00
Total Medium-Term Municipal Bond Investments (Cost of $0, $0,
$14,938,504, and $14,938,504, respectively)
Long-Term Municipal Bond Investments - 99.4%
Alabama
Birmingham, AL, Jefferson Civic Center, Special
Tax Revenue, 7.4%, 01/01/2008 12,000,000.00 12,000,000.00
Alaska
Anchorage, AK, Electric Utilities Revenue, 6.5%, 12/01/2015 5,000,000.00 5,000,000.00
North Slope Borough, AK, General Obligation, Series 1994 B,
Zero Coupon, 06/30/2004 30,500,000.00 30,500,000.00
North Slope Borough, AK, General Obligation, Series 1994 B,
Zero Coupon, 06/30/2005 43,800,000.00 43,800,000.00
North Slope Borough, AK, General Obligation, Series 1995 A,
Zero Coupon, 06/30/2006 11,000,000.00 11,000,000.00
North Slope Borough, AK, General Obligation, Series 1997A,
Zero Coupon, 06/30/2008 21,935,000.00 7,000,000.00 28,935,000.00
North Slope Borough, Alaska, General Obligation, 06/30/2011 5,000,000.00 5,000,000.00
Arizona
Arizona Municipal Finance Program, Certificate of Participation,
Series 25, MBIA, 7.875%, 08/01/2014 3,500,000.00 3,500,000.00
Coconino County, AZ, Industrial Development Authority, Revenue,
Guidance Center Income Project, Prerefunded 6/1/2001,
9.25%, 06/01/2011 515,000.00 515,000.00
Maricopa County, AZ, School District #6, Washington Elementary,
Series B, FGIC, 4.1%, 07/01/2013 2,950,000.00 2,950,000.00
Maricopa County, AZ, School District No. 28, Kyrene
Elementary School, Series 1993 B, Zero Coupon, 01/01/2006 4,905,000.00 4,905,000.00
Maricopa County, AZ, Unified School District #41, Gilbert School,
FGIC, Zero Coupon, 01/01/2005 5,280,000.00 5,280,000.00
Phoenix, AZ, General Obligation, Partially Prerefunded, 6.375%,
07/01/2013 7,400,000.00 7,400,000.00
Phoenix, AZ, Civic Improvement Corp., Wastewater System Revenue,
6%, 07/01/2011 4,105,000.00 4,105,000.00
Phoenix, AZ, Street & Highway User Revenue, Prerefunded 7/1/2002,
6.25%, 07/01/2011 10,000,000.00 10,000,000.00
Salt River Project, Arizona Agricultural Improvement, Revenue,
Series C, 6.25%, 01/01/2019 7,000,000.00 7,000,000.00
Arkansas
Jonesboro, AR, Residential Housing, Revenue, St Bernards Regional
Medical Center, Series A, 5.8%, 07/01/2012 4,025,000.00 4,025,000.00
North Little Rock, AR, Electric Revenue, Series A, 6.5%, 07/01/2010 19,750,000.00 19,750,000.00
North Little Rock, AR, Electric Revenue, Series A, 6.5%, 07/01/2015 13,080,000.00 13,080,000.00
California
Alameda County, CA, Certificate of Participation, Santa Rita
Jail Project, 5.375%, 06/01/2009 5,000,000.00 5,000,000.00
Banning, CA, Wastewater, Certificate of Participation, AMBAC,
8%, 01/01/2019 960,000.00 960,000.00
Banning, CA, Wastewater, Certificate of Participation, AMBAC,
8%, 01/01/2019 1,080,000.00 1,080,000.00
California Housing Finance Agency, Multi-Unit Rental Housing
Revenue, Series 1992 A, 7.7%, 08/01/2010 1,000,000.00 1,000,000.00
California Pollution Control Financing Authority, Solid Waste
Disposal Revenue, CanFibre of Riverside PJ, Series 1997 A,
AMT, 9%, 07/01/2019 12,000,000.00 12,000,000.00
California General Obligation, Series 1989, 6.25%, 10/01/2007 4,000,000.00 4,000,000.00
California General Obligation, Series 1990, 6.25%, 04/01/2008 5,000,000.00 5,000,000.00
California, General Obligation, Series 1991, 6.6%, 02/01/2009 15,600,000.00 15,600,000.00
State of California, General Obligation, 5.75%, 05/01/2010 10,000,000.00 10,000,000.00
California State Public Works Board, Lease Revenue, Series A,
AMBAC insured, 6.3%, 12/01/2006 8,095,000.00 8,095,000.00
California Statewide Community Development Authority, Certificates
of Participation, Lutheran Homes, Series 1999, 5.5%,
11/15/2008 2,250,000.00 2,250,000.00
Foothill/ Eastern Corridor Agency, CA, Toll Road Revenue, Series A,
Prerefunded 1/1/2007, 6.5%, 01/01/2032 19,975,000.00 19,975,000.00
Foothill/ Eastern Corridor Agency, CA, Toll Road Revenue, Series A,
Prerefunded 1/1/2007, 6%, 1/1/2034 8,400,000.00 8,400,000.00
Foothill Eastern Transportation Corridor Agency, CA,
Toll Road Revenue, Series 1995 A, Zero Coupon, 01/01/2015 11,000,000.00 11,000,000.00
Foothills Eastern Corridor Agency, California Toll Road Revenue,
Series A, Zero Coupon, 01/01/2017 5,000,000.00 5,000,000.00
Foothill Eastern Transportation Corridor Agency, CA, Toll Road
Revenue, Series 1995 A, Step-up Coupon, ETM, 0% to 1/1/2005,
7.05% to, 01/01/2009 5,000,000.00 5,000,000.00
Foothill Eastern Transportation Corridor Agency, CA, Toll Road
Revenue, Series 1995 A, Step-up Coupon, Prerefunded 1/1/2010
at 102, 0% to 1/1/2005, 7.1% to, 01/01/2011 4,000,000.00 4,000,000.00
Foothill Eastern Transportation Corridor Agency, CA, Toll Road
Revenue, Series 1995 A, Step-up Coupon, Prerefunded 1/1/2010
at 102, 0% to 1/1/2005, 7.1% to, 01/01/2012 4,000,000.00 4,000,000.00
Foothill Eastern Transportation Corridor Agency, CA, Toll Road
Revenue, Series 1995 A, Step-up Coupon, Prerefunded 1/1/2010
at 102, 0% to 1/1/2005, 7.15% to, 01/01/2014 6,250,000.00 6,250,000.00
Foothill/ Eastern Corridor Agency, CA, Toll Road Revenue,
Series A, Prerefunded 1/1/2010, 6%, 01/01/2016 20,400,000.00 20,400,000.00
Foothill/Eastern Corridor Agency, CA, Toll Road Revenue,
Series 1995 A, 5%, 01/01/2035 7,850,000.00 7,850,000.00
Los Angeles County, CA, Certificate of Participation,
Disney Parking Project, Series 1993, Zero Coupon, 09/01/2007 4,030,000.00 4,030,000.00
Los Angeles County, CA, Certificate of Participation,
Disney Parking Project, Series 1993, Zero Coupon, 09/01/2009 5,425,000.00 5,425,000.00
Los Angeles County, CA, Capital Asset Leasing, AMBAC,
6%, 12/01/2006 9,000,000.00 9,000,000.00
Madera County, CA, Certificates of Participation,
Valley Childrens Hospital, 6.5%, 03/15/2010 2,840,000.00 2,840,000.00
Murrieta Valley, CA, University School District,
General Obligation, Series A, Zero Coupon, 09/01/2014 4,235,000.00 4,235,000.00
Oakland, CA, Redevelopment Agency, Tax Allocation, AMBAC,
6%, 02/01/2007 2,000,000.00 2,000,000.00
Roseville, CA, Unified High School District,
General Obligation, Series 1995 B, Zero Coupon, 08/01/2010 1,830,000.00 1,830,000.00
Roseville, CA, Unified High School District, General Obligation,
Series 1995 B, Zero Coupon, 08/01/2015 1,000,000.00 1,000,000.00
San Diego, CA, Industrial Development Revenue, 6.8966%, 09/01/2019 7,300,000.00 7,300,000.00
San Diego, CA, Unified School District, General Obligation,
Series A, Zero Coupon, 07/01/2014 3,420,000.00 3,420,000.00
San Diego County, CA, Water Authority Revenue, Certificate
of Participation, FGIC, 5.632%, 04/25/2007 6,300,000.00 6,300,000.00
San Diego, CA, Water Authority, Certificate of Participation,
FGIC, 5.681%, 04/22/2009 4,500,000.00 4,500,000.00
San Francisco, CA, Bay Area Rapid Transit District, Sales Tax
Revenue Refunding, AMBAC, 6.75%, 07/01/2010 2,000,000.00 2,000,000.00
San Joaquin, CA, Certificate of Participation, County Public
Facilities Project, Series 1993, 5.5%, 11/15/2013 3,895,000.00 3,895,000.00
San Joaquin Hills, CA, Revenue, Capital Appreciation,
Series 1997 A, Zero Coupon, 01/15/2012 5,000,000.00 5,000,000.00
San Joaquin Hills, CA, Transportation, Revenue, Series A,
Zero Coupon, 01/15/2013 35,295,000.00 35,295,000.00
San Joaquin Hills, CA, Transportation, Revenue, Series A,
Zero Coupon, 01/15/2014 14,905,000.00 14,905,000.00
Ukiah, CA, Unified School District, Zero Coupon, 08/01/2015 2,000,000.00 2,000,000.00
Colorado
Arapahoe County, CO, Capital Improvements, Revenue, Series E,
Prerefunded 8/31/2005, 7%, 08/31/2026 25,525,000.00 25,525,000.00
Colorado Dept Trans RevRevenue, non-callable, fixed, 6%, 06/15/2010 8,680,000.00 8,680,000.00
Colorado Health Facilities Authority Revenue, Covenant
Retirement Community Project, 6.75%, 12/01/2025 4,150,000.00 4,150,000.00
Colorado Health Facilities Authority Revenue, Covenant Retirement
Community Project, 6.75%, 12/01/2015 1,750,000.00 1,750,000.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992, 8.25%, 10/01/2010 1,940,000.00 1,940,000.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992, 8.1%, 10/01/2005 2,030,000.00 2,030,000.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992, 8.15%, 10/01/2006 2,145,000.00 2,145,000.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992 A, 8.15%, 10/01/2007 2,320,000.00 2,320,000.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992 A, 8.2%, 10/01/2008 2,510,000.00 2,510,000.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992 A, 8.2%, 10/01/2009 2,725,000.00 2,725,000.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992, 8.25%, 10/01/2011 1,680,000.00 1,680,000.00
<CAPTION>
Kemper Ohio Scudder Pro Forma
Tax Free Kemper Managed Combined
Market Value Municipal Bond Municipal Bond Market
Security Name ($) Market Value ($) Market Value ($) Value ($)
---------------------------------------------------------------
<S> <C> <C> <C> <C>
Short-Term Municipal Bond Investments - 0.3%
Alabama
North Alabama, Environmental Improvement Authority,
Pollution Control Revenue, Variable Rate, 4.85%,
12/01/2000 1,100,000.00 1,100,000.00
Alaska
Valdez, AK, Marine Terminal Revenue, Exxon Pipeline Project B,
4.2%, 12/01/2033 500,000.00 750,000.00 1,250,000.00
Kentucky
Kentucky Economic Development Authority Systems (Series C),
Zero Coupon, 10/01/2016 5,056,350.00 5,056,350.00
Louisiana
Louisiana State Offshore Terminal Port Authority Revenue
Series 1992 VRDN, 4.24999932%, 9/01/2008 1,500,000.00 1,500,000.00
Michigan
University of Michigan, Hospital Revenue, Series 1992 A,
Daily Demand Note, 4.2%, 12/01/2019 1,000,000.00 1,000,000.00
New York
Long Island, NY, Power Authority New York Electricity,
Revenue, Series 6, 4%, 5/01/2033 2,900,000.00 2,900,000.00
New York Municipal Water Authority, Series 1994 G, Variable
Rate Demand Note, 3.7499%, 6/15/2024 1,500,000.00 1,500,000.00
Ohio
Ohio State Turnpike Community Revenue, Series A, 5.5%,
2/15/2017 1,034,170.00 1,034,170.00
Pennsylvania
Pennsylvania State Higher Education Facilities Authority
Revenue, 3.85%, 11/02/2029 4,200,000.00 4,200,000.00
Texas
Harris County, TX, Health Facilities Authority Revenue,
St. Lukes Episcopal Hospital, Series A, Daily Demand Note,
4.15%, 2/15/2027 3,000,000.00 3,000,000.00
Harris County, TX, Health Facilities Revenue,
St. Lukes Episcopal Hospital, Series B, 4.15%, 4,100,000.00 4,100,000.00
2/15/2027
North Central, TX, Health Facilities Development Corp.,
Presbyterian Medical Center, Daily Demand Note, Series C,
4.15%, 12/01/2015 1,800,000.00 1,800,000.00
North Central, TX, Health Facilities Development Corp.,
Presbyterian Medical Center, 1995 Series D,
Daily Demand Note, 4.1%, 12/01/2015 1,000,000.00 1,000,000.00
---------------------------------------------------------------
Total Short-Term Municipal Bond Investments (Cost of $1,032,492,
$15,937,840, $12,250,000, and $29,220,332 respectively) 1,034,170.00 16,156,350.00 12,250,000.00 29,440,520.00
===============================================================
Medium-Term Municipal Bond Investments - 0.3%
District Of Columbia
District of Columbia, Unrefunded Balance, Series B,
6.125%, 06/01/2003 4,046,868.00 4,046,868.00
Texas
Montgomery County, TX, Prerefunded, Capital Appreciation,
Zero Coupon, 09/01/2003 704,536.00 704,536.00
Montgomery County, TX, Prerefunded, Capital Appreciation,
Zero Coupon, 09/01/2004 667,323.00 667,323.00
Montgomery County, TX,Prerefunded, Capital Appreciation,
Zero Coupon, 09/01/2005 547,760.00 547,760.00
Montgomery County, TX, Unrefunded Balance, Capital Appreciation,
Zero Coupon, 09/01/2003 2,353,251.00 2,353,251.00
Montgomery County, TX, Unrefunded Balance, Capital Appreciation,
Zero Coupon, 09/01/2004 2,246,295.00 2,246,295.00
Montgomery County, TX, Unrefunded Balance, Capital Appreciation,
Zero Coupon, 09/01/2005 2,225,862.00 2,225,862.00
West Virginia
West Virginia ST Hospital Fin Authority, 6.75%, 09/01/2030 3,051,180.00 3,051,180.00
---------------------------------------------------------------
Total Medium-Term Municipal Bond Investments (Cost of $0, $0,
$14,938,504, and $14,938,504 , respectively) - - 15,843,075.00 15,843,075.00
===============================================================
Long-Term Municipal Bond Investments - 99.4%
Alabama
Birmingham, AL, Jefferson Civic Center, Special
Tax Revenue, 7.4%, 01/01/2008 12,020,520.00 12,020,520.00
Alaska
Anchorage, AK, Electric Utilities Revenue, 6.5%, 12/01/2015 5,730,600.00 5,730,600.00
North Slope Borough, AK, General Obligation, Series 1994 B,
Zero Coupon, 06/30/2004 25,723,700.00 25,723,700.00
North Slope Borough, AK, General Obligation, Series 1994 B,
Zero Coupon, 06/30/2005 35,131,542.00 35,131,542.00
North Slope Borough, AK, General Obligation, Series 1995 A,
Zero Coupon, 06/30/2006 8,385,630.00 8,385,630.00
North Slope Borough, AK, General Obligation, Series 1997A,
Zero Coupon, 06/30/2008 15,060,790.00 4,806,270.00 19,867,060.00
North Slope Borough, Alaska, General Obligation, 06/30/2011 2,906,850.00 2,906,850.00
Arizona
Arizona Municipal Finance Program, Certificate of Participation,
Series 25, MBIA, 7.875%, 08/01/2014 4,422,600.00 4,422,600.00
Coconino County, AZ, Industrial Development Authority, Revenue,
Guidance Center Income Project, Prerefunded 6/1/2001,
9.25%, 06/01/2011 533,246.00 533,246.00
Maricopa County, AZ, School District #6, Washington Elementary,
Series B, FGIC, 4.1%, 07/01/2013 2,677,567.00 2,677,567.00
Maricopa County, AZ, School District No. 28, Kyrene
Elementary School, Series 1993 B, Zero Coupon, 01/01/2006 3,861,265.00 3,861,265.00
Maricopa County, AZ, Unified School District #41, Gilbert School,
FGIC, Zero Coupon, 01/01/2005 4,372,315.00 4,372,315.00
Phoenix, AZ, General Obligation, Partially Prerefunded, 6.375%,
07/01/2013 7,730,262.00 7,730,262.00
Phoenix, AZ,Civic Improvement Corp., Wastewater System Revenue,
6%, 07/01/2011 4,514,104.00 4,514,104.00
Phoenix, AZ, Street & Highway User Revenue, Prerefunded 7/1/2002,
6.25%, 07/01/2011 10,435,200.00 10,435,200.00
Salt River Project, Arizona Agricultural Improvement, Revenue,
Series C, 6.25%, 01/01/2019 7,229,320.00 7,229,320.00
Arkansas
Jonesboro, AR, Residential Housing, Revenue, St Bernards Regional
Medical Center, Series A, 5.8%, 07/01/2012 4,223,191.00 4,223,191.00
North Little Rock, AR, Electric Revenue, Series A, 6.5%, 07/01/2010 22,296,367.00 22,296,367.00
North Little Rock, AR, Electric Revenue, Series A, 6.5%, 07/01/2015 14,954,625.00 14,954,625.00
California
Alameda County, CA, Certificate of Participation, Santa Rita
Jail Project, 5.375%, 06/01/2009 5,348,200.00 5,348,200.00
Banning, CA, Wastewater, Certificate of Participation, AMBAC,
8%, 01/01/2019 1,249,651.00 1,249,651.00
Banning, CA, Wastewater, Certificate of Participation, AMBAC,
8%, 01/01/2019 1,376,643.00 1,376,643.00
California Housing Finance Agency, Multi-Unit Rental Housing
Revenue, Series 1992 A, 7.7%, 08/01/2010 1,057,750.00 1,057,750.00
California Pollution Control Financing Authority, Solid Waste
Disposal Revenue, CanFibre ofRiverside PJ, Series 1997 A,
AMT, 9%, 07/01/2019 7,560,000.00 7,560,000.00
California General Obligation, Series 1989, 6.25%, 10/01/2007 4,473,800.00 4,473,800.00
California General Obligation, Series 1990, 6.25%, 04/01/2008 5,612,550.00 5,612,550.00
California, General Obligation, Series 1991, 6.6%, 02/01/2009 17,956,848.00 17,956,848.00
State of California, General Obligation, 5.75%, 05/01/2010 10,970,800.00 10,970,800.00
California State Public Works Board, Lease Revenue, Series A,
AMBAC insured, 6.3%, 12/01/2006 8,981,969.00 8,981,969.00
California Statewide Community Development Authority, Certificates
of Participation, Lutheran Homes, Series 1999, 5.5%,
11/15/2008 2,415,397.00 2,415,397.00
Foothill/ Eastern Corridor Agency, CA, Toll Road Revenue, Series A,
Prerefunded 1/1/2007, 6.5%, 01/01/2032 22,470,277.00 22,470,277.00
Foothill/ Eastern Corridor Agency, CA, Toll Road Revenue, Series A,
Prerefunded 1/1/2007, 6%, 1/1/2034 9,230,256.00 9,230,256.00
Foothill Eastern Transportation Corridor Agency, CA,
Toll Road Revenue, Series 1995 A, Zero Coupon, 01/01/2015 5,312,010.00 5,312,010.00
Foothills Eastern Corridor Agency, California Toll Road Revenue,
Series A, Zero Coupon, 01/01/2017 2,113,600.00 2,113,600.00
Foothill Eastern Transportation Corridor Agency, CA, Toll Road
Revenue, Series 1995 A, Step-up Coupon, ETM, 0% to 1/1/2005,
7.05% to, 01/01/2009 4,452,700.00 4,452,700.00
Foothill Eastern Transportation Corridor Agency, CA, Toll Road
Revenue, Series 1995 A, Step-up Coupon, Prerefunded 1/1/2010
at 102, 0% to 1/1/2005, 7.1% to, 01/01/2011 3,668,520.00 3,668,520.00
Foothill Eastern Transportation Corridor Agency, CA, Toll Road
Revenue, Series 1995 A, Step-up Coupon, Prerefunded 1/1/2010
at 102, 0% to 1/1/2005, 7.1% to, 01/01/2012 3,668,520.00 3,668,520.00
Foothill Eastern Transportation Corridor Agency, CA , Toll Road
Revenue, Series 1995 A, Step-up Coupon, Prerefunded 1/1/2010
at 102, 0% to 1/1/2005, 7.15% to, 01/01/2014 5,743,312.00 5,743,312.00
Foothill/ Eastern Corridor Agency, CA, Toll Road Revenue,
Series A, Prerefunded 1/1/2010, 6%, 01/01/2016 22,960,404.00 22,960,404.00
Foothill/Eastern Corridor Agency, CA, Toll Road Revenue,
Series 1995 A, 5%, 01/01/2035 7,359,218.00 7,359,218.00
Los Angeles County, CA, Certificate of Participation,
Disney Parking Project, Series 1993, Zero Coupon, 09/01/2007 2,890,033.00 2,890,033.00
Los Angeles County, CA, Certificate of Participation,
Disney Parking Project, Series 1993, Zero Coupon, 09/01/2009 3,477,750.00 3,477,750.00
Los Angeles County, CA, Capital Asset Leasing, AMBAC,
6%, 12/01/2006 9,829,260.00 9,829,260.00
Madera County, CA, Certificates of Participation,
Valley Childrens Hospital, 6.5%, 03/15/2010 3,270,714.00 3,270,714.00
Murrieta Valley, CA, University School District,
General Obligation, Series A, Zero Coupon, 09/01/2014 2,091,835.00 2,091,835.00
Oakland, CA, Redevelopment Agency, Tax Allocation, AMBAC,
6%, 02/01/2007 2,189,760.00 2,189,760.00
Roseville, CA, Unified High School District,
General Obligation, Series 1995 B, Zero Coupon, 08/01/2010 1,161,738.00 1,161,738.00
Roseville, CA, Unified High School District, General Obligation,
Series 1995 B, Zero Coupon, 08/01/2015 466,570.00 466,570.00
San Diego, CA, Industrial Development Revenue, 6.8966%, 09/01/2019 7,929,406.00 7,929,406.00
San Diego, CA, Unified School District, General Obligation,
Series A, Zero Coupon, 07/01/2014 1,694,781.00 1,694,781.00
San Diego County, CA, Water Authority Revenue, Certificate
of Participation, FGIC, 5.632%, 04/25/2007 6,702,759.00 6,702,759.00
San Diego, CA, Water Authority, Certificate of Participation,
FGIC, 5.681%, 04/22/2009 4,812,705.00 4,812,705.00
San Francisco, CA, Bay Area Rapid Transit District, Sales Tax
Revenue Refunding, AMBAC, 6.75%, 07/01/2010 2,358,260.00 2,358,260.00
San Joaquin, CA, Certificate of Participation, County Public
Facilities Project, Series 1993, 5.5%, 11/15/2013 4,216,415.00 4,216,415.00
San Joaquin Hills, CA, Revenue, Capital Appreciation,
Series 1997 A, Zero Coupon, 01/15/2012 2,888,000.00 2,888,000.00
San Joaquin Hills, CA, Transportation, Revenue, Series A,
Zero Coupon, 01/15/2013 19,154,243.00 19,154,243.00
San Joaquin Hills, CA, Transportation, Revenue, Series A,
Zero Coupon, 01/15/2014 7,583,664.00 7,583,664.00
Ukiah, CA, Unified School District, Zero Coupon, 08/01/2015 933,140.00 933,140.00
Colorado
Arapahoe County, CO, Capital Improvements, Revenue, Series E,
Prerefunded 8/31/2005, 7%, 08/31/2026 28,838,400.00 28,838,400.00
Colorado Dept Trans RevRevenue, non-callable, fixed, 6%, 06/15/2010 9,494,010.00 9,494,010.00
Colorado Health Facilities Authority Revenue, Covenant
Retirement Community Project, 6.75%, 12/01/2025 4,164,857.00 4,164,857.00
Colorado Health Facilities Authority Revenue, Covenant Retirement
Community Project, 6.75%, 12/01/2015 1,778,717.00 1,778,717.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992, 8.25%, 10/01/2010 2,068,971.00 2,068,971.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992, 8.1%, 10/01/2005 2,159,696.00 2,159,696.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992, 8.15%, 10/01/2006 2,283,910.00 2,283,910.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992 A, 8.15%, 10/01/2007 2,470,243.00 2,470,243.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992 A, 8.2%, 10/01/2008 2,674,706.00 2,674,706.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992 A, 8.2%, 10/01/2009 2,903,814.00 2,903,814.00
Colorado Housing Finance Authority Revenue, Multi-Family Mortgage,
Series 1992, 8.25%, 10/01/2011 1,791,686.00 1,791,686.00
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Colorado Housing Finance Authority Revenue, 1,945,000.00 1,945,000.00 2,074,303.00
Multi-Family Mortgage, Series 1992, 8.25%,
10/01/2012
Denver, CO, City and County School Districts, 3,000,000.00 3,000,000.00 3,415,440.00
General Obligation, Series A, 6.5%, 12/01/2010
Denver, CO, City and County School Districts,
General Obligation, Series A, 6.5%, 06/01/2010 3,225,000.00 3,225,000.00 3,645,991.00
Denver, CO, City and County Airport Revenue,
Series A, Prerefunded 11/15/2012, 7.5%, 11/15/2012 5,940,000.00 5,940,000.00 6,391,440.00
Denver, CO, City and County Airport Revenue,
Series A, 7.4%, 11/15/2005 1,250,000.00 1,250,000.00 1,372,837.00
Denver, CO, City and County Airport Revenue,
Series A, 7.5%, 11/15/2006 1,000,000.00 1,000,000.00 1,094,980.00
Denver, CO, City and County Airport Revenue,
Series A, Prerefunded 11/15/2025, 7.25%, 11/15/2025 2,750,000.00 2,750,000.00 2,946,212.00
Denver, CO, City and County Airport Revenue,
Series A, Prerefunded 11/15/2025, 7.25%, 11/15/2025 7,000,000.00 7,000,000.00 7,499,450.00
Denver, CO, City and County Airport Revenue,
Series E, 5.25%, 11/15/2023 10,000,000.00 10,000,000.00 9,657,000.00
Denver, CO, City and County Airport Revenue,
Series B, Prerefunded 11/15/2012, 7.25%, 11/15/2012 3,260,000.00 3,260,000.00 3,487,515.00
Denver, CO, City and County Airport Revenue,
Series C, Prerefunded 11/15/2002, 6.75%, 11/15/2022 1,380,000.00 1,380,000.00 1,463,517.00
Denver, CO, City and County Airport Revenue,
Series A, Prerefunded 11/15/2001, 8.75%, 11/15/2023 2,120,000.00 2,120,000.00 2,245,652.00
Denver, CO, City and County Airport Revenue,
Series A, Prerefunded 11/15/2004, 7.5%, 11/15/2023 1,240,000.00 1,240,000.00 1,389,221.00
Denver, CO, City and County Airport Revenue,
Series B, 7.25%, 11/15/2012 12,715,000.00 12,715,000.00 13,418,139.00
Denver, CO, City and County Airport Revenue,
Series C, 6.75%, 11/15/2022 5,180,000.00 5,180,000.00 5,403,931.00
Denver, CO, City and County Airport, Unrefunded
Balance, Revenue, Series A, 8.75%, 11/15/2023 5,880,000.00 5,880,000.00 6,183,702.00
Denver, CO, City and County Airport, Unrefunded
Balance, Revenue, Series A, 7.5%, 11/15/2023 5,945,000.00 5,945,000.00 6,484,033.00
Denver Colo City & Cnty Arpt Rev,
11.7732%, 11/15/2013 5,000,000.00 5,000,000.00 5,603,500.00
Denver, CO, Urban Renewal Authority,
Tax Increment Revenue, Pavilions-Convention, AMT,
Series 1989, 7.5%, 09/01/2004 760,000.00 760,000.00 795,233.00
Douglas County, CO, School District,
General Obligation, 7%, 12/15/2013 10,000,000.00 10,000,000.00 11,915,000.00
Douglas County, CO, School District,
General Obligation, Series A, 6.5%, 12/15/2016 715,000.00 715,000.00 765,464.00
Colorado Public Highway Authority Revenue,
Series A, 5.75%, 09/01/2014 13,700,000.00 13,700,000.00 14,648,451.00
Colorado Public Highway Authority Revenue,
Series B, Zero Coupon, 09/01/2014 11,295,000.00 11,295,000.00 5,432,330.00
Colorado Public Highway Authority Revenue,
Series B, Zero Coupon, 09/01/2015 21,500,000.00 21,500,000.00 9,709,185.00
Colorado Public Highway Authority Revenue,
Series B, Zero Coupon, 09/01/2017 5,000,000.00 5,000,000.00 1,989,900.00
Colorado Public Highway Authority Revenue,
Series B, Zero Coupon, 09/01/2018 12,000,000.00 12,000,000.00 4,487,520.00
Arapahoe E-470 Public Highway,
Zero Coupon, 09/01/2020 7,000,000.00 7,000,000.00 2,306,570.00
E-470 Pub Hwy Auth Colo RevRevenue,
Zero Coupon, 9/1/2024 20,000,000.00 20,000,000.00 5,179,000.00
E-470 Pub Hwy Auth Colo RevRevenue,
Zero Coupon, 09/01/2024 10,000,000.00 10,000,000.00 2,595,400.00
E-470 Pub Hwy Auth Colo RevRevenue,
Zero Coupon, 09/01/2025 20,000,000.00 20,000,000.00 4,892,600.00
E-470 Pub Hwy Auth Colo RevRevenue,
Zero Coupon, 9/1/2034 15,200,000.00 15,200,000.00 1,239,864.00
Mesa County, CO, Residual Revenue,
Single Family Housing, ETM, Series 1992,
Zero Coupon, 12/01/2011 11,435,000.00 11,435,000.00 6,584,501.00
Colorado Metropolitan Waste & Water Reclamation,
Revenue, Series B, 6%, 04/01/2010 11,505,000.00 11,505,000.00 11,684,478.00
Connecticut
Bridgeport, CT, Series A, 6%, 07/15/2014 5,535,000.00 5,535,000.00 5,972,431.00
Connecticut State General Obligation Series B,
5.75%, 6/15/2012 9,935,000.00 9,935,000.00 10,622,998.00
Connecticut State General Obligation Series B,
5.75%, 06/15/2013 11,260,000.00 11,260,000.00 11,960,146.00
Connecticut StateGeneral Obligation Series B,
5.875%, 06/15/2014 5,000,000.00 5,000,000.00 5,346,250.00
Connecticut State, Series E, 6%, 03/15/2012 7,300,000.00 7,300,000.00 8,039,417.00
Connecticut Special Tax Obligation Transportation
Special Tax Series 10, 5.5%, 09/01/2013 7,480,000.00 7,480,000.00 7,816,076.00
Greenwich, CT, Housing Authority Revenue,
Series A, 6.35%, 09/01/2027 2,640,000.00 2,640,000.00 2,430,436.00
District Of Columbia
District of Columbia, General Obligation,
Series B3, MBIA, 5.4%, 06/01/2006 10,000,000.00 10,000,000.00 10,328,600.00
District of Columbia, General Obligation,
Series 1993 B, 5.5%, 06/01/2008 3,225,000.00 3,225,000.00 3,364,803.00
District of Columbia, General Obligation,
Series B, MBIA, 5.5%, 06/01/2009 2,840,000.00 2,840,000.00 2,966,380.00
District of Columbia, General Obligation,
Series B, MBIA, 5.5%, 06/01/2012 1,050,000.00 1,050,000.00 1,089,448.00
District of Columbia, General Obligation,
Series 1989 B, Zero Coupon, 06/01/2003 2,000,000.00 2,000,000.00 1,781,780.00
District of Columbia, General Obligation,
Series B, Prerefunded 6/1/2010, 6.3%, 06/01/2010 4,500,000.00 4,500,000.00 4,705,650.00
District of Columbia, General Obligation,
Series B, AMBAC, 5.4%, 06/01/2006 15,000,000.00 15,000,000.00 15,492,900.00
District of Columbia, General Obligation,
Series B, AMBAC, 5.5%, 06/01/2007 23,000,000.00 23,000,000.00 23,948,750.00
District of Columbia, General Obligation,
Series B, AMBAC, 5.5%, 06/01/2008 11,300,000.00 11,300,000.00 11,789,855.00
District of Columbia, General Obligation,
Series B, AMBAC, 5.5%, 06/01/2009 16,150,000.00 16,150,000.00 16,868,675.00
District of Columbia, Certificate of Participation,
Series 1993, 6.875%, 01/01/2003 1,380,000.00 1,380,000.00 1,398,243.00
District of Columbia, Certificate of Participation,
Series 1993, 7.3%, 01/01/2013 1,000,000.00 1,000,000.00 1,046,790.00
District of Columbia, General Obligation,
Prerefunded 8/1/99 at 100, MBIA Insured, 6.5%,
06/01/2010 110,000.00 110,000.00 124,449.00
District of Columbia, Unrefunded Balance,
MBIA Insured, 6.25%, 06/01/2010 2,160,000.00 2,160,000.00 2,419,200.00
District of Columbia, Inverse Floating Rate Bond,
11%, 12/07/2008 20,620,000.00 20,620,000.00 22,067,317.00
District of Columbia, General Obligation,
Inverse Floating Rate Note,
Series 1999 B, 6.818%, 06/01/2010 12,500,000.00 12,500,000.00 13,696,500.00
District of Columbia Redevelopment Land Agency,
Revenue, 5.625%, 11/01/2010 3,280,000.00 3,280,000.00 3,301,385.00
District of Columbia, Water and Sewer Authority,
Public Utility Revenue, Series 1998, 5.5%,
10/01/2023 5,000,000.00 5,000,000.00 5,041,800.00
District of Columbia Water & Sewer Authority,
Inverse Floating Rate Bond, Series 13, 7.875%,
10/01/2013 1,210,000.00 1,210,000.00 1,421,459.00
District of Columbia Water & Sewer Authority,
Inverse Floating Rate Bond, Series 14, 7.873%,
10/01/2014 1,970,000.00 1,970,000.00 2,313,804.00
District of Columbia Water & Sewer Authority,
Inverse Floating Rate Bond, Series 15, 7.87%,
10/01/2015 3,565,000.00 3,565,000.00 4,173,830.00
District of Columbia Water & Sewer Authority,
Inverse Floating Rate Bond, Series 16, 7.87%,
10/01/2016 2,750,000.00 2,750,000.00 3,211,065.00
Florida
Broward County, FL, Resource Recovery
Waste Energy Company, Revenue, 7.95%, 12/01/2008 7,665,000.00 7,665,000.00 7,883,452.00
Collier County Florida Health Facilities,
Authority Hospital Revenue, 01/01/2033 2,000,000.00 2,000,000.00 2,000,000.00
Florida State Board of Education Lottery Revenue,
Series A, 5.75%, 07/01/2012 6,530,000.00 6,530,000.00 6,997,809.00
Flordia St Dept Environmental Protn
Preservation RevRevenue, 5.75%, 07/01/2012 10,000,000.00 10,000,000.00 10,716,400.00
Highlands County, FL, Health Facilities Authority
Revenue, Adventist Health Systems, 5.25%,
11/15/2028 5,300,000.00 5,300,000.00 4,211,698.00
Hillsborough County, FL, Industrial Development,
Revenue, Tampa Electric Project, 8%, 05/01/2022 10,000,000.00 10,000,000.00 10,671,600.00
Jacksonville, FL, Health Facilities A, Revenue,
Prerefunded 10/01/2012, 11.5%, 10/01/2012 10,000.00 10,000.00 11,838.00
Jacksonville, FL, Health Facilities A, Revenue,
Prerefunded 10/1/2012, 11.5%, 10/01/2012 35,000.00 35,000.00 43,461.00
Jacksonville, FL, Health Facilities A, Revenue,
Prerefunded 10/1/2012, 11.5%, 10/01/2012 40,000.00 40,000.00 51,828.00
Jacksonville, FL, Health Facilities A, Revenue,
Prerefunded 10/1/2012, 11.5%, 10/01/2012 15,000.00 15,000.00 20,200.00
Jacksonville, FL, Health Facilities A, Revenue,
11.5%, 10/01/2012 85,000.00 85,000.00 134,142.00
Lee County, FL, Airport Revenue,
Series 14, 7.79%, 10/01/2013 3,960,000.00 3,960,000.00 4,571,107.00
Lee County, FL, Airport Revenue,
Series 14, 8.04%, 10/01/2015 1,500,000.00 1,500,000.00 1,746,825.00
Lee County, FL, Airport Revenue,
Series 14, 7.79%, 10/01/2020 1,410,000.00 1,410,000.00 1,550,732.00
Miami-Dade County, FL, Revenue,
Series A, Zero Coupon, 10/01/2014 2,195,000.00 2,195,000.00 1,021,574.00
Miami-Dade County, FL, Special Obligation,
Refunded, Series A, Zero Coupon, 10/01/2022 7,000,000.00 7,000,000.00 1,923,110.00
Orange County, FL, Health Facilities,
Revenue, 6.25%, 10/01/2016 710,000.00 710,000.00 791,756.00
Orange County, FL, Health Facilities,
Revenue, 6.25%, 10/01/2018 290,000.00 290,000.00 322,393.00
Orange County, FL, Health Facilities Authority,
Revenue, Orlando Regional Healthcare, 6.25%,
10/01/2021 6,000,000.00 6,000,000.00 6,668,820.00
Orlando, FL, Utilities Commission Water and
Electricity, Revenue, 6.75%, 10/01/2017 3,500,000.00 3,500,000.00 4,070,150.00
Palm Beach County, FL, Solid Waste Authority
Revenue, Series A, Zero Coupon, 10/01/2013 20,000,000.00 20,000,000.00 10,269,200.00
Sunrise, FL, Utilities System Revenue,
Refunded, 5.5%, 10/01/2018 10,000,000.00 10,000,000.00 10,327,500.00
Georgia
Atlanta, GA, Airport Revenue,
General Obligation, Series B, 5.75%, 01/01/2010 4,240,000.00 4,240,000.00 4,487,192.00
Atlanta, GA, Airport Revenue, General Obligation,
Series B, 5.75%, 01/01/2011 1,590,000.00 1,590,000.00 1,678,976.00
Atlanta, GA, Airport Revenue,
General Obligation, Series C, 6%, 01/01/2011 7,375,000.00 7,375,000.00 7,938,155.00
Atlanta, GA, Airport Revenue, General Obligation,
Series C, 6.125%, 01/01/2012 7,735,000.00 7,735,000.00 8,392,552.00
Atlanta, GA, Water & Wastewater Revenue,
Series A, 5.5%, 11/01/2019 13,000,000.00 13,000,000.00 13,346,840.00
Burke County, GA, Development Authority,
Pollution Control Revenue,
Votgle Project, 7.7%, 01/01/2006 5,000,000.00 5,000,000.00 5,459,500.00
Chatham County, GA, School District,
General Obligation, Prerefunded 8/1/2001, 6.15%,
08/01/2010 7,300,000.00 7,300,000.00 7,527,833.00
Cobb County, GA, Kennestone Hospital Authority,
Series A, MBIA, 5.625%, 04/01/2011 2,305,000.00 2,305,000.00 2,430,484.00
Fulton County, GA, Housing Authority Single,
Revenue, 6.55%, 03/01/2018 175,000.00 175,000.00 179,203.00
Fulton County, GA, Housing Authority Single,
Revenue, Series A, 6.6%, 03/01/2028 2,660,000.00 2,660,000.00 2,744,667.00
Georgia State, Series C, 5.75%, 09/01/2013 4,600,000.00 4,600,000.00 4,964,872.00
State of Georgia, General Obligation,
5.5%, 09/01/2014 5,485,000.00 5,485,000.00 5,768,903.00
Georgia State, General Obligation Series C,
6%, 07/01/2011 13,480,000.00 13,480,000.00 14,770,305.00
Georgia State(Series D),
5.75%, 10/01/2013 5,000,000.00 5,000,000.00 5,318,150.00
Georgia State Housing & Financial Authority
Revenue, Single Family Mortgage, 6.25%, 12/01/2028 12,455,000.00 12,455,000.00 12,793,402.00
Georgia Municipal Electric Authority,
Power Revenue, Series 1991 V, 6.5%, 01/01/2012 5,000,000.00 5,000,000.00 5,648,050.00
Georgia Municipal Electricity Authority,
Power Revenue, Series 1997 X, 6.5%, 01/01/2012 3,500,000.00 3,500,000.00 3,953,635.00
Municipal Electric Authority Power Revenue,
Series Y, 6.4%, 01/01/2013 3,500,000.00 3,500,000.00 3,929,800.00
Georgia Municipal Electric Authority,
Power Revenue, Series W, 6.6%, 01/01/2018 3,500,000.00 3,500,000.00 4,030,670.00
Georgia Municipal Electric Authority Power Revenue,
RITES-PA 786, 6.3324%, 01/01/2016 4,600,000.00 4,600,000.00 5,745,814.00
Macon-Bibb County, GA, Hospital Authority,
Medical Center of Central Georgia,
Series C, FGIC, 5.25%, 08/01/2011 3,000,000.00 3,000,000.00 3,072,450.00
Hawaii
State of Hawaii, General Obligation,
Series CT, 5.7%, 09/01/2013 18,095,000.00 18,095,000.00 19,027,616.00
State of Hawaii, General Obligation,
Series C, 5.75%, 09/01/2014 5,000,000.00 5,000,000.00 5,264,300.00
State of Hawaii, General Obligation,
Series C, 5.8%, 09/01/2015 5,000,000.00 5,000,000.00 5,259,350.00
Hawaii State, Series CU, 5.875%, 10/01/2014 1,500,000.00 1,500,000.00 1,591,905.00
Hawaii St, Series CU, 5.875%, 10/01/2015 2,855,000.00 2,855,000.00 3,016,336.00
State of Hawaii, General Obligation, 5.25%,
10/1/2020 2,325,000.00 2,325,000.00 2,267,479.00
Hawaii St Arpts Systems Revenue, 6.5%, 07/01/2013 6,680,000.00 6,680,000.00 7,382,869.00
Illinois
Central Lake County, IL, Joint Action Water Agency,
Refunding Revenue, MBIA, Zero Coupon,
05/01/2002 2,245,000.00 2,245,000.00 2,103,475.00
Central Lake County, IL, Joint Action Water Agency,
Series 1991, Zero Coupon, 05/01/2004 2,445,000.00 2,445,000.00 2,081,697.00
Chicago, IL, General Obligation,
Series A, MBIA, 5.375%, 01/01/2013 15,410,000.00 15,410,000.00 15,851,188.00
Chicago, IL, General Obligation,
Certificate of Participation, Emergency
Telephone Systems, Series 1993, 5.6%, 1/1/2009 7,200,000.00 7,200,000.00 7,648,848.00
Chicago, IL, General Obligation,
Series B, AMBAC, 5%, 01/01/2010 5,200,000.00 5,200,000.00 5,250,856.00
Chicago, IL, General Obligation, Series B, 5%,
01/01/2011 1,620,000.00 1,620,000.00 1,633,348.00
Chicago, IL, General Obligation,
Series B, AMBAC, 5.125%, 01/01/2015 9,550,000.00 9,550,000.00 9,530,613.00
Chicago, IL, General Obligation, AMBAC, 6.25%,
01/01/2011 3,000,000.00 3,000,000.00 3,327,960.00
Chicago, IL, Capital Appreciation, City Colleges,
Zero Coupon, 01/01/2017 20,000,000.00 20,000,000.00 8,264,600.00
Chicago, IL, Board of Education,
Certificates of Participation,
Series A, 6.25%, 01/01/2009 6,735,000.00 6,735,000.00 7,352,128.00
Chicago, IL, General Obligation Lease,
Board of Education,
Series A, MBIA, 6.25%, 01/01/2010 11,550,000.00 11,550,000.00 12,712,969.00
Chicago, IL, Board of Education,
Certificates of Participation,
Series A, 6.25%, 01/01/2011 10,000,000.00 10,000,000.00 11,093,200.00
Chicago, IL, General Obligation Lease,
Certificate of Participation, Board of Education,
Series 1992 A, 6 .25%, 01/01/2015 28,725,000.00 28,725,000.00 31,937,604.00
Chicago, IL, General Obligation Lease,
Board of Education,
Series A, MBIA Insured, 6%, 01/01/2016 11,025,000.00 11,025,000.00 11,968,850.00
Chicago, IL, Board of Education,
Certificates of Participation,
Series A, 6%, 01/01/2020 36,625,000.00 36,625,000.00 39,516,910.00
Chicago, IL, General Obligation Lease,
Board of Education,
MBIA Insured, Series 1996, 6.25%, 12/01/2011 1,600,000.00 1,600,000.00 1,787,088.00
Chicago, IL, Board of Education, General
Obligation, Chicago School Reform, 6%, 12/01/2016 5,000,000.00 5,000,000.00 5,244,150.00
<CAPTION>
<S> <C>
Colorado Housing Finance Authority Revenue,
Multi-Family Mortgage, Series 1992, 8.25%,
10/01/2012 2,074,303.00
Denver, CO, City and County School Districts,
General Obligation, Series A, 6.5%, 12/01/2010 3,415,440.00
Denver, CO, City and County School Districts,
General Obligation, Series A, 6.5%, 06/01/2010 3,645,991.00
Denver, CO, City and County Airport Revenue,
Series A, Prerefunded 11/15/2012, 7.5%, 11/15/2012 6,391,440.00
Denver, CO, City and County Airport Revenue,
Series A, 7.4%, 11/15/2005
Denver, CO, City and County Airport Revenue, 1,372,837.00
Series A, 7.5%, 11/15/2006 1,094,980.00
Denver, CO, City and County Airport Revenue,
Series A, Prerefunded 11/15/2025, 7.25%, 11/15/2025 2,946,212.00
Denver, CO, City and County Airport Revenue,
Series A, Prerefunded 11/15/2025, 7.25%, 11/15/2025 7,499,450.00
Denver, CO, City and County Airport Revenue,
Series E, 5.25%, 11/15/2023 9,657,000.00
Denver, CO, City and County Airport Revenue,
Series B, Prerefunded 11/15/2012, 7.25%, 11/15/2012 3,487,515.00
Denver, CO, City and County Airport Revenue,
Series C, Prerefunded 11/15/2002, 6.75%, 11/15/2022 1,463,517.00
Denver, CO, City and County Airport Revenue,
Series A, Prerefunded 11/15/2001, 8.75%, 11/15/2023 2,245,652.00
Denver, CO, City and County Airport Revenue,
Series A, Prerefunded 11/15/2004, 7.5%, 11/15/2023 1,389,221.00
Denver, CO, City and County Airport Revenue,
Series B, 7.25%, 11/15/2012 13,418,139.00
Denver, CO, City and County Airport Revenue,
Series C, 6.75%, 11/15/2022 5,403,931.00
Denver, CO, City and County Airport, Unrefunded
Balance, Revenue, Series A, 8.75%, 11/15/2023 6,183,702.00
Denver, CO, City and County Airport, Unrefunded
Balance, Revenue, Series A, 7.5%, 11/15/2023 6,484,033.00
Denver Colo City & Cnty Arpt Rev,
11.7732%, 11/15/2013 5,603,500.00
Denver, CO, Urban Renewal Authority,
Tax Increment Revenue, Pavilions-Convention, AMT,
Series 1989, 7.5%, 09/01/2004 795,233.00
Douglas County, CO, School District,
General Obligation, 7%, 12/15/2013 11,915,000.00
Douglas County, CO, School District,
General Obligation, Series A, 6.5%, 12/15/2016 765,464.00
Colorado Public Highway Authority Revenue,
Series A, 5.75%, 09/01/2014 14,648,451.00
Colorado Public Highway Authority Revenue,
Series B, Zero Coupon, 09/01/2014 5,432,330.00
Colorado Public Highway Authority Revenue,
Series B, Zero Coupon, 09/01/2015 9,709,185.00
Colorado Public Highway Authority Revenue,
Series B, Zero Coupon, 09/01/2017 1,989,900.00
Colorado Public Highway Authority Revenue,
Series B, Zero Coupon, 09/01/2018 4,487,520.00
Arapahoe E-470 Public Highway,
Zero Coupon, 09/01/2020 2,306,570.00
E-470 Pub Hwy Auth Colo RevRevenue,
Zero Coupon, 9/1/2024 5,179,000.00
E-470 Pub Hwy Auth Colo RevRevenue,
Zero Coupon, 09/01/2024 2,595,400.00
E-470 Pub Hwy Auth Colo RevRevenue,
Zero Coupon, 09/01/2025 4,892,600.00
E-470 Pub Hwy Auth Colo RevRevenue,
Zero Coupon, 9/1/2034 1,239,864.00
Mesa County, CO, Residual Revenue,
Single Family Housing, ETM, Series 1992,
Zero Coupon, 12/01/2011 6,584,501.00
Colorado Metropolitan Waste & Water Reclamation,
Revenue, Series B, 6%, 04/01/2010 11,684,478.00
Connecticut
Bridgeport, CT, Series A, 6%, 07/15/2014 5,972,431.00
Connecticut StateGeneral Obligation Series B,
5.75%, 6/15/2012 10,622,998.00
Connecticut StateGeneral Obligation Series B,
5.75%, 06/15/2013 11,960,146.00
Connecticut StateGeneral Obligation Series B,
5.875%, 06/15/2014 5,346,250.00
Connecticut State, Series E, 6%, 03/15/2012 8,039,417.00
Connecticut Special Tax Obligation Transportation
Special Tax Series 10, 5.5%, 09/01/2013 7,816,076.00
Greenwich, CT, Housing Authority Revenue,
Series A, 6.35%, 09/01/2027 2,430,436.00
District Of Columbia
District of Columbia, General Obligation,
Series B3, MBIA, 5.4%, 06/01/2006 10,328,600.00
District of Columbia, General Obligation,
Series 1993 B, 5.5%, 06/01/2008 3,364,803.00
District of Columbia, General Obligation,
Series B, MBIA, 5.5%, 06/01/2009 2,966,380.00
District of Columbia, General Obligation,
Series B, MBIA, 5.5%, 06/01/2012 1,089,448.00
District of Columbia, General Obligation,
Series 1989 B, Zero Coupon, 06/01/2003 1,781,780.00
District of Columbia, General Obligation,
Series B, Prerefunded 6/1/2010, 6.3%, 06/01/2010 4,705,650.00
District of Columbia, General Obligation,
Series B, AMBAC, 5.4%, 06/01/2006 15,492,900.00
District of Columbia, General Obligation,
Series B, AMBAC, 5.5%, 06/01/2007 23,948,750.00
District of Columbia, General Obligation,
Series B, AMBAC, 5.5%, 06/01/2008 11,789,855.00
District of Columbia, General Obligation,
Series B, AMBAC, 5.5%, 06/01/2009 16,868,675.00
District of Columbia, Certificate of Participation,
Series 1993, 6.875%, 01/01/2003 1,398,243.00
District of Columbia, Certificate of Participation,
Series 1993, 7.3%, 01/01/2013 1,046,790.00
District of Columbia, General Obligation,
Prerefunded 8/1/99 at 100, MBIA Insured, 6.5%,
06/01/2010 124,449.00
District of Columbia, Unrefunded Balance,
MBIA Insured, 6.25%, 06/01/2010 2,419,200.00
District of Columbia, Inverse Floating Rate Bond,
11%, 12/07/2008 22,067,317.00
District of Columbia, General Obligation,
Inverse Floating Rate Note,
Series 1999 B, 6.818%, 06/01/2010 13,696,500.00
District of Columbia Redevelopment Land Agency,
Revenue, 5.625%, 11/01/2010 3,301,385.00
District of Columbia, Water and Sewer Authority,
Public Utility Revenue, Series 1998, 5.5%,
10/01/2023 5,041,800.00
District of Columbia Water & Sewer Authority,
Inverse Floating Rate Bond, Series 13, 7.875%,
10/01/2013 1,421,459.00
District of Columbia Water & Sewer Authority,
Inverse Floating Rate Bond, Series 14, 7.873%,
10/01/2014 2,313,804.00
District of Columbia Water & Sewer Authority,
Inverse Floating Rate Bond, Series 15, 7.87%,
10/01/2015 4,173,830.00
District of Columbia Water & Sewer Authority,
Inverse Floating Rate Bond, Series 16, 7.87%,
10/01/2016 3,211,065.00
Florida
Broward County, FL, Resource Recovery
Waste Energy Company, Revenue, 7.95%, 12/01/2008 7,883,452.00
Collier County Florida Health Facilities,
Authority Hospital Revenue, 01/01/2033 2,000,000.00
Florida State Board of Education Lottery Revenue,
Series A, 5.75%, 07/01/2012 6,997,809.00
Flordia St Dept Environmental Protn
Preservation RevRevenue, 5.75%, 07/01/2012 10,716,400.00
Highlands County, FL, Health Facilities Authority
Revenue, Adventist Health Systems, 5.25%,
11/15/2028 4,211,698.00
Hillsborough County, FL, Industrial Development,
Revenue, Tampa Electric Project, 8%, 05/01/2022 10,671,600.00
Jacksonville, FL, Health Facilities A, Revenue,
Prerefunded 10/01/2012, 11.5%, 10/01/2012 11,838.00
Jacksonville, FL, Health Facilities A, Revenue,
Prerefunded 10/1/2012, 11.5%, 10/01/2012 43,461.00
Jacksonville, FL, Health Facilities A, Revenue,
Prerefunded 10/1/2012, 11.5%, 10/01/2012 51,828.00
Jacksonville, FL, Health Facilities A, Revenue,
Prerefunded 10/1/2012, 11.5%, 10/01/2012 20,200.00
Jacksonville, FL, Health Facilities A, Revenue,
11.5%, 10/01/2012 134,142.00
Lee County, FL, Airport Revenue,
Series 14, 7.79%, 10/01/2013 4,571,107.00
Lee County, FL, Airport Revenue,
Series 14, 8.04%, 10/01/2015 1,746,825.00
Lee County, FL, Airport Revenue,
Series 14, 7.79%, 10/01/2020 1,550,732.00
Miami-Dade County, FL, Revenue,
Series A, Zero Coupon, 10/01/2014 1,021,574.00
Miami-Dade County, FL, Special Obligation,
Refunded, Series A, Zero Coupon, 10/01/2022 1,923,110.00
Orange County, FL, Health Facilities,
Revenue, 6.25%, 10/01/2016 791,756.00
Orange County, FL, Health Facilities,
Revenue, 6.25%, 10/01/2018 322,393.00
Orange County, FL, Health Facilities Authority,
Revenue, Orlando Regional Healthcare, 6.25%,
10/01/2021 6,668,820.00
Orlando, FL, Utilities Commission Water and
Electricity, Revenue, 6.75%, 10/01/2017 4,070,150.00
Palm Beach County, FL, Solid Waste Authority
Revenue, Series A, Zero Coupon, 10/01/2013 10,269,200.00
Sunrise, FL, Utilities System Revenue,
Refunded, 5.5%, 10/01/2018 10,327,500.00
Georgia
Atlanta, GA, Airport Revenue,
General Obligation, Series B, 5.75%, 01/01/2010 4,487,192.00
Atlanta, GA, Airport Revenue, General Obligation,
Series B, 5.75%, 01/01/2011 1,678,976.00
Atlanta, GA, Airport Revenue,
General Obligation, Series C, 6%, 01/01/2011 7,938,155.00
Atlanta, GA, Airport Revenue, General Obligation,
Series C, 6.125%, 01/01/2012 8,392,552.00
Atlanta, GA, Water & Wastewater Revenue,
Series A, 5.5%, 11/01/2019 13,346,840.00
Burke County, GA, Development Authority,
Pollution Control Revenue,
Votgle Project, 7.7%, 01/01/2006 5,459,500.00
Chatham County, GA, School District,
General Obligation, Prerefunded 8/1/2001, 6.15%,
08/01/2010 7,527,833.00
Cobb County, GA, Kennestone Hospital Authority,
Series A, MBIA, 5.625%, 04/01/2011 2,430,484.00
Fulton County, GA, Housing Authority Single,
Revenue, 6.55%, 03/01/2018 179,203.00
Fulton County, GA, Housing Authority Single,
Revenue, Series A, 6.6%, 03/01/2028 2,744,667.00
Georgia State, Series C, 5.75%, 09/01/2013 4,964,872.00
State of Georgia, General Obligation,
5.5%, 09/01/2014 5,768,903.00
Georgia State, General Obligation Series C,
6%, 07/01/2011 14,770,305.00
Georgia State(Series D),
5.75%, 10/01/2013 5,318,150.00
Georgia State Housing & Financial Authority
Revenue, Single Family Mortgage, 6.25%, 12/01/2028 12,793,402.00
Georgia Municipal Electric Authority,
Power Revenue, Series 1991 V, 6.5%, 01/01/2012 5,648,050.00
Georgia Municipal Electricity Authority,
Power Revenue, Series 1997 X, 6.5%, 01/01/2012 3,953,635.00
Municipal Electric Authority Power Revenue,
Series Y, 6.4%, 01/01/2013 3,929,800.00
Georgia Municipal Electric Authority,
Power Revenue, Series W, 6.6%, 01/01/2018 4,030,670.00
Georgia Municipal Electric Authority Power Revenue,
RITES-PA 786, 6.3324%, 01/01/2016 5,745,814.00
Macon-Bibb County, GA, Hospital Authority,
Medical Center of Central Georgia,
Series C, FGIC, 5.25%, 08/01/2011 3,072,450.00
Hawaii
State of Hawaii, General Obligation,
Series CT, 5.7%, 09/01/2013 19,027,616.00
State of Hawaii, General Obligation,
Series C, 5.75%, 09/01/2014 5,264,300.00
State of Hawaii, General Obligation,
Series C, 5.8%, 09/01/2015 5,259,350.00
Hawaii State, Series CU, 5.875%, 10/01/2014 1,591,905.00
Hawaii St, Series CU, 5.875%, 10/01/2015 3,016,336.00
State of Hawaii, General Obligation, 5.25%,
10/1/2020 2,267,479.00
Hawaii St Arpts Systems Revenue, 6.5%, 07/01/2013 7,382,869.00
Illinois
Central Lake County, IL, Joint Action Water Agency,
Refunding Revenue, MBIA, Zero Coupon,
05/01/2002 2,103,475.00
Central Lake County, IL, Joint Action Water Agency,
Series 1991, Zero Coupon, 05/01/2004 2,081,697.00
Chicago, IL, General Obligation,
Series A, MBIA, 5.375%, 01/01/2013 15,851,188.00
Chicago, IL, General Obligation,
Certificate of Participation, Emergency
Telephone Systems, Series 1993, 5.6%, 1/1/2009 7,648,848.00
Chicago, IL, General Obligation,
Series B, AMBAC, 5%, 01/01/2010 5,250,856.00
Chicago, IL, General Obligation, Series B, 5%,
01/01/2011 1,633,348.00
Chicago, IL, General Obligation,
Series B, AMBAC, 5.125%, 01/01/2015 9,530,613.00
Chicago, IL, General Obligation, AMBAC, 6.25%,
01/01/2011 3,327,960.00
Chicago, IL, Capital Appreciation, City Colleges,
Zero Coupon, 01/01/2017 8,264,600.00
Chicago, IL, Board of Education,
Certificates of Participation,
Series A, 6.25%, 01/01/2009 7,352,128.00
Chicago, IL, General Obligation Lease,
Board of Education,
Series A, MBIA, 6.25%, 01/01/2010 12,712,969.00
Chicago, IL, Board of Education,
Certificates of Participation,
Series A, 6.25%, 01/01/2011 11,093,200.00
Chicago, IL, General Obligation Lease,
Certificate of Participation, Board of Education,
Series 1992 A, 6 .25%, 01/01/2015 31,937,604.00
Chicago, IL, General Obligation Lease,
Board of Education,
Series A, MBIA Insured, 6%, 01/01/2016 11,968,850.00
Chicago, IL, Board of Education,
Certificates of Participation,
Series A, 6%, 01/01/2020 39,516,910.00
Chicago, IL, General Obligation Lease,
Board of Education,
MBIA Insured, Series 1996, 6.25%, 12/01/2011 1,787,088.00
Chicago, IL, Board of Education, General
Obligation, Chicago School Reform, 6%, 12/01/2016 5,244,150.00
</TABLE>
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<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Chicago, IL, Board of Education,
General Obligation, Chicago
School Reform, Series A, Zero
Coupon, 12/01/2012 3,500,000.00 3,500,000.00 1,870,225.00 1,870,225.00
Chicago, IL, Board of Education,
General Obligation, Chicago
School Reform, Series A, Zero
Coupon, 12/01/2014 2,000,000.00 2,000,000.00 941,960.00 941,960.00
Chicago, IL, Board of Education,
General Obligation, Chicago
School Reform, Series B, Zero
Coupon, 12/01/2009 7,615,000.00 7,615,000.00 4,774,985.00 4,774,985.00
Chicago, IL, Motor Fuel Tax
Revenue, Series 1993, 5.375%,
01/01/2014 5,000,000.00 5,000,000.00 5,098,750.00 5,098,750.00
Chicago, IL, O'Hare International
Airport, Special Facilities Revenue,
United Airlines 1999 A, 5.35%,
Project, Series 09/01/2016 3,000,000.00 4,500,000.00 7,500,000.00 2,609,250.00 3,913,875.00 6,523,125.00
Chicago, IL, O' Hare International
Airport Revenue, Series A, 6%,
01/01/2012 5,000,000.00 5,000,000.00 5,108,850.00 5,108,850.00
Chicago,IL, O'Hare International
Airport, Revenue Refunding, Series
C, MBIA, 5%, 01/01/2011 6,500,000.00 6,500,000.00 6,522,685.00 6,522,685.00
Chicago, IL, Public Building
Commission, Board of Education,
Series A, MBIA, Zero Coupon,
01/01/2006 2,430,000.00 2,430,000.00 1,909,129.00 1,909,129.00
Chicago, IL, Public Building
Commission, Series 1990 A ,ETM,
Zero Coupon, 01/01/2008 4,000,000.00 4,000,000.00 2,842,400.00 2,842,400.00
Chicago, IL, Public Building
Commission, Series 1993 A,
5.25%, 12/01/2008 2,655,000.00 2,655,000.00 2,739,853.00 2,739,853.00
Chicago, IL, Public Building
Commission, Building Revenue,
Series A, MBIA, 5.25%,
12/01/2011 9,705,000.00 9,705,000.00 9,945,586.00 9,945,586.00
Chicago, IL, Public Building
Commission, Building Revenue,
Series A, MBIA, 5.25%, 12/01/2009 10,420,000.00 10,420,000.00 10,748,021.00 10,748,021.00
Chicago, IL, Tax Allocation,
Central Station Project, Series A,
Prerefunded 1/1/2005,
8.9%, 01/01/2011 1,530,000.00 1,530,000.00 1,632,234.00 1,632,234.00
Chicago, IL, Wastewater Transmission
Revenue, FGIC, 5.5%, 01/01/2009 11,990,000.00 11,990,000.00 12,534,226.00 12,534,226.00
Chicago, IL, Wastewater Transmission
Revenue, FGIC, 5.5%, 01/01/2010 7,220,000.00 7,220,000.00 7,553,130.00 7,553,130.00
Chicago, IL, Wastewater Transmission
Revenue, Series 1993, 5.375%,
01/01/2013 3,215,000.00 3,215,000.00 3,289,523.00 3,289,523.00
Chicago, IL, Water Revenue, Zero
Coupon, 11/01/2012 6,350,000.00 6,350,000.00 3,431,794.00 3,431,794.00
Cook & Dupage Counties, IL,
Housing Development Authority,
Zero Coupon, FSA Insured,
12/01/2007 2,550,000.00 2,550,000.00 1,815,600.00 1,815,600.00
Cook & Dupage Counties, IL,
Housing Development Authority,
Zero Coupon, FSA Insured, 12/01/2008 2,625,000.00 2,625,000.00 1,773,555.00 1,773,555.00
Cook & Dupage Counties, IL,
Housing Development Authority,
Zero Coupon, FSA Insured, 12/01/2009 2,860,000.00 2,860,000.00 1,831,887.00 1,831,887.00
Cook County, IL, Rites-PA 591,
10.6851%, 11/15/2013 10,610,000.00 10,610,000.00 13,542,179.00 13,542,179.00
Cook County, IL, General Obligation,
Zero Coupon, ETM, AMBAC Insured,
11/01/2004 3,205,000.00 3,205,000.00 2,669,412.00 2,669,412.00
Cook County, IL, General Obligation,
Series C, FGIC, 6%, 11/15/2007 5,000,000.00 5,000,000.00 5,361,950.00 5,361,950.00
Cook County, IL, Capital Improvements,
General Obligation, 6.5%, 11/15/2014 18,560,000.00 18,560,000.00 21,161,740.00 21,161,740.00
Decatur, IL, General Obligation,
Series 1991, AMBAC, Zero Coupon,
10/01/2003 1,455,000.00 1,455,000.00 1,275,031.00 1,275,031.00
Decatur, IL, General Obligation,
Series 1991, AMBAC, Zero Coupon,
10/01/2004 1,415,000.00 1,415,000.00 1,181,369.00 1,181,369.00
Du-Page, IL, Industrial Development
Revenue, Weyerhaeuser Company
Project, Series 1983, 8.65%,
11/01/2008 3,600,000.00 3,600,000.00 3,643,308.00 3,643,308.00
Hoffman Estates, IL, Tax Increment
Revenue, Series 1991, Zero Coupon,
05/15/2006 4,500,000.00 4,500,000.00 3,407,580.00 3,407,580.00
Hoffman Estates, IL, Tax Increment
Revenue, Capital Appreciation,
Junior Lien, Series 1991, Zero
Coupon, 05/15/2007 15,460,000.00 15,460,000.00 11,090,385.00 11,090,385.00
Illinois Development Financial
Authority, Pollution Revenue,
Commonwealth Edison Company
Project, Series D, 6.75%,
03/01/2015 16,780,000.00 16,780,000.00 18,166,195.00 18,166,195.00
Illinois Development Finance
Authority, Pollution Control
Revenue, Commonwealth Edison,
Series 1994, 5.85%, 01/15/2014 5,000,000.00 5,000,000.00 5,310,450.00 5,310,450.00
Illinois Development Financial
Authority Hospital Revenue,
Adventist Health System, 5.5%,
11/15/2020 10,000,000.00 10,000,000.00 8,456,400.00 8,456,400.00
Illinois Adventish Health
Systems, 5.5%, 11/15/2029 5,475,000.00 5,475,000.00 4,438,637.00 4,438,637.00
Illinois Development Financial
Authority, General Obligation,
Debt Restructure-East St Louis,
7.5%, 11/15/2013 3,750,000.00 3,750,000.00 4,070,437.00 4,070,437.00
Illinois Educational Facilities
Authority, Loyola University,
1991 Series A, MBIA, Zero
Coupon, 07/01/2004 2,860,000.00 2,860,000.00 2,416,013.00 2,416,013.00
Illinois Educational Facilities
Authority, Loyola University,
Series 1991 A, ETM, Zero
Coupon, 07/01/2005 7,100,000.00 7,100,000.00 5,711,950.00 5,711,950.00
Illinois Health Facilities
Authority, Children's Memorial
Hospital, MBIA, 6.25%, 08/15/2013 3,400,000.00 3,400,000.00 3,750,336.00 3,750,336.00
Illinois Health Facilities
Authority, Felician Healthcare
Inc., Series A, AMBAC, 6.25%,
12/01/2015 17,000,000.00 17,000,000.00 18,792,990.00 18,792,990.00
Illinois Health Facilities
Authority, SSM Healthcare System,
MBIA, 6.4%, 06/01/2008 1,350,000.00 1,350,000.00 1,480,383.00 1,480,383.00
Illinois Health Facilities
Authority, Brokaw-Mennonite
Healthcare, FGIC, 6%, 08/15/2009 1,640,000.00 1,640,000.00 1,767,100.00 1,767,100.00
Illinois Health Facilities
Authority, Brokaw-Mennonite
Healthcare, FGIC, 6%, 08/15/2006 1,380,000.00 1,380,000.00 1,465,601.00 1,465,601.00
Illinois Health Facilities
Authority, Brokaw-Mennonite
Healthcare, FGIC, 6%, 08/15/2007 1,460,000.00 1,460,000.00 1,560,652.00 1,560,652.00
Illinois Health Facilities
Authority, Brokaw-Mennonite
Healthcare, FGIC, 6%, 08/15/2008 1,550,000.00 1,550,000.00 1,663,894.00 1,663,894.00
Illinois Health Facilities Authority
Revenue, Health Care Facilities-
Northwestern Medical, Prerefunded
11/15/2004, 6.5%, 11/15/2015 3,900,000.00 3,900,000.00 4,243,005.00 4,243,005.00
Illinois Health Facilities Authority,
Centegra Health System, Series 1998,
5.2%, 09/01/2012 1,000,000.00 1,000,000.00 902,970.00 902,970.00
Illinois Health Facilities Authority
Revenue, South Suburban Hospital,
Prerefunded 2/15/2002,
7%, 02/15/2009 3,055,000.00 3,055,000.00 3,202,403.00 3,202,403.00
Illinois Health Facilities
Authority Revenue, South Suburban
Hospital, 7%, 02/15/2009 4,695,000.00 4,695,000.00 5,163,795.00 5,163,795.00
Illinois Dedicated Tax Revenue,
Civic Center Project, Series A,
6.5%, 12/15/2007 4,765,000.00 4,765,000.00 5,281,526.00 5,281,526.00
Illinois Dedicated Tax Revenue,
Civic Center Project, Series A,
AMBAC, 6.5%, 12/15/2008 5,255,000.00 5,255,000.00 5,872,935.00 5,872,935.00
Illinois, Dedicated Tax Revenue,
Civic Center Project, AMBAC, 6.25%,
12/15/2011 3,000,000.00 3,000,000.00 3,335,370.00 3,335,370.00
Illinois, Dedicated Tax Revenue,
Civic Center Project, AMBAC, 6.25%,
12/15/2020 6,975,000.00 6,975,000.00 7,613,352.00 7,613,352.00
Illinois State Sales Tax Revenue,
6%, 06/15/2010 3,500,000.00 3,500,000.00 3,805,865.00 3,805,865.00
Illinois State Sales Tax Revenue,
6.125%, 06/15/2012 2,000,000.00 2,000,000.00 2,171,400.00 2,171,400.00
Illinois State Sales Tax Revenue,
Series 1992 P, 6.5%, 06/15/2013 2,100,000.00 2,100,000.00 2,358,447.00 2,358,447.00
Illinois State Toll Highway
Authority, Toll Highway Priority
Revenue Bond, Series 1998 A,
5.5%, 01/01/2013 3,665,000.00 3,665,000.00 3,814,348.00 3,814,348.00
Joliet, IL, Junior College Assistance
Corp., Lease Revenue, North Campus
Extension Center, MBIA, 6.7%,
09/01/2012 2,500,000.00 2,500,000.00 2,817,725.00 2,817,725.00
Kane, Cook and Dupage Counties, IL,
School District #46 Elgin, Series
1996B, FSA Insured, Zero Coupon,
01/01/2011 1,040,000.00 1,040,000.00 623,344.00 623,344.00
Kane, Cook and Dupage Counties, IL,
School District #46 Elgin, Series
1996B, FSA Insured, Zero Coupon,
01/01/2012 1,300,000.00 1,300,000.00 733,460.00 733,460.00
Kane, Cook and Dupage Counties, IL,
School District #46 Elgin, Series
1996B, FSA Insured, Zero Coupon,
01/01/2013 4,595,000.00 4,595,000.00 2,436,085.00 2,436,085.00
Kane County, IL , MBIA Insured,
Series 1996A, 6.5%, 02/01/2010 1,775,000.00 1,775,000.00 1,990,272.00 1,990,272.00
Kendall, Kane and Will Counties,
IL, Community Unit School District
Number 308, Oswego, FGIC, Zero
Coupon, 03/01/2005 1,540,000.00 1,540,000.00 1,258,149.00 1,258,149.00
Kendall, Kane and Will Counties,
IL, Community Unit School District
Number 308, Oswego, FGIC, Zero
Coupon, 03/01/2006 1,595,000.00 1,595,000.00 1,239,410.00 1,239,410.00
Lake, Cook, Kane and McHenry Counties,
IL, General Obligation, 6.3%,
12/01/2017 1,885,000.00 1,885,000.00 2,113,744.00 2,113,744.00
Decatur, IL, Public Building
Commission, General Obligation,
Certificate of Participation, FGIC,
6.5%, 01/01/2003 1,725,000.00 1,725,000.00 1,792,016.00 1,792,016.00
Decatur, IL, Public Building Commission,
General Obligation, Certificate of
Participation, FGIC, 6.5%, 01/01/2006 1,500,000.00 1,500,000.00 1,622,565.00 1,622,565.00
Metropolitan Pier & Exposition Auth
Ill Dedicated ST Tax Rev, 06/15/2011 3,795,000.00 3,795,000.00 2,222,617.00 2,222,617.00
Metropolitan Pier & Exposition Authority
of Illinois , McCormick Project, Series
1994, Zero Coupon, 06/15/2013 7,565,000.00 7,565,000.00 3,915,870.00 3,915,870.00
Northern Illinois University, Board of
Regents, Series 1992, Zero Coupon,
04/01/2005 1,865,000.00 1,865,000.00 1,517,643.00 1,517,643.00
Northern Illinois University, Board of
Regents, Series 1992, Zero Coupon,
10/01/2005 1,865,000.00 1,865,000.00 1,482,003.00 1,482,003.00
Northern Illinois University, Board of
Regents, Series 1992, Zero Coupon,
04/01/2006 1,865,000.00 1,865,000.00 1,443,435.00 1,443,435.00
Northern Illinois University, Board of
Regents, Series 1992, Zero Coupon,
10/01/2006 1,865,000.00 1,865,000.00 1,409,194.00 1,409,194.00
Northern Illinois University, Board of
Regents, Series 1992, Zero Coupon,
04/01/2007 1,865,000.00 1,865,000.00 1,371,521.00 1,371,521.00
Northern Illinois University, Board of
Regents, Series 1992, Zero Coupon,
10/01/2007 1,865,000.00 1,865,000.00 1,338,659.00 1,338,659.00
Northwest Suburban Municipal Joint
Action Water Agency, IL, Supply System
Revenue, MBIA, 6.45%, 05/01/2007 2,575,000.00 2,575,000.00 2,820,165.00 2,820,165.00
Oak Lawn, IL, Water and Sewer Revenue,
Series 1992 A, Zero Coupon, 10/01/2003 1,295,000.00 1,295,000.00 1,125,898.00 1,125,898.00
Oak Lawn, IL, Water and Sewer Revenue,
Series 1992 A, Zero Coupon, 10/01/2004 1,295,000.00 1,295,000.00 1,069,307.00 1,069,307.00
Oak Lawn, IL, Water and Sewer Revenue,
Series 1992 A, Zero Coupon, 10/01/2005 1,295,000.00 1,295,000.00 1,014,839.00 1,014,839.00
Oak Lawn, IL, Water and Sewer Revenue,
Series 1992 A, Zero Coupon, 10/01/2006 1,295,000.00 1,295,000.00 962,754.00 962,754.00
Illinois Regional Transportation
Authority, 11.1422%, 11/01/2021 12,900,000.00 12,900,000.00 17,384,943.00 17,384,943.00
Rosemont, IL, Tax Increment Revenue,
Series 1990, Zero Coupon, 12/01/2004 6,000,000.00 6,000,000.00 4,970,220.00 4,970,220.00
Rosemont, IL, Tax Increment, Series
C, FGIC, Zero Coupon, 12/01/2005 4,455,000.00 4,455,000.00 3,512,188.00 3,512,188.00
Rosemont, IL, Tax Increment Revenue,
Series 1990 , Zero Coupon, 12/01/2005 7,060,000.00 7,060,000.00 5,565,892.00 5,565,892.00
Rosemont, IL, Tax Increment, Series C,
FGIC, Zero Coupon, 12/01/2007 2,655,000.00 2,655,000.00 1,890,360.00 1,890,360.00
St. Charles, IL, Multifamily Housing
Revenue, Housing-Wessel Court
Project, 7.6%, 04/01/2024 3,680,000.00 3,680,000.00 3,713,782.00 3,713,782.00
Skokie, IL, Park District, Series
1994B, AMBAC Insured, Zero Coupon,
12/01/2011 3,000,000.00 3,000,000.00 1,716,390.00 1,716,390.00
State University Retirement System,
IL, Special Revenue, MBIA, Zero
Coupon, 10/01/2003 2,750,000.00 2,750,000.00 2,409,852.00 2,409,852.00
Illinois University Retirement
System, Series 1990, Zero Coupon,
10/01/2005 7,000,000.00 7,000,000.00 5,562,480.00 5,562,480.00
University of Illinois, Board of
Trustees, Series 1991, AMBAC,
Zero Coupon, 04/01/2003 3,890,000.00 3,890,000.00 3,489,135.00 3,489,135.00
University of Illinois, Board of
Trustees, Series 1991, AMBAC,
Zero Coupon, 04/01/2005 3,830,000.00 3,830,000.00 3,116,662.00 3,116,662.00
University Ill Univ Revs, 04/01/2015 3,300,000.00 3,300,000.00 1,524,501.00 1,524,501.00
University Park, IL, Tax Allocation,
Governors Gateway Industrial Park,
8.5%, 12/01/2011 2,440,000.00 2,440,000.00 2,638,908.00 2,638,908.00
Will County, IL, Forest Preserves
District, General Obligation, Series
B, Zero Coupon, 12/01/2011 4,145,000.00 4,145,000.00 2,367,914.00 2,367,914.00
Will County, IL, Forest Preserves
District, General Obligation, Series
B, Zero Coupon, 12/01/2012 2,480,000.00 2,480,000.00 1,332,032.00 1,332,032.00
Will County, IL, Forest Preserves
District, General Obligation, Series
B, Zero Coupon, 12/01/2013 12,030,000.00 12,030,000.00 6,064,323.00 6,064,323.00
Will County, IL, Forest Preserves
District, General Obligation, Series
B, Zero Coupon, 12/01/2014 10,255,000.00 10,255,000.00 4,856,357.00 4,856,357.00
Will County, IL, School District No.
201, General Obligation, Series 1991,
ETM, Zero Coupon, 12/15/2006 3,725,000.00 3,725,000.00 2,796,841.00 2,796,841.00
Will County, IL, Community Unit School
District, General Obligation, Series
B, Zero Coupon, 11/01/2015 8,000,000.00 8,000,000.00 3,578,320.00 3,578,320.00
Winnebago County, IL, School District
No. 122, General Obligation, Series
1992, 6.55%, 06/01/2009 1,675,000.00 1,675,000.00 1,876,804.00 1,876,804.00
Winnebago County, IL, School District
No. 122, General Obligation, Series
1992, 6.55%, 06/01/2010 1,825,000.00 1,825,000.00 2,059,731.00 2,059,731.00
Indiana
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2002 1,290,000.00 1,290,000.00 1,319,541.00 1,319,541.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2003 1,370,000.00 1,370,000.00 1,418,059.00 1,418,059.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2004 1,450,000.00 1,450,000.00 1,516,091.00 1,516,091.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 7/1/2005 1,535,000.00 1,535,000.00 1,619,302.00 1,619,302.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2006 1,630,000.00 1,630,000.00 1,733,374.00 1,733,374.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2007 1,725,000.00 1,725,000.00 1,847,147.00 1,847,147.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2008 945,000.00 945,000.00 1,017,906.00 1,017,906.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2009 980,000.00 980,000.00 1,060,840.00 1,060,840.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2010 1,035,000.00 1,035,000.00 1,124,920.00 1,124,920.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2011 1,100,000.00 1,100,000.00 1,197,537.00 1,197,537.00
Indiana Health Facilities Financing
Authority Hospital Revenue,
Prerefunded, Techs Ancilla, Series
A, 8%, 07/01/2012 1,165,000.00 1,165,000.00 1,264,852.00 1,264,852.00
Indiana Health Facilities Financing
Authority Hospital Revenue,
Prerefunded, Techs Ancilla, 6%
07/01/2013 1,230,000.00 1,230,000.00 1,330,048.00 1,330,048.00
Indiana Health Facilities Financing
Authority Hospital Revenue,
Prerefunded, Techs Ancilla, 6%
07/01/2014 1,310,000.00 1,310,000.00 1,413,123.00 1,413,123.00
Indiana Health Facilities Financing
Authority Hospital Revenue,
Prerefunded, Techs Ancilla, 6%
07/01/2015 1,385,000.00 1,385,000.00 1,489,138.00 1,489,138.00
Indiana Health Facilities Financing
Authority Hospital Revenue,
Prerefunded, Techs Ancilla, 6%
07/01/2016 1,470,000.00 1,470,000.00 1,577,339.00 1,577,339.00
Indiana Health Facilities Financing
Authority Hospital Revenue,
Prerefunded, Techs Ancilla, 6%
07/01/2017 1,560,000.00 1,560,000.00 1,669,605.00 1,669,605.00
Indiana Health Facilities Financing
Authority Hospital Revenue,
Prerefunded, Techs Ancilla, 6%
07/01/2018 1,655,000.00 1,655,000.00 1,765,769.00 1,765,769.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2002 405,000.00 405,000.00 414,148.00 414,148.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2003 430,000.00 430,000.00 444,448.00 444,448.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2004 455,000.00 455,000.00 474,974.00 474,974.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2005 485,000.00 485,000.00 510,812.00 510,812.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2006 515,000.00 515,000.00 546,363.00 546,363.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2007 545,000.00 545,000.00 582,005.00 582,005.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2008 300,000.00 300,000.00 321,765.00 321,765.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/2009 310,000.00 310,000.00 333,764.00 333,764.00
Indiana Health Fac Fing Auth Hosp
Rev, 6%, 07/01/20010 325,000.00 325,000.00 350,909.00 350,909.00
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<S> <C> <C> <C>
Indiana Health Fac Fing Auth Hosp Rev, 6%, 07/01/2011 345,000.00 345,000.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2012 370,000.00 370,000.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2013 390,000.00 390,000.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2014 410,000.00 410,000.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2015 440,000.00 440,000.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2016 465,000.00 465,000.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2017 490,000.00 490,000.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2018 520,000.00 520,000.00
Indiana Health Facilities Financing Authority, Hospital Revenue,
Fayette Memorial Hospital Project, 7.2%, 10/01/2022 1,800,000.00 1,800,000.00
Indiana Health Facilities Financing Authority,
Charity Obligation Group, Series D, 5.75%, 11/15/2012 4,660,000.00 4,660,000.00
Indiana Municipal Power Agency, Power Supply System,
Series 1993 B, 6%, 01/01/2012 1,750,000.00 1,750,000.00
Indiana Municipal Power Agency, Power Supply System,
Series 1993 B, 5.5%, 01/01/2016 8,960,000.00 8,960,000.00
Indiana Transportation Financial Authority, Highway Revenue,
Series A, 7.25%, 06/01/2015 4,000,000.00 4,000,000.00
Indiana Transportation Finance Authority, Highway Revenue,
Series 1993 A, 5.75%, 06/01/2012 5,000,000.00 5,000,000.00
Indiana University, Revenue Refunding, Series H, AMBAC,
Zero Coupon, 08/01/2006 8,500,000.00 8,500,000.00
Indiana University, Revenue Refunding, Student Fee Revenue,
Series H, Zero Coupon, AMBAC, 08/01/2008 10,000,000.00 10,000,000.00
Merrillville, IN, Multiple School Building Corp., First
Mortgage, MBIA, Zero Coupon, 01/15/2011 4,000,000.00 4,000,000.00
Iowa
Iowa Financial Authority, Hospital Facility Revenue, Trinity
Regional Hospital Project, Prerefunded 7/1/2002, 7%, 07/01/2022 12,000,000.00 12,000,000.00
Polk County, IA, Mercy Hospital, MBIA, 6.75%, 11/01/2005 5,000,000.00 5,000,000.00
Kansas
Kansas City, KS, Utility System Revenue, ETM, Zero Coupon, 09/01/2004 3,575,000.00 3,575,000.00
Kansas City, KS, Utility System Revenue, ETM, Zero Coupon, 09/01/2005 5,300,000.00 5,300,000.00
Kansas City, KS, Utility System Revenue, ETM, Zero Coupon, 09/01/2006 1,875,000.00 1,875,000.00
Kansas City, KS, Utility System Revenue, Zero Coupon, 09/01/2004 2,640,000.00 2,640,000.00
Kansas City, KS, Utility System Revenue, Zero Coupon, 09/01/2005 3,950,000.00 3,950,000.00
Kansas City, KS, Utility System Revenue, Zero Coupon, 09/01/2006 1,375,000.00 1,375,000.00
Kansas Department of Transportation, 5.75%, 09/1/2012 17,450,000.00 17,450,000.00
Kansas Department of Transportation, 5.75%, 09/1/2013 8,235,000.00 8,235,000.00
Kentucky
Hopkins County, KY, Hospital Revenue, Trover Clinic Found,
6.625%, 11/15/2011 4,000,000.00 4,000,000.00
Kenton County, KY, Airport Board Revenue, Cincinnati Northern
Kentucky, Series A, 6.3%, 03/01/2015 6,250,000.00 6,250,000.00
Kentucky Economic Development Finance Authority Health Systems
Revenue(Series C), Zero Coupon, 10/01/2011 10,295,000.00 10,295,000.00
Kentucky Economic Development Finance Authority Health Systems
(Series C), Zero Coupon, 10/1/2012 13,670,000.00 13,670,000.00
Kentucky Economic Development Finance Authority Health Systems
(Series C), Zero Coupon, 10/01/2013 5,000,000.00 3,245,000.00 8,245,000.00
Kentucky Economic Development Financial Authority Health Systems
Revenues, 10/01/2014 5,130,000.00 5,130,000.00
Kentucky Economic Development Financial Authority Health Systems
Revenues, 10/1/2015 5,235,000.00 5,235,000.00
Kentucky State Ppty & Bldgs Commn Revs, Project No. 68, 5.75%,
10/1/2012 3,095,000.00 3,095,000.00
Kentucky State Property & Buildings Commision Revenue, Project
No. 68, 5.75%, 10/1/2015 3,000,000.00 2,375,000.00 5,375,000.00
Louisville & Jefferson cnty KY met Swr, 5%, 5/15/2019 2,500,000.00 2,500,000.00
Lousiana
Louisiana Public Facilities Authority Revenue, Centenary College
Louisiana Project, Prerefunded 2/1/2008, 5.75%, 2/1/2012 1,000,000.00 1,000,000.00
Louisiana Public Facilities Authority Revenue, Centenary College
Louisiana Project, Prerefunded 2/1/2008, 5.9%, 2/1/2017 1,000,000.00 1,000,000.00
Louisiana Public Facilities Authority, Prerefunded 2/15/08 at 100,
4.75%, 2/15/2008 5,765,000.00 5,765,000.00
New Orleans, LA, General Obligation, Series 1991, Zero Coupon,
9/1/1905 2,500,000.00 2,500,000.00
New Orleans, LA, General Obligation, AMBAC, Zero Coupon, 9/1/2007 10,000,000.00 10,000,000.00
Orleans, LA, Levee District, Levee Improvement Bonds, Series 1986,
5.95%, 11/1/2014 1,695,000.00 1,695,000.00
Maine
Maine Health & Higher Educational Facilities, Revenue, Series B,
7.1%, 7/1/2014 2,750,000.00 2,750,000.00
Maine Turnpike Authority, 5.625%, 7/1/2017 4,350,000.00 4,350,000.00
Maryland
Baltimore, MD, Revenue Exchanged, Auto Parking Revenue, Series
1996A, 5.9%, 7/1/2012 3,100,000.00 3,100,000.00
Maryland General Obligation, 5.75%, 8/1/2013 18,565,000.00 18,565,000.00
Maryland Economic Development Corporation, Chesapeake Bay Conference,
Series 1999B, 7.75%, 12/1/2031 30,000,000.00 7,000,000.00 37,000,000.00
Maryland Health & Educational Facilities Authority, 6.75%, 7/1/2030 3,000,000.00 1,000,000.00 4,000,000.00
Maryland State Health & Higher Educational Facilities, Revenue,
Doctors County Hospital, 5.75%, 7/1/2013 6,785,000.00 6,785,000.00
Northeast Maryland Waste Disposal Authority Revenue, Southwest
Resource Recovery System, Series 1993, 7.2%, 1/1/2006 1,500,000.00 3,440,000.00 4,940,000.00
Northeast Maryland Waste Disposal Authority, Southwest Resource
Recovery System Revenue, Series 1993, 7.2%, 1/1/2007 3,390,000.00 3,390,000.00
Massachusetts
Massachusetts Bay Transportation Authority, Revenue, General
Transportation, Series A, 5.875%, 3/1/2015 10,075,000.00 10,075,000.00
Massachusetts Bay Transportation Authority, General Transportation
Revenue, Series 1997B, 6.2%, 3/1/2016 12,950,000.00 2,500,000.00 15,450,000.00
Massachusetts Municipal Wholesale Electric Company, Revenue, Series B,
6.75%, 7/1/2011 17,500,000.00 17,500,000.00
Massachusetts Municipal Wholesale Electric Company, Revenue, Series C,
6.625%, 7/1/2018 10,000,000.00 10,000,000.00
Massachusetts Municipal Wholesale Electric Company, Revenue, Series B,
6.75%, 7/1/2017 3,945,000.00 3,945,000.00
Massachusetts Municipal Wholesale Electric Company, Revenue, Series A,
6%, 7/1/2018 5,610,000.00 5,610,000.00
State of Massachusetts, General Obligation, Series B, 6.5%, 8/1/2011, 5,940,000.00 5,940,000.00
5.75%, 10/1/2012 4,000,000.00 4,000,000.00
Massachusetts State, RITES-PA 793, 10/1/2015 6,095,000.00 6,095,000.00
Massachusetts College Building Authority Project, Series A, 7.5%,
5/1/2010 4,110,000.00 4,110,000.00
Massachusetts College Building Authority Project, Series 1994 A,
7.5%, 5/1/2014 5,500,000.00 5,500,000.00
Massachusetts State Development Financial Agency, Revenue, Health Care
Facilities, Series 1999 A, 7.1%, 7/1/2032 3,000,000.00 2,000,000.00 5,000,000.00
State of Massachusetts, Revenue Bond, Federal Highway, Series 1998A,
Zero Coupon, 12/15/2014 27,680,000.00 27,680,000.00
Massachusetts Health & Educational Facilities Authority, Massachusetts
General Hospital, Series 1992 F, 6.25%, 7/1/2012 1,000,000.00 1,000,000.00
Massachusetts Health & Educational Facilities Authority, Boston
Medical Center, Series A, 5.25%, 7/1/2012 2,920,000.00 2,920,000.00
Massachusetts State Port Authority Revenue, 13%, 7/1/2013 1,500,000.00 1,500,000.00
Massachusetts State Port Authority Revenue, Series B, 5.5%, 7/1/2015 3,025,000.00 3,025,000.00
Massachusetts State Turnpike Metropolitan Authority, Revenue, Series C,
Zero Coupon, 1/1/2018 10,000,000.00 10,000,000.00
Massachusetts State Turnpike Metropolitan Authority, Revenue, Series C,
Zero Coupon, 1/1/2019 5,500,000.00 5,500,000.00
Massachusetts State Turnpike Metropolitan Authority, Revenue, Series C,
Zero Coupon, 1/1/2020 7,000,000.00 7,000,000.00
Massachusetts Water Resource Authority, Series 1992 A, 6.5%, 7/15/2009 2,625,000.00 2,625,000.00
Massachusetts Water Resource Authority, Series 1992 A, 6.5%, 7/15/2019 13,710,000.00 13,710,000.00
Massachusetts Water Resource Authority, Series 1993 C, 6%, 12/1/2011 10,000,000.00 10,000,000.00
Massachusetts Water Pollution Abatement Trust, Series 5, 5.375%, 8/1/2027 5,000,000.00 5,000,000.00
Michigan
Battle Creek, MI, Downtown Development, Tax Allocation, Prerefunded
5/1/2004, 7.6%, 5/1/2016 3,800,000.00 3,800,000.00
Detroit, MI, General Obligation, Series A, Prerefunded 4/1/2005,
6.7%, 4/1/2010 2,500,000.00 2,500,000.00
Detroit, MI, General Obligation, Series B, 6.25%, 4/1/2010 3,410,000.00 3,410,000.00
Detroit, MI, General Obligation, 6%, 4/1/2016 2,865,000.00 2,865,000.00
Detroit, MI, General Obligation, Series B, 5%, 5/1/2017 2,895,000.00 2,895,000.00
Detroit, MI, General Obligation, City School District, Series 1998
C, 5.25%, 5/1/2014 1,000,000.00 1,000,000.00
Detroit, MI, Sewerage Disposal System, Series A, 7/1/2015 8,710,000.00 8,710,000.00
Grand Rapids, Michigan Water Supply, 5.75%, 1/1/2016 2,955,000.00 2,955,000.00
Michigan State Building Authority Revenue, Series I, 6.75%, 10/1/2011 9,750,000.00 9,750,000.00
Michigan St Hosp Fin Auth RevRevenue, 6%, 11/15/2013 10,000,000.00 10,000,000.00
Michigan St Hosp Fin Auth RevRevenue, 6.25%, 11/15/2014 10,000,000.00 10,000,000.00
Michigan State Hospital Financial Authority Revenue, Gratiot Community
Hospital, 6.1%, 10/1/2007 2,250,000.00 2,250,000.00
Michigan State Trunk Line, Revenue, Series A, 5.5%, 11/1/2017 7,000,000.00 7,000,000.00
Michigan State Strategic Fund Limited, Revenue, 5.75%, 11/15/2018 1,400,000.00 1,400,000.00
Southgate, MI, Community School District, General Obligation,
5%, 5/1/2025 5,500,000.00 5,500,000.00
Tawas City, MI, Hospital Financial Authority, Revenue, Series A,
ETM, 5.6%, 2/15/2013 2,735,000.00 2,735,000.00
Wayne Charter County, MI, Detroit-Metro Wayne County, Revenue, 5%,
12/1/2022 25,925,000.00 25,925,000.00
Wayne St Univ Mich Univ Revs, 5.25%, 11/15/2019 4,000,000.00 4,000,000.00
Minnesota
Minneapolis and Saint Paul, MN, Metropolitan Airport Community Airport
Revenue, Series B, 5.25%, 1/1/2019 3,700,000.00 3,700,000.00
New Hope, MN, Housing & Health, Revenue, Minnesota Masonic Home North
Ridge, 5.9%, 3/1/2019 1,335,000.00 1,335,000.00
New Hope, MN, Housing & Health, Revenue, Minnesota Masonic Home North
Ridge, 5.875%, 3/1/2029 2,700,000.00 2,700,000.00
University of Minnesota, Series A, 5.75%, 7/1/2017 3,240,000.00 3,240,000.00
University of Minnesota, Series A, 5.75%, 7/1/2018 6,760,000.00 6,760,000.00
Mississippi
Jones County, MS, Hospital Revenue, South Central Regional Medical
Center, 5.5%, 12/1/2017 2,055,000.00 2,055,000.00
Mississippi State, Capital Improvement, 5%, 11/1/2019 5,000,000.00 5,000,000.00
Missouri
Clarence Cannon, MO, Wholesale Water Revenue, 6%, 5/15/2020 10,000,000.00 10,000,000.00
Missouri Health & Educational Facilities Authority, SSM Healthcare,
1992 Series AA, MBIA, 6.35%, 6/1/2008 8,125,000.00 8,125,000.00
Missouri Health & Educational Facilities Authority, SSM Healthcare,
1992 Series AA, MBIA, 6.4%, 6/1/2009 8,640,000.00 8,640,000.00
Missouri State Health & Educational Facilities, Revenue, Lutheran
Senior Services, 5.75%, 2/1/2017 3,250,000.00 3,250,000.00
Missouri State Health & Educational Facilities, Revenue, Christian
Health Services, Series B, Prerefunded 2/15/2001, 6.875%, 2/15/2013 7,000,000.00 7,000,000.00
St Louis County, MO, Regional Convention, Revenue, Series B,
Prerefunded 8/15/2003, 7%, 8/15/2011 4,380,000.00 4,380,000.00
St. Louis Industrial Developement Authority , 7.25%, 12/15/2035 5,000,000.00 5,000,000.00
St. Louis, Missouri Industrial Development Authority Revenue, Senior
Lien, St. Louis Convention, Series A, 6.875%, 12/15/2020 2,500,000.00 2,500,000.00
St. Louis, Missouri Industrial Development Authority, Leasehold Revenue,
Comp Int, Convention Center Hotel, 7/15/2015 4,200,000.00 4,200,000.00
Saint Louis Industrial Developement Authority, Zero Coupon, 7/15/2016 6,895,000.00 6,895,000.00
St Louis County, MO, Regional Convention, Revenue, Series C,
Prerefunded 8/15/2003, 7.9%, 8/15/2021 4,760,000.00 4,760,000.00
St Louis County, MO, Regional Convention, Revenue, Series C,
7.9%, 8/15/2021 240,000.00 240,000.00
St Louis, MO, Tax Increment Revenue, Tax Allocation, Series A,
10%, 8/1/2010 7,260,000.00 7,260,000.00
Sikeston, MO, Electric Revenue, 6.2%, 6/1/2010 6,870,000.00 6,870,000.00
Montana
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Indiana Health Fac Fing Auth Hosp Rev, 6%, 07/01/2011 372,631.00 372,631.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2012 399,348.00 399,348.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2013 420,217.00 420,217.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2014 441,442.00 441,442.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2015 473,083.00 473,083.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2016 498,954.00 498,954.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2017 524,986.00 524,986.00
Indiana Health Facilities Financing Authority Hospital Revenue,
Unrefunded Balance, TECRS, 6%, 07/01/2018 556,644.00 556,644.00
Indiana Health Facilities Financing Authority, Hospital Revenue,
Fayette Memorial Hospital Project, 7.2%, 10/01/2022 1,786,050.00 1,786,050.00
Indiana Health Facilities Financing Authority,
Charity Obligation Group, Series D, 5.75%, 11/15/2012 4,858,096.00 4,858,096.00
Indiana Municipal Power Agency, Power Supply System,
Series 1993 B, 6%, 01/01/2012 1,901,357.00 1,901,357.00
Indiana Municipal Power Agency, Power Supply System,
Series 1993 B, 5.5%, 01/01/2016 9,233,459.00 9,233,459.00
Indiana Transportation Financial Authority, Highway Revenue,
Series A, 7.25%, 06/01/2015 4,796,040.00 4,796,040.00
Indiana Transportation Finance Authority, Highway Revenue,
Series 1993 A, 5.75%, 06/01/2012 5,349,900.00 5,349,900.00
Indiana University, Revenue Refunding, Series H, AMBAC,
Zero Coupon, 08/01/2006 6,449,205.00 6,449,205.00
Indiana University, Revenue Refunding, Student Fee Revenue,
Series H, Zero Coupon, AMBAC, 08/01/2008 6,831,800.00 6,831,800.00
Merrillville, IN, Multiple School Building Corp., First
Mortgage, MBIA, Zero Coupon, 01/15/2011 2,390,400.00 2,390,400.00
Iowa
Iowa Financial Authority, Hospital Facility Revenue, Trinity
Regional Hospital Project, Prerefunded 7/1/2002, 7%, 07/01/2022 12,657,360.00 12,657,360.00
Polk County, IA, Mercy Hospital, MBIA, 6.75%, 11/01/2005 5,155,500.00 5,155,500.00
Kansas
Kansas City, KS, Utility System Revenue, ETM, Zero Coupon, 09/01/2004 3,003,035.00 3,003,035.00
Kansas City, KS, Utility System Revenue, ETM, Zero Coupon, 09/01/2005 4,242,067.00 4,242,067.00
Kansas City, KS, Utility System Revenue, ETM, Zero Coupon, 09/01/2006 1,428,843.00 1,428,843.00
Kansas City, KS, Utility System Revenue, Zero Coupon, 09/01/2004 2,215,197.00 2,215,197.00
Kansas City, KS, Utility System Revenue, Zero Coupon, 09/01/2005 3,155,694.00 3,155,694.00
Kansas City, KS, Utility System Revenue, Zero Coupon, 09/01/2006 1,044,876.00 1,044,876.00
Kansas Department of Transportation, 5.75%, 09/1/2012 18,608,505.00 18,608,505.00
Kansas Department of Transportation, 5.75%, 09/1/2013 8,729,264.00 8,729,264.00
Kentucky
Hopkins County, KY, Hospital Revenue, Trover Clinic Found,
6.625%, 11/15/2011 4,152,720.00 4,152,720.00
Kenton County, KY, Airport Board Revenue, Cincinnati Northern
Kentucky, Series A, 6.3%, 03/01/2015 6,673,562.00 6,673,562.00
Kentucky Economic Development Finance Authority Health Systems
Revenue(Series C), Zero Coupon, 10/01/2011 8,146,536.00 8,146,536.00
Kentucky Economic Development Finance Authority Health Systems
(Series C), Zero Coupon, 10/1/2012 10,803,264.00 10,803,264.00
Kentucky Economic Development Finance Authority Health Systems
(Series C), Zero Coupon, 10/01/2013 3,954,250.00 2,566,308.00 6,520,558.00
Kentucky Economic Development Financial Authority Health Systems
Revenues, 10/01/2014 4,059,933.00 4,059,933.00
Kentucky Economic Development Financial Authority Health Systems
Revenues, 10/1/2015 4,097,748.00 4,097,748.00
Kentucky State Ppty & Bldgs Commn Revs, Project No. 68, 5.75%,
10/1/2012 3,286,982.00 3,286,982.00
Kentucky State Property & Buildings Commision Revenue, Project
No. 68, 5.75%, 10/1/2015 3,143,220.00 2,488,382.00 5,631,602.00
Louisville & Jefferson cnty KY met Swr, 5%, 5/15/2019 2,368,350.00 2,368,350.00
Lousiana
Louisiana Public Facilities Authority Revenue, Centenary College
Louisiana Project, Prerefunded 2/1/2008, 5.75%, 2/1/2012 1,065,660.00 1,065,660.00
Louisiana Public Facilities Authority Revenue, Centenary College
Louisiana Project, Prerefunded 2/1/2008, 5.9%, 2/1/2017 1,074,680.00 1,074,680.00
Louisiana Public Facilities Authority, Prerefunded 2/15/08 at 100,
4.75%, 2/15/2008 5,787,310.00 5,787,310.00
New Orleans, LA, General Obligation, Series 1991, Zero Coupon,
9/1/1905 1,997,275.00 1,997,275.00
New Orleans, LA, General Obligation, AMBAC, Zero Coupon, 9/1/2007 7,221,100.00 7,221,100.00
Orleans, LA, Levee District, Levee Improvement Bonds, Series 1986,
5.95%, 11/1/2014 1,789,496.00 1,789,496.00
Maine
Maine Health & Higher Educational Facilities, Revenue, Series B,
7.1%, 7/1/2014 3,032,535.00 3,032,535.00
Maine Turnpike Authority, 5.625%, 7/1/2017 4,464,970.00 4,464,970.00
Maryland
Baltimore, MD, Revenue Exchanged, Auto Parking Revenue, Series
1996A, 5.9%, 7/1/2012 3,391,834.00 3,391,834.00
Maryland General Obligation, 5.75%, 8/1/2013 19,950,505.00 19,950,505.00
Maryland Economic Development Corporation, Chesapeake Bay Conference,
Series 1999B, 7.75%, 12/1/2031 30,037,200.00 7,008,680.00 37,045,880.00
Maryland Health & Educational Facilities Authority, 6.75%, 7/1/2030 3,107,610.00 1,035,870.00 4,143,480.00
Maryland State Health & Higher Educational Facilities, Revenue,
Doctors County Hospital, 5.75%, 7/1/2013 6,040,889.00 6,040,889.00
Northeast Maryland Waste Disposal Authority Revenue, Southwest
Resource Recovery System, Series 1993, 7.2%, 1/1/2006 1,641,105.00 3,763,600.00 5,404,705.00
Northeast Maryland Waste Disposal Authority, Southwest Resource
Recovery System Revenue, Series 1993, 7.2%, 1/1/2007 3,708,897.00 3,708,897.00
Massachusetts
Massachusetts Bay Transportation Authority, Revenue, General
Transportation, Series A, 5.875%, 3/1/2015 10,879,488.00 10,879,488.00
Massachusetts Bay Transportation Authority, General Transportation
Revenue, Series 1997B, 6.2%, 3/1/2016 14,380,586.00 2,776,175.00 17,156,761.00
Massachusetts Municipal Wholesale Electric Company, Revenue, Series B,
6.75%, 7/1/2011 18,273,150.00 18,273,150.00
Massachusetts Municipal Wholesale Electric Company, Revenue, Series C,
6.625%, 7/1/2018 10,238,700.00 10,238,700.00
Massachusetts Municipal Wholesale Electric Company, Revenue, Series B,
6.75%, 7/1/2017 4,074,159.00 4,074,159.00
Massachusetts Municipal Wholesale Electric Company, Revenue, Series A,
6%, 7/1/2018 5,701,050.00 5,701,050.00
State of Massachusetts, General Obligation, Series B, 6.5%, 8/1/2011 6,133,941.00 6,133,941.00
, 5.75%, 10/1/2012 4,254,560.00 4,254,560.00
Massachusetts State, RITES-PA 793, 10/1/2015 6,696,210.00 6,696,210.00
Massachusetts College Building Authority Project, Series A,
7.5%, 5/1/2010 4,942,768.00 4,942,768.00
Massachusetts College Building Authority Project, Series 1994 A,
7.5%, 5/1/2014 6,740,910.00 6,740,910.00
Massachusetts State Development Financial Agency, Revenue, Health Care
Facilities, Series 1999 A, 7.1%, 7/1/2032 2,782,470.00 1,854,980.00 4,637,450.00
State of Massachusetts, Revenue Bond, Federal Highway, Series 1998A,
Zero Coupon, 12/15/2014 13,080,737.00 13,080,737.00
Massachusetts Health & Educational Facilities Authority, Massachusetts
General Hospital, Series 1992 F, 6.25%, 7/1/2012 1,120,570.00 1,120,570.00
Massachusetts Health & Educational Facilities Authority, Boston
Medical Center, Series A, 5.25%, 7/1/2012 2,951,652.00 2,951,652.00
Massachusetts State Port Authority Revenue, 13%, 7/1/2013 2,316,750.00 2,316,750.00
Massachusetts State Port Authority Revenue, Series B, 5.5%, 7/1/2015 3,059,666.00 3,059,666.00
Massachusetts State Turnpike Metropolitan Authority, Revenue, Series C,
Zero Coupon, 1/1/2018 3,924,400.00 3,924,400.00
Massachusetts State Turnpike Metropolitan Authority, Revenue, Series C,
Zero Coupon, 1/1/2019 2,029,115.00 2,029,115.00
Massachusetts State Turnpike Metropolitan Authority, Revenue, Series C,
Zero Coupon, 1/1/2020 2,434,950.00 2,434,950.00
Massachusetts Water Resource Authority, Series 1992 A, 6.5%, 7/15/2009 2,955,723.00 2,955,723.00
Massachusetts Water Resource Authority, Series 1992 A, 6.5%, 7/15/2019 15,703,159.00 15,703,159.00
Massachusetts Water Resource Authority, Series 1993 C, 6%, 12/1/2011 10,967,200.00 10,967,200.00
Massachusetts Water Pollution Abatement Trust, Series 5, 5.375%, 8/1/2027 4,939,550.00 4,939,550.00
Michigan
Battle Creek, MI, Downtown Development, Tax Allocation, Prerefunded
5/1/2004, 7.6%, 5/1/2016 4,227,538.00 4,227,538.00
Detroit, MI, General Obligation, Series A, Prerefunded 4/1/2005,
6.7%, 4/1/2010 2,734,375.00 2,734,375.00
Detroit, MI, General Obligation, Series B, 6.25%, 4/1/2010 3,564,268.00 3,564,268.00
Detroit, MI, General Obligation, 6%, 4/1/2016 3,053,602.00 3,053,602.00
Detroit, MI, General Obligation, Series B, 5%, 5/1/2017 2,776,218.00 2,776,218.00
Detroit, MI, General Obligation, City School District, Series 1998
C, 5.25%, 5/1/2014 1,013,920.00 1,013,920.00
Detroit, MI, Sewerage Disposal System, Series A, 7/1/2015 3,992,576.00 3,992,576.00
Grand Rapids, Michigan Water Supply, 5.75%, 1/1/2016 3,077,632.00 3,077,632.00
Michigan State Building Authority Revenue, Series I, 6.75%, 10/1/2011 10,107,727.00 10,107,727.00
Michigan St Hosp Fin Auth RevRevenue, 6%, 11/15/2013 10,532,000.00 10,532,000.00
Michigan St Hosp Fin Auth RevRevenue, 6.25%, 11/15/2014 10,699,500.00 10,699,500.00
Michigan State Hospital Financial Authority Revenue, Gratiot Community
Hospital, 6.1%, 10/1/2007 2,232,202.00 2,232,202.00
Michigan State Trunk Line, Revenue, Series A, 5.5%, 11/1/2017 7,230,090.00 7,230,090.00
Michigan State Strategic Fund Limited, Revenue, 5.75%, 11/15/2018 1,178,058.00 1,178,058.00
Southgate, MI, Community School District, General Obligation,
5%, 5/1/2025 5,122,205.00 5,122,205.00
Tawas City, MI, Hospital Financial Authority, Revenue, Series A,
ETM, 5.6%, 2/15/2013 2,759,806.00 2,759,806.00
Wayne Charter County, MI, Detroit-Metro Wayne County, Revenue, 5%,
12/1/2022 23,723,189.00 23,723,189.00
Wayne St Univ Mich Univ Revs, 5.25%, 11/15/2019 3,922,280.00 3,922,280.00
Minnesota
Minneapolis and Saint Paul, MN, Metropolitan Airport Community Airport
Revenue, Series B, 5.25%, 1/1/2019 3,554,146.00 3,554,146.00
New Hope, MN, Housing & Health, Revenue, Minnesota Masonic Home North
Ridge, 5.9%, 3/1/2019 1,136,044.00 1,136,044.00
New Hope, MN, Housing & Health, Revenue, Minnesota Masonic Home North
Ridge, 5.875%, 3/1/2029 2,185,029.00 2,185,029.00
University of Minnesota, Series A, 5.75%, 7/1/2017 3,453,030.00 3,453,030.00
University of Minnesota, Series A, 5.75%, 7/1/2018 7,180,742.00 7,180,742.00
Mississippi
Jones County, MS, Hospital Revenue, South Central Regional Medical
Center, 5.5%, 12/1/2017 1,812,653.00 1,812,653.00
Mississippi State, Capital Improvement, 5%, 11/1/2019 4,773,100.00 4,773,100.00
Missouri
Clarence Cannon, MO, Wholesale Water Revenue, 6%, 5/15/2020 9,704,000.00 9,704,000.00
Missouri Health & Educational Facilities Authority, SSM Healthcare,
1992 Series AA, MBIA, 6.35%, 6/1/2008 8,943,431.00 8,943,431.00
Missouri Health & Educational Facilities Authority, SSM Healthcare,
1992 Series AA, MBIA, 6.4%, 6/1/2009 9,601,545.00 9,601,545.00
Missouri State Health & Educational Facilities, Revenue, Lutheran
Senior Services, 5.75%, 2/1/2017 2,982,102.00 2,982,102.00
Missouri State Health & Educational Facilities, Revenue, Christian
Health Services, Series B, Prerefunded 2/15/2001, 6.875%, 2/15/2013 7,174,020.00 7,174,020.00
St Louis County, MO, Regional Convention, Revenue, Series B,
Prerefunded 8/15/2003, 7%, 8/15/2011 4,663,342.00 4,663,342.00
St. Louis Industrial Developement Authority , 7.25%, 12/15/2035 5,036,850.00 5,036,850.00
St. Louis, Missouri Industrial Development Authority Revenue, Senior
Lien, St. Louis Convention, Series A, 6.875%, 12/15/2020 2,466,475.00 2,466,475.00
St. Louis, Missouri Industrial Development Authority, Leasehold Revenue,
Comp Int, Convention Center Hotel, 7/15/2015 1,917,384.00 1,917,384.00
Saint Louis Industrial Developement Authority, Zero Coupon, 7/15/2016 2,962,574.00 2,962,574.00
St Louis County, MO, Regional Convention, Revenue, Series C,
Prerefunded 8/15/2003, 7.9%, 8/15/2021 5,176,071.00 5,176,071.00
St Louis County, MO, Regional Convention, Revenue, Series C,
7.9%, 8/15/2021 252,672.00 252,672.00
St Louis, MO, Tax Increment Revenue, Tax Allocation, Series A,
10%, 8/1/2010 8,709,023.00 8,709,023.00
Sikeston, MO, Electric Revenue, 6.2%, 6/1/2010 7,633,050.00 7,633,050.00
Montana
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Montana State Housing Board, Revenue,
Single Family Mortgage, Series A-2, 6.15%,
6/1/2030 2,405,000.00 2,405,000.00
Montana Board Housing Revenue, Family Housing
Authority, Series 1984 A, Zero Coupon, 6/1/2010 5,000.00 5,000.00
Montana State Board , 6%, 5/15/2019 5,000,000.00 5,000,000.00
Nebraska
Nebraska Investment Finance Authority Single,
Revenue, Series A, 6.7%, 9/1/2026 3,520,000.00 3,520,000.00
Omaha, NE, Public Power Revenue, Series B, 6.2%, 2/1/2017 4,700,000.00 4,700,000.00
Scotts Bluff County, NE, Hospital Authority,
Revenue, Prerefunded 12/15/2002, 6.45%, 12/15/2004 1,675,000.00 1,675,000.00
Scotts Bluff County, NE, Hospital Authority,
Revenue, 6.45%, 12/15/2004 1,150,000.00 1,150,000.00
Nevada
Clark County, NV, Industrial Development Revenue,
Refunded, Nevada Power Company Project, Series B, 5.9%,
10/1/2030 5,000,000.00 5,000,000.00
Clark County, NV, School District, General Obligation,
Series B, FGIC, Zero Coupon, 3/1/2005 8,070,000.00 8,070,000.00
Clark County, NV, School District, Series 1991B,
Zero Coupon, 3/1/2009 4,350,000.00 4,350,000.00
Las Vegas Nevada Monorail Department Business and industry,
1/1/2013 5,000,000.00 5,000,000.00
Nevada Las Vegas Monorail, 7.375%, 1/1/2040 8,000,000.00 7,000,000.00 15,000,000.00
Humboldt County, NV, Pollution Control, Revenue,
Idaho Power Company Project, 8.3%, 12/1/2014 9,650,000.00 9,650,000.00
Nevada State Housing Division, Single Family
Mortgage Revenue, Series 1993 R, 5.95%, 10/1/2011 2,150,000.00 2,150,000.00
Reno, NV, Redevelopment Agency Tax Allocatation,
Series E, Prerefunded 9/1/2003, 5.65%, 9/1/2013 3,145,000.00 3,145,000.00
Reno, NV, Redevelopment Agency Tax Allocatation,
Series E, Prerefunded 9/1/2003, 5.75%, 9/1/2017 4,020,000.00 4,020,000.00
New Hampshire
New Hampshire Higher Educational & Health Facilities,
Revenue, Havenwood Heritage Heights, 7.35%, 1/1/2018 2,500,000.00 2,500,000.00
New Hampshire Higher Educational & Health Facilities,
Revenue, Havenwood Heritage Heights, 7.45%, 1/1/2025 4,000,000.00 4,000,000.00
New Jersey
Atlantic City, NJ, Board of Education, General
Obligation, 6%, 12/1/2013 4,600,000.00 4,600,000.00
Atlantic City, NJ, Board of Education, General
Obligation, 6.1%, 12/1/2014 4,500,000.00 4,500,000.00
Essex County, NJ, Improvement Authority Revenue,
Jail & Youth Housing Projects, Prerefunded 12/1/2004, 6.9%,
12/1/2014 2,645,000.00 2,645,000.00
Essex County, NJ, Improvement Authority Revenue,
Property & Equiptment Project, 12/1/2012 6.5%, 4,050,000.00 4,050,000.00
Jersey City, NJ, Sewer Authority Sewer, Revenue, 4.5%,
1/1/2019 13,000,000.00 13,000,000.00
New Jersey Economic Development Authority, Economic
Development Revenue, United Methodist Homes, 5.5%,
7/1/2019 2,500,000.00 2,500,000.00
New Jersey Economic Development Authority, Revenue,
United Methodist Homes, 5.75%, 7/1/2029 9,500,000.00 9,500,000.00
New Jersey Health Care Facilities, Revenue,
Atlantic City Medical Center, Series C, 6.8%, 7/1/2011
New Jersey Health Care Facilities, Revenue, 6,840,000.00 6,840,000.00
West Jersey Health Systems, Prerefunded 7/1/2002, 6.125%,
7/1/2012 11,000,000.00 11,000,000.00
New Jersey Health Care Facilities, Revenue,
Southern Ocean County Hospital, Series A, 6.125%,
7/1/2013 3,735,000.00 3,735,000.00
New Jersey Economic Development Authority Revenue,
Harrogate Inc., Series A, 5.875%, 12/1/2026 1,000,000.00 1,000,000.00
New Jersey Economic Development Authority, Revenue,
Series A, 5.875%, 5/1/2014 5,000,000.00 5,000,000.00
New Jersey Highway Authority, ETM, 6.5%, 1/1/2011 4,111,000.00 4,111,000.00
New Jersey State Tran Corp Certificates, Federal
Transportation Administration Grants, Series B,
5.75%, 9/15/2013 11,000,000.00 11,000,000.00
New Jersey State Transportation Corp Certificates,
Rites-PA 785, 5.8375%, 9/15/2015 5,190,000.00 5,190,000.00
New Jersey State Transportation Trust Fund Authority,
Transportation System, Series A, 5%, 6/15/2017 21,660,000.00 21,660,000.00
New Jersey State Transportation Trust Fund Authority,
Transportation System, Series A, 5.625%, 6/15/2014 3,555,000.00 3,555,000.00
New Jersey State Transportation Trust Fund Authority,
Residual Certificates, Series 224, 7.44%, 6/15/2016 11,000,000.00 11,000,000.00
New Jersey State Turnpike Authority, Revenue,
10.375%, 1/1/2003 1,450,000.00 1,450,000.00
New Jersey State Turnpike Authority, Revenue,
Series A, 6.5%, 1/1/2016 45,720,000.00 45,720,000.00
New Jersey State Turnpike Authority, Revenue,
9.1385%, 1/1/2016 21,170,000.00 21,170,000.00
New Jersey State Turnpike Authority, Revenue,
9.1385%, 1/1/2016 3,830,000.00 3,830,000.00
New Jersey State Turnpike Authority Revenue,
6%, 1/1/2012 7,000,000.00 7,000,000.00
New Jersey State Turnpike Authority Revenue,
6%, 1/1/2013 5,000,000.00 5,000,000.00
New Jersey State Turnpike Authority Revenue,
6.17%, 1/1/2010 11,100,000.00 11,100,000.00
New Jersey State Turnpike Authority, 6.17%, 1/1/2011 12,140,000.00 12,140,000.00
New Mexico
Albuquerque, NM, Hospital Revenue, Southwest Community
Health Services, 10%, 8/1/2003 525,000.00 525,000.00
Albuquerque, NM, Hospital Revenue, Southwest Community
Health Services, Prerefunded 8/1/2008, 10.125%, 8/1/2012 4,000,000.00 4,000,000.00
Los Alamos County, NM, Utility Income, Revenue,
Series A, 6.1%, 7/1/2010 4,400,000.00 4,400,000.00
New Mexico Mortgage Finance Authority, Revenue,
Series E-2, 6.8%, 3/1/2031 7,440,000.00 7,440,000.00
Socorro, NM, Hospital System Revenue, Southwest
Community Health Services, 10%, 8/1/2003 710,000.00 710,000.00
New York
Long Island Power Authority, NY Electric
Systems Revenue, Series 1998 A, 5%, 12/1/2018 5,000,000.00 5,000,000.00
Long Island Power AuthorityZero Coupon, 6/1/2008 14,500,000.00 14,500,000.00
Long Island Pwr Auth N Y Elec Sys Rev Revenue,
Zero Coupon, 6/1/2012 6,750,000.00 6,750,000.00
Metropolitan Transportation Authority of New York,
Transit Facilities Revenue, Series 1993 O, 5.75%, 7/1/2013 6,775,000.00 6,775,000.00
Metropolitan Transportation Authority of New York,
Transportation Facilities Revenue, Series C, 5.125%, 7/1/2011 10,000,000.00 10,000,000.00
Metropolitan Transportation Authority of New York,
Transit Facilities Revenue, Series 1998 C, 5.125%, 7/1/2013 5,000,000.00 5,000,000.00
New York Metropolitan Transportation Authority, Revenue,
Series Q, 5.125%, 7/1/2012 7,750,000.00 7,750,000.00
New York Metropolitan Transportation Authority,
Revenue, Series O, 6.25%, 7/1/2014 6,000,000.00 6,000,000.00
New York Metropolitan Transportation Authority,
Revenue, Series A, 6%, 4/1/2020 5,000,000.00 5,000,000.00
Monroe County, NY, Airport Authority, Airport
Revenue, 8.928%, 1/1/2014 2,005,000.00 2,005,000.00
Monroe County, NY, Airport Authority, Airport
Revenue, 8.9247%, 1/1/2015 2,515,000.00 2,515,000.00
Monroe County, NY, Airport Authority, Airport
Revenue, 9.2149%, 1/1/2016 1,915,000.00 1,915,000.00
Nassau County, Industrial Finance Authority,
5.75%, 11/15/2015 3,060,000.00 3,060,000.00
Nassau County, Industrial Finance Authority ,
5.75%, 11/15/2016 4,250,000.00 4,250,000.00
New York City, NY, General Obligation, Series 1992 A,
6.375%, 8/1/2004 5,000,000.00 5,000,000.00
New York City, NY, General Obligation, Series C, AMBAC,
Prerefunded 8/1/02 at 101.50, 275,000.00 275,000.00
6.4%, 8/1/2004
New York City, NY, General Obligation, Series 1995 B,
6%, 8/15/2004 3,425,000.00 3,425,000.00
New York, NY, General Obligation, Prerefunded 11/15/2001,
8.4%, 11/15/2005 4,295,000.00 4,295,000.00
New York, NY, General Obligation, Series F, 8.4%,
11/15/2005 190,000.00 190,000.00
New York, NY, General Obligation, Series F, Prerefunded
11/15/2001, 8.4%, 11/15/2006 6,440,000.00 6,440,000.00
New York, NY, General Obligation, Series F, 8.4%, 11/15/2006 560,000.00 560,000.00
New York City, NY, General Obligation, Series E,
ETM, MBIA, 7%, 12/1/2007 1,385,000.00 1,385,000.00
New York, NY, General Obligation, Series F,
Prerefunded 11/15/2001, 8.4%, 11/15/2007 6,335,000.00 6,335,000.00
New York, NY, General Obligation, Series F,
Prerefunded 11/15/2001, 8.4%, 11/15/2008 11,000,000.00 11,000,000.00
New York, NY, General Obligation, Series F,
Prerefunded 11/15/2001, 8.4%, 11/15/2009 1,050,000.00 1,050,000.00
New York City, NY, General Obligation, Series 1995 E,
6.5%, 2/15/2005 7,000,000.00 7,000,000.00
New York, NY, General Obligation, Series A, Prerefunded
8/15/2001, 7.75%, 8/15/2015 3,408,000.00 3,408,000.00
New York, NY, General Obligation, Series A, 7.75%,
8/15/2015 92,000.00 92,000.00
New York City, NY, General Obligation, Series 1996 G,
6.75%, 2/1/2009 2,000,000.00 2,000,000.00
New York, NY, General Obligation, Series J, 5.875%,
2/15/2019 16,060,000.00 16,060,000.00
New York City, NY, General Obligation, Series 1992 H,
Prerefunded 1/1/2002 at 101.50,, 7%, 2/1/2005 5,000.00 5,000.00
New York City, NY, General Obligation, Series H, 7%,
2/1/2005 480,000.00 480,000.00
New York City, NY, General Obligation, 6.5%, 5/15/2012 7,000,000.00 7,000,000.00
New York, NY, General Obligation, Series H, Prerefunded
2/1/2002, 7%, 2/1/2007 2,760,000.00 2,760,000.00
New York, NY, General Obligation, Series H, 7%, 2/1/2007 240,000.00 240,000.00
New York, NY, Series G, 5%, 8/1/2018 4,750,000.00 4,750,000.00
New York, NY, General Obligation, Series G, Zero Coupon,
8/1/2009 19,100,000.00 19,100,000.00
New York, NY, Series C, 5.3875%, 11/15/2017 5,000,000.00 5,000,000.00
New York, NY, City Municipal Water Financial Authority,
Revenue, Water & Sewer Systems, Prerefunded 6/15/2001, 7%,
6/15/2015 230,000.00 230,000.00
New York, NY, City Municipal Water Financial Authority,
Revenue, Water & Sewer Systems, 7%, 6/15/2015 740,000.00 740,000.00
New York, NY, City Municipal Water Financial Authority,
Revenue, Water & Sewer Systems, Prerefunded 6/15/2001, 7%,
6/15/2015 530,000.00 530,000.00
New York NY City Transitional FIN Authority Revenue, 5%,
5/1/2026 4,000,000.00 4,000,000.00
New York, NY, City Industrial Development Agency Revenue, USTA
National Tennis Center Project, 6.5%, 11/15/2010 3,485,000.00 3,485,000.00
New York City, NY, Industrial Development Agency Revenue, USTA
National Tennis Center Project, 6.6%, 11/15/2011 3,000,000.00 3,000,000.00
New York State Dormitory Authority Revenue, City University,
FGIC, Series D, 7%, 7/1/2009 4,000,000.00 4,000,000.00
New York State Dormitory Authority Revenue, City University,
Series C, FGIC, 7.5%, 7/1/2010 5,750,000.00 5,750,000.00
New York State Dormitory Authority RevenueSeries 1993 A, 5.5%,
5/15/2019 1,500,000.00 1,500,000.00
New York State Dormitory Authority RevenueSeries 1993 C, 5.25%,
5/15/2021 2,000,000.00 2,000,000.00
New York State Dormitory Authority, Revenue, State University
Educational Facilities, Revenue, Prerefunded
5/15/02, 7.25%, 5/15/2018 3,370,000.00 3,370,000.00
New York State Dormitory Authority, Revenue, State University
Educational Facilities, Revenue, Prerefunded
5/15/2002, 7.25%, 5/15/2018 440,000.00 440,000.00
New York State Dormitory Authority, City University System,
Consolidated Revenue, Series F, 5.375%, 7/1/2007 2,000,000.00 2,000,000.00
New York State Dormitory Authority, City University, Revenue,
5.75%, 7/1/2013 5,500,000.00 5,500,000.00
New York State Dormitory Authority Revenue, City University
System, 6%, 7/1/2014 7,000,000.00 7,000,000.00
New York State Dormitory Authority, City University System,
Revenue, Series I, 5.125%, 7/1/2027 19,100,000.00 19,100,000.00
New York State Dormitory Authority Revenue, State Universities
Educational Facilities, Series B, 5%, 5/15/2018 7,000,000.00 7,000,000.00
New York State Dormitory Authority, Mental Health Services,
Revenue, 5.25%, 8/15/2024 10,250,000.00 10,250,000.00
New York State Dormitory Authority, Revenue Bond, 5.25%,
5/15/2017 3,500,000.00 3,500,000.00
New York State Environmental Facilities Corporation, State
Water Pollution, Revolving Fund Revenue, Series A,
Prerefunded 06/15/2001, 7.25%, 6/15/2010 4,520,000.00 4,520,000.00
New York State Environment Facilities Corporation Revenue,
Pollution Control, Prerefunded 6/15/2004, 6.875%,
6/15/2014 6,815,000.00 6,815,000.00
New York State Environmental Facilities Corporation, State
Water Pollution Control, Revolving Fund Revenue,
Series A, 7.25%, 6/15/2010 480,000.00 480,000.00
New York State Environmental Facilities Corporation Revenue,
Pollution Control, 6.875%, 6/15/2014 4,560,000.00 4,560,000.00
New York State Environmental Facilities Corporation Revenue,
Pollution Control, Series C, 7.2%, 3/15/2011 2,500,000.00 2,500,000.00
New York State Local Assistance Corporation, Revenue, Series B,
Prerefunded 4/1/2001, 7.5%, 4/1/2020 7,000,000.00 7,000,000.00
New York State Medical Care Facilities Financial Agency Revenue,
Prerefunded 2/15/2000, 7.75%, 8/15/2010 805,000.00 805,000.00
New York State Medical Care Facilities Financial Agency Revenue,
Series D, Prerefunded 2/15/2003, 6.45%, 2/15/2009 8,015,000.00 8,015,000.00
New York State Medical Care Facilities Financial Agency
Revenue, Series A, Prerefunded 2/15/2005, 6.75%,
8/15/2014 8,000,000.00 8,000,000.00
New York State Thruway Authority Revenue, Local Highway
& Bridge, 5.625%, 4/1/2012 5,470,000.00 5,470,000.00
New York St Twy Auth Svc Contract Rev, 5.5%, 4/1/2011 5,000,000.00 5,000,000.00
</TABLE>
<TABLE>
<S> <C> <C> <C>
Montana State Housing Board, Revenue,
Single Family Mortgage, Series A-2, 6.15%,
6/1/2030 2,444,754.00 2,444,754.00
Montana Board Housing Revenue, Family Housing
Authority, Series 1984 A, Zero Coupon, 6/1/2010 1,796.00 1,796.00
Montana State Board , 6%, 5/15/2019 5,308,600.00 5,308,600.00
Nebraska
Nebraska Investment Finance Authority Single,
Revenue, Series A, 6.7%, 9/1/2026 3,600,502.00 3,600,502.00
Omaha, NE, Public Power Revenue, Series B, 6.2%, 2/1/201 5,150,824.00 5,150,824.00
Scotts Bluff County, NE, Hospital Authority,
Revenue, Prerefunded 12/15/2002, 6.45%, 12/15/2004 1,757,175.00 1,757,175.00
Scotts Bluff County, NE, Hospital Authority,
Revenue, 6.45%, 12/15/2004 1,170,228.00 1,170,228.00
Nevada
Clark County, NV, Industrial Development Revenue,
Refunded, Nevada Power Company Project, Series B, 5.9%,
10/1/2030 4,399,000.00 4,399,000.00
Clark County, NV, School District, General Obligation,
Series B, FGIC, Zero Coupon, 3/1/2005 6,593,028.00 6,593,028.00
Clark County, NV, School District, Series 1991B,
Zero Coupon, 3/1/2009 2,891,575.00 2,891,575.00
Las Vegas Nevada Monorail Department Business and industry,
1/1/2013 2,616,700.00 2,616,700.00
Nevada Las Vegas Monorail, 7.375%, 1/1/2040 7,600,080.00 6,650,070.00 14,250,150.00
Humboldt County, NV, Pollution Control, Revenue,
Idaho Power Company Project, 8.3%, 12/1/2014 10,735,721.00 10,735,721.00
Nevada State Housing Division, Single Family
Mortgage Revenue, Series 1993 R, 5.95%, 10/1/2011 2,176,767.00 2,176,767.00
Reno, NV, Redevelopment Agency Tax Allocatation, 3,262,339.00 3,262,339.00
Series E, Prerefunded 9/1/2003, 5.65%, 9/1/2013
Reno, NV, Redevelopment Agency Tax Allocatation, 4,180,277.00 4,180,277.00
Series E, Prerefunded 9/1/2003, 5.75%, 9/1/2017
New Hampshire
New Hampshire Higher Educational & Health Facilities, 2,506,725.00 2,506,725.00
Revenue, Havenwood Heritage Heights, 7.35%, 1/1/2018
New Hampshire Higher Educational & Health Facilities, 4,010,720.00 4,010,720.00
Revenue, Havenwood Heritage Heights, 7.45%, 1/1/2025
New Jersey
Atlantic City, NJ, Board of Education, General 5,070,718.00 5,070,718.00
Obligation, 6%, 12/1/2013
Atlantic City, NJ, Board of Education, General 5,001,390.00 5,001,390.00
Obligation, 6.1%, 12/1/2014
Essex County, NJ, Improvement Authority Revenue,
Jail & Youth Housing Projects, Prerefunded 12/1/2004, 6.9%, 2,922,407.00 2,922,407.00
12/1/2014
Essex County, NJ, Improvement Authority Revenue, 4,259,911.00 4,259,911.00
Property & Equiptment Project, 12/1/2012
6.5%,
Jersey City, NJ, Sewer Authority Sewer, Revenue, 4.5%, 1/1/2019 11,666,200.00 11,666,200.00
New Jersey Economic Development Authority, Economic
Development Revenue, United Methodist Homes, 5.5%,
7/1/2019 2,019,925.00 2,019,925.00
New Jersey Economic Development Authority, Revenue,
United Methodist Homes, 5.75%, 7/1/2029 7,506,615.00 7,506,615.00
New Jersey Health Care Facilities, Revenue,
Atlantic City Medical Center, Series C, 6.8%, 7/1/2011 7,140,891.00 7,140,891.00
New Jersey Health Care Facilities, Revenue,
West Jersey Health Systems, Prerefunded 7/1/2002, 6.125%,
7/1/2012 11,500,280.00 11,500,280.00
New Jersey Health Care Facilities, Revenue,
Southern Ocean County Hospital, Series A, 6.125%,
7/1/2013 3,532,824.00 3,532,824.00
New Jersey Economic Development Authority Revenue,
Harrogate Inc., Series A, 5.875%, 12/1/2026 850,370.00 850,370.00
New Jersey Economic Development Authority, Revenue,
Series A, 5.875%, 5/1/2014 5,292,150.00 5,292,150.00
New Jersey Highway Authority, ETM, 6.5%, 1/1/2011 4,436,344.00 4,436,344.00
New Jersey State Tran Corp Certificates, Federal
Transportation Administration Grants, Series B,
5.75%, 9/15/2013 11,636,020.00 11,636,020.00
New Jersey State Transportation Corp Certificates,
Rites-PA 785, 5.8375%, 5,898,019.00 5,898,019.00
9/15/2015
New Jersey State Transportation Trust Fund Authority,
Transportation System, Series A, 5%, 6/15/2017 21,007,600.00 21,007,600.00
New Jersey State Transportation Trust Fund Authority,
Transportation System, Series A, 5.625%, 6/15/2014 3,771,606.00 3,771,606.00
New Jersey State Transportation Trust Fund Authority,
Residual Certificates, Series 224, 7.44%, 6/15/2016 12,311,310.00 12,311,310.00
New Jersey State Turnpike Authority, Revenue,
10.375%, 1/1/2003 1,543,003.00 1,543,003.00
New Jersey State Turnpike Authority, Revenue,
Series A, 6.5%, 1/1/2016 52,131,772.00 52,131,772.00
New Jersey State Turnpike Authority, Revenue,
9.1385%, 1/1/2016 27,106,914.00 27,106,914.00
New Jersey State Turnpike Authority, Revenue,
9.1385%, 1/1/2016 4,904,085.00 4,904,085.00
New Jersey State Turnpike Authority Revenue,
6%, 1/1/2012 7,693,140.00 7,693,140.00
New Jersey State Turnpike Authority Revenue,
6%, 1/1/2013 5,494,500.00 5,494,500.00
New Jersey State Turnpike Authority Revenue,
6.17%, 1/1/2010 12,798,300.00 12,798,300.00
New Jersey State Turnpike Authority, 6.17%, 1/1/2011 14,558,895.00 14,558,895.00
New Mexico
Albuquerque, NM, Hospital Revenue, Southwest Community
Health Services, 10%, 8/1/2003 570,218.00 570,218.00
Albuquerque, NM, Hospital Revenue, Southwest Community
Health Services, Prerefunded 8/1/2008, 10.125%, 8/1/2012 5,025,960.00 5,025,960.00
Los Alamos County, NM, Utility Income, Revenue,
Series A, 6.1%, 7/1/2010 4,678,388.00 4,678,388.00
New Mexico Mortgage Finance Authority, Revenue,
Series E-2, 6.8%, 3/1/2031 8,036,613.00 8,036,613.00
Socorro, NM, Hospital System Revenue, Southwest
Community Health Services, 10%, 8/1/2003 771,237.00 771,237.00
New York
Long Island Power Authority, NY Electric
Systems Revenue, Series 1998 A, 5%, 12/1/2018 4,774,300.00 4,774,300.00
Long Island Power AuthorityZero Coupon, 6/1/2008 10,102,440.00 10,102,440.00
Long Island Pwr Auth N Y Elec Sys Rev Revenue,
Zero Coupon, 6/1/2012 4,463,167.00 4,463,167.00
Metropolitan Transportation Authority of New York,
Transit Facilities Revenue, Series 1993 O, 5.75%, 7/1/2013 7,228,721.00 7,228,721.00
Metropolitan Transportation Authority of New York,
Transportation Facilities Revenue, Series C, 5.125%, 7/1/2011 10,196,000.00 10,196,000.00
Metropolitan Transportation Authority of New York,
Transit Facilities Revenue, Series 1998 C, 5.125%, 7/1/2013 5,032,250.00 5,032,250.00
New York Metropolitan Transportation Authority, Revenue,
Series Q, 5.125%, 7/1/2012 7,846,332.00 7,846,332.00
New York Metropolitan Transportation Authority,
Revenue, Series O, 6.25%, 7/1/2014 6,450,600.00 6,450,600.00
New York Metropolitan Transportation Authority,
Revenue, Series A, 6%, 4/1/2020 5,448,450.00 5,448,450.00
Monroe County, NY, Airport Authority, Airport
Revenue, 8.928%, 1/1/2014 2,241,630.00 2,241,630.00
Monroe County, NY, Airport Authority, Airport
Revenue, 8.9247%, 1/1/2015 2,806,664.00 2,806,664.00
Monroe County, NY, Airport Authority, Airport
Revenue, 9.2149%, 1/1/2016 2,170,365.00 2,170,365.00
Nassau County, Industrial Finance Authority,
5.75%, 11/15/2015 3,188,244.00 3,188,244.00
Nassau County, Industrial Finance Authority ,
5.75%, 11/15/2016 4,424,760.00 4,424,760.00
New York City, NY, General Obligation, Series 1992 A,
6.375%, 8/1/2004 5,216,350.00 5,216,350.00
New York City, NY, General Obligation, Series C, AMBAC,
Prerefunded 8/1/02 at 101.50, 6.4%, 8/1/2004 288,279.00 288,279.00
New York City, NY, General Obligation, Series 1995 B,
6%, 8/15/2004 3,595,428.00 3,595,428.00
New York, NY, General Obligation, Prerefunded 11/15/2001,
8.4%, 11/15/2005 4,522,935.00 4,522,935.00
New York, NY, General Obligation, Series F, 8.4%,
11/15/2005 199,581.00 199,581.00
New York, NY, General Obligation, Series F, Prerefunded
11/15/2001, 8.4%, 11/15/2006 6,781,770.00 6,781,770.00
New York, NY, General Obligation, Series F, 8.4%, 11/15/2006 588,240.00 588,240.00
New York City, NY, General Obligation, Series E,
ETM, MBIA, 7%, 12/1/2007 1,467,615.00 1,467,615.00
New York, NY, General Obligation, Series F,
Prerefunded 11/15/2001, 8.4%, 11/15/2007 6,671,198.00 6,671,198.00
New York, NY, General Obligation, Series F,
Prerefunded 11/15/2001, 8.4%, 11/15/2008 11,583,770.00 11,583,770.00
New York, NY, General Obligation, Series F,
Prerefunded 11/15/2001, 8.4%, 11/15/2009 1,105,723.00 1,105,723.00
New York City, NY, General Obligation, Series 1995 E,
6.5%, 2/15/2005 7,504,420.00 7,504,420.00
New York, NY, General Obligation, Series A, Prerefunded
8/15/2001, 7.75%, 8/15/2015 3,540,264.00 3,540,264.00
New York, NY, General Obligation, Series A, 7.75%,
8/15/2015 95,279.00 95,279.00
New York City, NY, General Obligation, Series 1996 G,
6.75%, 2/1/2009 2,250,040.00 2,250,040.00
New York, NY, General Obligation, Series J, 5.875%,
2/15/2019 16,398,544.00 16,398,544.00
New York City, NY, General Obligation, Series 1992 H,
Prerefunded 1/1/2002 at 101.50,, 7%, 2/1/2005 5,226.00 5,226.00
New York City, NY, General Obligation, Series H, 7%,
2/1/2005 499,809.00 499,809.00
New York City, NY, General Obligation, 6.5%, 5/15/2012 7,813,330.00 7,813,330.00
New York, NY, General Obligation, Series H, Prerefunded
2/1/2002, 7%, 2/1/2007 2,884,310.00 2,884,310.00
New York, NY, General Obligation, Series H, 7%, 2/1/2007 249,904.00 249,904.00
New York, NY, Series G, 5%, 8/1/2018 4,470,605.00 4,470,605.00
New York, NY, General Obligation, Series G, Zero Coupon,
8/1/2009 12,495,220.00 12,495,220.00
New York, NY, Series C, 5.3875%, 11/15/2017 5,021,050.00 5,021,050.00
New York, NY, City Municipal Water Financial Authority,
Revenue, Water & Sewer Systems, Prerefunded
6/15/2001, 7%, 6/15/2015 235,621.00 235,621.00
New York, NY, City Municipal Water Financial Authority,
Revenue, Water & Sewer Systems, 7%, 6/15/2015 758,085.00 758,085.00
New York, NY, City Municipal Water Financial Authority,
Revenue, Water & Sewer Systems, Prerefunded
6/15/2001, 7%,6/15/2015 542,953.00 542,953.00
New York NY City Transitional FIN Authority Revenue, 5%,
5/1/2026 3,714,840.00 3,714,840.00
New York, NY, City Industrial Development Agency Revenue, USTA
National Tennis Center Project, 6.5%, 11/15/2010 3,749,372.00 3,749,372.00
New York City, NY, Industrial Development Agency Revenue, USTA
National Tennis Center Project, 6.6%, 11/15/2011 3,246,750.00 3,246,750.00
New York State Dormitory Authority Revenue, City University,
FGIC, Series D, 7%, 7/1/2009 4,445,000.00 4,445,000.00
New York State Dormitory Authority Revenue, City University,
Series C, FGIC, 7.5%, 7/1/2010 6,702,602.00 6,702,602.00
New York State Dormitory Authority RevenueSeries 1993 A, 5.5%,
5/15/2019 1,537,680.00 1,537,680.00
New York State Dormitory Authority RevenueSeries 1993 C, 5.25%,
5/15/2021 1,976,480.00 1,976,480.00
New York State Dormitory Authority, Revenue, State University
Educational Facilities, Revenue, Prerefunded
5/15/02, 7.25%, 5/15/2018 3,576,041.00 3,576,041.00
New York State Dormitory Authority, Revenue, State University
Educational Facilities, Revenue, Prerefunded
5/15/2002, 7.25%, 5/15/2018 466,901.00 466,901.00
New York State Dormitory Authority, City University System,
Consolidated Revenue, Series F, 5.375%, 7/1/2007 2,067,040.00 2,067,040.00
New York State Dormitory Authority, City University, Revenue,
5.75%, 7/1/2013 5,921,630.00 5,921,630.00
New York State Dormitory Authority Revenue, City University
System, 6%, 7/1/2014 7,702,100.00 7,702,100.00
New York State Dormitory Authority, City University System,
Revenue, Series I, 5.125%, 7/1/2027 17,977,684.00 17,977,684.00
New York State Dormitory Authority Revenue, State Universities
Educational Facilities, Series B, 5%, 5/15/2018 6,704,880.00 6,704,880.00
New York State Dormitory Authority, Mental Health Services,
Revenue, 5.25%, 8/15/2024 9,892,172.00 9,892,172.00
New York State Dormitory Authority, Revenue Bond, 5.25%,
5/15/2017 3,482,745.00 3,482,745.00
New York State Environmental Facilities Corporation, State
Water Pollution, Revolving Fund Revenue, Series A,
Prerefunded 06/15/2001, 7.25%, 6/15/2010 4,680,912.00 4,680,912.00
New York State Environment Facilities Corporation Revenue,
Pollution Control, Prerefunded 6/15/2004, 6.875%, 6/15/2014 7,452,406.00 7,452,406.00
New York State Environmental Facilities Corporation, State
Water Pollution Control, Revolving Fund Revenue,
Series A, 7.25%, 6/15/2010 496,449.00 496,449.00
New York State Environmental Facilities Corporation Revenue,
Pollution Control, 6.875%, 6/15/2014 4,910,937.00 4,910,937.00
New York State Environmental Facilities Corporation Revenue,
Pollution Control, Series C, 7.2%, 3/15/2011 2,554,950.00 2,554,950.00
New York State Local Assistance Corporation, Revenue, Series B,
Prerefunded 4/1/2001, 7.5%, 4/1/2020 7,212,800.00 7,212,800.00
New York State Medical Care Facilities Financial Agency Revenue,
Prerefunded 2/15/2000, 7.75%, 8/15/2010 839,051.00 839,051.00
New York State Medical Care Facilities Financial Agency Revenue,
Series D, Prerefunded 2/15/2003, 6.45%, 2/15/2009 8,491,652.00 8,491,652.00
New York State Medical Care Facilities Financial Agency
Revenue, Series A, Prerefunded 2/15/2005, 6.75%, 8/15/2014 8,847,600.00 8,847,600.00
New York State Thruway Authority Revenue, Local Highway
& Bridge, 5.625%, 4/1/2012 5,765,270.00 5,765,270.00
New York St Twy Auth Svc Contract Rev, 5.5%, 4/1/2011 5,259,300.00 5,259,300.00
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
New York State thruway service
contract, 5.75%, 4/1/2016 10,000,000.00 10,000,000.00
New York State Urban Development
Corporation, State Facilities,
Revenue, 5.6%, 4/1/2015 4,655,000.00 4,655,000.00
New York State Urban Development
Corporation, State Facilities,
Revenue, 5.7%, 4/1/2020 3,600,000.00 3,600,000.00
New York State, Urban Development
Authority, Correctional Facilities,
6.5%, 1/1/2011 4,500,000.00 4,500,000.00
Onondaga County, NY, Industrial
Development Agency, Solid Waste
Disposal Facility, Solvay
Paperboard LLC, Series
1998, AMT, 7%, 11/1/2030 3,500,000.00 3,500,000.00
New York & New Jersey, Port
Authority Revenue, Series 8,
6.5%, 10/15/2008 5,390,000.00 5,390,000.00
New York & New Jersey Port
Authority, Revenue, Series 6,
6, 7/1/2013 6,555,000.00 6,555,000.00
New York & New Jersey Port
Authority, Revenue, Series 6,
6%, 7/1/2015 2,500,000.00 2,500,000.00
New York & New Jersey Port
Authority, 6.9199992%, 10/15/2014 6,160,000.00 6,160,000.00
New York & New Jersey Port
Authority, Special Obligation,
Revenue, Continental/Eastern
Project, Laguardia, 9.125%,
12/1/2015 3,150,000.00 3,150,000.00
Port Authority of New York &
New Jersey, Special Obligation,
JFK International Air Terminal,
Split Amount, Series 1996, AMT,
7%, 10/1/2007 2,000,000.00 2,000,000.00
Suffolk County, NY, Industrial
Development Agency, Southwest
Sewer Symstem, FGIC, 6%, 2/1/2007 8,000,000.00 8,000,000.00
Triborough Bridge & Tunnel Authority,
NY, General Purpose Revenue,
Series A, 5.125%, 1/1/2018 6,500,000.00 6,500,000.00
Triborough Bridge & Tunnel Authority,
NY, General Purpose Revenue,
Series Y, 5.5%, 1/1/2017 5,050,000.00 5,050,000.00
North Carolina
Durham County, NC, Certificates
of Participation, Jail Facilities
& Computer Equipment Project,
Prerefunded 8/1/2008, 6.625%,
5/1/2014 5,500,000.00 5,500,000.00
North Carolina Eastern Municipal
Power Agency, Power System Revenue,
Series B, FGIC, 6%, 1/1/2018 8,775,000.00 8,775,000.00
North Carolina Eastern Municipal
Power Agency Revenue, Series B,
6%, 1/1/2022 18,775,000.00 18,775,000.00
North Carolina Municipal Power
Agency No. 1, Catawba Electric
Revenue, MBIA, 6%, 1/1/2011 8,235,000.00 8,235,000.00
North Carolina Municipal Power
Agency No. 1, Catawba Electric
Revenue, MBIA, 5.25%, 1/1/2008 2,500,000.00 2,500,000.00
North Carolina Municipal Power
Agency No. 1, Catawba Electricity,
Revenue, Series 1992, 7.25%, 1/1/2007 5,000,000.00 5,000,000.00
North Carolina Municipal Power Agency
No. 1, Catawba Electric Revenue,
Series 1993, 5.25%, 1/1/2009 8,500,000.00 8,500,000.00
State of North Carolina, General
Obligation, Public School Building,
4.6%, 4/1/2013 16,500,000.00 16,500,000.00
North Dakota
Bismarck, ND, Hospital Revenue,
St. Alexius Medical Center, Series
1991, AMBAC, Zero Coupon, 5/1/2002 2,850,000.00 2,850,000.00
North Dakota State Financial Agency
Revenue, Single Family Mortgage,
Series A, 8.05%, 1/1/2024 430,000.00 430,000.00
Ohio
Akron Ohio Econ Dev, 6%, 12/1/2012 1,000,000.00 1,000,000.00
Akron, OH, Sewer System, Revenue,
5.9%, 12/1/2011 385,000.00 385,000.00 409,281.00
Athens County, OH, Economic
Development, Revenue, Ohio Athens
Inc. Project, 6.25%, 11/1/2011 500,000.00 500,000.00 483,300.00
Avon, OH, Local School District,
General Obligation, 6.5%, 12/1/2015 940,000.00 940,000.00 1,082,720.00
Batavia, OH, Local School District,
General Obligation, Prerefunded
12/01/2005, 7%, 12/1/2014 500,000.00 500,000.00 564,525.00
Beavercreek, OH, Local School District,
General Obligation, Series 1996,
6.6%, 12/1/2015 500,000.00 1,000,000.00 1,500,000.00 577,690.00
Big Walnut, OH, Local School District,
General Obligation, zero coupon,
12/1/2012 420,000.00 420,000.00 226,140.00
Bowling Green State University, Ohio
Gen Receipts, 5.75%, 6/1/2013 125,000.00 125,000.00 131,731.00
Bowling Green State University, Ohio
Gen Receipts, 5.75%, 6/1/2016 250,000.00 250,000.00 259,552.00
Clermont County, OH, Hospital
Facilities Revenue, Mercy Health
Center, Series A, Prerefunded
9/1/2019, 7.5%, 9/1/2019 2,205,000.00 2,205,000.00
Cleveland-Cuyahoga County, OH, Port
Development Revenue, C&P Docks
Project, 6%, 3/1/2007 485,000.00 1,205,000.00 965,000.00 2,655,000.00 469,989.00
Cleveland, OH, General Obligation,
Series A, Prerefunded 07/01/2002,
6.3%, 7/1/2006 1,000,000.00 1,000,000.00
Cleveland, OH, Parking Facility Revenue,
6%, 9/15/2009 1,385,000.00 1,385,000.00
Cleveland, OH Public Power Systems
Revenue, Capital Appreciation,
First Mortgage, Series 1994A, Zero
Coupon, 11/15/2012 2,250,000.00 2,250,000.00
Cleveland, OH, Public Power System
Revenue, Series 1996-1, 6%, 11/15/2011 1,050,000.00 1,050,000.00
Cleveland, OH, Public Power System
Revenue, Prerefunded, Series A,
7%, 11/15/2017 510,000.00 510,000.00
Cleveland, OH, Public Power System
Revenue, Prerefunded, Series A,
7%, 11/15/2017 145,000.00 145,000.00
Cleveland, OH, Public Power System
Revenue, Unrefunded Balance, Series A,
7%, 11/15/2017 340,000.00 340,000.00
Cleveland, OH, Public Power System
Revenue, Unrefunded Balance, Series A,
7%, 11/15/2017 605,000.00 605,000.00
CLEVELAND OHIO PUB PWR SYSTEMS, Prefunded
11/15/2001, 7%, 11/15/2017 150,000.00 150,000.00 156,631.00
CLEVELAND OHIO PUB PWR SYSTEMS, 7%,
11/15/2017 600,000.00 600,000.00 624,408.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, zero coupon, 12/1/2008 825,000.00 825,000.00 524,394.00
Cleveland, OH, Non Taxable Revenue
Bond, Cleveland Stadium, Series A,
12/1/2011 820,000.00 820,000.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, Series A, 12/1/2014 820,000.00 820,000.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, Series A, 12/1/2017 820,000.00 820,000.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, zero coupon, 12/1/2020 820,000.00 820,000.00 262,826.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, 12/1/2012 815,000.00 815,000.00 412,838.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, Series B, 12/1/2015 815,000.00 815,000.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, Series B, 12/1/2018 815,000.00 815,000.00
Cleveland, OH, Urban Renewal Tax
Increment Rock & Roll Hall of Fame
and Museum Project, 6.75%, 3/15/2018 1,000,000.00 1,000,000.00
Cleveland, OH, Water Works Revenue,
MBIA Insured, Series 1993G, 5.5%,
1/1/2013 10,000,000.00 10,000,000.00
Cleveland, OH, Waterworks Revenue,
Series B, Prerefunded 1/1/2002, 6.5%,
1/1/2011 4,195,000.00 4,195,000.00
Cleveland, OH, Waterworks Revenue,
Series B, 6.5%, 1/1/2011 385,000.00 385,000.00
Cleveland, OH, Waterworks Revenue,
Series I, 5%, 1/1/2017 1,000,000.00 1,000,000.00
Cleveland, OH, Waterworks Revenue,
Prerefunded 01/01/2002, 6.25%, 1/1/2015 615,000.00 615,000.00 638,874.00
Cleveland, OH, Waterworks Revenue,
6.25%, 1/1/2015 25,000.00 25,000.00 25,859.00
Columbus, OH, General Obligation,
Unlimited Tax, Sewer Improvement,
Prerefunded 05/01/2003, 6%, /5/1/2013 1,000,000.00 1,000,000.00
Crawford County, OH, General Obligation,
Prerefunded 12/01/20004,
6.75%, 12/1/2019 700,000.00 700,000.00 771,127.00
Cuyahoga County, OH, General Obligation,
5.65%, 5/15/2018 500,000.00 500,000.00 524,480.00
Cuyahoga County, OH, 5%, 12/1/2020 1,000,000.00 1,000,000.00 952,030.00
Cuyahoga County, OH, General Obligation,
Jail Facilities, Series 1991,
ETM, Zero Coupon, 10/1/2002 1,500,000.00 1,500,000.00
Cuyahoga County, OH, Hospital Revenue,
Meridia Health System, Prerefunded
8/15/2005, 6.25%, 8/15/2014 950,000.00 7,050,000.00 8,000,000.00 1,034,531.00
Cuyahoga County, OH, Hospital Facilities
Revenue, Health Cleveland Inc.,
Series 1993, 6.25%, 8/15/2010 1,000,000.00 1,000,000.00
Cuyahoga County, OH, Multifamily Housing
Revenue, 6.5%, 10/20/2020 1,000,000.00 1,000,000.00 1,035,770.00
Dublin, OH, City School District,
General Obligation, 12/1/2011 1,095,000.00 1,095,000.00 629,844.00
Edon Township, OH, Local School District,
General Obligation, 6%, 12/1/2019 475,000.00 475,000.00 509,190.00
Fairfield, OH, City School District,
7.2%, 12/1/2009 1,000,000.00 1,000,000.00
Fayette County, OH, Rattlesnake
Improvement Area, General
Obligation, 5.9%, 12/1/2013 135,000.00 135,000.00 138,329.00
Finneytown, OH, Local School District,
General Obligation, 6.2%, 12/1/2017 320,000.00 320,000.00 357,177.00
Franklin County, OH, Health Care
Facilities, Revenue Refunding, Ohio
Presbyterian Services, Series 1997,
5.25%, 7/2/2008 500,000.00 500,000.00
Franklin County, OH, Health Care
Facilities, Revenue Refunding, Ohio
Presbyterian Services, Series 1997,
5.5%, 7/1/2017 1,000,000.00 1,000,000.00
Franklin County, OH, Riverside United
Methodist Hospital, Series A,
5.75%, 5/15/2012 1,950,000.00 1,950,000.00
Franklin, OH, Muskingum County Local
School District, General Obligation,
6.5%, 12/1/2013 500,000.00 500,000.00 566,965.00
Gateway Economic Development Corporation
of Cleveland, OH, Stadium Revenue,
6.5%, 9/15/2014 4,000,000.00 4,000,000.00
Green Springs, OH, Health Care, Revenue,
St Francis Health Care Center Project,
Series A, 7%, 5/15/2014 400,000.00 4,235,000.00 4,635,000.00 339,096.00
Green Springs, OH, Health Care, Revenue,
St Francis Health Care Center Project,
Series A, 7.125%, 5/15/2025 4,405,000.00 4,405,000.00
Hamilton County, OH, 5%, 12/1/2024 1,000,000.00 1,000,000.00 926,910.00
Hamilton County, OH, Health System
Revenue, Franciscan Sisters of the
Poor Health System, Providence Hospital,
Series 1992, 6.8%, 7/1/2008 2,000,000.00 2,000,000.00
Hamilton County, OH, 5.75%, 12/1/2014 2,000,000.00 2,000,000.00
Hamilton County, OH, 5.75%, 12/1/2015 240,000.00 4,000,000.00 4,240,000.00 251,817.00
Hamilton County, OH, Sewer System
Revenue, Improvement and Refunding,
FGIC Insured, 5.45%, 12/1/2009 1,000,000.00 1,000,000.00
Highland Heights, OH, General Obligation,
6.15%, 12/1/2012 145,000.00 145,000.00 151,699.00
Hilliard, OH, School District, Series
1996A, Zero Coupon, FGIC Insured,
12/1/2012 1,655,000.00 1,655,000.00
Huber Heights, OH, Water System Revenue,
Capital Appreciation, Zero Coupon,
12/1/2012 1,005,000.00 1,005,000.00
Lakeview, OH, Local School District,
General Obligation, Prerefunded
12/01/2004, 6.9%, 12/1/2014 700,000.00 700,000.00 774,774.00
Liberty, OH, Local School District,
General Obligation, 12/1/2014 570,000.00 570,000.00 269,741.00
Liberty, OH, Local School District,
General Obligation, 12/1/2011 250,000.00 250,000.00 143,800.00
Liberty, OH, Local School District,
12/1/2012 255,000.00 255,000.00 138,023.00
Lorain County, OH, Hospital Refunding
Revenue, Humility of Mary Health
Care System, Series A, Prerefunded
12/15/2005, 5.9%, 12/15/2008 1,000,000.00 1,000,000.00
Lorain, OH, Hospital Authority
Refunding Revenue, Lakeland Community
Hospital Inc., 6.5%, 11/15/2012 1,000,000.00 1,000,000.00
Lucas County, OH, General Obligation,
6.05%, 12/1/2013 130,000.00 130,000.00 138,126.00
Lucas County, OH, Health Facilities
Revenue, Ohio Presbyterian, Series A,
6.625%, 7/1/2014 2,000,000.00 2,000,000.00
Lucas County, OH, Health Facilities
Revenue, Ohio Presbyterian, Series A,
6.75%, 7/1/2020 2,000,000.00 2,000,000.00
Lucas County, OH, Hospital Revenue,
Flower Hospital, Series 1993, Prerefunded
12/01/2004, 6.125%, 12/1/2013 1,375,000.00 1,375,000.00
Marion County, OH, Health Care Facilities,
Revenue, Church Homes Project, 6.375%,
11/15/2010 260,000.00 3,480,000.00 3,740,000.00 246,516.00
Marion County, OH, Health Care
Facilities, Revenue, Church Homes
Project, 6.3%, 11/15/2015 400,000.00 2,950,000.00 3,350,000.00 361,580.00
Miami County, OH, Revenue Refunding,
Hospital Upper Valley,Series 1996 C,
6.25%, 5/15/2013 1,000,000.00 1,000,000.00
Napoleon, OH, Health Care Facility,
Lutheran Orphans' and Old Folks'
Home Society, Revenue, 6.875%, 8/1/2023 445,000.00 445,000.00 473,560.00
North Olmsted, OH, General Obligation,,
6.25%, 12/15/2012 1,500,000.00 1,500,000.00
North Olmstead, OH, General Obligation,
6.2%, 12/1/2011 2,000,000.00 2,000,000.00
Northeast Ohio Regional Sewer District,
Wastewater Revenue, Prerefunded
11/15/2001, 6.5%, 11/15/2016 300,000.00 300,000.00 308,991.00
Northeast Ohio Regional Sewer District,
Wastewater Improvement Revenue
Refunding, 5.5%, 11/15/2012 1,550,000.00 1,550,000.00
Ohio Housing Finance Agency, Multifamily
Housing, Westlake Apartments Project,
Revenue, 5.85%, 12/1/2016 300,000.00 300,000.00 302,859.00
Ohio Housing Finance Agency, GNMA Single
Familty Mortgage Revenue, Prerefunded
1/15/2013, Zero Coupon, 1/15/2015 1,000,000.00 3,360,000.00 4,360,000.00 435,770.00
Ohio Housing Finance Agency, Single
Family Mortgage Revenue, Zero Coupon,
Prerefunded 7/15/2013, 1/15/2015 3,515,000.00 3,515,000.00
Ohio General Obligation, Series 1994,
6%, 8/1/2010 1,000,000.00 1,000,000.00
Ohio State General Obligation (Series B),
5.625%, 5/1/2015 1,000,000.00 1,000,000.00 1,039,970.00
Ohio State Building Authority, Adult
Correctional Building Fund, Revenue,
6.125%, 10/1/2012 310,000.00 310,000.00 327,223.00
Ohio State Building Authority, Toledo
Government Office Building, Series A,
Prerefunded 04/01/2003, 8%, 10/1/2027 500,000.00 500,000.00
Ohio State Building Authority, Revenue,
Prerefunded 06/01/2001, 6.25%, 6/1/2011 215,000.00 215,000.00 221,230.00
Ohio State Building Authority,
Administrative Building Funds Project
Revenue, 6.3%, 10/1/2011 140,000.00 140,000.00 147,256.00
Ohio State Building Authority, Juvenile
Correctional Building Authority,
Prerefunded 10/01/2004, 6.6%, 10/1/2014 200,000.00 200,000.00 218,338.00
Ohio State Building Authority, 5.375%,
10/1/2013 1,000,000.00 1,000,000.00
Ohio State Building Authority Adult
Correctional - A, 5.75%, 4/1/2012 2,400,000.00 2,400,000.00
Ohio State Building Authority, 5.75%,
4/1/2013 1,000,000.00 1,000,000.00
Ohio State Higher Education Facility,
Dominican College, Revenue, 6.625%,
12/1/2014 600,000.00 600,000.00 626,640.00
Ohio State Higher Education Facility,
University of Dayton, Revenue, 6.6%,
12/1/2017 430,000.00 430,000.00 459,674.00
Ohio Higher Education Facility Commission,
University of Findlay Project, Revenue,
6.125%, 9/1/2016 400,000.00 400,000.00 407,024.00
Ohio State Higher Education Facility,
Xavier University, Revenue, 6%, 5/15/2011 240,000.00 240,000.00 257,901.00
Ohio State Higher Education Facility,
Series 1997 A, Step-Up Coupon 0% to
7/1/2000, 6.5% to, 7/1/2008 2,325,000.00 2,325,000.00
</TABLE>
<TABLE>
<S> <C> <C> <C>
New York State thruway service
contract, 5.75%, 4/1/2016 10,471,400.00 10,471,400.00
New York State Urban Development
Corporation, State Facilities,
Revenue, 5.6%, 4/1/2015 4,852,185.00
New York State Urban Development
Corporation, State Facilities,
Revenue, 5.7%, 4/1/2020 4,852,185.00 3,717,360.00
New York State, Urban Development
Authority, Correctional Facilities,
6.5%, 1/1/2011 3,717,360.00 5,111,550.00 5,111,550.00
Onondaga County, NY, Industrial
Development Agency, Solid Waste
Disposal Facility, Solvay
Paperboard LLC, Series
1998, AMT, 7%, 11/1/2030 3,330,005.00 3,330,005.00
New York & New Jersey, Port
Authority Revenue, Series 8,
6.5%, 10/15/2008 5,575,955.00
New York & New Jersey Port
Authority, Revenue, Series 6,
6, 7/1/2013 5,575,955.00 6,860,135.00
New York & New Jersey Port
Authority, Revenue, Series 6,
6%, 7/1/2015 6,860,135.00 2,599,125.00
New York & New Jersey Port
Authority, 6.9199992%, 10/15/2014 6,687,604.00
New York & New Jersey Port 2,599,125.00
Authority, Special Obligation,
Revenue, Continental/Eastern 6,687,604.00
Project, Laguardia, 9.125%,
12/1/2015 3,237,034.00
Port Authority of New York &
New Jersey, Special Obligation,
JFK International Air Terminal, 3,237,034.00
Split Amount, Series 1996, AMT,
7%, 10/1/2007 2,075,440.00 2,075,440.00
Suffolk County, NY, Industrial
Development Agency, Southwest
Sewer Symstem, FGIC, 6%, 2/1/2007 8,579,520.00 8,579,520.00
Triborough Bridge & Tunnel Authority,
NY, General Purpose Revenue,
Series A, 5.125%, 1/1/2018 6,305,390.00 6,305,390.00
Triborough Bridge & Tunnel Authority,
NY, General Purpose Revenue,
Series Y, 5.5%, 1/1/2017 5,227,457.00 5,227,457.00
North Carolina
Durham County, NC, Certificates
of Participation, Jail Facilities
& Computer Equipment Project,
Prerefunded 8/1/2008, 6.625%,
5/1/2014 5,659,225.00 5,659,225.00
North Carolina Eastern Municipal
Power Agency, Power System Revenue,
Series B, FGIC, 6%, 1/1/2018 9,485,073.00 9,485,073.00
North Carolina Eastern Municipal
Power Agency Revenue, Series B,
6%, 1/1/2022 20,243,580.00 20,243,580.00
North Carolina Municipal Power
Agency No. 1, Catawba Electric
Revenue, MBIA, 6%, 1/1/2011 8,931,681.00 8,931,681.00
North Carolina Municipal Power
Agency No. 1, Catawba Electric
Revenue, MBIA, 5.25%, 1/1/2008 2,578,150.00 2,578,150.00
North Carolina Municipal Power
Agency No. 1, Catawba Electricity,
Revenue, Series 1992, 7.25%, 1/1/2007 5,663,550.00 5,663,550.00
North Carolina Municipal Power Agency
No. 1, Catawba Electric Revenue,
Series 1993, 5.25%, 1/1/2009 8,767,835.00 8,767,835.00
State of North Carolina, General
Obligation, Public School Building,
4.6%, 4/1/2013 15,599,925.00 15,599,925.00
North Dakota
Bismarck, ND, Hospital Revenue,
St. Alexius Medical Center, Series
1991, AMBAC, Zero Coupon, 5/1/2002 2,669,965.00 2,669,965.00
North Dakota State Financial Agency
Revenue, Single Family Mortgage,
Series A, 8.05%, 1/1/2024 436,174.00 436,174.00
Ohio
Akron Ohio Econ Dev, 6%, 12/1/2012 1,095,590.00 1,095,590.00
Akron, OH, Sewer System, Revenue,
5.9%, 12/1/2011 409,281.00
Athens County, OH, Economic
Development, Revenue, Ohio Athens
Inc. Project, 6.25%, 11/1/2011 483,300.00
Avon, OH, Local School District,
General Obligation, 6.5%, 12/1/2015 1,082,720.00
Batavia, OH, Local School District,
General Obligation, Prerefunded
12/01/2005, 7%, 12/1/2014 564,525.00
Beavercreek, OH, Local School District,
General Obligation, Series 1996,
6.6%, 12/1/2015 1,155,380.00 1,733,070.00
Big Walnut, OH, Local School District,
General Obligation, zero coupon,
12/1/2012 226,140.00
Bowling Green State University, Ohio
Gen Receipts, 5.75%, 6/1/2013 131,731.00
Bowling Green State University, Ohio
Gen Receipts, 5.75%, 6/1/2016 259,552.00
Clermont County, OH, Hospital
Facilities Revenue, Mercy Health
Center, Series A, Prerefunded
9/1/2019, 7.5%, 9/1/2019 2,232,452.00 2,232,452.00
Cleveland-Cuyahoga County, OH, Port
Development Revenue, C&P Docks
Project, 6%, 3/1/2007 1,167,705.00 935,133.00 2,572,827.00
Cleveland, OH, General Obligation,
Series A, Prerefunded 07/01/2002,
6.3%, 7/1/2006 1,048,130.00 1,048,130.00
Cleveland, OH, Parking Facility Revenue,
6%, 9/15/2009 1,515,937.00 1,515,937.00
Cleveland, OH Public Power Systems
Revenue, Capital Appreciation,
First Mortgage, Series 1994A, Zero
Coupon, 11/15/2012 1,220,647.00 1,220,647.00
Cleveland, OH, Public Power System
Revenue, Series 1996-1, 6%, 11/15/2011 1,154,023.00 1,154,023.00
Cleveland, OH, Public Power System
Revenue, Prerefunded, Series A,
7%, 11/15/2017 532,251.00 532,251.00
Cleveland, OH, Public Power System
Revenue, Prerefunded, Series A,
7%, 11/15/2017 151,326.00 151,326.00
Cleveland, OH, Public Power System
Revenue, Unrefunded Balance, Series A,
7%, 11/15/2017 353,372.00 353,372.00
Cleveland, OH, Public Power System
Revenue, Unrefunded Balance, Series A,
7%, 11/15/2017 628,794.00 628,794.00
CLEVELAND OHIO PUB PWR SYSTEMS, Prefunded
11/15/2001, 7%, 11/15/2017 156,631.00
CLEVELAND OHIO PUB PWR SYSTEMS, 7%,
11/15/2017 624,408.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, zero coupon, 12/1/2008 524,394.00
Cleveland, OH, Non Taxable Revenue
Bond, Cleveland Stadium, Series A,
12/1/2011 439,634.00 439,634.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, Series A, 12/1/2014 370,804.00 370,804.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, Series A, 12/1/2017 312,764.00 312,764.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, zero coupon, 12/1/2020 262,826.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, 12/1/2012 412,838.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, Series B, 12/1/2015 348,216.00 348,216.00
Cleveland, OH, Revenue Bond, Cleveland
Stadium, Series B, 12/1/2018 293,717.00 293,717.00
Cleveland, OH, Urban Renewal Tax
Increment Rock & Roll Hall of Fame
and Museum Project, 6.75%, 3/15/2018 1,019,760.00 1,019,760.00
Cleveland, OH, Water Works Revenue,
MBIA Insured, Series 1993G, 5.5%,
1/1/2013 10,462,900.00 10,462,900.00
Cleveland, OH, Waterworks Revenue,
Series B, Prerefunded 1/1/2002, 6.5%,
1/1/2011 4,368,840.00 4,368,840.00
Cleveland, OH, Waterworks Revenue,
Series B, 6.5%, 1/1/2011 400,349.00 400,349.00
Cleveland, OH, Waterworks Revenue,
Series I, 5%, 1/1/2017 965,970.00 965,970.00
Cleveland, OH, Waterworks Revenue,
Prerefunded 01/01/2002, 6.25%, 1/1/2015 638,874.00
Cleveland, OH, Waterworks Revenue,
6.25%, 1/1/2015 25,859.00
Columbus, OH, General Obligation,
Unlimited Tax, Sewer Improvement,
Prerefunded 05/01/2003, 6%, /5/1/2013 1,054,180.00 1,054,180.00
Crawford County, OH, General Obligation,
Prerefunded 12/01/20004,
6.75%, 12/1/2019 771,127.00
Cuyahoga County, OH, General Obligation,
5.65%, 5/15/2018 524,480.00
Cuyahoga County, OH, 5%, 12/1/2020 952,030.00
Cuyahoga County, OH, General Obligation,
Jail Facilities, Series 1991,
ETM, Zero Coupon, 10/1/2002 1,377,855.00 1,377,855.00
Cuyahoga County, OH, Hospital Revenue,
Meridia Health System, Prerefunded
8/15/2005, 6.25%, 8/15/2014 7,677,309.00 8,711,840.00
Cuyahoga County, OH, Hospital Facilities
Revenue, Health Cleveland Inc.,
Series 1993, 6.25%, 8/15/2010 1,045,170.00 1,045,170.00
Cuyahoga County, OH, Multifamily Housing
Revenue, 6.5%, 10/20/2020 1,035,770.00
Dublin, OH, City School District,
General Obligation, 12/1/2011 629,844.00
Edon Township, OH, Local School District,
General Obligation, 6%, 12/1/2019 509,190.00
Fairfield, OH, City School District,
7.2%, 12/1/2009 1,135,530.00 1,135,530.00
Fayette County, OH, Rattlesnake
Improvement Area, General
Obligation, 5.9%, 12/1/2013 138,329.00
Finneytown, OH, Local School District,
General Obligation, 6.2%, 12/1/2017 357,177.00
Franklin County, OH , Health Care
Facilities, Revenue Refunding, Ohio
Presbyterian Services, Series 1997,
5.25%, 7/2/2008 465,810.00 465,810.00
Franklin County, OH, Health Care
Facilities, Revenue Refunding, Ohio
Presbyterian Services, Series 1997,
5.5%, 7/1/2017 841,470.00 841,470.00
Franklin County, OH, Riverside United
Methodist Hospital, Series A,
5.75%, 5/15/2012 1,949,122.00 1,949,122.00
Franklin, OH, Muskingum County Local
School District, General Obligation,
6.5%, 12/1/2013 566,965.00
Gateway Economic Development Corporation
of Cleveland, OH, Stadium Revenue,
6.5%, 9/15/2014 4,059,360.00 4,059,360.00
Green Springs, OH, Health Care, Revenue,
St Francis Health Care Center Project,
Series A, 7%, 5/15/2014 3,590,178.00 3,929,274.00
Green Springs, OH, Health Care, Revenue,
St Francis Health Care Center Project,
Series A, 7.125%, 5/15/2025 3,549,945.00 3,549,945.00
Hamilton County, OH, 5%, 12/1/2024 926,910.00
Hamilton County, OH, Health System
Revenue, Franciscan Sisters of the
Poor Health System, Providence Hospital,
Series 1992, 6.8%, 7/1/2008 2,104,140.00 2,104,140.00
Hamilton County, OH, 5.75%, 12/1/2014 2,109,680.00 2,109,680.00
Hamilton County, OH, 5.75%, 12/1/2015 4,196,960.00 4,448,777.00
Hamilton County, OH, Sewer System
Revenue, Improvement and Refunding,
FGIC Insured, 5.45%, 12/1/2009 1,056,420.00 1,056,420.00
Highland Heights, OH, General Obligation,
6.15%, 12/1/2012 151,699.00
Hilliard, OH, School District, Series
1996A, Zero Coupon, FGIC Insured,
12/1/2012 895,801.00 895,801.00
Huber Heights, OH, Water System Revenue,
Capital Appreciation, Zero Coupon,
12/1/2012 543,976.00 543,976.00
Lakeview, OH, Local School District,
General Obligation, Prerefunded
12/01/2004, 6.9%, 12/1/2014 774,774.00
Liberty, OH, Local School District,
General Obligation, 12/1/2014 269,741.00
Liberty, OH, Local School District,
General Obligation, 12/1/2011 143,800.00
Liberty, OH, Local School District,
12/1/2012 138,023.00
Lorain County, OH, Hospital Refunding
Revenue, Humility of Mary Health
Care System, Series A, Prerefunded
12/15/2005, 5.9%, 12/15/2008 1,051,360.00 1,051,360.00
Lorain, OH, Hospital Authority
Refunding Revenue, Lakeland Community
Hospital Inc., 6.5%, 11/15/2012 1,052,210.00 1,052,210.00
Lucas County, OH, General Obligation,
6.05%, 12/1/2013 138,126.00
Lucas County, OH, Health Facilities
Revenue, Ohio Presbyterian, Series A,
6.625%, 7/1/2014 1,944,820.00 1,944,820.00
Lucas County, OH, Health Facilities
Revenue, Ohio Presbyterian, Series A,
6.75%, 7/1/2020 1,876,280.00 1,876,280.00
Lucas County, OH, Hospital Revenue,
Flower Hospital, Series 1993, Prerefunded
12/01/2004, 6.125%, 12/1/2013 1,460,511.00 1,460,511.00
Marion County, OH, Health Care Facilities,
Revenue, Church Homes Project, 6.375%,
11/15/2010 3,299,527.00 3,546,043.00
Marion County, OH, Health Care
Facilities, Revenue, Church Homes
Project, 6.3%, 11/15/2015 2,666,652.00 3,028,232.00
Miami County, OH, Revenue Refunding,
Hospital Upper Valley,Series 1996 C,
6.25%, 5/15/2013 922,670.00 922,670.00
Napoleon, OH, Health Care Facility,
Lutheran Orphans' and Old Folks'
Home Society, Revenue, 6.875%, 8/1/2023 473,560.00
North Olmsted, OH, General Obligation,
6.25%, 12/15/2012 1,571,310.00 1,571,310.00
North Olmstead, OH, General Obligation,
6.2%, 12/1/2011 2,201,580.00 2,201,580.00
Northeast Ohio Regional Sewer District,
Wastewater Revenue, Prerefunded
11/15/2001, 6.5%, 11/15/2016 308,991.00
Northeast Ohio Regional Sewer District,
Wastewater Improvement Revenue
Refunding, 5.5%, 11/15/2012 1,599,553.00 1,599,553.00
Ohio Housing Finance Agency, Multifamily
Housing, Westlake Apartments Project,
Revenue, 5.85%, 12/1/2016 302,859.00
Ohio Housing Finance Agency, GNMA Single
Familty Mortgage Revenue, Prerefunded
1/15/2013, Zero Coupon, 1/15/2015 1,464,187.00 1,899,957.00
Ohio Housing Finance Agency, Single
Family Mortgage Revenue, Zero Coupon,
Prerefunded 7/15/2013, 1/15/2015 1,568,885.00 1,568,885.00
Ohio General Obligation, Series 1994,
6%, 8/1/2010 1,099,600.00 1,099,600.00
Ohio State General Obligation(Series B),
5.625%, 5/1/2015 1,039,970.00
Ohio State Building Authority, Adult
Correctional Building Fund, Revenue,
6.125%, 10/1/2012 327,223.00
Ohio State Building Authority, Toledo
Government Office Building, Series A,
Prerefunded 04/01/2003, 8%, 10/1/2027 539,330.00 539,330.00
Ohio State Building Authority, Revenue,
Prerefunded 06/01/2001, 6.25%, 6/1/2011 221,230.00
Ohio State Building Authority,
Administrative Building Funds Project
Revenue, 6.3%, 10/1/2011 147,256.00
Ohio State Building Authority, Juvenile
Correctional Building Authority,
Prerefunded 10/01/2004, 6.6%, 10/1/2014 218,338.00
Ohio State Building Authority, 5.375%,
10/1/2013 1,024,490.00 1,024,490.00
Ohio State Building AuthorityAdult
Correctional - A, 5.75%, 4/1/2012 2,554,704.00 2,554,704.00
Ohio State Building Authority, 5.75%,
4/1/2013 1,058,650.00 1,058,650.00
Ohio State Higher Education Facility,
Dominican College, Revenue, 6.625%,
12/1/2014 626,640.00
Ohio State Higher Education Facility,
University of Dayton, Revenue, 6.6%,
12/1/2017 459,674.00
Ohio Higher Education Facility Commission,
University of Findlay Project, Revenue,
6.125%, 9/1/2016 407,024.00
Ohio State Higher Education Facility,
Xavier University, Revenue, 6%, 5/15/2011 257,901.00
Ohio State Higher Education Facility,
Series 1997 A, Step-Up Coupon 0% to
7/1/2000, 6.5% to, 7/1/2008 2,590,119.00 2,590,119.00
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Ohio Higher Education Facilities Revenue, Case
Western Reserve University, Series B, 6.5%, 10/1/2020 2,250,000.00 2,250,000.00
Ohio Higher Educational Facility Commission, Refunding
Revenue, Case Western Reserve University, 6%, 10/1/2014 1,000,000.00 1,000,000.00
Ohio Public Facilities Commission, Higher Educational
Capital Facilities Revenue, Series 2B, 5.4%, 11/1/2007 1,500,000.00 1,500,000.00
Ohio State University, General Receipts, 6%, 12/1/2016
Ohio State University, General Receipts, 6%, 12/1/2017 560,000.00 500,000.00 1,060,000.00
Ohio State Water Development Authority, Pollution
Control, Revenue, 6.1%, 8/1/2020 1,000,000.00 1,000,000.00
Ohio State Water Development Authority, Revenue, Bay
Shore Project, Series A, 5.875%, 9/1/2020 200,000.00 3,550,000.00 500,000.00 4,250,000.00
Olentangy, OH, Local School District, General Obligation,
Prerefunded 12/01/01, 6.35%, 12/1/2017 150,000.00 150,000.00
Olentangy, OH, Local School District, General Obligation,
5.85%, 12/1/2007 400,000.00 400,000.00
Olmsted Falls, OH, City School District, General Obligation,
Series 1991, Prerefunded 12/15/2001, 7.05%, 12/15/2011 1,000,000.00 1,000,000.00
Olmstead Falls, OH, City School District, General Obligation,
Prerefunded 12/15/04, 6.85%, 12/15/2011 250,000.00 250,000.00
Puerto Rico Electric Power Authority, 5.25%, 7/1/2029 500,000.00 500,000.00
Puerto Rico, Municipal Finance Agency, Revenue, 6%, 7/1/2014 250,000.00 250,000.00
Puerto Rico, Ports Authority, American Airlines, Inc., Project,
Revenue, 6.25%, 6/1/2026 360,000.00 360,000.00
Sandusky County, OH, General Obligation, 6.2%, 12/1/2013 500,000.00 500,000.00
South Euclid-Lyndhurst, OH, City School District, General
Obligation, 6.4%, 12/1/2018 535,000.00 535,000.00
Springboro, OH, Community City School District, School
Improvement, General Obligation, 6%, 12/1/2011 500,000.00 500,000.00
Springdale, OH, Hospital Facilities Revenue, 6%, 11/1/2018 750,000.00 1,250,000.00 2,000,000.00
Steubenville, OH Hosiptal Revenue, 6.5%, 10/1/2030 500,000.00 500,000.00
Summit County, OH, General Obligation, Prerefunded 12/01/2004,
6.4%, 12/1/2014 1,000,000.00 1,000,000.00
Lucas County, OH, Toledo Port Authority Development, Revenue
Bond, Northwest Ohio Bond Fund, Series A, 5.4%, 5/15/2019 500,000.00 500,000.00 1,000,000.00
Toledo, OH, General Obligation, 6.35%, 12/1/2025 1,000,000.00 1,000,000.00
Toledo, OH, Waterworks Revenue, 4.75%, 11/15/2017 1,000,000.00 1,000,000.00
Trumbull County, OH, Sewer Improvement, General Obligation,
6.2%, 12/1/2014 500,000.00 500,000.00
Tuscarawas Valley, OH, Local School District, General
Obligation, 6.6%, 12/1/2015 365,000.00 365,000.00
University of Akron, General Receipts, Revenue, 5.75%, 1/1/2013 1,000,000.00 1,365,000.00 2,365,000.00
University Cinninnati Ohio Gen Repts, Revenue, 6/1/2012 1,280,000.00 1,280,000.00
Warren County, OH, Water Improvement, General Obligation,
The P&G Project, Series 1995, 5.25%, 12/1/2016 1,720,000.00 1,720,000.00
Wayne, OH, Local School District, General Obligation, 6.45%,
12/1/2011 155,000.00 155,000.00
Wayne, OH, Local School District, General Obligation, 6.45%,
12/1/2011 200,000.00 200,000.00
Willoughby, OH, Industrial Development Revenue, Series A,
6.875%, 7/1/2016 575,000.00 2,250,000.00 2,825,000.00
Wooster, OH, City School District, General Obligation, 12/1/2013 930,000.00 930,000.00
Worthington, OH, City School District, General Obligation,
6.375%, 12/1/2012 6,210,000.00 6,210,000.00
Youngstown, OH, General Obligation, 6.125%, 12/1/2014 110,000.00 110,000.00
Oklahoma
Grand River Dam Authority Revenue, Refunded, 6.25%, 6/1/2011 32,250,000.00 32,250,000.00
Tulsa, OK, Industrial Development Authority, Hospital Revenue,
St. John's Medical Center, MBIA, Zero Coupon, 12/1/2004 5,430,000.00 5,430,000.00
Tulsa, OK, Industrial Development Authority, Hospital Revenue,
St. John's Medical Center, MBIA Insured, Zero Coupon, 12/1/2006 6,430,000.00 6,430,000.00
Oklahoma Valley View Hospital Authority, Revenue, 5.75%,
8/15/2006 3,435,000.00 3,435,000.00
Oklahoma Valley View Hospital Authority, Revenue, 6%, 8/15/2014 2,695,000.00 2,695,000.00
Woodward, OK, Municipal Authority, Hospital Revenue, 6.45%,
11/1/2014 2,070,000.00 2,070,000.00
Oregon
Chemeketa, OR, Community College District, Series 1998, 5.5%,
6/1/2015 2,600,000.00 2,600,000.00
Oregon Transnational Highway Revenue, 5.75%, 11/15/2015 1,435,000.00 1,435,000.00
Oregon Transnational Highway Revenue, 5.75%, 11/15/2016 3,140,000.00 3,140,000.00
Portland, OR, Portland Airport, Inverse Floating Rate Bond,
Series A, 7.2%, 7/1/2010 2,390,000.00 2,390,000.00
Portland, OR, Portland Airport, Inverse Floating Rate Bond,
Series B, 7.2%, 7/1/2011 2,530,000.00 2,530,000.00
Portland, OR, Portland Airport, Inverse Floating Rate Bond,
Series C, 7.2%, 7/1/2012 2,675,000.00 2,675,000.00
Portland, OR, Portland Airport, Inverse Floating Rate Bond,
Series D, 7.2%, 7/1/2013 2,675,000.00 2,675,000.00
Pennsylvania
Allegheny County, PA, Airport Revenue, Pittsburgh International
Airport, Series 1997 A, AMT,, 5.75%, 1/1/2013 3,080,000.00 3,080,000.00
Allegheny County, PA, Airport, Inverse Floating Rate Bond,
Series A, 7.4068%, 1/1/2010 3,000,000.00 3,000,000.00
Allegheny County, PA, Airport, Inverse Floating Rate Bond,
Series B, 7.4068%, 1/1/2011 1,500,000.00 1,500,000.00
Allegheny County, PA, Airport, Inverse Floating Rate Bond,
Series C, 7.4159%, 1/1/2013 3,160,000.00 3,160,000.00
Allegheny County, PA, Airport, Inverse Floating Rate Bond,
Series D, 7.4068%, 1/1/2014 5,250,000.00 5,250,000.00
Armstrong County, PA, Hospital Authority, Revenue, St Francis
Medical Center Project, Series A, 6.25%, 6/1/2013 11,350,000.00 1,000,000.00 12,350,000.00
Berks County, PA, Municipal Authority Hospital Revenue,
Reading Hospital & Medical Center Project, Series 1993, 5.7%,
10/1/2014 1,000,000.00 1,000,000.00
Bethlehem, PA, Water Revenue, Series 1992, Prerefunded 11/15/01
at 100, 11/15/2001, 6.25%, 11/15/2001 1,000,000.00 1,000,000.00
Bucks County, PA, Water and Sewer Authority Revenue,Series 1977,
ETM,, 6.375%, 12/1/2008 425,000.00 425,000.00
Delaware County, PA, Health Facilities Revenue, Mercy Health
Corporation of Southeastern Pennsylvania, Series 1993 B,
6%, 11/15/2007 1,315,000.00 1,315,000.00
Delaware County, PA, White Horse Village, Series 1996 A, 6.6%,
7/1/2006 1,000,000.00 1,000,000.00
Erie County, PA, Pollution Control, 5.3%, 4/1/2012 1,000,000.00 1,000,000.00
Erie County, PA, Prison Authority, Commonwealth Lease Revenue,
Series 1991, Prerefunded 11/1/01 at 100,, 6.25%, 11/1/2001 1,000,000.00 1,000,000.00
Erie, PA, General Obligation, Series B, Zero Coupon, 11/15/2008 5,055,000.00 5,055,000.00
Hazleton, PA, Health Services Authority, Hospital Revenue,
Hazelton-St Joseph Medical Center, 6.125%, 7/1/2016 3,780,000.00 3,780,000.00
Indiana County, PA, Industrial Development Authority, Polution
Control Revenue, Pennsylvania Electric Company, Series 995,
5.35%, 11/1/2010 1,000,000.00 1,000,000.00
Jeannette, PA, Health Service Authority, Revenue, Jeannette
District Memorial Hospital, Series A, 6%, 11/1/2018 945,000.00 945,000.00
Latrobe, PA, Industrial Development Authority, ST. Vincent
College Project, Series 1998, 5.375%, 5/1/2013 1,000,000.00 1,000,000.00
Lehigh County, PA, General Purpose Authority, Revenue, Lehigh
Valley Hospital, Series A, Prerefunded 7/1/2002, 6.5%, 7/1/2010 6,000,000.00 6,000,000.00
Mckean County, PA, Hospital Authority, Revenue, Bradford
Hospital, 5.95%, 10/1/2008 2,800,000.00 2,800,000.00
Montgomery County, PA, Industrial Development Authority,
Revenue, Retirement-Life Communities, 5.25%, 11/15/2028 4,000,000.00 4,000,000.00
Montgomery County, PA, Multi-Family Housing Revenue, KBF
Associates L.P. Project, Series 1993 A, 6.375%, 7/1/2012 1,500,000.00 1,500,000.00
New Castle, PA, Area Hospital Authority, Revenue, Jameson
Memorial Hospital, 6%, 7/1/2010 845,000.00 845,000.00
Pennsylvania Convention Center Authority, Series 1989 A,
ETM, 6%, 9/1/2009 2,200,000.00 2,200,000.00
Pennsylvania Convention Center Authority Revenue, Series A,
6.7%, 9/1/2014 3,750,000.00 3,750,000.00
Pennsylvania Convention Center Authority Revenue, 6.75%,
9/1/2019 8,775,000.00 8,775,000.00
Pennsylvania Housing Finance Agency, Single Family Mortgage
Revenue, Series 1991, 7.15%, 4/1/2015 865,000.00 865,000.00
Pennsylvania Intergovernmental Cooperation Authority, Special
Tax Revenue, City of Philadelphia, Series 1992,
Prerefunded 6/15/02 at 100,, 6.8%, 6/15/2012 1,000,000.00 1,000,000.00
Pennsylvania Intergovernmental Cooperational Authority,
Inverse Floating Rate Bond, 6.37%, 6/15/2014 2,500,000.00 2,500,000.00
Pennsylvania Intergovernmental Cooperational Authority,
Inverse Floating Rate Bond, 6.37%, 6/15/2015 2,250,000.00 2,250,000.00
Pennsylvania Intergovernmental Cooperational Authority,
Inverse Floating Rate Bond, 6.37%, 6/15/2013 2,225,000.00 2,225,000.00
Pennsylvania General Obligation, Series 1992, 6.25%, 7/1/2010 1,000,000.00 1,000,000.00
Pennsylvania State Higher Educational Facility, Revenue,
Ursinus College, 5.85%, 1/1/2017 1,475,000.00 1,475,000.00
Pennsylvania State Higher Educational Facility, Revenue,
Ursinus College, 5.9%, 1/1/2027 3,400,000.00 3,400,000.00
Pennsylvania State Industrial Development Authority, Revenue,
Series A, Prerefunded 1/1/2011, 7%, 1/1/2011 5,000,000.00 5,000,000.00
Commonwealth of Pennsylvania, Industrial Development
Authority, Economic Development Revenue, 5.8%, 1/1/2008 4,250,000.00 4,250,000.00
Commonwealth of Pennsylvania, Industrial Development Authority,
Economic Development Revenue, AMBAC, 5.8%, 7/1/2008 4,875,000.00 4,875,000.00
Philadelphia, PA, Industrial Development Authority, Commercial
Development Revenues, Series 1997, 6.5%, 10/1/2027 1,000,000.00 1,000,000.00
Philadelphia, PA, Industrial Development Authority, Baptist
Home of Philadelphia, Series 1998 A, 5.5%, 11/15/2018 1,000,000.00 1,000,000.00
Philadelphia, PA, Gas Works Revenue, Series 13, Prerefunded
6/15/2001, 7.7%, 6/15/2021 6,850,000.00 6,850,000.00
Philadelphia, PA, Gas Works Revenue, Series 13, Prerefunded
6/15/2011, 7.7%, 6/15/2011 5,485,000.00 5,485,000.00
Philadelphia, PA, Gas Works Revenue, Series 13, Prerefunded
6/15/2011, 7.7%, 6/15/2011 2,515,000.00 2,515,000.00
Philadelphia, PA, Gas Works Revenue, Series 14, Prerefunded
7/1/2003, 6.375%, 7/1/2014 10,035,000.00 10,035,000.00
Philadelphia, PA, Gas Works Revenue, Series 14, 6.375%,
7/1/2014 21,045,000.00 21,045,000.00
Philadelphia, PA, Port Authority Lease Revenue, Series 1993,
6.2%, 9/1/2013 2,000,000.00 2,000,000.00
Philadelphia, Pennsylvania School District , 5.75%, 2/1/2013 3,915,000.00 3,915,000.00
Philadelphia, PA, General Obligation, School District, Series
1995 A, 6.25%, 9/1/2009 1,000,000.00 1,000,000.00
Commonwealth of Philadelphia, PA, Water & Wastewater Revenue,
MBIA, 5.5%, 6/15/2007 5,000,000.00 5,000,000.00
Philadelphia, PA, Water & Wastewater Revenue, Series 1993,
5.625%, 6/15/2009 2,000,000.00 2,000,000.00
Philadelphia, PA, Water and Wastewater Revenue, Series 1995,
6.25%, 8/1/2010 1,000,000.00 1,000,000.00
Philadelphia, PA, Hospital and Higher Education Facilities
Authority, Children's Seashore House, Series 1992 A, 7%,
8/15/2012 1,000,000.00 1,000,000.00
Philadelphia, PA, Municipal Authority Revenue, Series D,
6.3%, 7/15/2017 2,300,000.00 2,300,000.00
Philadelphia, PA, Municipal Authority Revenue, Series D,
6.25%, 7/15/2013 2,500,000.00 2,500,000.00
Pittsburgh, PA, General Obligation, Series 1993 A, 5.5%,
9/1/2014 1,500,000.00 1,500,000.00
Pittsburgh, PA, Water and Sewer System Revenue, Series
1986, ETM, 7.25%, 9/1/2014 150,000.00 150,000.00
Somerset County, PA, General Authority, Commonwealth
Lease Revenue, Series 1991, Prerefunded 10/15/01 at 100,,
6.25%, 10/15/2011 1,000,000.00 1,000,000.00
Union County, PA, Higher Education Facilities Authority,
Bucknell University, Series 1992, 6.2%, 4/1/2007 1,000,000.00 1,000,000.00
University Area, PA, Sewer Revenue,Series 1993, 5.25%, 11/1/2014 1,750,000.00 1,750,000.00
Westmoreland County, PA, Industrial Development Revenue,
Westmoreland Health System, AMBAC, 5.375%, 7/1/2011 7,300,000.00 7,300,000.00
Puerto Rico
Puerto Rico, General Obligation, Public Improvement, Prerefunded
07/01/2002, 6.6%, 7/1/2013 1,000,000.00 1,000,000.00
Puerto Rico Commonwealth, Rites, 10.5736%, 7/1/2013 2,500,000.00 2,500,000.00
Puerto Rico Commonwealth, Highway & Transportation Authority,
Series 1993W, 5.5%, 7/1/2013 1,000,000.00 1,000,000.00
Puerto Rico Public Building Authority, Government Facilities
Revenue, Series 1995 A, 6.25%, 7/1/2013 1,000,000.00 1,000,000.00
Puerto Rico Electric Power Authority, Series 1994S, 6.125%,
7/1/2009 2,000,000.00 2,000,000.00
Rhode Island
Rhode Island Convention Center Authority, Refunding Revenue,
1993 Series B, MBIA Insured, 5.25%, 5/15/2015 22,000,000.00 22,000,000.00
Rhode Island Convention Center Authority, Refunding Revenue,
Series 1993 B, MBIA, 5%, 5/15/2010 5,000,000.00 5,000,000.00
Rhode Island Convention Center Authority, Series B, 5%,
5/15/2020 2,750,000.00 2,750,000.00
Rhode Island Depositors Economic Protection Corp., Special
Obligation, Series B, MBIA, 5.8%, 8/1/2010 6,200,000.00 6,200,000.00
Rhode Island Depositors Economic Protection Corp., Special
Obligation, Series B, MBIA, 5.8%, 8/1/2011 4,525,000.00 4,525,000.00
<CAPTION>
<S> <C> <C> <C> <C>
Ohio Higher Education Facilities Revenue, Case
Western Reserve University, Series B, 6.5%, 10/1/2020 2,577,217.00 2,577,217.00
Ohio Higher Educational Facility Commission, Refunding
Revenue, Case Western Reserve University, 6%, 10/1/2014 1,093,160.00 1,093,160.00
Ohio Public Facilities Commission, Higher Educational
Capital Facilities Revenue, Series 2B, 5.4%, 11/1/2007 1,547,130.00 1,547,130.00
Ohio State University, General Receipts, 6%, 12/1/2016 1,068,810.00 1,068,810.00
Ohio State University, General Receipts, 6%, 12/1/2017 596,864.00 532,915.00 1,129,779.00
Ohio State Water Development Authority, Pollution
Control, Revenue, 6.1%, 8/1/2020 942,110.00 942,110.00
Ohio State Water Development Authority, Revenue, Bay
Shore Project, Series A, 5.875%, 9/1/2020 159,046.00 2,823,066.00 397,615.00 3,379,727.00
Olentangy, OH, Local School District, General Obligation,
Prerefunded 12/01/01, 6.35%, 12/1/2017 155,853.00 155,853.00
Olentangy, OH, Local School District, General Obligation,
5.85%, 12/1/2007 426,500.00 426,500.00
Olmsted Falls, OH, City School District, General Obligation,
Series 1991, Prerefunded 12/15/2001, 7.05%, 12/15/2011 1,047,190.00 1,047,190.00
Olmstead Falls, OH, City School District, General Obligation,
Prerefunded 12/15/04, 6.85%, 12/15/2011 276,062.00 276,062.00
Puerto Rico Electric Power Authority, 5.25%, 7/1/2029 492,335.00 492,335.00
Puerto Rico, Municipal Finance Agency, Revenue, 6%, 7/1/2014 268,620.00 268,620.00
Puerto Rico, Ports Authority, American Airlines, Inc., Project,
Revenue, 6.25%, 6/1/2026 365,806.00 365,806.00
Sandusky County, OH, General Obligation, 6.2%, 12/1/2013 534,905.00 534,905.00
South Euclid-Lyndhurst, OH, City School District, General
Obligation, 6.4%, 12/1/2018 585,621.00 585,621.00
Springboro, OH, Community City School District, School
Improvement, General Obligation, 6%, 12/1/2011 551,050.00 551,050.00
Springdale, OH, Hospital Facilities Revenue, 6%, 11/1/2018 683,280.00 1,138,800.00 1,822,080.00
Steubenville, OH Hosiptal Revenue, 6.5%, 10/1/2030 489,950.00 489,950.00
Summit County, OH, General Obligation, Prerefunded 12/01/2004,
6.4%, 12/1/2014 1,087,360.00 1,087,360.00
Lucas County, OH, Toledo Port Authority Development, Revenue
Bond, Northwest Ohio Bond Fund, Series A, 5.4%, 5/15/2019 407,980.00 407,980.00 815,960.00
Toledo, OH, General Obligation, 6.35%, 12/1/2025 1,058,480.00 1,058,480.00
Toledo, OH, Waterworks Revenue, 4.75%, 11/15/2017 929,520.00 929,520.00
Trumbull County, OH, Sewer Improvement, General Obligation,
6.2%, 12/1/2014 533,960.00 533,960.00
Tuscarawas Valley, OH, Local School District, General
Obligation, 6.6%, 12/1/2015 405,796.00 405,796.00
University of Akron, General Receipts, Revenue, 5.75%, 1/1/2013 1,058,390.00 1,444,702.00 2,503,092.00
University Cinninnati Ohio Gen Repts, Revenue, 6/1/2012 1,340,608.00 1,340,608.00
Warren County, OH, Water Improvement, General Obligation,
The P&G Project, Series 1995, 5.25%, 12/1/2016 1,721,307.00 1,721,307.00
Wayne, OH, Local School District, General Obligation, 6.45%,
12/1/2011 175,869.00 175,869.00
Wayne, OH, Local School District, General Obligation, 6.45%,
12/1/2011 229,270.00 229,270.00
Willoughby, OH, Industrial Development Revenue, Series A,
6.875%, 7/1/2016 547,296.00 2,141,595.00 2,688,891.00
Wooster, OH, City School District, General Obligation, 12/1/2013 472,505.00 472,505.00
Worthington, OH, City School District, General Obligation,
6.375%, 12/1/2012 6,475,415.00 6,475,415.00
Youngstown, OH, General Obligation, 6.125%, 12/1/2014 117,174.00 117,174.00
Oklahoma
Grand River Dam Authority Revenue, Refunded, 6.25%, 6/1/2011 36,086,460.00 36,086,460.00
Tulsa, OK, Industrial Development Authority, Hospital Revenue,
St. John's Medical Center, MBIA, Zero Coupon, 12/1/2004 4,492,782.00 4,492,782.00
Tulsa, OK, Industrial Development Authority, Hospital Revenue,
St. John's Medical Center, MBIA Insured, Zero Coupon, 12/1/2006 4,811,311.00 4,811,311.00
Oklahoma Valley View Hospital Authority, Revenue, 5.75%,
8/15/2006 3,355,788.00 3,355,788.00
Oklahoma Valley View Hospital Authority, Revenue, 6%, 8/15/2014 2,459,564.00 2,459,564.00
Woodward, OK, Municipal Authority, Hospital Revenue, 6.45%,
11/1/2014 1,965,920.00 1,965,920.00
Oregon
Chemeketa, OR, Community College District, Series 1998, 5.5%, 6/1/2015 2,715,180.00 2,715,180.00
Oregon Transnational Highway Revenue, 5.75%, 11/15/2015 1,505,372.00 1,505,372.00
Oregon Transnational Highway Revenue, 5.75%, 11/15/2016 3,279,039.00 3,279,039.00
Portland, OR, Portland Airport, Inverse Floating Rate Bond,
Series A, 7.2%, 7/1/2010 2,691,976.00 2,691,976.00
Portland, OR, Portland Airport, Inverse Floating Rate Bond,
Series B, 7.2%, 7/1/2011 2,814,017.00 2,814,017.00
Portland, OR, Portland Airport, Inverse Floating Rate Bond,
Series C, 7.2%, 7/1/2012 2,937,899.00 2,937,899.00
Portland, OR, Portland Airport, Inverse Floating Rate Bond,
Series D, 7.2%, 7/1/2013 2,796,739.00 2,796,739.00
Pennsylvania
Allegheny County, PA, Airport Revenue, Pittsburgh International
Airport, Series 1997 A, AMT,, 5.75%, 1/1/2013 3,229,041.00 3,229,041.00
Allegheny County, PA, Airport, Inverse Floating Rate Bond,
Series A, 7.4068%, 1/1/2010 3,313,920.00 3,313,920.00
Allegheny County, PA, Airport, Inverse Floating Rate Bond,
Series B, 7.4068%, 1/1/2011 1,660,590.00 1,660,590.00
Allegheny County, PA, Airport, Inverse Floating Rate Bond,
Series C, 7.4159%, 1/1/2013 3,465,793.00 3,465,793.00
Allegheny County, PA, Airport, Inverse Floating Rate Bond,
Series D, 7.4068%, 1/1/2014 5,736,832.00 5,736,832.00
Armstrong County, PA, Hospital Authority, Revenue, St Francis
Medical Center Project, Series A, 6.25%, 6/1/2013 11,797,871.00 1,039,460.00 12,837,331.00
Berks County, PA, Municipal Authority Hospital Revenue,
Reading Hospital & Medical Center Project, Series 1993, 5.7%,
10/1/2014 1,049,120.00 1,049,120.00
Bethlehem, PA, Water Revenue, Series 1992, Prerefunded 11/15/01
at 100, 11/15/2001, 6.25%, 11/15/2001 1,018,050.00 1,018,050.00
Bucks County, PA, Water and Sewer Authority Revenue,Series 1977,
ETM,, 6.375%, 12/1/2008 450,478.00 450,478.00
Delaware County, PA, Health Facilities Revenue, Mercy Health
Corporation of Southeastern Pennsylvania, Series 1993 B,
6%, 11/15/2007 1,384,826.00 1,384,826.00
Delaware County, PA, White Horse Village, Series 1996 A, 6.6%,
7/1/2006 988,840.00 988,840.00
Erie County, PA, Pollution Control, 5.3%, 4/1/2012 984,460.00 984,460.00
Erie County, PA, Prison Authority, Commonwealth Lease Revenue,
Series 1991, Prerefunded 11/1/01 at 100,, 6.25%, 11/1/2001 1,017,040.00 1,017,040.00
Erie, PA, General Obligation, Series B, Zero Coupon, 11/15/2008 3,370,320.00 3,370,320.00
Hazleton, PA, Health Services Authority, Hospital Revenue,
Hazelton-St Joseph Medical Center, 6.125%, 7/1/2016 3,402,718.00 3,402,718.00
Indiana County, PA, Industrial Development Authority, Polution
Control Revenue, Pennsylvania Electric Company, Series 995,
5.35%, 11/1/2010 1,045,770.00 1,045,770.00
Jeannette, PA, Health Service Authority, Revenue, Jeannette
District Memorial Hospital, Series A, 6%, 11/1/2018 847,504.00 847,504.00
Latrobe, PA, Industrial Development Authority, ST. Vincent
College Project, Series 1998, 5.375%, 5/1/2013 972,600.00 972,600.00
Lehigh County, PA, General Purpose Authority, Revenue, Lehigh
Valley Hospital, Series A, Prerefunded 7/1/2002, 6.5%, 7/1/2010 6,306,960.00 6,306,960.00
Mckean County, PA, Hospital Authority, Revenue, Bradford
Hospital, 5.95%, 10/1/2008 2,878,092.00 2,878,092.00
Montgomery County, PA, Industrial Development Authority,
Revenue, Retirement-Life Communities, 5.25%, 11/15/2028 3,252,480.00 3,252,480.00
Montgomery County, PA, Multi-Family Housing Revenue, KBF
Associates L.P. Project, Series 1993 A, 6.375%, 7/1/2012 1,490,805.00 1,490,805.00
New Castle, PA, Area Hospital Authority, Revenue, Jameson
Memorial Hospital, 6%, 7/1/2010 913,706.00 913,706.00
Pennsylvania Convention Center Authority, Series 1989 A,
ETM, 6%, 9/1/2009 2,369,114.00 2,369,114.00
Pennsylvania Convention Center Authority Revenue, Series A,
6.7%, 9/1/2014 3,926,625.00 3,926,625.00
Pennsylvania Convention Center Authority Revenue, 6.75%,
9/1/2019 9,092,304.00 9,092,304.00
Pennsylvania Housing Finance Agency, Single Family Mortgage
Revenue, Series 1991, 7.15%, 4/1/2015 890,647.00 890,647.00
Pennsylvania Intergovernmental Cooperation Authority, Special
Tax Revenue, City of Philadelphia, Series 1992,
Prerefunded 6/15/02 at 100,, 6.8%, 6/15/2012 1,036,050.00 1,036,050.00
Pennsylvania Intergovernmental Cooperational Authority,
Inverse Floating Rate Bond, 6.37%, 6/15/2014 2,542,650.00 2,542,650.00
Pennsylvania Intergovernmental Cooperational Authority,
Inverse Floating Rate Bond, 6.37%, 6/15/2015 2,269,845.00 2,269,845.00
Pennsylvania Intergovernmental Cooperational Authority,
Inverse Floating Rate Bond, 6.37%, 6/15/2013 2,278,311.00 2,278,311.00
Pennsylvania General Obligation, Series 1992, 6.25%, 7/1/2010 1,114,790.00 1,114,790.00
Pennsylvania State Higher Educational Facility, Revenue,
Ursinus College, 5.85%, 1/1/2017 1,447,815.00 1,447,815.00
Pennsylvania State Higher Educational Facility, Revenue,
Ursinus College, 5.9%, 1/1/2027 3,256,044.00 3,256,044.00
Pennsylvania State Industrial Development Authority, Revenue,
Series A, Prerefunded 1/1/2011, 7%, 1/1/2011 5,174,450.00 5,174,450.00
Commonwealth of Pennsylvania, Industrial Development
Authority, Economic Development Revenue, 5.8%, 1/1/2008 4,522,212.00 4,522,212.00
Commonwealth of Pennsylvania, Industrial Development Authority,
Economic Development Revenue, AMBAC, 5.8%, 7/1/2008 5,205,622.00 5,205,622.00
Philadelphia, PA, Industrial Development Authority, Commercial
Development Revenues, Series 1997, 6.5%, 10/1/2027 962,890.00 962,890.00
Philadelphia, PA, Industrial Development Authority, Baptist
Home of Philadelphia, Series 1998 A, 5.5%, 11/15/2018 812,840.00 812,840.00
Philadelphia, PA, Gas Works Revenue, Series 13, Prerefunded
6/15/2001, 7.7%, 6/15/2021 7,106,806.00 7,106,806.00
Philadelphia, PA, Gas Works Revenue, Series 13, Prerefunded
6/15/2011, 7.7%, 6/15/2011 5,690,632.00 5,690,632.00
Philadelphia, PA, Gas Works Revenue, Series 13, Prerefunded
6/15/2011, 7.7%, 6/15/2011 2,607,753.00 2,607,753.00
Philadelphia, PA, Gas Works Revenue, Series 14, Prerefunded
7/1/2003, 6.375%, 7/1/2014 10,674,229.00 10,674,229.00
Philadelphia, PA, Gas Works Revenue, Series 14, 6.375%,
7/1/2014 21,580,174.00 21,580,174.00
Philadelphia, PA, Port Authority Lease Revenue, Series 1993,
6.2%, 9/1/2013 2,084,520.00 2,084,520.00
Philadelphia, Pennsylvania School District , 5.75%, 2/1/2013 4,144,927.00 4,144,927.00
Philadelphia, PA, General Obligation, School District, Series
1995 A, 6.25%, 9/1/2009 1,107,440.00 1,107,440.00
Commonwealth of Philadelphia, PA, Water & Wastewater Revenue,
MBIA, 5.5%, 6/15/2007 5,230,050.00 5,230,050.00
Philadelphia, PA, Water & Wastewater Revenue, Series 1993,
5.625%, 6/15/2009 2,118,060.00 2,118,060.00
Philadelphia, PA, Water and Wastewater Revenue, Series 1995,
6.25%, 8/1/2010 1,109,000.00 1,109,000.00
Philadelphia, PA, Hospital and Higher Education Facilities
Authority, Children's Seashore House, Series 1992 A, 7%,
8/15/2012 1,044,340.00 1,044,340.00
Philadelphia, PA, Municipal Authority Revenue, Series D,
6.3%, 7/15/2017 2,313,501.00 2,313,501.00
Philadelphia, PA, Municipal Authority Revenue, Series D,
6.25%, 7/15/2013 2,535,775.00 2,535,775.00
Pittsburgh, PA, General Obligation, Series 1993 A, 5.5%,
9/1/2014 1,559,415.00 1,559,415.00
Pittsburgh, PA, Water and Sewer System Revenue, Series
1986, ETM, 7.25%, 9/1/2014 176,949.00 176,949.00
Somerset County, PA, General Authority, Commonwealth
Lease Revenue, Series 1991, Prerefunded 10/15/01 at 100,,
6.25%, 10/15/2011 1,016,470.00 1,016,470.00
Union County, PA, Higher Education Facilities Authority,
Bucknell University, Series 1992, 6.2%, 4/1/2007 1,030,230.00 1,030,230.00
University Area, PA, Sewer Revenue,Series 1993, 5.25%, 11/1/2014 1,780,222.00 1,780,222.00
Westmoreland County, PA, Industrial Development Revenue,
Westmoreland Health System, AMBAC, 5.375%, 7/1/2011 7,549,879.00 7,549,879.00
Puerto Rico
Puerto Rico, General Obligation, Public Improvement, Prerefunded
07/01/2002, 6.6%, 7/1/2013 1,052,740.00 1,052,740.00
Puerto Rico Commonwealth, Rites, 10.5736%, 7/1/2013 3,084,250.00 3,084,250.00
Puerto Rico Commonwealth, Highway & Transportation Authority,
Series 1993W, 5.5%, 7/1/2013 1,067,950.00 1,067,950.00
Puerto Rico Public Building Authority, Government Facilities
Revenue, Series 1995 A, 6.25%, 7/1/2013 1,140,320.00 1,140,320.00
Puerto Rico Electric Power Authority, Series 1994S, 6.125%, 7/1/2009 2,239,080.00 2,239,080.00
Rhode Island
Rhode Island Convention Center Authority, Refunding Revenue,
1993 Series B, MBIA Insured, 5.25%, 5/15/2015 22,232,980.00 22,232,980.00
Rhode Island Convention Center Authority, Refunding Revenue,
Series 1993 B, MBIA, 5%, 5/15/2010 5,084,700.00 5,084,700.00
Rhode Island Convention Center Authority, Series B, 5%, 5/15/2020 2,579,115.00 2,579,115.00
Rhode Island Depositors Economic Protection Corp., Special
Obligation, Series B, MBIA, 5.8%, 8/1/2010 6,717,080.00 6,717,080.00
Rhode Island Depositors Economic Protection Corp., Special
Obligation, Series B, MBIA, 5.8%, 8/1/2011 4,908,901.00 4,908,901.00
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Rhode Island Depositors Economic Protection Corp., Special Obligation,
Series B, MBIA, 5.8%, 8/1/2012 2,500,000.00 2,500,000.00
Rhode Island Depositors Economic Protection Corp., Special Obligation,
Series B, MBIA, 5.8%, 8/1/2013 7,340,000.00 7,340,000.00
Rhode Island Clean Water Protection Agency, Pollution Control Revenue,
Revolving Fund, Series A, MBIA, 5.4%, 10/1/2015 2,000,000.00 2,000,000.00
South Carolina
Charleston County, SC, Certificates of Participation,
Series B, Prerefunded 6/1/2004, 6.875%, 6/1/2014 4,875,000.00 4,875,000.00
Charleston County, SC, Certificates of Participation, Series B,
Prerefunded 6/1/2004, 7%, 6/1/2019 2,385,000.00 2,385,000.00
Charleston County, SC, Certificates of Participation,
Series B, 6.875%, 6/1/2014 240,000.00 240,000.00
Charleston County, SC, Certificates of Participation,
Series B, 7%, 6/1/2019 115,000.00 115,000.00
Darlington County, SC, Pollution Control Revenue, Power and Light,
6.6%, 11/1/2010 7,500,000.00 7,500,000.00
Grand Strand, SC, Water & Sewer Authority, Revenue, 6.375%, 6/1/2012 5,000,000.00 5,000,000.00
Piedmont, SC, Municipal Power Agency, Electric Revenue Bond,
6.75%, 1/1/2019 3,525,000.00 3,525,000.00
Piedmont, SC, Municipal Power Agency, Electric Revenue, Series 1991 A,
ETM, FGIC Insured, 6.5%, 1/1/2016 430,000.00 430,000.00
Piedmont, SC, Municipal Power Agency, Electric Revenue, Series 1993,
ETM, MBIA Insured, 5.5%, 1/1/2008 840,000.00 840,000.00
Piedmont, SC, Municipal Power Agency, Electric Revenue, Series 1993,
ETM, MBIA Insured, 5.5%, 1/1/2012 2,190,000.00 2,190,000.00
Piedmont, SC, Municipal Power Agency, Electric Revenue, MBIA Insured,
5.5%, 1/1/2012 2,810,000.00 2,810,000.00
South Carolina Jobs and Economic Development Authority, Hospital
Facilities Revenue, 7.375%, 12/15/2021 3,000,000.00 1,500,000.00 4,500,000.00
South Carolina State Public Services Authority, Revenue, Series A,
6.25%, 1/1/2022 7,000,000.00 7,000,000.00
Tennessee
Knox County, TN, Health, Education & Housing Facilities Board,
Hospital Facilities Revenue, Fort Sanders Alliance, 7.25%, 1/1/2009 3,750,000.00 3,750,000.00
Knox County, TN, Health & Educational Hospital Facilities Board,
Fort Sanders Alliance, MBIA, 5.75%, 1/1/2011 15,405,000.00 15,405,000.00
Knox County, TN, Health & Educational Facilities Board, Fort
Sanders Alliance, MBIA, 6.25%, 1/1/2013 4,000,000.00 4,000,000.00
Knox County, TN, Health, Education and Housing Facilities Board,
MBIA insured, 5.75%, 1/1/2014 2,000,000.00 2,000,000.00
Knox Cnty Tenn Health Edl & Hsg Facs Brd Hosp Facs Rev, 1/1/2012 8,940,000.00 8,940,000.00
Metropolitan Nashville, TN, Airport Authority, Revenue, Series C,
6.6%, 7/1/2015 5,250,000.00 5,250,000.00
Shelby County, TN, General Obligation, Zero Coupon, 8/1/2012 3,410,000.00 3,410,000.00
Shelby County, TN, General Obligation, Zero Coupon, 8/1/2013 3,440,000.00 3,440,000.00
Shelby County, TN, General Obligation, Zero Coupon, 8/1/2014 4,965,000.00 4,965,000.00
Tennessee Housing Development Agency Mortgage Financial, Revenue,
Series A, 7.05%, 7/1/2020 17,770,000.00 17,770,000.00
Tennessee Housing Development Agency Mortgage Financial, Revenue,
Series A, 7.125%, 7/1/2026 1,885,000.00 1,885,000.00
Texas
Abilene, TX, Health Facilities Development Corporation Revenue,
Retirement Facilities, 5.875%, 11/15/2018 3,250,000.00 3,250,000.00
Austin, TX, Bergstrom Landhost Enterprises, Airport Hotel,
Series 1999 A, 6.75%, 4/1/2027 17,785,000.00 4,000,000.00 21,785,000.00
Austin, TX, Independant School District, Series 1998, 5%, 8/1/2015 2,000,000.00 2,000,000.00
Austin, TXCombined Utility System Revenue, Zero Coupon, 11/15/2011 12,600,000.00 12,600,000.00
Austin, TXUtility System, AMBAC Insured, 11/15/2012 13,520,000.00 13,520,000.00
Austin, TX, Utility Systems Revenue Refunding, MBIA Insured,
Series A, Zero Coupon, 11/15/1908 3,460,000.00 3,460,000.00
Austin, TX, Utility Systems Revenue, 6%, 11/15/2013 9,500,000.00 9,500,000.00
Austin, TX, Water, Sewer and Electric Revenue, 14%, 11/15/2001 10,000.00 10,000.00
Austin, TX, Water, Sewer and Electric Revenue, 14%, 11/15/2001 110,000.00 110,000.00
Austin, TX, Water, Sewer and Electric Revenue, 14%, 11/15/2001 715,000.00 715,000.00
Texas Beaumiont W&S, 5%, 9/1/2019 3,140,000.00 3,140,000.00
Texas Beaumont W&S, 5%, 9/1/2020 3,595,000.00 3,595,000.00
Bexar County, TX, Health Facilities Development Corp., Baptist Health
System, Series 1997A, 6%, 11/15/2011 2,000,000.00 2,000,000.00
Bexar County, TX, Health Facilities Development Corp., Baptist Health
System, Series 1997, 6%, 11/15/2012 3,000,000.00 3,000,000.00
Boerne, TX, Independent School District, General Obligation, Zero
Coupon, 2/1/2014 2,785,000.00 2,785,000.00
Boerne, TX, Independent School District, General Obligation, Zero
Coupon, 2/1/2016 3,285,000.00 3,285,000.00
Brazos River Authority, Texas Pollution Control, Revenue, Daily
Demand Note, 3.9%, 6/1/2030 5,000,000.00 5,000,000.00
Brownsville, TX, Utility System Revenue, AMBAC Insured, 6.25%, 9/1/2010 4,085,000.00 4,085,000.00
Cedar Hill, TX, Zero Coupon, Series 1996, 8/15/2009 1,500,000.00 1,500,000.00
Cedar Hill, TX, Zero Coupon, Series 1996, 8/15/2010 3,130,000.00 3,130,000.00
Cypress - Fairbanks, Texas Independent School District, Capital
Appreciation, Series A, 2/15/2012 5,750,000.00 5,750,000.00
Cypress-Fairbanks, Texas Independent School District, Capital
Appreciation, Series A, 2/15/2013 8,840,000.00 8,840,000.00
Cypress - Fairbanks Texas Independent School District, Capital
Appreciation - Ref, Series A, 2/15/2014 6,000,000.00 6,000,000.00
Dallas-Fort Worth, TX, Airport Revenue, FGIC, 7.75%, 11/1/2003 1,000,000.00 1,000,000.00
Dallas-Fort Worth, TX, Airport Revenue, FGIC, 7.8%, 11/1/2005 2,000,000.00 2,000,000.00
Dallas-Fort Worth, TX, Airport Revenue, FGIC, 7.8%, 11/1/2006 2,025,000.00 2,025,000.00
Dallas-Fort Worth, TX, Airport Revenue, Series 1992 A, 7.8%, 11/1/2007 2,390,000.00 2,390,000.00
Dallas-Fort Worth, TX, Airport Revenue, FGIC, 7.375%, 11/1/2008 4,500,000.00 4,500,000.00
Dallas-Fort Worth, TX, Airport Revenue, Series 1992 A, 7.375%, 11/1/2009 4,500,000.00 4,500,000.00
Dallas-Fort Worth, TX, Airport Revenue, FGIC, 7.375%, 11/1/2010 3,500,000.00 3,500,000.00
Dallas, TX, Civic Center, Revenue, 5%, 8/15/2028 10,000,000.00 10,000,000.00
Dallas, TX, Housing Finance Corp., Single Family Mortgage Revenue,
MBIA, Zero Coupon, 10/1/2016 4,540,000.00 4,540,000.00
Ector County, TX, Hospital District, Hospital Revenue, Prerefunded
4/15/2012, 7.3%, 4/15/2012 550,000.00 550,000.00
El Paso, TX, Independent School District, General Obligation,
Zero Coupon, 8/15/2011 3,600,000.00 3,600,000.00
Fort Bend, Texas Independent School District, 5%, 8/15/2020 5,130,000.00 5,130,000.00
Fort Bend, Texas Independent School District, 5%, 8/15/2021 5,425,000.00 5,425,000.00
Fort Worth, TX, Higher Education Finance Corp., Revenue, 5%, 3/15/2020 3,500,000.00 3,500,000.00
Georgetown, TX, Higher Education Finance, Revenue, Southwestern
University Project, 6.25%, 2/15/2009 840,000.00 840,000.00
Grapevine-Colleyville, TX, General Obligation, Zero Coupon, 8/15/2007 6,065,000.00 6,065,000.00
Grapevine-Colleyville, TX, General Obligation, Zero Coupon, 8/15/2009 6,360,000.00 6,360,000.00
Grapevine-Colleyville, TX, General Obligation, Zero Coupon, 8/15/2010 2,160,000.00 2,160,000.00
Grapevine-Colleyville, TX, General Obligation, Zero Coupon, 8/15/2011 4,830,000.00 4,830,000.00
Grapevine-Colleyville, TX, General Obligation, Zero Coupon, 8/15/2013 1,000,000.00 1,000,000.00
Harris County, TX, General Obligation,Toll Road Authority, Subordinate
Lien, Unlimited Tax, Series A, Zero Coupon, 8/15/2004 2,050,000.00 2,050,000.00
Harris County, TX, General Obligation, Toll Road Authority,
Subordinate Lien, Series A, Zero Coupon, 8/15/2005 4,025,000.00 4,025,000.00
Harris County, TX, Toll Road Authority, Toll Road Revenue, Subordinate
Lien, Series 1994 A, Zero Coupon, 8/15/2006 4,010,000.00 4,010,000.00
Harris County, TX, Revenue, Toll Road, Prerefunded 8/1/2001, 6.75%,
8/1/2014 15,000,000.00 15,000,000.00
Harris County, TX, Toll Road Authority, Series 1992 A, Zero Coupon,
8/15/2004 4,050,000.00 4,050,000.00
Harris County, TX, Toll Road Revenue, Sub Lien, 6%, 8/1/2010 18,415,000.00 18,415,000.00
Harris County, Texas, REF-Toll Road-Sub Lien, 6%, 8/1/2011 19,480,000.00 19,480,000.00
Harris County Texas, Ref-Toll Road-Sub Lien, 6%, 8/1/2012 9,605,000.00 9,605,000.00
Harris County, TX, Health Facilities , Texas Medical Center Project,
MBIA Insured, 6.25%, 5/15/2008 2,785,000.00 2,785,000.00
Harris County, TX , Health Facilities Development, MBIA Insured,
6.25%, 5/15/2009 2,965,000.00 2,965,000.00
Harris County, TX, Health Facilities, Texas Medical Center Project,
Series 1996, 6.25%, 5/15/2010 3,000,000.00 3,000,000.00
Houston, TX, Airport System Revenue, Series B, 5.25%, 7/1/2011 16,020,000.00 16,020,000.00
Houston Texas Airport Sys Revenue, AMT - Sub Lien, Series A, 5.875%,
7/1/2013 6,000,000.00 6,000,000.00
, 5.875%, 7/1/2015 9,505,000.00 9,505,000.00
Houston, TX, Airport System Revenue, Refunded, Series A, 6%, 7/1/2014 5,030,000.00 5,030,000.00
Houston, TX, Airport System Revenue, 5%, 7/1/2025 9,520,000.00 9,520,000.00
Houston, TX, Higher Education Finance Corporation, Revenue, University
of Saint Thomas Project, 7.25%, 12/1/2007 1,445,000.00 1,445,000.00
Houston, TX, Independent School District, General Obligation, Series A,
Zero Coupon, 2/15/2010 8,500,000.00 8,500,000.00
Houston, TX, Independent School District, General Obligation, Series A,
Zero Coupon, 2/15/2011 3,750,000.00 3,750,000.00
Houston, TX, Independent School District, General Obligation, Series A,
Zero Coupon, 2/15/2015 26,000,000.00 26,000,000.00
Huston Tex Indpt Sch Dist, 5%, 2/15/2019 5,000,000.00 5,000,000.00
Houston, TX, Water and Sewer System Authority, Series 1991 C, Zero Coupon,
12/1/2005 15,000,000.00 15,000,000.00
Houston, TX, Water & Sewer System Authority, Series C, AMBAC, Zero Coupon,
12/1/2006 14,575,000.00 14,575,000.00
Houston, TX, Water and Sewer System Authority, Series 1991 C, Zero Coupon,
12/1/2007 3,400,000.00 3,400,000.00
Houston, TX, Water & Sewer System Authority, Series C, AMBAC, Zero Coupon,
12/1/2008 8,000,000.00 8,000,000.00
Houston, TX, Water & Sewer System Authority, Series C, Zero Coupon, AMBAC,
12/1/2009 14,750,000.00 14,750,000.00
Houston, TX, Water & Sewer System Authority, Zero Coupon, AMBAC Insured,
12/1/2010 5,000,000.00 5,000,000.00
Houston, TX, Water & Sewer System Authority, Zero Coupon, AMBAC Insured,
Series 1991C, 12/1/2012 3,350,000.00 3,350,000.00
Hurst Euless Bedford, TX, Independent School District,Capital Appreciation
Refunding, Series 1994, Zero Coupon, 8/15/2009 4,925,000.00 4,925,000.00
Keller, TX, School District, Series 1998, 5%, 8/15/2030 5,000,000.00 5,000,000.00
Laredo TX, Independent School District, 6%, 8/1/2011 2,465,000.00 2,465,000.00
Lower Colorado River Authority, Texas RevenueCapital Appreciation, Junior Lien,
1/1/2013 5,600,000.00 5,600,000.00
Lubbock, TX, Health Facilities Development Corp., Methodist Hospital, Series B,
AMBAC, 5.6%, 12/1/2007 2,415,000.00 2,415,000.00
Lubbock, TX, Health Facilities Development Corp., Methodist Hospital, Series B,
AMBAC, 5.625%, 12/1/2008 4,400,000.00 4,400,000.00
Lubbock, TX, Health Facilities Development Corporation, Series B,, 5.625%,
12/1/2009 4,640,000.00 4,640,000.00
Mesquite, TX, Independent School District, General Obligation, 5.125%, 8/15/2019 2,640,000.00 2,640,000.00
North Texas, Highway Revenue Tolls, Dallas Tollway, Series 1997 A, 5%, 1/1/2020 2,165,000.00 2,165,000.00
Northeast, TX, Hospital Authority, Revenue Refunding, Northeast Medical Center,
Series 1997, 6%, 5/15/2010 2,180,000.00 2,180,000.00
Northwest Texas Independent School District, Capital Appreciation Bonds, Series
1991, Zero Coupon, 8/15/2010 3,690,000.00 3,690,000.00
Rio Grande Valley, TX, Health Facilities Development, Revenue, Series B, 6.4%,
8/1/2012 3,700,000.00 3,700,000.00
Round Rock, TX, Independent School District, General Obligation, Zero Coupon,
8/1/2008 5,020,000.00 5,020,000.00
Texas, Sabine River Pollution Authority, Revenue, Southwestern Electric Power,
6.1%, 4/1/2018 30,200,000.00 30,200,000.00
San Antonio, TX, Airport Systems Revenue, Series 1991, ETM,, 7%, 7/1/2002 1,695,000.00 1,695,000.00
San Antonio, TX, Electric and Gas Revenue, Series 1989 A, Zero Coupon,
2/1/2005 9,500,000.00 9,500,000.00
San Antonio, TX, Electric and Gas Revenue, Series 1991 A, Zero Coupon,
2/1/2005 13,000,000.00 13,000,000.00
San Antonio, TX, Electric & Gas, Revenue Refunding, Series A, FGIC, Zero
Coupon, 2/1/2006 17,900,000.00 17,900,000.00
San Antonio, TX, Zero Coupon, FGIC Insured, Series 1991B, 2/1/2009 4,400,000.00 4,400,000.00
San Antonio, TX, Electric & Gas, Revenue, Series A, 5.25%, 2/1/2012 3,000,000.00 3,000,000.00
Tarrant County, TX, Health Facilities Development Corp., Hospital Refunding
Revenue, Fort Worth Osteopathic Hospital, MBIA, 6%, 5/15/2011 4,615,000.00 4,615,000.00
Tarrant County, TX, Health Facilities Development Corp., Hospital Refunding
Revenue, Fort -Worth Osteopathic Hospital, MBIA, 6%, 5/15/2021 6,235,000.00 6,235,000.00
Texas General Obligation, 7%, 9/15/2012 9,081,165.19 9,081,165.19
Texas Housing Agency Mortgage Revenue, Series A, 7.15%, 9/1/2012 150,000.00 150,000.00
Texas Municipal Power Agency, MBIA, 6.1%, 9/1/2007 9,250,000.00 9,250,000.0
Texas Municipal Power Agency, MBIA, 6.1%, 9/1/2009 4,435,000.00 4,435,000.0
Tesas Municipal Power Agency Revenue, Capital Appreciation, 9/1/2016 18,675,000.00 18,675,000.00
Texas Municipal Power Agency Revenue, Capital Appreciation, Refunded, Zero
Coupon, 9/1/2017 6,000,000.00 6,000,000.00
State of Texas, General Obligation, Amt-Veterans Land, 6.4%, 12/1/2024 8,550,000.00 8,550,000.00
State of Texas, General Obligation, Capital Appreciation, Prerefunded,
Series C, 4/1/2005 7,540,000.00 7,540,000.00
</TABLE>
<TABLE>
<S> <C> <C> <C>
Rhode Island Depositors Economic Protection Corp., Special Obligation,
Series B, MBIA, 5.8%, 8/1/2012 2,703,775.00 2,703,775.00
Rhode Island Depositors Economic Protection Corp., Special Obligation,
Series B, MBIA, 5.8%, 8/1/2013 7,903,491.00 7,903,491.00
Rhode Island Clean Water Protection Agency, Pollution Control Revenue,
Revolving Fund, Series A, MBIA, 5.4%, 10/1/2015 2,040,240.00 2,040,240.00
South Carolina
Charleston County, SC, Certificates of Participation, Series B,
Prerefunded 6/1/2004, 6.875%, 6/1/2014 5,333,103.00 5,333,103.00
Charleston County, SC, Certificates of Participation, Series B,
Prerefunded 6/1/2004, 7%, 6/1/2019 2,618,276.00 2,618,276.00
Charleston County, SC, Certificates of Participation, Series B,
6.875%, 6/1/2014 258,936.00 258,936.00
Charleston County, SC, Certificates of Participation, Series B, 7%,
6/1/2019 124,298.00 124,298.00
Darlington County, SC, Pollution Control Revenue, Power and Light,
6.6%, 11/1/2010 7,956,900.00 7,956,900.00
Grand Strand, SC, Water & Sewer Authority, Revenue, 6.375%, 6/1/2012 5,637,950.00 5,637,950.00
Piedmont, SC, Municipal Power Agency, Electric Revenue Bond, 6.75%,
1/1/2019 4,098,940.00 4,098,940.00
Piedmont, SC, Municipal Power Agency, Electric Revenue, Series 1991 A,
ETM, FGIC Insured, 6.5%, 1/1/2016 489,133.00 489,133.00
Piedmont, SC, Municipal Power Agency, Electric Revenue, Series 1993,
ETM, MBIA Insured, 5.5%, 1/1/2008 883,940.00 883,940.00
Piedmont, SC, Municipal Power Agency, Electric Revenue, Series 1993, ETM,
MBIA Insured, 5.5%, 1/1/2012 2,306,048.00 2,306,048.00
Piedmont, SC, Municipal Power Agency, Electric Revenue, MBIA Insured, 5.5%,
1/1/2012 2,924,676.00 2,924,676.00
South Carolina Jobs and Economic Development Authority, Hospital Facilities
Revenue, 7.375%, 12/15/2021 2,982,420.00 1,491,210.00 4,473,630.00
South Carolina State Public Services Authority, Revenue, Series A, 6.25%,
1/1/2022 7,390,320.00 7,390,320.00
Tennessee
Knox County, TN, Health, Education & Housing Facilities Board, Hospital
Facilities Revenue, Fort Sanders Alliance, 7.25%, 1/1/2009 4,349,962.00 4,349,962.00
Knox County, TN, Health & Educational Hospital Facilities Board, Fort
Sanders Alliance, MBIA, 5.75%, 1/1/2011 16,229,629.00 16,229,629.00
Knox County, TN, Health & Educational Facilities Board, Fort Sanders
Alliance, MBIA, 6.25%, 1/1/2013 4,375,040.00 4,375,040.00
Knox County, TN, Health, Education and Housing Facilities Board, MBIA
insured, 5.75%, 1/1/2014 2,104,360.00 2,104,360.00
Knox Cnty Tenn Health Edl & Hsg Facs Brd Hosp Facs Rev, 1/1/2012 9,859,836.00 9,859,836.00
Metropolitan Nashville, TN, Airport Authority, Revenue, Series C,
6.6%, 7/1/2015 5,410,282.00 5,410,282.00
Shelby County, TN, General Obligation, Zero Coupon, 8/1/2012 1,879,626.00 1,879,626.00
Shelby County, TN, General Obligation, Zero Coupon, 8/1/2013 1,782,780.00 1,782,780.00
Shelby County, TN, General Obligation, Zero Coupon, 8/1/2014 2,418,401.00 2,418,401.00
Tennessee Housing Development Agency Mortgage Financial, Revenue,
Series A, 7.05%, 7/1/2020 18,334,375.00 18,334,375.00
Tennessee Housing Development Agency Mortgage Financial, Revenue,
Series A, 7.125%, 7/1/2026 1,945,206.00 1,945,206.00
Texas
Abilene, TX, Health Facilities Development Corporation Revenue,
Retirement Facilities, 5.875%, 11/15/2018 2,727,757.00 2,727,757.00
Austin, TX, Bergstrom Landhost Enterprises, Airport Hotel, Series
1999 A, 6.75%, 4/1/2027 16,680,907.00 3,751,680.00 20,432,587.00
Austin, TX, Independant School District, Series 1998, 5%, 8/1/2015 1,970,240.00 1,970,240.00
Austin, TXCombined Utility System Revenue, Zero Coupon, 11/15/2011 7,225,092.00 7,225,092.00
Austin, TXUtility System, AMBAC Insured, 11/15/2012 7,292,012.00 7,292,012.00
Austin, TX, Utility Systems Revenue Refunding, MBIA Insured, Series
A, Zero Coupon, 11/15/1908 2,342,800.00 2,342,800.00
Austin, TX, Utility Systems Revenue, 6%, 11/15/2013 10,393,095.00 10,393,095.00
Austin, TX, Water, Sewer and Electric Revenue, 14%, 11/15/2001 10,429.00 10,429.00
Austin, TX, Water, Sewer and Electric Revenue, 14%, 11/15/2001 117,894.00 117,894.00
Austin, TX, Water, Sewer and Electric Revenue, 14%, 11/15/2001 758,600.00 758,600.00
Texas Beaumiont W&S, 5%, 9/1/2019 2,987,458.00 2,987,458.00
Texas Beaumont W&S, 5%, 9/1/2020 3,402,559.00 3,402,559.00
Bexar County, TX, Health Facilities Development Corp., Baptist
Health System, Series 1997A, 6%, 11/15/2011 2,164,480.00 2,164,480.00
Bexar County, TX, Health Facilities Development Corp., Baptist
Health System, Series 1997, 6%, 11/15/2012 3,243,630.00 3,243,630.00
Boerne, TX, Independent School District, General Obligation, Zero
Coupon, 2/1/2014 1,360,583.00 1,360,583.00
Boerne, TX, Independent School District, General Obligation, Zero
Coupon, 2/1/2016 1,424,638.00 1,424,638.00
Brazos River Authority, Texas Pollution Control, Revenue, Daily
Demand Note, 3.9%, 6/1/2030 5,000,000.00 5,000,000.00
Brownsville, TX, Utility System Revenue, AMBAC Insured, 6.25%, 9/1/2010 4,529,897.00 4,529,897.00
Cedar Hill, TX , Zero Coupon, Series 1996, 8/15/2009 951,975.00 951,975.00
Cedar Hill, TX , Zero Coupon, Series 1996, 8/15/2010 1,897,906.00 1,897,906.00
Cypress - Fairbanks, Texas Independent School District, Capital Appreciation,
Series A, 2/15/2012 3,223,737.00 3,223,737.00
Cypress-Fairbanks, Texas Independent School District, Capital Appreciation,
Series A, 2/15/2013 4,656,646.00 4,656,646.00
Cypress - Fairbanks Texas Independent School District, Capital Appreciation
- Ref, Series A, 2/15/2014 2,972,040.00 2,972,040.00
Dallas-Fort Worth, TX, Airport Revenue, FGIC, 7.75%, 11/1/2003 1,086,360.00 1,086,360.00
Dallas-Fort Worth, TX, Airport Revenue, FGIC, 7.8%, 11/1/2005 2,231,060.00 2,231,060.00
Dallas-Fort Worth, TX, Airport Revenue, FGIC, 7.8%, 11/1/2006 2,256,295.00 2,256,295.00
Dallas-Fort Worth, TX, Airport Revenue, Series 1992 A, 7.8%, 11/1/2007 2,671,040.00 2,671,040.00
Dallas-Fort Worth, TX, Airport Revenue, FGIC, 7.375%, 11/1/2008 4,961,745.00 4,961,745.00
Dallas-Fort Worth, TX, Airport Revenue, Series 1992 A, 7.375%, 11/1/2009 4,961,745.00 4,961,745.00
Dallas-Fort Worth, TX, Airport Revenue, FGIC, 7.375%, 11/1/2010 3,847,445.00 3,847,445.00
Dallas, TX, Civic Center, Revenue, 5%, 8/15/2028 9,211,000.00 9,211,000.00
Dallas, TX, Housing Finance Corp., Single Family Mortgage Revenue, MBIA,
Zero Coupon, 10/1/2016 903,460.00 903,460.00
Ector County, TX, Hospital District, Hospital Revenue, Prerefunded
4/15/2012, 7.3%, 4/15/2012 581,493.00 581,493.00
El Paso, TX, Independent School District, General Obligation, Zero Coupon,
8/15/2011 2,051,532.00 2,051,532.00
Fort Bend, Texas Independent School District, 5%, 8/15/2020 4,855,750.00 4,855,750.00
Fort Bend, Texas Independent School District, 5%, 8/15/2021 5,107,691.00 5,107,691.00
Fort Worth, TX, Higher Education Finance Corp., Revenue, 5%, 3/15/2020 3,307,150.00 3,307,150.00
Georgetown, TX, Higher Education Finance, Revenue, Southwestern University
Project, 6.25%, 2/15/2009 874,734.00 874,734.00
Grapevine-Colleyville, TX, General Obligation, Zero Coupon, 8/15/2007 4,312,093.00 4,312,093.00
Grapevine-Colleyville, TX, General Obligation, Zero Coupon, 8/15/2009 4,059,715.00 4,059,715.00
Grapevine-Colleyville, TX, General Obligation, Zero Coupon, 8/15/2010 1,304,316.00 1,304,316.00
Grapevine-Colleyville, TX, General Obligation, Zero Coupon, 8/15/2011 2,746,482.00 2,746,482.00
Grapevine-Colleyville, TX, General Obligation, Zero Coupon, 8/15/2013 501,690.00 501,690.00
Harris County, TX, General Obligation,Toll Road Authority, Subordinate Lien,
Unlimited Tax, Series A, Zero Coupon, 8/15/2004 1,721,836.00 1,721,836.00
Harris County, TX, General Obligation, Toll Road Authority, Subordinate
Lien, Series A, Zero Coupon, 8/15/2005 3,217,907.00 3,217,907.00
Harris County, TX, Toll Road Authority, Toll Road Revenue, Subordinate
Lien, Series 1994 A, Zero Coupon, 8/15/2006 3,048,602.00 3,048,602.00
Harris County, TX, Revenue, Toll Road, Prerefunded 8/1/2001, 6.75%, 8/1/2014 15,504,600.00 15,504,600.00
Harris County, TX, Toll Road Authority, Series 1992 A, Zero Coupon, 8/15/2004 3,401,676.00 3,401,676.00
Harris County, TX, Toll Road Revenue, Sub Lien, 6%, 8/1/2010 20,027,233.00 20,027,233.00
Harris County, Texas, REF-Toll Road-Sub Lien, 6%, 8/1/2011 21,161,708.00 21,161,708.00
Harris County Texas, Ref-Toll Road-Sub Lien, 6%, 8/1/2012 10,407,497.00 10,407,497.00
Harris County, TX, Health Facilities, Texas Medical Center Project, MBIA
Insured, 6.25%, 5/15/2008 3,023,785.00 3,023,785.00
Harris County, TX, Health Facilities Development, MBIA Insured, 6.25%,
5/15/2009 3,236,178.00 3,236,178.00
Harris County, TX, Health Facilities, Texas Medical Center Project, Series
1996, 6.25%, 5/15/2010 3,290,460.00 3,290,460.00
Houston, TX, Airport System Revenue, Series B, 5.25%, 7/1/2011 16,134,863.00 16,134,863.00
Houston Texas Airport Sys Revenue, AMT - Sub Lien, Series A, 5.875%, 7/1/2013 6,286,260.00 6,286,260.00
, 5.875%, 7/1/2015 9,864,098.00 9,864,098.00
Houston, TX, Airport System Revenue, Refunded, Series A, 6%, 7/1/2014 5,260,323.00 5,260,323.00
Houston, TX, Airport System Revenue, 5%, 7/1/2025 8,580,090.00 8,580,090.00
Houston, TX, Higher Education Finance Corporation, Revenue, University of
Saint Thomas Project, 7.25%, 12/1/2007 1,500,935.00 1,500,935.00
Houston, TX, Independent School District, General Obligation, Series A,
Zero Coupon, 2/15/2010 5,156,525.00 5,156,525.00
Houston, TX, Independent School District, General Obligation, Series A,
Zero Coupon, 2/15/2011 2,143,237.00 2,143,237.00
Houston, TX, Independent School District, General Obligation, Series A,
Zero Coupon, 2/15/2015 11,603,020.00 11,603,020.00
Huston Tex Indpt Sch Dist, 5%, 2/15/2019 4,727,500.00 4,727,500.00
Houston, TX, Water and Sewer System Authority, Series 1991 C, Zero Coupon,
12/1/2005 11,808,300.00 11,808,300.00
Houston, TX, Water & Sewer System Authority, Series C, AMBAC, Zero Coupon,
12/1/2006 10,905,889.00 10,905,889.00
Houston, TX, Water and Sewer System Authority, Series 1991 C, Zero Coupon,
12/1/2007 2,415,836.00 2,415,836.00
Houston, TX, Water & Sewer System Authority, Series C, AMBAC, Zero Coupon,
12/1/2008 5,392,480.00 5,392,480.00
Houston, TX, Water & Sewer System Authority, Series C, Zero Coupon, AMBAC,
12/1/2009 9,422,742.00 9,422,742.00
Houston, TX, Water & Sewer System Authority, Zero Coupon, AMBAC Insured,
12/1/2010 3,024,250.00 3,024,250.00
Houston, TX, Water & Sewer System Authority, Zero Coupon, AMBAC Insured,
Series 1991C, 12/1/2012 1,796,370.00 1,796,370.00
Hurst Euless Bedford, TX, Independent School District, Capital Appreciation
Refunding, Series 1994, Zero Coupon, 8/15/2009 3,200,856.00 3,200,856.00
Keller, TX, School District, Series 1998, 5%, 8/15/2030 4,591,350.00 4,591,350.00
Laredo TX, Independent School District, 6%, 8/1/2011 2,658,970.00 2,658,970.00
Lower Colorado River Authority, Texas RevenueCapital Appreciation, Junior
Lien, 1/1/2013 2,997,008.00 2,997,008.00
Lubbock, TX, Health Facilities Development Corp., Methodist Hospital,
Series B, AMBAC, 5.6%, 12/1/2007 2,554,490.00 2,554,490.00
Lubbock, TX, Health Facilities Development Corp., Methodist Hospital,
Series B, AMBAC, 5.625%, 12/1/2008 4,679,444.00 4,679,444.00
Lubbock, TX, Health Facilities Development Corporation, Series B,, 5.625%,
12/1/2009 4,950,369.00 4,950,369.00
Mesquite, TX, Independent School District, General Obligation, 5.125%,
8/15/2019 2,550,424.00 2,550,424.00
North Texas, Highway Revenue Tolls, Dallas Tollway, Series 1997 A, 5%,
1/1/2020 2,051,424.00 2,051,424.00
Northeast, TX, Hospital Authority, Revenue Refunding, Northeast Medical
Center, Series 1997, 6%, 5/15/2010 2,346,900.00 2,346,900.00
Northwest Texas Independent School District, Capital Appreciation Bonds,
Series 1991, Zero Coupon, 8/15/2010 2,271,637.00 2,271,637.00
Rio Grande Valley, TX, Health Facilities Development, Revenue, Series B,
6.4%, 8/1/2012 3,861,690.00 3,861,690.00
Round Rock, TX, Independent School District, General Obligation, Zero
Coupon, 8/1/2008 3,393,319.00 3,393,319.00
Texas, Sabine River Pollution Authority, Revenue, Southwestern Electric
Power, 6.1%, 4/1/2018 31,571,684.00 31,571,684.00
San Antonio, TX, Airport Systems Revenue, Series 1991, ETM,, 7%, 7/1/2002 1,759,732.00 1,759,732.00
San Antonio, TX, Electric and Gas Revenue, Series 1989 A, Zero Coupon,
2/1/2005 7,795,320.00 7,795,320.00
San Antonio, TX, Electric and Gas Revenue, Series 1991 A, Zero Coupon,
2/1/2005 10,667,280.00 10,667,280.00
San Antonio, TX, Electric & Gas, Revenue Refunding, Series A, FGIC, Zero
Coupon, 2/1/2006 14,007,645.00 14,007,645.00
San Antonio, TX, Zero Coupon, FGIC Insured, Series 1991B, 2/1/2009 2,958,076.00 2,958,076.00
San Antonio, TX, Electric & Gas, Revenue, Series A, 5.25%, 2/1/2012 3,051,090.00 3,051,090.00
Tarrant County, TX, Health Facilities Development Corp., Hospital Refunding
Revenue, Fort Worth Osteopathic Hospital, MBIA, 6%, 5/15/2011 4,948,341.00 4,948,341.00
Tarrant County, TX, Health Facilities Development Corp., Hospital Refunding
Revenue, Fort -Worth Osteopathic Hospital, MBIA, 6%, 5/15/2021 6,634,663.00 6,634,663.00
Texas General Obligation, 7%, 9/15/2012 9,340,614.00 9,340,614.00
Texas Housing Agency Mortgage Revenue, Series A, 7.15%, 9/1/2012 154,395.00 154,395.00
Texas Municipal Power Agency, MBIA, 6.1%, 9/1/2007 9,999,435.00 9,999,435.00
Texas Municipal Power Agency, MBIA, 6.1%, 9/1/2009 4,884,354.00 4,884,354.00
Tesas Municipal Power Agency Revenue, Capital Appreciation, 9/1/2016 7,932,393.00 7,932,393.00
Texas Municipal Power Agency Revenue, Capital Appreciation, Refunded, Zero
Coupon, 9/1/2017 2,390,220.00 2,390,220.00
State of Texas, General Obligation, Amt-Veterans Land, 6.4%, 12/1/2024 8,815,990.00 8,815,990.00
State of Texas, General Obligation, Capital Appreciation, Prerefunded,
Series C, 4/1/2005 6,148,719.00 6,148,719.00
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C> <C> <C>
Texas State, College Student Loan, 5%, 8/1/2020 3,560,000.00 3,560,000.00
Texas State Deptartment Housing & Community Affairs,
Revenue, Series A, 6.4%, 1/1/2027 3,350,000.00 3,350,000.00
Texas Public Finance Authority, Building Authority,
Series B, AMBAC, 6.25%, 2/1/2008 5,190,000.00 5,190,000.00
Texas Water Development Board Revenue,
Series 1999 B, 5.25%, 7/15/2017 5,000,000.00 5,000,000.00
Texas Water Revenue, 5.625%, 7/15/2011 3,630,000.00 3,630,000.00
Texas Water Revenue C10 S00A, 5.625%, 7/15/2015 1,000,000.00 1,000,000.00
Titus County, TX, Hospital District Revenue,
Revenue, 6.125%, 8/15/2013 6,700,000.00 6,700,000.00
Travis County, TX, Health Facilities Development
Corp., Ascension Health, Series 1999 A, 5.75%,
11/15/2011 3,440,000.00 3,440,000.00
Travis County, TX, Health Facilities Development
Corp., Ascension Health, Series 199 A, 6.25%,
11/15/2015 2,780,000.00 2,780,000.00
Travis County, TX, Health Facilities Development
Corp., Series 1999 A, 6.25%, 11/15/2016 13,770,000.00 13,770,000.00
Travis County, TX, Housing Financial Corporation
Revenue, Series A, 7%, 12/1/2011 225,000.00 225,000.00
Trinity River, Texas, Wastewater Systems Revenue,
Series B, 5.25%, 8/1/2012 5,540,000.00 5,540,000.00
Waxahachie, TX, Independent School District,
General Obligation, Zero Coupon, 8/15/2012 4,120,000.00 4,120,000.00
Waxahachie, TX, Independent School District,
General Obligation, Zero Coupon, 8/15/2013 2,060,000.00 2,060,000.00
Utah
Intermountain Power Supply Agency, UT, Power
Supply Revenue, Series A, AMBAC, Zero Coupon,
7/1/2002 1,655,000.00 1,655,000.00
Intermountain Power Supply Agency, UT, 5%,
7/1/2012 630,000.00 630,000.00
Intermountain Power Supply Agency, UT, 7/1/2003 630,000.00 630,000.00
Intermountain Power Supply Agency, UT, 7/1/2004 1,095,000.00 1,095,000.00
Intermountain Power Supply Agency, UT, 5%,
7/1/2012 370,000.00 370,000.00
Intermountain Power Supply Agency, UT, 7/1/2003 370,000.00 370,000.00
Intermountain Power Supply Agency, UT, 7/1/2004 635,000.00 635,000.00
Intermountain Power Supply Agency, UT, 6.5%,
7/1/2008 2,530,000.00 2,530,000.00
Intermountain Power Supply Agency, UT, 6.5%,
7/1/2008 1,470,000.00 1,470,000.00
Provo, UT, Electric System Revenue, ETM, AMBAC,
10.375%, 9/15/2015 1,745,000.00 1,745,000.00
Salt Lake City, UT, Hospital Revenue,
Intermountain Health Care, Inversed Inflow,
Series 1992, 6.15%, 2/15/2012 1,500,000.00 1,500,000.00
Associated Municipal Power System, UT, Hunter
Project, Refunding Revenue, AMBAC, Zero Coupon,
7/1/2002 5,200,000.00 5,200,000.00
Associated Municipal Power System, UT, Hunter
Project, Refunding Revenue, AMBAC, Zero Coupon,
7/1/2004 5,895,000.00 5,895,000.00
Associated Municipal Power System, UT, Hunter
Project, Refunding Revenue, AMBAC, Zero Coupon,
7/1/2005 5,900,000.00 5,900,000.00
Associated Municipal Power System, UT, Hunter
Project, Refunding Revenue, AMBAC, Zero Coupon,
7/1/2006 5,895,000.00 5,895,000.00
Associated Municipal Power System, UT, Hunter
Project, Refunding Revenue, AMBAC, Zero Coupon,
7/1/2007 3,750,000.00 3,750,000.00
Utah State Housing Financial Agency, Revenue,
Series D, 8.625%, 1/1/2019 40,000.00 40,000.00
West Valley City, UT, Excise Tax Revenue, 10.625%,
7/1/2004 555,000.00 555,000.00
Virgin Islands
Virgin Islands Public Financial Authority Revenue,
Series 1992 A, Prerefunded 10/01/2002 at 102,
7.25%, 10/1/2018 225,000.00 3,000,000.00 2,500,000.00 5,725,000.00
Virgin Islands Public Finance Authority, Revenue
Bond, Series 1999 A, 6.5%, 10/1/2024 300,000.00 600,000.00 900,000.00
Virginia
Fairfax County, VA, Economic Development Authority
Revenue, Series 1999 A, 7.25%, 10/1/2019 2,000,000.00 2,000,000.00
Fairfax County, VA, Economic Development Authority
Revenue, Retirement Community, Series A, 7.5%,
10/1/2029 7,100,000.00 7,100,000.00
Richmond, VA, General Obligation, Series B,
6.25%, 1/15/2018 2,665,000.00 2,665,000.00
Roanoke, VA, Industrial Development Authority,
Roanoke Memorial Hospital, Series B, MBIA,
6.125%, 7/1/2017 5,500,000.00 5,500,000.00
Southeastern Public Service Authority, VA,
Refunding Revenue, Series A, MBIA, 5.25%,
7/1/2010 7,380,000.00 7,380,000.00
Virginia Beach, VA, Development Authority,
VA Beach General Hospital Project,
Series 1993, 5.125%, 2/15/2018 3,000,000.00 3,000,000.00
Virginia State Public School Authority, Series B, 5%,
8/1/2017 6,010,000.00 6,010,000.00
Virginia State Public School Authority, Series B, 5%,
8/1/2020 2,960,000.00 2,960,000.00
Winchester County, VA, Industrial Development
Authority, Hospital Revenue, AMBAC, 6%, 1/1/2015 5,700,000.00 5,700,000.00
Washington
Chelan County, Washington Public Utility No. 1
Columbia River Rock, Capital Appreciation,
Series A, 6/1/2014 12,685,000.00 12,685,000.00
Clark County, WA, Public Utility District, FGIC
Insured, Series 1995, 6%, 1/1/2008 2,200,000.00 2,200,000.00
Clark County, WA, School District, General Obligation,
6.125%, 12/1/2011 3,190,000.00 3,190,000.00
King & Snohomish Counties, WA, General Obligation,
School District #417, FGIC, 5.6%, 12/1/2010 1,650,000.00 1,650,000.00
King County, WA, General Obligation, Series B,
6.625%, 12/1/2015 9,845,000.00 9,845,000.00
Port Seattle Wash Rev, 6%, 2/1/2012 1,765,000.00 1,765,000.00
Port Seattle Washington Revenue, 6%, 2/1/2014 4,000,000.00 4,000,000.00
Snohomish County, WA, School District #6, FGIC,
6.5%, 12/1/2007 3,325,000.00 3,325,000.00
Snohomish County, WA, School District # 015,
General Obligation, 5.75%, 12/1/2011 3,485,000.00 3,485,000.00
Spokane County, WA, School District, General
Obligation, Series B, Zero Coupon, 12/1/2014 2,500,000.00 2,500,000.00
State of Washington, General Obligation Series AT-5,
MBIA Insured, Zero Coupon, 8/1/2010 2,625,000.00 2,625,000.00
Washington St, 1/1/2017 4,535,000.00 4,535,000.00
Washington Health Care Facilities Authority,
Empire Health Services- Spokane, MBIA, 5.8%,
11/1/2009 4,595,000.00 4,595,000.00
Washington Health Care Facilities Authority,
Empire Health Services-Spokane, MBIA, 5.75%,
11/1/2007 7,350,000.00 7,350,000.00
Washington State Health Care Facilities Authority,
Empire Health Services -Spokane, Series 1993,
5.8%, 11/1/2008 4,865,000.00 4,865,000.00
Washington Health Care Facilities Authority,
Empire Health Services-Spokane, MBIA, 5.8%, 11/1/2010 2,100,000.00 2,100,000.00
Washington State Public Power Supply System, Nuclear
Project No. 1, Series 1990 B, 7.25%, 7/1/2009 12,350,000.00 12,350,000.00
Washington St Pub Pwr Supply Sys Nuclear Proj No 2 Rev,
7/1/2007 4,195,000.00 4,195,000.00
Washington St Pub Pwr Supply Sys Nuclear Proj No 2 Rev,
7/1/2007 4,375,000.00 4,375,000.00
Washington State Public Power Supply System, Nuclear
Project No. 2, Series 1990 A, 7.25%, 7/1/2006 7,000,000.00 7,000,000.00
Washington Public Power Supply System,
Nuclear Project #2, Series 1992A, MBIA/BIG Insured,
Zero Coupon, 7/1/2011 4,200,000.00 4,200,000.00
Washington Public Power Supply System, Revenue
Refunding, Nuclear Project #2, Series A, MBIA,
5.7%, 7/1/2008 5,000,000.00 5,000,000.00
Washington State Public Power Supply System Nuclear
Project No. 2, Series 1994 A, 6%, 7/1/2007 7,000,000.00 7,000,000.00
Washington Public Power Supply System, Revenue
Refunding, Nuclear Project #3, Series A,
MBIA, Zero Coupon, 7/1/2004 3,625,000.00 3,625,000.00
Washington Public Power Supply System, Revenue
Refunding, Nuclear Project #3, Series A, MBIA,
Zero Coupon, 7/1/2005 4,125,000.00 4,125,000.00
Washington State Public Power Supply System,,
Nuclear Project No. 3, Series 1989 A, Zero Coupon,
7/1/2006 1,380,000.00 1,380,000.00
Washington Public Power Supply System, Nuclear
Power Project #3, Series 1989A, MBIA/BIG Insured,
7/1/2010 5,860,000.00 5,860,000.00
Washington State Public Power Supply System, Nuclear
Project No. 3, Series 1989 B, Zero Coupon, 7/1/2006 5,555,000.00 5,555,000.00
Washington State Public Power Supply System, Nuclear
Project No. 3, Series 1990 B, Zero Coupon, 7/1/2002 11,925,000.00 11,925,000.00
Washington State Public Power Supply, Series C, 5.37
7/1/2015 5,410,000.00 5,410,000.00
West Virginia
West Virginia State General Obligation, 11/1/2024 5,000,000.00 5,000,000.00
Wisconsin
Green Bay, WI, Industrial Development Revenue,
Weyerhaeuser Company Project, Series A, 9%, 9/1/200 1,700,000.00 1,700,000.00
Kenosha, WI, General Obligation, Series C, MBIA,
Zero Coupon, 6/1/2004 3,475,000.00 3,475,000.00
Kenosha, WI, General Obligation, Series B, Zero Coup
10/15/2008 6,885,000.00 6,885,000.00
Milwaukee, Wisconsin General Obligation, 12/1/2011 5,915,000.00 5,915,000.00
Wisconsin State, Series D, 5.75%, 5/1/2015 8,445,000.00 8,445,000.00
Wisconsin Health & Educational Facilities Authority,
Aurora Medical, FSA Insured, 5.75%, 11/15/2007 1,500,000.00 1,500,000.00
Wisconsin Health & Educational Facilities Authority,
Aurora Medical, FSA Insured, 6%, 11/15/2009 4,330,000.00 4,330,000.00
Wisconsin Health & Educational Facilities Authority,
Felician Healthcare Inc., Series B, AMBAC, 6.25%,
1/1/2022 5,285,000.00 5,285,000.00
Wisconsin Health & Educational Facilities Authority,
Villa St. Francis Inc., Series C, AMBAC, 6.25%, 1/1/2022 9,230,000.00 9,230,000.00
Wisconsin Health & Educational Facilities Authority,
SSM Healthcare, Series 1992 AA, MBIA, 6.4%, 6/1/2008 2,335,000.00 2,335,000.00
Wisconsin Health & Educational Facilities Authority,
SSM Healthcare, Series 1992 AA, MBIA, 6.45%, 6/1/2009 2,485,000.00 2,485,000.00
Wisconsin Health & Educational Facilities Authority,
SSM Healthcare, Series 1992 AA, 6.45%, 6/1/2010 2,650,000.00 2,650,000.00
Wisconsin Health & Educational Facilities Authority,
SSM Healthcare, Series 1992 AA, MBIA, 6.5%, 6/1/2011 2,820,000.00 2,820,000.00
Wisconsin Health & Educational Facilities Authority,
SSM Healthcare, Series 1992 AA, MBIA, 6.5%, 6/1/2012 3,000,000.00 3,000,000.00
Wisconsin Health & Educational Facilities Authority,
Wheaton Franciscan Services, MBIA, 6.1%, 8/15/2008 4,580,000.00 4,580,000.00
Wisconsin Health & Educational Facilities Authority,
MBIA Insured, 6.1%, 8/15/2009 2,000,000.00 2,000,000.00
Wisconsin Health and Educational Facilities Authority,
Hospital Sisters Services Inc. - Obligated Group,
5.375%, 6/1/2018 4,800,000.00 4,800,000.00
Wisconsin Health & Educational Facilities Authority,
Aurora Medical, FSA Insured, 6%, 11/15/2008 4,085,000.00 4,085,000.00
Wisconsin Health & Educational Facilities Authority,
Aurora Medical, FSA Insured, 5.75%, 11/15/2006 2,000,000.00 2,000,000.00
Wisconsin Health & Educational Facilities Authority,
Aurora Health Care Inc., Series 1999 A, 5.6%, 2/15/2029 17,800,000.00 4,000,000.00 21,800,000.00
Wisconsin State Health & Educational Facilities,
Aurora Health Care Inc., Series 1999 B, 5.625%,
2/15/2029 7,225,000.00 2,500,000.00 9,725,000.00
Wyoming
Wyoming Community Development Authority, Revenue,
Single Family Mortgage, Series B, 8.125%, 6/1/2021 220,000.00 220,000.00
Wyoming Community Development Authority, Single
Family Mortgage Revenue, Series 1993 A, 5.85%, 6/1/2013 3,000,000.00 3,000,000.00
Wyoming Community Development Authority Housing,
Revenue, Series 2, 6.35%, 6/1/2029 3,765,000.00 3,765,000.00
Total Long-Term Municipal Bond Investments (Cost of
$35,697,851, $2,369,883,531, $2,064,805,164, and
$4,470,164,463 respectively)
Total Investment Portfolio (Cost of $36,730,343,
$2,385,821,371, $2,091,993,668, and $4,514,545,382
respectively)
<CAPTION>
<S> <C> <C> <C> <C>
Texas State, College Student Loan, 5%, 8/1/2020 3,315,428.00 3,315,428.00
Texas State Deptartment Housing & Community Affairs,
Revenue, Series A, 6.4%, 1/1/2027 3,408,893.00 3,408,893.00
Texas Public Finance Authority, Building Authority,
Series B, AMBAC, 6.25%, 2/1/2008 5,676,095.00 5,676,095.00
Texas Water Development Board Revenue,
Series 1999 B, 5.25%, 7/15/2017 4,964,100.00 4,964,100.00
Texas Water Revenue, 5.625%, 7/15/2011 3,848,380.00 3,848,380.00
Texas Water Revenue C10 S00A, 5.625%, 7/15/2015 1,036,780.00 1,036,780.00
Titus County, TX, Hospital District Revenue,
Revenue, 6.125%, 8/15/2013 6,179,209.00 6,179,209.00
Travis County, TX, Health Facilities Development
Corp., Ascension Health, Series 1999 A, 5.75%,
11/15/2011 3,627,927.00 3,627,927.00
Travis County, TX, Health Facilities Development
Corp., Ascension Health, Series 199 A, 6.25%,
11/15/2015 2,985,581.00 2,985,581.00
Travis County, TX, Health Facilities Development
Corp., Series 1999 A, 6.25%, 11/15/2016 14,722,195.00 14,722,195.00
Travis County, TX, Housing Financial Corporation
Revenue, Series A, 7%, 12/1/2011 232,177.00 232,177.00
Trinity River, Texas, Wastewater Systems Revenue,
Series B, 5.25%, 8/1/2012 5,628,695.00 5,628,695.00
Waxahachie, TX, Independent School District,
General Obligation, Zero Coupon, 8/15/2012 2,251,003.00 2,251,003.00
Waxahachie, TX, Independent School District,
General Obligation, Zero Coupon, 8/15/2013 1,057,027.00 1,057,027.00
Utah
Intermountain Power Supply Agency, UT, Power
Supply Revenue, Series A, AMBAC, Zero Coupon,
7/1/2002 1,538,868.00 1,538,868.00
Intermountain Power Supply Agency, UT, 5%,
7/1/2012 629,993.00 629,993.00
Intermountain Power Supply Agency, UT, 7/1/2003 558,684.00 558,684.00
Intermountain Power Supply Agency, UT, 7/1/2004 925,012.00 925,012.00
Intermountain Power Supply Agency, UT, 5%,
7/1/2012 367,254.00 367,254.00
Intermountain Power Supply Agency, UT, 7/1/2003 327,783.00 327,783.00
Intermountain Power Supply Agency, UT, 7/1/2004 535,863.00 535,863.00
Intermountain Power Supply Agency, UT, 6.5%,
7/1/2008 2,827,047.00 2,827,047.00
Intermountain Power Supply Agency, UT, 6.5%,
7/1/2008 1,627,745.00 1,627,745.00
Provo, UT, Electric System Revenue, ETM, AMBAC,
10.375%, 9/15/2015 2,408,466.00 2,408,466.00
Salt Lake City, UT, Hospital Revenue,
Intermountain Health Care, Inversed Inflow,
Series 1992, 6.15%, 2/15/2012 1,616,445.00 1,616,445.00
Associated Municipal Power System, UT, Hunter
Project, Refunding Revenue, AMBAC, Zero Coupon,
7/1/2002 4,835,116.00 4,835,116.00
Associated Municipal Power System, UT, Hunter
Project, Refunding Revenue, AMBAC, Zero Coupon,
7/1/2004 4,979,860.00 4,979,860.00
Associated Municipal Power System, UT, Hunter
Project, Refunding Revenue, AMBAC, Zero Coupon,
7/1/2005 4,744,426.00 4,744,426.00
Associated Municipal Power System, UT, Hunter
Project, Refunding Revenue, AMBAC, Zero Coupon,
7/1/2006 4,508,083.00 4,508,083.00
Associated Municipal Power System, UT, Hunter
Project, Refunding Revenue, AMBAC, Zero Coupon,
7/1/2007 2,724,487.00 2,724,487.00
Utah State Housing Financial Agency, Revenue,
Series D, 8.625%, 1/1/2019 40,198.00 40,198.00
West Valley City, UT, Excise Tax Revenue, 10.625%, 620,650.00 620,650.00
7/1/2004
Virgin Islands
Virgin Islands Public Financial Authority Revenue,
Series 1992 A, Prerefunded 10/01/2002 at 102,
7.25%, 10/1/2018 241,677.00 3,222,360.00 2,685,300.00 6,149,337.00
Virgin Islands Public Finance Authority, Revenue
Bond, Series 1999 A, 6.5%, 10/1/2024 311,205.00 622,380.00 933,585.00
Virginia
Fairfax County, VA, Economic Development Authority
Revenue, Series 1999 A, 7.25%, 10/1/2019 2,013,120.00 2,013,120.00
Fairfax County, VA, Economic Development Authority
Revenue, Retirement Community, Series A, 7.5%,
10/1/2029 7,225,315.00 7,225,315.00
Richmond, VA, General Obligation, Series B,
6.25%, 1/15/2018 2,724,056.00 2,724,056.00
Roanoke, VA, Industrial Development Authority,
Roanoke Memorial Hospital, Series B, MBIA,
6.125%, 7/1/2017 6,044,335.00 6,044,335.00
Southeastern Public Service Authority, VA,
Refunding Revenue, Series A, MBIA, 5.25%,
7/1/2010 7,635,348.00 7,635,348.00
Virginia Beach, VA, Development Authority,
VA Beach General Hospital Project,
Series 1993, 5.125%, 2/15/2018 2,949,270.00 2,949,270.00
Virginia State Public School Authority, Series B, 5%,
8/1/2017 5,827,776.00 5,827,776.00
Virginia State Public School Authority, Series B, 5%,
8/1/2020 2,815,670.00 2,815,670.00
Winchester County, VA, Industrial Development
Authority, Hospital Revenue, AMBAC, 6%, 1/1/2015 5,894,940.00 5,894,940.00
Washington
Chelan County, Washington Public Utility No. 1
Columbia River Rock, Capital Appreciation,
Series A, 6/1/2014 6,137,129.00 6,137,129.00
Clark County, WA, Public Utility District, FGIC
Insured, Series 1995, 6%, 1/1/2008 2,365,770.00 2,365,770.00
Clark County, WA, School District, General Obligation,
6.125%, 12/1/2011 3,494,772.00 3,494,772.00
King & Snohomish Counties, WA, General Obligation,
School District #417, FGIC, 5.6%, 12/1/2010 1,758,619.00 1,758,619.00
King County, WA, General Obligation, Series B,
6.625%, 12/1/2015 10,984,854.00 10,984,854.00
Port Seattle Wash Rev, 6%, 2/1/2012 1,893,403.00 1,893,403.00
Port Seattle Washington Revenue, 6%, 2/1/2014 4,280,320.00 4,280,320.00
Snohomish County, WA, School District #6, FGIC,
6.5%, 12/1/2007 3,685,928.00 3,685,928.00
Snohomish County, WA, School District # 015,
General Obligation, 5.75%, 12/1/2011 3,736,163.00 3,736,163.00
Spokane County, WA, School District, General
Obligation, Series B, Zero Coupon, 12/1/2014 1,174,875.00 1,174,875.00
State of Washington, General Obligation Series AT-5,
MBIA Insured, Zero Coupon, 8/1/2010 1,619,126.00 1,619,126.00
Washington St, 1/1/2017 1,882,841.00 1,882,841.00
Washington Health Care Facilities Authority,
Empire Health Services- Spokane, MBIA, 5.8%,
11/1/2009 4,889,034.00 4,889,034.00
Washington Health Care Facilities Authority,
Empire Health Services-Spokane, MBIA, 5.75%,
11/1/2007 7,754,470.00 7,754,470.00
Washington State Health Care Facilities Authority,
Empire Health Services -Spokane, Series 1993,
5.8%, 11/1/2008 5,160,792.00 5,160,792.00
Washington Health Care Facilities Authority,
Empire Health Services-Spokane, MBIA, 5.8%, 11/1/2010 2,239,335.00 2,239,335.00
Washington State Public Power Supply System, Nuclear
Project No. 1, Series 1990 B, 7.25%, 7/1/2009 13,987,733.00 13,987,733.00
Washington St Pub Pwr Supply Sys Nuclear Proj No 2 Rev,
7/1/2007 3,051,736.00 3,051,736.00
Washington St Pub Pwr Supply Sys Nuclear Proj No 2 Rev,
7/1/2007 3,172,443.00 3,172,443.00
Washington State Public Power Supply System, Nuclear
Project No. 2, Series 1990 A, 7.25%, 7/1/2006 7,840,350.00 7,840,350.00
Washington Public Power Supply System,
Nuclear Project #2, Series 1992A, MBIA/BIG Insured,
Zero Coupon, 7/1/2011 2,466,996.00 2,466,996.00
Washington Public Power Supply System, Revenue
Refunding, Nuclear Project #2, Series A, MBIA,
5.7%, 7/1/2008 5,297,750.00 5,297,750.00
Washington State Public Power Supply System Nuclear
Project No. 2, Series 1994 A, 6%, 7/1/2007 7,503,860.00 7,503,860.00
Washington Public Power Supply System, Revenue
Refunding, Nuclear Project #3, Series A,
MBIA, Zero Coupon, 7/1/2004 3,059,065.00 3,059,065.00
Washington Public Power Supply System, Revenue
Refunding, Nuclear Project #3, Series A, MBIA,
Zero Coupon, 7/1/2005 3,312,622.00 3,312,622.00
Washington State Public Power Supply System,,
Nuclear Project No. 3, Series 1989 A, Zero Coupon,
7/1/2006 1,053,602.00 1,053,602.00
Washington Public Power Supply System, Nuclear
Power Project #3, Series 1989A, MBIA/BIG Insured,
7/1/2010 3,619,429.00 3,619,429.00
Washington State Public Power Supply System, Nuclear
Project No. 3, Series 1989 B, Zero Coupon, 7/1/2006 4,241,131.00 4,241,131.00
Washington State Public Power Supply System, Nuclear
Project No. 3, Series 1990 B, Zero Coupon, 7/1/2002 11,083,095.00 11,083,095.00
Washington State Public Power Supply, Series C, 5.37
7/1/2015 5,427,149.00 5,427,149.00
West Virginia
West Virginia State General Obligation, 11/1/2024 1,296,300.00 1,296,300.00
Wisconsin
Green Bay, WI, Industrial Development Revenue,
Weyerhaeuser Company Project, Series A, 9%, 9/1/200 1,713,515.00 1,713,515.00
Kenosha, WI, General Obligation, Series C, MBIA,
Zero Coupon, 6/1/2004 2,947,078.00 2,947,078.00
Kenosha, WI, General Obligation, Series B, Zero Coup
10/15/2008 4,610,677.00 4,610,677.00
Milwaukee, Wisconsin General Obligation , 12/1/2011 3,384,148.00 3,384,148.00
Wisconsin State, Series D, 5.75%, 5/1/2015 8,859,649.00 8,859,649.00
Wisconsin Health & Educational Facilities Authority,
Aurora Medical, FSA Insured, 5.75%, 11/15/2007 1,583,775.00 1,583,775.00
Wisconsin Health & Educational Facilities Authority,
Aurora Medical, FSA Insured, 6%, 11/15/2009 4,670,294.00 4,670,294.00
Wisconsin Health & Educational Facilities Authority,
Felician Healthcare Inc., Series B, AMBAC, 6.25%,
1/1/2022 5,828,403.00 5,828,403.00
Wisconsin Health & Educational Facilities Authority,
Villa St. Francis Inc., Series C, AMBAC, 6.25%, 1/1/2022 10,203,765.00 10,203,765.00
Wisconsin Health & Educational Facilities Authority,
SSM Healthcare, Series 1992 AA, MBIA, 6.4%, 6/1/2008 2,557,432.00 2,557,432.00
Wisconsin Health & Educational Facilities Authority,
SSM Healthcare, Series 1992 AA, MBIA, 6.45%, 6/1/2009 2,745,328.00 2,745,328.00
Wisconsin Health & Educational Facilities Authority,
SSM Healthcare, Series 1992 AA, 6.45%, 6/1/2010 2,947,383.00 2,947,383.00
Wisconsin Health & Educational Facilities Authority,
SSM Healthcare, Series 1992 AA, MBIA, 6.5%, 6/1/2011 3,178,337.00 3,178,337.00
Wisconsin Health & Educational Facilities Authority,
SSM Healthcare, Series 1992 AA, MBIA, 6.5%, 6/1/2012 3,385,830.00 3,385,830.00
Wisconsin Health & Educational Facilities Authority,
Wheaton Franciscan Services, MBIA, 6.1%, 8/15/2008 4,939,575.00 4,939,575.00
Wisconsin Health & Educational Facilities Authority,
MBIA Insured, 6.1%, 8/15/2009 2,166,080.00 2,166,080.00
Wisconsin Health and Educational Facilities Authority,
Hospital Sisters Services Inc. - Obligated Group,
5.375%, 6/1/2018 4,709,328.00 4,709,328.00
Wisconsin Health & Educational Facilities Authority,
Aurora Medical, FSA Insured, 6%, 11/15/2008 4,390,598.00 4,390,598.00
Wisconsin Health & Educational Facilities Authority,
Aurora Medical, FSA Insured, 5.75%, 11/15/2006 2,103,220.00 2,103,220.00
Wisconsin Health & Educational Facilities Authority,
Aurora Health Care Inc., Series 1999 A, 5.6%, 2/15/2029 14,811,380.00 3,328,400.00 18,139,780.00
Wisconsin State Health & Educational Facilities,
Aurora Health Care Inc., Series 1999 B, 5.625%,
2/15/2029 5,894,805.00 2,039,725.00 7,934,530.00
Wyoming
Wyoming Community Development Authority, Revenue,
Single Family Mortgage, Series B, 8.125%, 6/1/2021 223,568.00 223,568.00
Wyoming Community Development Authority, Single
Family Mortgage Revenue, Series 1993 A, 5.85%, 6/1/2013 3,055,362.00 3,055,362.00
Wyoming Community Development Authority Housing,
Revenue, Series 2, 6.35%, 6/1/2029 3,866,997.00 3,866,997.00
------------------------------------------------------------------------
Total Long-Term Municipal Bond Investments (Cost of
$35,697,851, $2,369,883,531, $2,064,805,164, and
$4,470,164,463 respectively) 36,696,451.00 2,473,755,036.00 2,213,138,466.00 4,723,589,953.00
========================================================================
------------------------------------------------------------------------
Total Investment Portfolio (Cost of $36,730,343,
$2,385,821,371, $2,091,993,668, and $4,514,545,382
respectively) 37,730,621.00 2,489,911,386.00 2,241,231,541.00 4,768,873,548.00
========================================================================
</TABLE>
<PAGE>
PRO FORMA FINANCIAL STATEMENTS (UNAUDITED)
PRO FORMA COMBINING CONDENSED STATEMENT OF ASSETS AND LIABILITIES
AS OF NOVEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Scudder Managed Kemper Ohio Kemper Municipal Pro Forma Pro Forma
Municipal Bonds Tax Free Income Bond Adjustments Combined
------------------ ----------------- ----------------------------------- -----------------
<S> <C> <C> <C> <C> <C>
Investments, at value 2,241,231,541 $ 37,730,621 $ 2,489,911,386 $ 4,768,873,548
Cash 617,529 (142,273) 31,835 $ 507,091
Other assets less liabilities (27,191,419) 131,880 39,154,187 $ - (2) $ 12,094,648
------------------ -------------- ----------------------------------- -----------------
Total Net assets $ 2,214,657,651 $ 37,720,228 $ 2,529,097,408 $ - $ 4,781,475,287
================== ============== =================================== =================
Net Assets
Class S Shares $ 768,364,686 $ 768,364,686
Class AARP Shares $ 1,446,292,965 $ 1,446,292,965
Class A Shares $ 24,673,336 $ 2,459,913,045 $ 2,484,586,381
Class B Shares $ 10,715,941 $ 61,127,564 $ 71,843,505
Class C Shares $ 2,330,951 $ 8,056,799 $ 10,387,750
Shares Outstanding
Class S Shares 87,690,199 87,690,199
Class AARP Shares 165,067,246 165,067,246
Class A Shares 2,482,322 253,434,706 27,711,554 283,628,582
Class B Shares 1,078,679 6,314,141 808,493 8,201,313
Class C Shares 234,615 828,763 122,438 1,185,816
Net Asset Value per Share
Class S Shares $ 8.76 $ 8.76
Class AARP Shares $ 8.76 $ 8.76
Class A Shares 9.94 9.71 $ 8.76
Class B Shares 9.93 9.68 $ 8.76
Class C Shares 9.94 9.72 $ 8.76
</TABLE>
<PAGE>
PRO FORMA COMBINING CONDENSED STATEMENT OF OPERATIONS
FOR THE TWELVE MONTH PERIOD ENDED NOVEMBER 30, 2000 (UNAUDITED)
<TABLE>
<CAPTION>
Scudder Managed Kemper Ohio Kemper Municipal Pro Forma Pro Forma
Municipal Bonds Tax Free Income Bond Adjustments Combined
------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Investment Income:
Interest income $ 68,758,951 2,186,707 153,537,361 $ -- $ 224,483,019
------------------------------------------------------------------------------------
Total Investment Income 68,758,951 2,186,707 153,537,361 224,483,019
Expenses
Management fees 5,950,438 205,443 10,600,856 (1,030,003) (3) 15,726,734
12B-1 Fees - 188,050 5,375,276 5,563,326
Trustees Fees 70,563 5,461 61,902 - (4) 137,926
All other expenses 1,562,843 122,751 2,596,679 145,701 (5) 4,427,974
------------------------------------------------------------------------------------
Total expenses before reductions 7,583,844 521,705 18,634,713 (884,302) 25,855,960
Expense reductions - - - (126,258) (6) (126,258)
------------------------------------------------------------------------------------
Expenses, net 7,583,844 521,705 18,634,713 (1,010,560) 25,729,702
------------------------------------------------------------------------------------
Net investment income (loss) 61,175,107 1,665,002 134,902,648 1,010,560 198,753,317
------------------------------------------------------------------------------------
Net Realized and Unrealized Gain (Loss)
on Investments:
Net realized gain (loss) from investments 4,593,843 (107,027) (26,752,235) -- (22,265,419)
Net increase in unrealized appreciation
of investments during the period 113,421,883 489,786 79,579,577 -- 193,491,246
------------------------------------------------------------------------------------
Net increase in net assets from operations $ 179,190,833 $ 2,047,761 $ 187,729,990 $ 1,010,560 $ 369,979,144
====================================================================================
</TABLE>
Notes to Pro Forma Combining Financial Statements
(Unaudited)
November 30, 2000
1. These financial statements set forth the unaudited pro forma condensed
Statement of Assets and Liabilities as of November 30, 2000, and the
unaudited pro forma condensed Statement of Operations for the twelve month
period ended November 30, 2000 for Scudder Managed Municipal Bonds, Kemper
Ohio Tax Free Income Fund, and Kemper Municipal Bond Fund as adjusted giving
effect to the Reorganization as if it had occurred as of the beginning of
the period. These statements have been derived from the books and records
utilized in calculating daily net asset value for each fund.
2. Represents one-time proxy, legal, accounting and other costs of the
Reorganization of $xxxxxx, $xxxxx and $xxxxxx to be borne by Scudder Managed
Municipal Bonds, Kemper Ohio Tax Free Income Fund and Kemper Municipal Bond
Fund, respectively.
3. Represents reduction in management fees resulting from a new management
agreement.
4. Reduction in trustee fees resulting from the Reorganization.
5. Represents increase in other expenses resulting from the utilization of
Scudder Managed Municipal Bonds administrative agreement for the entire
year.
6. Reflects implementation of fee waivers in connection with administrative
agreement.
<PAGE>
PART C. OTHER INFORMATION
Item 15. Indemnification.
-------- ----------------
A policy of insurance covering Scudder Kemper Investments, Inc., its
subsidiaries, including Scudder Investor Services, Inc., and all of the
registered investment companies advised by Scudder Kemper Investments, Inc.
insures the Registrant's trustees and officers and others against liability
arising by reason of an alleged breach of duty caused by any negligent act,
error or accidental omission in the scope of their duties.
Article IV, Sections 4.1 - 4.3 of the Registrant's Declaration of
Trust (Exhibits (1)(a)(1) (a)(7) hereto, which are incorporated herein by
reference) provides as follows:
Section 4.1. No Personal Liability of Shareholders, Trustees, etc. No
Shareholder shall be subject to any personal liability whatsoever to any
Person in connection with Trust property or the acts, obligations or
affairs of the Trust. No Trustee, officer, employee or agent of the Trust
shall be subject to any personal liability whatsoever to any Person, other
than to the Trust or its Shareholders, in connection with Trust Property or
the affairs of the Trust, save only that arising from bad faith, willful
misfeasance, gross negligence or reckless disregard of his duties with
respect to such Person; and all such Persons shall look solely to the Trust
Property for satisfaction of claims of any nature arising in connection
with the affairs of the Trust. If any Shareholder, Trustee, officer,
employee, or agent, as such, of the Trust, is made a party to any suit or
proceeding to enforce any such liability of the Trust, he shall not, on
account thereof, be held to any personal liability. The Trust shall
indemnify and hold each Shareholder harmless from and against all claims
and liabilities, to which such Shareholder may become subject by reason of
his being or having been a Shareholder, and shall reimburse such
Shareholder for all legal and other expenses reasonably incurred by him in
connection with any such claim or liability. The indemnification and
reimbursement required by the preceding sentence shall be made only out of
the asset of the one or more Series of which the Shareholder who is
entitled to indemnification or reimbursement was a Shareholder at the time
the act or event occurred which gave rise to the claim against or liability
of said Shareholder. The rights accruing to a Shareholder under this
Section 4.1 shall not impair any other right to which such Shareholder may
be lawfully entitled, nor shall anything herein contained restrict the
right of the Trust to indemnify or reimburse a Shareholder in any
appropriate situation even though not specifically provided herein.
Section 4.2. Non-Liability of Trustees, etc. No Trustee, officer,
employee or agent of the Trust shall be liable to the Trust, its
Shareholders or to any Shareholder, Trustee, officer, employee, or agent
thereof for any action or failure to act (including without limitation the
failure to compel in any way any former or acting Trustee to redress any
breach of trust) except for his own bad faith, willful misfeasance, gross
negligence or reckless disregard of the duties involved in the conduct of
his office.
Section 4.3. Mandatory Indemnification. (a) Subject to the exceptions
and limitations contained in paragraph (b) below:
(i) every person who is, or has been, a Trustee or officer
of the Trust shall be indemnified by the Trust to the fullest extent
permitted by law against all liability and against all expenses reasonably
incurred or paid by him in connection with any claim, action, suit or
proceeding in which he becomes involved as a party or otherwise by virtue
of his being or having been a Trustee or officer and against amounts paid
or incurred by him in the settlement thereof;
<PAGE>
(ii) the words "claim," "action," "suit," or "proceeding" shall
apply to all claims, actions, suits or proceedings (civil, criminal,
administrative or other, including appeals), actual or threatened; and the
words "liability" and "expenses" shall include, without limitation,
attorneys' fees, costs, judgments, amounts paid in settlement, fines,
penalties and other liabilities.
(b) No indemnification shall be provided hereunder to a Trustee
or officer:
(i) against any liability to the Trust, a Series thereof, or
the Shareholders by reason of a final adjudication by a court or other body
before which a proceeding was brought that he engaged in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust;
(iii) in the event of a settlement or other disposition not
involving a final adjudication as provided in paragraph (b)(i) or (b)(ii)
resulting in a payment by a Trustee or officer, unless there has been a
determination that such Trustee or officer did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of his office:
(A) by the court or other body approving the settlement or
other disposition; or
(B) based upon a review of readily available facts (as
opposed to a full trial-type inquiry) by (x) vote of a majority of the
disinterested Trustees acting on the matter (provided that a majority of
the Disinterested Trustees then in office act on the matter) or (y) written
opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be
insured against by policies maintained by the Trust, shall be severable,
shall not affect any other rights to which any Trustee or officer may now
or hereafter be entitled, shall continue as to a person who has ceased to
be such Trustee or officer and shall inure to the benefit of the heirs,
executors, administrators and assigns of such a person. Nothing contained
herein shall affect any rights to indemnification to which personnel of the
Trust other than Trustees and officers may be entitled by contract or
otherwise under law.
Item 16. Exhibits.
-------- ---------
(1) (a)(1) Amended and Restated Declaration of Trust, dated
December 8, 1987, is incorporated by reference to Post-
Effective Amendment No. 33 to the Registrant's
Registration Statement on Form N-1A, as amended (the
"Registration Statement").
(a)(2) Amendment to Amended and Restated Declaration of Trust,
dated December 11, 1990, is incorporated by reference
to Post-Effective Amendment No. 33 to the Registration
Statement.
<PAGE>
(a)(3) Instrument Establishing and Designating an Additional
Series of Shares, dated October 29, 1986, is
incorporated by reference to Post-Effective Amendment
No. 33 to the Registration Statement.
(a)(4) Establishment and Designation of Series, dated November
6, 1987, is incorporated by reference to Post-Effective
Amendment No. 33 to the Registration Statement.
(a)(5) Establishment and Designation of Classes of Shares of
Beneficial Interest, $0.01 par value, with respect to
Scudder High Yield Tax Free Fund (Class A Shares, Class
B Shares, Class C Shares and Class S Shares), dated
February 8, 2000, is incorporated by reference to Post-
Effective Amendment No. 41 to the Registration
Statement.
(a)(6) Establishment and Designation of Classes of Shares of
Beneficial Interest, $0.01 par value, Class S and Class
AARP with respect to Scudder Managed Municipal Bonds,
dated April 11, 2000, is incorporated by reference to
Post-Effective Amendment No. 42 to the Registration
Statement.
(a)(7) Establishment and Designation of Classes of Shares of
Beneficial Interest, $0.01 par value, Class A Shares,
Class B Shares, Class C Shares, Class S Shares and
Class AARP Shares with respect to Scudder High Yield
Tax Free Fund, dated April 11, 2000, is incorporated by
reference to Post-Effective Amendment No. 43 to the
Registration Statement.
(2) (b)(1) By-laws of the Registrant, dated September 24, 1976, as
amended through December 31, 1979, is incorporated by
reference to Post-Effective Amendment No. 33 to the
Registration Statement.
(b)(2) Amendment to the By-laws of the Registrant as amended
through December 8, 1987 is incorporated by reference
to Post-Effective Amendment No. 33 to the Registration
Statement.
(b)(3) Amendment to the By-laws of Registrant, dated August
13, 1991, is incorporated by reference to Post-
Effective Amendment No. 33 to the Registration
Statement.
(b)(4) Amendment to the By-laws of Registrant, dated December
10, 1991, is incorporated by reference to Post-
Effective Amendment No. 33 to the Registration
Statement.
(b)(5) Amendment to the By-laws of Registrant, dated February
7, 2000, is incorporated by reference to Post-Effective
Amendment No. 44 to the Registration Statement.
(3) Inapplicable.
(4) Form of Agreement and Plan of Reorganization is filed
herein as Exhibit A to Part A.
<PAGE>
(5) Inapplicable.
(6) (d)(1) Investment Management Agreement between the Registrant
(on behalf of Scudder Managed Municipal Bonds) and
Scudder Kemper Investments, Inc., dated September 7,
1998, is incorporated by reference to Post-Effective
Amendment No. 36 to the Registration Statement.
(d)(2) Investment Management Agreement between the Registrant
(on behalf of Scudder High Yield Tax Free Fund) and
Scudder Kemper Investments, Inc., dated September 7,
1998, is incorporated by reference to Post-Effective
Amendment No. 36 to the Registration Statement.
(d)(3) Investment Management Agreement between the Registrant
(on behalf of Scudder Managed Municipal Bonds) and
Scudder Kemper Investments, Inc., dated July 31, 2000,
is incorporated by reference to Post-Effective
Amendment No. 44 to the Registration Statement.
(7) (e)(1) Underwriting Agreement between the Registrant and
Scudder Investor Services, Inc., dated September 7,
1998, is incorporated by reference to Post-Effective
Amendment No. 36 to the Registration Statement.
(e)(2) Underwriting Agreement between the Registrant and
Kemper Distributors, Inc., dated May 1, 2000, is
incorporated by reference to Post-Effective Amendment
No. 41 to the Registration Statement.
(e)(3) Underwriting Agreement between the Registrant and
Scudder Investor Services, Inc., dated May 8, 2000, is
incorporated by reference to Post-Effective Amendment
No. 42 to the Registration Statement.
(8) Inapplicable.
(9) (g)(1) Custodian Contract between the Registrant and State
Street Bank and Trust Company, dated March 17, 1980, is
incorporated by reference to Post-Effective Amendment
No. 33 to the Registration Statement.
(g)(2) Fee schedule for Exhibit (9)(g)(1) is incorporated by
reference to Post-Effective Amendment No. 33 to the
Registration Statement.
(g)(3) Amendment No. 1 to the Custodian Contract between the
Registrant and State Street Bank and Trust Company,
dated March 17, 1980, is incorporated by reference to
Post-Effective Amendment No. 33 to the Registration
Statement.
(g)(4) Amendment to the Custodian Contract between the
Registrant and State Street Bank and Trust Company,
dated August 9, 1988, is incorporated by reference to
Post-Effective Amendment No. 33 to the Registration
Statement.
<PAGE>
(g)(5) Amendment to the Custodian Contract between the
Registrant and State Street Bank and Trust Company,
dated December 11, 1990, is incorporated by reference
to Post-Effective Amendment No. 33 to the Registration
Statement.
(g)(6) Subcustodian Agreement and Fee Schedule between State
Street Bank and Trust Company and The Bank of New York,
London office, dated December 31, 1978, is incorporated
by reference to Post-Effective Amendment No. 33 to the
Registration Statement.
(g)(7) Subcustodian Agreement between Irving Trust Company and
State Street Bank, dated November 30, 1987, is
incorporated by reference to Post-Effective Amendment
No. 33 to the Registration Statement.
(g)(8) Subcustodian Agreement between State Street Bank and
Trust Company and Morgan Guaranty Trust Company of New
York, dated November 25, 1985, is incorporated by
reference to Post-Effective Amendment No. 33 to the
Registration Statement.
(g)(9) Subcustodian Agreement between Chemical Bank and State
Street Bank and Trust Company, dated May 31, 1988, is
incorporated by reference to Post-Effective Amendment
No. 33 to the Registration Statement.
(g)(10) Subcustodian Agreement between Security Pacific
National Bank and Trust Company (New York) and State
Street Bank and Trust Company, dated February 18, 1988,
is incorporated by reference to Post-Effective
Amendment No. 33 to the Registration Statement.
(g)(11) Subcustodian Agreement between Bankers Trust Company
and State Street Bank and Trust Company, dated August
15, 1989, is incorporated by reference to Post-
Effective Amendment No. 33 to the Registration
Statement.
(10) (m)(1) Rule 12b-1 Plan for Class B and Class C Shares of
Scudder High Yield Tax Free Fund, dated May 1, 2000, is
incorporated by reference to Post-Effective Amendment
No. 41 to the Registration Statement.
(m)(2) Mutual Funds Multi-Distribution System Plan Pursuant to
Rule 18f-3 is incorporated by reference to Post-
Effective Amendment No. 41 to the Registration
Statement.
(m)(3) Plan with respect to Scudder Managed Municipal Bonds
pursuant to Rule 18f-3 is incorporated by reference to
Post-Effective Amendment No. 42 to the Registration
Statement.
(m)(4) Amended and Restated Plan with respect to Scudder
Municipal Bonds pursuant to Rule 18f-3 is incorporated
by reference to Post-Effective Amendment No. 42 to the
Registration Statement.
<PAGE>
(m)(5) Plan with respect to Scudder High Yield Tax Free Fund
pursuant to Rule 18f-3 is incorporated by reference to
Post-Effective Amendment No. 42 to the Registration
Statement.
(m)(6) Scudder Funds Amended and Restated Multi-Distribution
System Plan is filed herewith.
(11) Opinion and Consent of Dechert is filed herewith.
(12) Opinion and Consent of Willkie Farr & Gallagher to be
filed by post-effective amendment.
(13) (h)(1) Transfer Agency, Service Agreement and Fee Schedule
between the Registrant and Scudder Service Corporation,
dated October 2, 1989, is incorporated by reference to
Post-Effective Amendment No. 33 to the Registration
Statement.
(h)(2) Revised Fee Schedule, dated October 1, 1996, for
Exhibit (13)(h)(1) is incorporated by reference to
Post-Effective Amendment No. 32 to the Registration
Statement.
(h)(3) Fund Accounting Services Agreement between the
Registrant (on behalf of Scudder High Yield Tax Free
Fund) and Scudder Fund Accounting Corporation, dated
January 23, 1995, is incorporated by reference to Post-
Effective Amendment No. 29 to the Registration
Statement.
(h)(4) Fund Accounting Services Agreement between the
Registrant (on behalf of Scudder Managed Municipal
Bonds) and Scudder Fund Accounting Corporation, dated
February 9, 1995, is incorporated by reference to Post-
Effective Amendment No. 29 to the Registration
Statement.
(h)(5) Administrative Services Agreement between Scudder High
Yield Tax Free Fund and Kemper Distributors, Inc.,
dated May 1, 2000, is incorporated by reference to
Post-Effective Amendment No. 41 to the Registration
Statement.
(h)(6) Agency Agreement between the Registrant (on behalf of
Scudder High Yield Tax Free Fund) and Kemper Service
Company, dated May 1, 2000, is incorporated by
reference to Post-Effective Amendment No. 41 to the
Registration Statement.
(h)(7) Fund Accounting Agreement between Scudder High Yield
Tax Free Fund and Scudder Fund Accounting Corporation,
dated May 1, 2000, is incorporated by reference to
Post-Effective Amendment No. 41 to the Registration
Statement.
<PAGE>
(h)(8) Administration Agreement between the Registrant on
behalf of Scudder Municipal Trust and Scudder Kemper
Investments, Inc., dated July 31, 2000, is incorporated
by reference by Post-Effective amendment No. 45 in the
Registration Statement.
(14) Consents of Independent Accountants are filed herewith.
(15) Inapplicable.
(16) Powers of Attorney are filed herewith.
(17) Form of Proxy is filed herewith.
Item 17. Undertakings.
-------- -------------
(1) The undersigned Registrant agrees that prior to any public
reoffering of the securities registered through the use of a
prospectus which is a part of this registration statement by any
person or party who is deemed to be an underwriter within the meaning
of Rule 145(c) of the Securities Act of 1933 (the "1933 Act") [17 CFR
230.145c], the reoffering prospectus will contain the information
called for by the applicable registration form for reofferings by
persons who may be deemed underwriters, in addition to the information
called for by the other items of the applicable form.
(2) The undersigned Registrant agrees that every prospectus that is
filed under paragraph (1) above will be filed as a part of an
amendment to the registration statement and will not be used until the
amendment is effective, and that, in determining any liability under
the 1933 Act, each post-effective amendment shall be deemed to be a
new registration statement for the securities offered therein, and the
offering of the securities at that time shall be deemed to be the
initial bona fide offering of them.
(3) The undersigned Registrant undertakes to file, by post-effective
amendment, an opinion of counsel supporting the tax consequences of
the proposed reorganization within a reasonable time after receipt of
such opinion.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the
Investment Company Act of 1940, Scudder Municipal Trust has duly caused this
Registration Statement on Form N-14 to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Boston and the
Commonwealth of Massachusetts on the 5/th/ day of January, 2001.
SCUDDER MUNICIPAL TRUST
By: /s/ Linda C. Coughlin
------------------------
Title: President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form N-14 has been signed below by the following
persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE
--------- ----- ----
/s/ Linda C. Coughlin President and Trustee January 5, 2001
---------------------------
Linda C. Coughlin
/s/ Henry P. Becton, Jr. * Trustee January 5, 2001
---------------------------
Henry P. Becton, Jr.
/s/ Dawn-Marie Driscoll * Trustee January 5, 2001
---------------------------
Dawn-Marie Driscoll
/s/ Edgar R. Fiedler * Trustee January 5, 2001
---------------------------
Edgar R. Fiedler
/s/ Keith R. Fox * Trustee January 5, 2001
---------------------------
Keith R. Fox
/s/ Joan E. Spero * Trustee January 5, 2001
---------------------------
Joan E. Spero
/s/ Jean Gleason Stromberg* Trustee January 5, 2001
---------------------------
Jean Gleason Stromberg
/s/ Jean C. Tempel * Trustee January 5, 2001
---------------------------
Jean C. Tempel
/s/ Steven Zaleznick * Trustee January 5, 2001
---------------------------
Steven Zaleznick
/s/ John R. Hebble Treasurer (Principal Financial January 5, 2001
--------------------------- and Accounting Officer)
John R. Hebble
*By: /s/ Joseph R. Fleming January 5, 2001
-----------------------
Joseph R. Fleming, Attorney-in-fact
*Executed pursuant to powers of attorney filed herein as an exhibit to the
Registrant's Registration Statement on Form N-14.
<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
EXHIBITS
TO
FORM N-14
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
SCUDDER MUNICIPAL TRUST
<PAGE>
SCUDDER MUNICIPAL TRUST
EXHIBIT INDEX
Exhibit 10 Scudder Funds Amended and Restated Multi-Distribution System Plan
Exhibit 11 Opinion and Consent of Dechert
Exhibit 14 Consents of Independent Accountants
Exhibit 16 Powers of Attorney
Exhibit 17 Form of Proxy
