FRANKLIN
FEDERAL
TAX-FREE
INCOME
FUND
Annual Report
April 30, 1996
CONTENTS
MESSAGE FROM THE CHAIRMAN 1
SPECIAL FEATURE-- 3
PORTFOLIO UPDATE:
FRANKLIN'S TAX-FREE
INCOME FUNDS
MANAGER'S DISCUSSION 7
PERFORMANCE SUMMARY 10
STATEMENT OF INVESTMENTS 14
FINANCIAL STATEMENTS 38
NOTES TO FINANCIAL 40
STATEMENTS
REPORT OF 44
INDEPENDENT AUDITORS
To reduce the volume of mail shareholders receive and to reduce expenses, only
one copy of most Fund reports, such as the Fund's annual and semi-annual
reports, may be mailed to a household. Additional reports may be obtained,
without charge, by calling Fund Information at 1-800/DIAL BEN (1-800/342-5236).
PICTURE OMITTED
Charles B. Johnson
Chairman
June 14, 1996
Dear Shareholder:
It's a pleasure to bring you this annual report for the Franklin Federal
Tax-Free Income Fund covering the period ended April 30, 1996.
Declining interest rates, moderate growth and mild inflation characterized much
of the period under review. Economic growth slowed significantly in the first
half of this fiscal year, prompting the Federal Reserve Board to lower the
federal funds rate (the rate banks charge each other for overnight loans) on
three separate occasions -- in July and December 1995, and in February 1996.
Bond markets in general anticipated the Federal Reserve's actions, as long-term
bond yields had been decreasing steadily since the beginning of 1995, and prices
of fixed-income securities appreciated.
Interest rates did rise, however, following stronger-than-expected employment
reports released in March and April, which caused some temporary weakness in the
financial markets. Although inflation remained in check, hopes for immediate
rate reductions dimmed as the economy showed signs of improvement.
We anticipate continued moderate growth and mild inflation in the coming year.
Despite recent fluctuations, we believe interest rates may stabilize or possibly
decline in the near future, should inflation remain subdued. Such an environment
should benefit the municipal securities market through price appreciation and
competitive rates. On the pages that follow, you will find detailed information
about these conditions and their effects on the fund.
The rebound of the municipal securities market in 1995 reinforced our philosophy
that investors should maintain a long-term investment perspective. While your
fund may experience volatility from time to time, the Franklin Federal Tax-Free
Income Fund's performance should be rewarding over the long term.
As always, we appreciate your continued support, welcome your comments, and look
forward to serving you in the years to come.
Sincerely,
Charles B. Johnson
Chairman
Franklin Federal Tax-Free Income Fund
AN UPDATE ON TAX REFORM
Tax reform is an issue that has weighed heavily on everyone's mind -- including
ours. In January, the National Commission on Tax Reform and Economic Growth
released its long-anticipated report. Although the Commission endorsed the idea
of sweeping tax reform, the report may have actually raised more questions than
it answered, such as:
o What would be an acceptable tax rate?
o Would low-income families be excluded?
o What would be the tax status of investment income?
o Would the rich and poor gain at the expense of the middle class?
While several, more detailed tax reform plans are being discussed, investors
should keep in mind that making such dramatic change is not a simple process. We
recognize that media attention regarding a few of the high-profile proposals has
caused some investor concern over municipal investments, and we believe it is
important to note that the municipal bond market could be affected by tax
reform. We feel that any dramatic changes, however, are probably far down the
road. For more information regarding tax reform and its effects on the municipal
market, please see the Portfolio Update on the next page.
PORTFOLIO UPDATE:
FRANKLIN'S TAX-FREE INCOME FUNDS
Tom Kenny, director of Franklin Templeton's Municipal Bond Department, and
portfolio managers Bernie Schroer, Sheila Amoroso and Don Duerson take a look at
the important issues that shaped the municipal bond market last year.
Did the municipal market measure up to your expectations in 1995?
Tom Kenny: In our last portfolio update, we told you we were anticipating a
strong municipal market in 1995. We expected that the supply of new municipal
bonds would continue to be low, and that the interest-rate environment would be
more favorable for bond investors, thereby increasing demand. Generally
speaking, we were right. Tax-free income funds fared well in 1995, and
Franklin's funds were no exception. After enduring one of the worst fixed-income
markets of the last 25 years in 1994, last year's rebound only reinforced our
philosophy that investors should keep a long-term perspective (see Fig. 1 on
next page). That being said, the municipal market's performance wasn't quite as
robust as we had anticipated.
Why was that?
Tom: While investor demand was strong in the beginning of the year, it started
to decline in April, due in part to a "hangover" effect from the tough 1994
market. Additionally, the stock market performed so well that it pulled a lot of
assets into equities.
Bernie Schroer: There was also the fear of a "flat tax."
PICTURE OMITTED
Portfolio managers Don Duerson (left) and Sheila Amoroso (right) discuss aspects
of a new bond issue with Tom Kenny, director of Franklin Templeton's Municipal
Bond Department.
The media have focused considerable attention on a proposed "flat tax." What
does tax reform mean for individual municipal bonds and bond funds?
Don Duerson: It really depends upon which tax-reform proposal you are
discussing. There are several proposals out there, such as a flat tax, a
value-added tax, an unlimited savings allowance, and a consump- tion tax. The
popular appeal of most of these proposals is that they attempt to bring
simplicity to what is now a complex tax code.
Ultimately, however, no one proposal addresses every problem. So while we are
closely following the debate, we think it's too early to make any investment
decisions based purely on speculation.
Sheila Amoroso: The debate, however, has had an impact on the market, keeping
municipal securities' prices lower than they otherwise might have been.
What are the chances that some type of tax reform will be enacted this year?
Don: Because it is so complicated and the effects so far-reaching, tax reform
probably won't be addressed before 1997 -- although the political rhetoric will
certainly be a big part of the upcoming presidential election. Also, keep in
mind what happened to the health care reform proposals a few years ago. After
all the political debate and havoc that was wrought on health care securities,
the issue has quietly faded into the background.
Sheila: Change of this magnitude is not a simple process, as we have seen
recently with the balanced budget proposals. In that case, everyone agrees on
the goal of balancing the budget, but they disagree on how to get there. Tax
reform is much more difficult because the goals are not the same for all the
parties involved.
How about Orange County? Did that situation continue to affect the market in
1995?
Tom: Generally speaking, the overall municipal market was impacted by Orange
County's bankruptcy for a relatively short time, rebounding very quickly. The
California market, on the other hand, was affected well into 1995, until Orange
County established a recovery plan. While the "Orange County effect" is
essentially behind us, it does point out one of the major benefits of owning a
Franklin tax-free mutual fund as our funds invest in a variety of issues, and
the impact of any one issue, sector or region is usually very limited. Interest-
ingly, one measurable effect of Orange County's financial difficulties may be
the increased volume of insured bonds in the market. Approximately 44% of new
municipal bonds in 1995 were insured, versus 37% in 1994 (see Fig. 2).1 In
California that figure was even higher.
Does this mean the funds are buying more insured securities?
Bernie: Yes. Recently, we have been buying mostly insured bonds for many of the
Franklin tax-free funds, but that is primarily due to the narrow yield spread
between AAA and lesser-quality issues.2
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
1. Source: The Bond Buyer, 01/08/96.
2. Portfolio holdings are subject to change and may not represent future
portfolio composition.
PICTURE OMITTED
Staying on top of the municipal market. (From left) Andrew Jennings, Sr., Bernie
Schroer, Tom Kenny and Don Duerson.
What do you mean by "narrow spread?"
Bernie: In a declining or low interest-rate environment, investors tend to
"reach for yield," trying to obtain the same yield level they had in an earlier,
higher interest-rate environment. To accomplish this, investors have to buy
lesser-quality bonds, which are usually higher yielding. Paradoxically, this
added demand generally drives the prices of these securities higher and results
in lower relative yields. The end result is a much smaller yield difference, or
"narrow spread," between a AAA insured bond and a lesser-grade BBB bond. When
this happens, it makes more sense for us to buy the insured bonds.
Sheila, are you even purchasing insured bonds for the Franklin High Yield Tax
Free Income Fund?3
Sheila: Yes, recently we have been. Higher risk should mean higher potential
reward, but there just isn't enough of a yield spread in the rated market to
warrant the added risk in lower-quality bonds right now. In addition, we have
been focusing heavily on non-rated issues where yields have remained attractive.
We have one of the largest teams of municipal market analysts of any fund group
in the nation.4 With their hard work, we can determine which bonds meet our
strict internal ratings criteria, and we still get paid the higher yield for
buying a "non-rated" security. We feel this can definitely be an advantage for
our shareholders.
Do you anticipate a continued low supply of new issues this year?
Tom: Municipal bonds finance the building and repair of infrastructure across
the country. While the need for these projects clearly exists, nationally there
has been a taxpayer revolt. Across the country, many new Republican governors
have been swept into office on a theme of lower taxes, and many states continue
to face budget pressures. As a result, states and municipalities simply can't
afford to issue new securities. So while the need is there, I think the
economics and politics of the matter bode well for continued low supply (see
Fig. 3).
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
3. Portfolio holdings are subject to change and may not represent future
portfolio composition.
4. Source: Research and Ratings Review, 08/31/95.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
That could be good news for our shareholders, because if supply continues to
remain low, stronger investor demand could make municipal securities attractive
investments.
What do you see in the months ahead?
Tom: We think the fundamentals look good for municipal bonds. But regardless of
changing market conditions, we will continue to focus on providing our
shareholders with high current income free from regular federal and, depending
on the fund, state personal income taxes.5
Franklin has become the largest tax-free fund manager in the nation by following
a very straightforward, "plain vanilla" investment philosophy, which has proved
successful in both strong and weak markets.6 Over time, income has provided a
much greater percentage of total return than has capital appreciation, based on
the unmanaged Lehman Brothers 20-Year Municipal Bond Index (see Fig. 4). We plan
to maintain our approach and continue to make tax-free income our focus.
Looking ahead, I think municipal securities will remain an excellent investment
option for many individuals, and our 870,000 tax-free fund shareholders will
continue to find investing in our funds to be one of the most effective and
convenient ways to participate in the municipal securities market.
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
5. For investors subject to federal or state alternative minimum tax, all or a
portion of this income may be subject to such tax, depending on the fund.
Distributions of capital gains and of ordinary income from accrued market
discount, if any, are generally taxable.
6. Past performance is not predictive of future results.
MANAGER'S DISCUSSION
Fund Objective
The Franklin Federal Tax-Free Income Fund seeks to provide high current income
exempt from regular federal income tax through a nationally diversified
portfolio consisting primarily of municipal securities.*
As in the past, fluctuating interest rates directly affected the municipal
securities in which your fund invests. The declining federal funds rate resulted
in higher bond prices. As a result, the Franklin Federal Tax-Free Income Fund's
Class I share price rose to $11.83 on April 30, 1996, from $11.73 one year
earlier.
The most notable change we made during this fiscal year involved reducing the
number of pre-refunded bonds in the portfolio. Pre-refunding occurs when an
issuer refinances a bond by issuing a new, lower- coupon bond, using the
proceeds to repay the original bond. In some ways, pre-refunding is similar to
refinancing a home, to secure a lower mortgage payment when interest rates fall.
Pre-refunded bonds frequently rise in value because they are backed by U.S.
government securities. As such, we were able to sell at increased prices and
maintain some of the gain in the fund's net asset value. In addition, we felt
holding these bonds to maturity would result in paying higher prices for new
issues later, when supply may be lower. By selling, we tried to maximize the
long-term earning power of the fund, while protecting against declines in share
price.
GRAPHIC MATERIAL 5 OMITTED - SEE APPENDIX AT END OF DOCUMENT
* For investors subject to the federal alternative minimum tax, a small portion
of this income may be subject to such tax. Distributions of capital gains and of
ordinary income from accrued market discount, if any, are generally taxable.
To reduce our exposure to future call risk, we sold some of our pre-refunded
bonds before they were called. We invested the proceeds in full coupon bonds
offering call protection for a longer period of time. (Full coupon bonds pay
interest rates at or near the current market rate.) As a result, the fund's
prerefunded holdings declined to 10% of total long-term investments on April 30,
1996, from 20.6% on April 30, 1995.
During this fiscal year, we continued to purchase "essential service" bonds.
These securities tend to have a relatively reliable income stream generated from
hospitals, utilities and transportation projects, for example. Budgetary and
political changes tend to have a limited effect on such bonds, and we believe
they are attractive investments, particularly in the municipal cost-cutting
environment we have seen this year.
The Top Four
MAP OMITTED
More than one-third of the fund's total market value was held in California,
Texas, Illinois and New York on April 30, 1996.
The chart to the right illustrates that the fund is well- diversified across
several sectors. The fund contains bonds from a wide range of cities, counties
and other municipal entities throughout the country. In fact, as of April 30,
1996, your fund held investments in all 50 states and Puerto Rico, with its
largest holdings focused in New York (11.51% of total market value), California
(8.16%) and Texas (7.64%).
The quality of the bonds in your fund's portfolio remained consistent over the
fiscal year. On April 30, 1996, more than 68% of total long-term investments
represented bonds rated A or higher, compared with 70% one year earlier.+ Our
continued emphasis on seeking high quality bonds can help us protect the fund
against credit risk (the risk that a bond issuer will default on its loan
payments) while attempting to take advantage of competitive yields.
If current economic trends continue, the fund should benefit in the coming year.
the possibility of improving bond prices, coupled with the high quality of the
bonds in the portfolio, should help the fund maintain its positive
performance.
Franklin Federal Tax-Free Income Fund
Portfolio Breakdown on 4/30/96
Based on Total Long-Term Investments
% Total
Long-Term
Sector Investments
Utilities 29.9%
Housing 13.6%
Transportation 12.0%
Pre-Refunded 10.0%
General Obligations 9.2%
Hospitals 6.5%
Industrial 5.0%
Other Revenue 4.9%
Certificates of Participation 3.8%
Education 2.8%
Healthcare 1.3%
Tax Allocation Bonds 0.6%
Sales Tax Revenue 0.4%
For a complete list of portfolio holdings, please see page 14 of this report.
+Quality breakdown includes internal ratings for bonds not rated by a national
rating agency.
PERFORMANCE SUMMARY
CLASS I
(Class II Performance Summary starts on page 12.)
Franklin Federal Tax-Free Income Fund
Class I
Dividend Distributions 5/01/95 - 4/30/96
Dividend
Month per Share
May 6.2 cents
June 6.2 cents
July 6.2 cents
August 6.2 cents
September 6.2 cents
October 6.2 cents
November 6.2 cents
December 6.2 cents
January 6.2 cents
February 6.2 cents
March 6.2 cents
April 6.2 cents
Total 74.4 cents
We are pleased to report that the Franklin Federal Tax-Free Income Fund's Class
I share price, as measured by net asset value, increased 10 cents, from $11.73
on April 30, 1995, to $11.83 on April 30, 1996.
At the end of the reporting period, the Class I distribution rate was 6.02%,
based on an annualization of the current monthly dividend of 6.2 cents ($0.062)
per share and the maximum offering price of $12.36 on April 30, 1996. This
tax-free rate is generally higher than the after-tax return on a comparable
taxable investment. As the chart below illustrates, an investor in the maximum
federal income tax bracket of 39.6% would have to earn 9.97% from a taxable
investment to match the fund's tax-free distribution rate.
The chart on the following page illustrates that for the 10 years ended April
30, 1996, Class I shares far outperformed the Consumer Price Index (CPI),
keeping your purchasing power well ahead of inflation -- a primary goal of any
investment. Class I shares generally followed the performance of the unmanaged
Lehman Brothers Municipal Bond Index. Of course, comparing a fund with an
unmanaged index is never an apples- to-apples comparison. Unmanaged market
indices do not reflect management fees to cover salaries of securities analysts
or portfolio managers, nor do they include the impact of commissions or market
spreads to buy and sell bonds. Performance figures reported by a professionally
managed mutual fund, however, include the maximum initial sales charge, all fund
expenses and account fees. Unlike indices, mutual funds are never fully invested
because they must have cash on hand to redeem shares. If operating expenses of a
professionally managed fund, like the Franklin Federal Tax-Free Income Fund, had
been applied to this index, the index's performance would have been lower.
Please remember that an index is simply a measure of performance, and one cannot
invest in an index directly. Past performance is not predictive of future
results.
GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 7 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin Federal Tax-Free Income Fund
Class I
Periods ended April 30, 1996
1-Year 5-Year 10-Year
Cumulative
Total Return1 7.33% 44.98% 112.46%
Average Annual
Total Return2 2.77% 6.77% 7.36%
Distribution Rate3 6.02%
Taxable Equivalent
Distribution Rate4 9.97%
30-Day Standardized Yield5 5.19%
Taxable Equivalent Yield4 8.59%
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the current, maximum 4.25% initial
sales charge. See Note below.
2. Average annual total return represents the average annual change in value of
an investment over the specified periods and includes the current, maximum 4.25%
initial sales. See Note below.
3. Distribution rate is based on an annualization of the current 6.2 cent per
share monthly dividend and the maximum offering price of $12.36 on April 30,
1996.
4. Taxable equivalent distribution rate and yield assume the 1996 maximum
federal income tax rate of 39.6%.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 1996.
Note: Prior to July 1, 1994, shares were offered at a lower initial sales
charge, with dividends reinvested at the public offering price. Thus, actual
total returns for purchasers of shares during that period would have been
somewhat different than noted above. Effective May 1, 1994, the fund eliminated
the sales charge on reinvested dividends and implemented a plan of distribution
under Rule 12b-1, which affects subsequent performance.
All total return calculations assume reinvestment of dividends and capital gains
at net asset value. Investment return and principal value will fluctuate with
market conditions, and you may have a gain or loss when you sell your shares.
Past performance is not predictive of future results.
PERFORMANCE SUMMARY
CLASS II
Franklin Federal Tax-Free Income Fund
Class II
Dividend Distributions 5/01/95 - 4/30/96++
Dividend
Month per Share
May 6.2 cents
June 5.6 cents
July 5.6 cents
August 5.6 cents
September 5.6 cents
October 5.6 cents
November 5.6 cents
December 5.6 cents
January 5.6 cents
February 5.6 cents
March 5.6 cents
April 5.94 cents
Total 68.14 cents
We are pleased to report the Franklin Federal Tax-Free Income Fund's Class II
share price, as measured by net asset value, increased 15 cents from $11.67 on
May 1, 1995, the date the fund began offering these shares, to $11.82 on April
30, 1996.
At the end of the fund's fiscal year, the Class II distribution rate was 5.97%,
based on an annualization of the current monthly dividend of 5.94 cents
($0.0594) per share and the maximum offering price of $11.94 on April 30, 1996.
This tax-free rate is generally higher than the after-tax return on a comparable
taxable invest- ment. As the chart below illustrates, an investor in the maximum
federal income tax bracket of 39.6% would have to earn 9.88% from a taxable
investment to match the fund's tax-free distribution rate.
++The Class II share dividend and distribution rate reflect the reconciliation
of the 12b-1 differential between Class I and Class II shares. Subsequent
dividend distributions may revert to the dividend prior to adjustment.
The chart on the following page illustrates that Class II shares have
outperformed the Consumer Price Index (CPI) since they became available on May
1, 1995, keeping your purchasing power well ahead of inflation -- a primary goal
of any investment. Class II shares under- performed the unmanaged Lehman
Brothers Municipal Bond Index. Of course, comparing a fund with an unmanaged
index is never an apples-to-apples comparison. Unmanaged indices do not reflect
management fees to cover salaries of securities analysts or portfolio managers,
nor do they include the impact of commissions or market spreads to buy and sell
bonds. Performance figures reported by a professionally managed mutual fund,
however, include the initial sales charge, all fund expenses and account fees.
Unlike indices, mutual funds are never fully invested because they must have
cash on hand to redeem shares. If operating expenses of a professionally managed
fund, like the Franklin Federal Tax-Free Income Fund, had been applied to this
index, the index's performance would have been lower. Please remember that an
index is simply a measure of performance, and one cannot invest in an index
directly. Past performance is not predictive of future results.
GRAPHIC MATERIAL 8 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 9 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin Federal Tax-Free Income Fund
Class II
Period ended April 30, 1996
Since
Inception
(05/01/95)
Cumulative
Total Return1 6.66%
Average Annual
Total Return2 4.58%
Distribution Rate3 5.97%
Taxable Equivalent
Distribution Rate4 9.88%
30-Day Standardized Yield5 4.80%
Taxable Equivalent Yield4 7.95%
1. Cumulative total return measures the change in value of an investment over
the period indicated and does not include the current 1.0% initial sales charge
or the 1.0% Contingent Deferred Sales Charge (CDSC), applicable to shares
redeemed within 18 months of investment.
2. Average annual total return represents the average annual change in value of
an investment over the specified period and includes the current 1.0% initial
sales charge. It also includes the 1.0% CDSC applicable to shares redeemed
within 18 months of investment.
3. Distribution rate is based on an annualization of the current 5.94 cent per
share monthly dividend and the maximum offering price of $11.94 on April 30,
1996. The Class II share dividend and distribution rate reflect the
reconciliation of the 12b-1 differential between Class I and Class II shares.
Subsequent dividend distributions may revert to the dividend prior to
adjustment.
4. Taxable equivalent distribution rate and yield assume the 1996 maximum
federal income tax rate of 39.6%.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 1996.
All total return calculations assume reinvestment of dividends and capital gains
at net asset value. Investment return and principal value will fluctuate with
market conditions, and you may have a gain or loss when you sell your shares.
Past performance is not predictive of future results.
STATEMENT OF INVESTMENTS IN SECURITIES AND NET ASSETS
<TABLE>
<CAPTION>
Franklin Federal Tax-Free Income Fund, April 30, 1996
FACE VALUE
AMOUNT (NOTE1)
- -------------------------------------------------------------------------------------------------------------------------
Long Term Investments 98.6%
Bonds 97.1%
Alabama .8%
<S> <C> <C>
$ 6,620,000 Alabama Water Pollution Control Authority, Revolving Fund, Series B, 7.75%, 08/15/12 ... $ 7,009,057
5,000,000 Birmingham GO, Street Improvement Warrants, Pre-Refunded, 8.00%, 07/01/13 .............. 5,468,650
1,000,000 Citronelle IDB, PCR, Stauffer Chemical Project, Guaranteed by Imperial Chemical, Plc.,..
Series 1982, 8.00%,
12/01/12 .............................................................................. 1,121,540
18,830,000 Columbia IDB, PCR, Refunding, Alabama Power Co. Project, AMBAC Insured, 6.50%,..........
09/01/23 .............................................................................. 19,468,149
12,000,000 Courtland IDB, IDR, Refunding, Champion International Corp., Series A, 7.20%, 12/01/13 . 12,924,360
5,000,000 Courtland IDB, PCR, Refunding, Champion International Corp. Project, 6.15%, 06/01/19 ... 4,891,250
5,000,000 Jefferson County Board of Education, Capital Outlay Warrants, Series A, FSA Insured, 5.75%,
02/15/20 ............................................................................... 4,745,250
------------
55,628,256
------------
Alaska 2.0%
1,775,000 Alaska Industrial Development and Export Authority, Revolving Fund, Series A, 7.95%,....
04/01/10 ............................................................................... 1,924,686
Alaska State HFC,
100,000 Collateralized Home Mortgage, Series A, 8.375%, 12/01/16 ............................. 103,227
4,120,000 Collateralized Home Mortgage, Series A-1, 6.75%, 12/01/32 ............................ 4,235,690
1,280,000 Collateralized Home Mortgage, Series A-3, 7.70%, 12/01/13 ............................ 1,312,256
8,825,000 Refunding, Mortgage Insured, Program 1, Series 1990-B, 7.80%, 12/01/30 ............... 9,014,561
17,875,000 Refunding, Series A, MBIA Insured, 5.875%, 12/01/24 .................................. 17,077,596
11,600,000 Refunding, Series A, MBIA Insured, 5.875%, 12/01/30 .................................. 11,096,560
8,000,000 Series A, 6.60%, 12/01/23 ............................................................ 8,754,320
20,980,000 Veterans Mortgage Program, MBIA Insured, 6.75%, 12/01/25 ............................. 21,580,448
Anchorage Parking Authority Revenue, Refunding, 5th Avenue Garage Lease Project,........
3,360,000 6.50%, 12/01/02 ...................................................................... 3,550,747
3,500,000 6.75%, 12/01/08 ...................................................................... 3,647,595
Valdez Marine Terminal Revenue, Refunding, BP Pipelines, Inc. Project,..................
47,620,000 Series B, 5.50%, 10/01/28 ............................................................ 43,538,490
14,910,000 Series C, 5.65%, 12/01/28 ............................................................ 13,944,578
------------
139,780,754
------------
Arizona 1.0%
14,720,000 Glendale IDA, Hospital Revenue, Northwest Development, Inc. Project, Pre-Refunded, 8.875%,
01/01/16 .............................................................................. 15,287,162
10,000,000 Navajo County PCC Revenue, Refunding, Arizona Public Service Co., Series A, 5.875%,.....
08/15/28 .............................................................................. 9,324,400
11,650,000 Pima County IDA, MFHR, Fountains La Cholla Project, FHA Mortgage Insured, 8.00%,........
12/01/25 .............................................................................. 11,807,974
Salt River Project, Agricultural Improvement and Power District, Electrical Systems Revenue,
Series D, Refunding, ...................................................................
15,000,000 5.50%, 01/01/25 ....................................................................... 13,997,550
14,000,000 5.00%, 01/01/30 ....................................................................... 11,913,440
5,690,000 Tempe IDA, Residential Care Facilities Revenue, Volunteers of America Care Facilities, 9.00%,
06/01/18 .............................................................................. 5,988,782
------------
68,319,308
------------
Arkansas 1.1%
aArkansas State Development Financing Authority, Waste Water Systems Revenue, Revolving..
Loan Fund, Series A, ...................................................................
2,600,000 Series A, 5.70%, 12/01/12 ............................................................ 2,561,520
3,130,000 Series A, 5.85%, 12/01/19 ............................................................ 3,098,231
2,920,000 Desha County Residential Housing Facilities Board, SFMR, Refunding, 7.50%, 04/01/11 .... 3,080,016
3,115,000 Independence County Public Health and Education Facilities Board, Capital Revenue,......
Refunding & Improvement, ...............................................................
White River Control Project, Pre-Refunded, 8.00%, 06/01/09 ............................ 3,479,237
1,465,000 Jefferson County PCR, Refunding, Arkansas Power and Light Co. Project, 6.30%, 06/01/18 . 1,475,753
Pope County PCR, Refunding, Power and Light Co. Project,
60,000,000 6.30%, 11/01/20 ...................................................................... 59,555,400
2,600,000 6.30%, 12/01/16 ...................................................................... 2,579,096
------------
75,829,253
------------
California 8.0%
Alhambra COP, Clubhouse Facility Project,
410,000 11.25%, 01/01/08 ..................................................................... 423,879
455,000 11.25%, 01/01/09 ..................................................................... 470,283
500,000 11.25%, 01/01/10 ..................................................................... 516,750
5,325,000 Burbank RDA, Refunding, Tax Allocation, Series A, 6.25%, 12/01/24 ...................... 5,275,637
$ 2,030,000 Butte County COP, Justice Facilities Project, 5.70%, 07/01/14 .......................... $ 1,897,055
2,800,000 California Health Facilities, Financing Authority Revenue, Refunding, St. Francis Medical
Center, Series H, ......................................................................
AMBAC Insured, 6.30%, 10/01/15 ........................................................ 2,882,488
5,000,000 California State Department of Water Resources Revenue, Central Valley Project, Refunding,
Series L, 5.50%, .......................................................................
12/01/23 .............................................................................. 4,633,000
California State Educational Facilities Authority Revenue,
3,580,000 National University, Connie Lee Insured, 6.00%, 05/01/09 ............................. 3,625,573
1,000,000 Pooled College and University Financing, Refunding, Series B, 5.70%, 06/01/01 ........ 1,015,330
6,025,000 Pooled College and University Projects, Series B, 6.00%, 12/01/20 .................... 5,492,812
California State GO,
11,000,000 FGIC Insured, 6.00%, 08/01/19 ........................................................ 11,015,400
3,070,000 Series 1994, 5.90%, 05/01/08 ......................................................... 3,170,573
7,000,000 Series 1994, 6.00%, 05/01/18 ......................................................... 7,073,290
12,500,000 Series 1994, FGIC Insured, 6.00%, 05/01/20 ........................................... 12,452,625
11,750,000 Various Purposes, 5.90%, 04/01/23 .................................................... 11,577,863
5,000,000 Various Purposes, FSA Insured, 5.50%, 04/01/19 ....................................... 4,702,400
California State Public Works Board, Lease Revenue,
5,500,000 Series A, 5.75%, 09/01/21 ............................................................ 5,328,510
3,500,000 Various University of California Projects, Series A, 6.625%, 10/01/10 ................ 3,701,740
4,000,000 Various University of California Projects, Series A, 6.375%, 10/01/14 ................ 4,080,480
2,000,000 Various University of California Projects, Series A, 6.375%, 10/01/19 ................ 2,032,540
2,610,000 Various University of California Projects, Series B, 5.50%, 06/01/19 ................. 2,399,138
California State Veterans, GO,
1,000,000 Series BC, 6.00%, 02/01/10 ........................................................... 1,026,120
33,195,000 Series BD, BE, and BF, 6.55%, 02/01/25 ............................................... 33,562,801
14,750,000 California Statewide Communities Development Authority Revenue, COP, Sutter Health......
Obligation Group, ......................................................................
MBIA Insured, 6.00%, 08/15/25 ......................................................... 14,667,695
8,250,000 Chino USD, COP, Refunding, FSA Insured, 5.90%, 09/01/15 ................................ 8,164,778
1,020,000 Coalinga Public Finance Authority Revenue, Series B, 6.25%, 09/15/07 ................... 1,018,256
1,000,000 Commerce Refuse to Energy Authority Revenue, Refunding, Series 1994, 8.75%, 07/01/10 ... 1,116,540
9,000,000 Contra Costa County COP, Refunding, Consolidated Capital Facilities Project, AMBAC Insured,
5.60%, 06/01/19 ........................................................................ 8,509,860
4,000,000 Contra Costa Water Authority, Water Treatment Revenue, Refunding, Series A, FGIC Insured,
5.75%, 10/01/20 ........................................................................ 3,852,600
5,000,000 Contra Costa Water District, Water Revenue, Series G, MBIA Insured, 5.50%, 10/01/19 .... 4,723,400
4,000,000 Eden Township Hospital District, Health Facilities Revenue, Refunding, COP, Eden Hospital
Health Services Corp., .................................................................
5.75%, 07/01/12 ....................................................................... 3,801,840
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue, Senior Lien,
54,740,000 Series A, 6.50%, 01/01/32 ............................................................ 54,282,921
3,000,000 Series B, 5.00%, 01/01/35 ............................................................ 2,397,390
Forty-Niner Shops, Inc., Auxiliary Organization, California State Long Beach Project,
1,090,000 6.875%, 04/01/07 ..................................................................... 1,123,703
1,565,000 6.875%, 04/01/12 ..................................................................... 1,603,640
3,180,000 Los Angeles Community RDA, Housing Revenue, Refunding, Series A, AMBAC Insured, 6.55%,..
01/01/27 ............................................................................... 3,250,596
3,000,000 Los Angeles County Public Works, Financing Authority Lease Revenue, Multiple Capital....
Facilities Project IV, .................................................................
MBIA Insured, 5.25%, 12/01/16 ......................................................... 2,739,240
13,955,000 Los Angeles County Sanitation Districts, Financing Authority Revenue, Capital Projects,.
Series A, MBIA Insured, ................................................................
5.25%, 10/01/19........................................................................ 12,744,822
3,000,000 Los Angeles County Transportation Commission, Sales Tax Revenue, Proposition C, Series A,
MBIA Insured, 6.00%,
07/01/23 .............................................................................. 2,983,770
Los Angeles Department of Water and Power, Electric Plant Revenue,
11,765,000 Crossover Refunding, MBIA Insured, 5.375%, 09/01/23 .................................. 10,796,741
14,925,000 Refunding, 6.40%, 11/01/31 ........................................................... 15,289,469
3,000,000 Refunding, MBIA Insured, 6.00%, 02/01/28 ............................................. 2,982,780
10,500,000 Second Issue, MBIA Insured, 6.40%, 11/01/31 .......................................... 10,900,785
8,100,000 Los Angeles GO, Series A, FGIC Insured, 6.20%, 09/01/14 ................................ 8,254,143
8,400,000 Los Angeles Regional Airport Improvements Corp., Lease Revenue, Refunding, United Airlines,
Inc. Project, 6.875%, ..................................................................
11/15/12 .............................................................................. 8,548,596
24,270,000 Madera County COP, Valley Children's Hospital, MBIA Insured, 5.75%, 03/15/28 ........... 23,277,600
$ 6,470,000 Menlo Park CDA, Tax Allocation, Refunding, Las Pulgas Community Development Project,....
AMBAC Insured, 5.375%, .................................................................
06/01/16 .............................................................................. $ 6,044,209
10,000,000 Northern California Power Agency, Public Power Revenue, Refunding, Hydroelectric Project
No. 1, Series A, .......................................................................
MBIA Insured, 5.50%, 07/01/24 ......................................................... 9,272,400
15,110,000 Oakland Joint Powers Financing Authority Lease Revenue, Oakland Administration Buildings,
AMBAC Insured, .........................................................................
5.75%, 08/01/21 ....................................................................... 14,639,324
4,000,000 Pomona Public Financing Authority Revenue, Series Q, MBIA Insured, 5.90%, 12/01/25 ..... 3,869,520
Sacramento MUD, Electric Revenue, Refunding, MBIA Insured,
9,500,000 Series D, 5.25%, 11/15/20 ............................................................ 8,601,965
3,795,000 Series E, 5.75%, 05/15/22 ............................................................ 3,651,359
33,315,000 San Bernardino County COP, Medical Center Financing Project, Series A, 5.875%, 08/01/26 32,551,420
7,080,000 San Francisco City and County RDA Revenue, George Moscone Convention Center,............
Lease Revenue, 6.75%, ..................................................................
07/01/24 .............................................................................. 7,595,849
12,680,000 San Francisco City and County RDA Revenue, Tax Allocation Redevelopment Project, .......
6.50%, 08/01/22 ........................................................................ 12,829,497
10,380,000 San Francisco City and County Sewer Revenue, Series A, FGIC Insured, 5.90%, 10/01/20 ... 10,260,215
San Joaquin Hills Transportation, Corridor Agency Toll Road Revenue,
18,795,000 7.00%, 01/01/30 ...................................................................... 19,521,051
44,325,000 6.75%, 01/01/32 ...................................................................... 45,309,458
5,000,000 5.00%, 01/01/33 ...................................................................... 4,038,050
5,530,000 San Jose-Santa Clara Water Financing Authority, Sewer Revenue, Series A,................
FGIC Insured, 5.375%, 11/15/20 ......................................................... 5,095,508
3,150,000 Santa Barbara County Revenue, COP, Refunding, Montecito Retirement, 5.80%, 04/01/18 .... 2,949,818
5,330,000 Southern California Public Power Authority, Power Project Revenue, Multiple Projects,...
AMBAC Insured, 5.50%, ..................................................................
07/01/20 .............................................................................. 4,966,121
10,000,000 Southern California Public Power Authority, Transmission Project Revenue, Sub-Crossover.
Refunding, Southern ....................................................................
Transmission Project, MBIA Insured, 5.75%, 07/01/21 .................................... 9,626,300
26,780,000 University of California Revenues, Research Facilities, Series B, 6.55%, 09/01/24 ...... 27,319,349
2,405,000 Windsor RDA Revenue, Tax Allocation, Windsor Project, 7.00%, 09/01/24 .................. 2,463,249
------------
565,992,114
------------
Colorado 4.6%
5,000,000 Adams & Arapahoe Counties, Joint School District No. 28J, Aurora, Series C, 5.35%, 12/01/15 4,677,400
Colorado HFA, GO, Series A,
1,595,000 7.50%, 05/01/29 ...................................................................... 1,656,312
2,720,000 Pre-Refunded, 8.375%, 01/01/30 ....................................................... 2,955,498
Denver City and County, Airport System Revenue,
16,645,000 Series A, 8.875%, 11/15/12 ........................................................... 19,750,624
5,000,000 Series A, 8.00%, 11/15/17 ............................................................ 5,336,650
11,460,000 Series A, 7.75%, 11/15/21 ............................................................ 12,665,821
2,650,000 Series A, 7.25%, 11/15/23 ............................................................ 2,823,125
16,520,000 Series A, 7.50%, 11/15/23 ............................................................ 18,296,561
79,945,000 Series A, 8.50%, 11/15/23 ............................................................ 91,882,387
5,500,000 Series A, 5.70%, 11/15/25 ............................................................ 5,346,880
24,525,000 Series A, 7.25%, 11/15/25 ............................................................ 27,982,044
24,325,000 Series A, 8.00%, 11/15/25 ............................................................ 27,457,316
11,200,000 Series A, Pre-Refunded, 7.50%, 11/15/12 .............................................. 12,974,192
10,010,000 Series D, 7.00%, 11/15/25 ............................................................ 10,253,143
47,980,000 Denver City and County, Special Facilities Airport Revenue, United Airlines, Inc. Project,
Series A, 6.875%, 10/01/32 ............................................................. 48,203,587
3,000,000 Garfield Pitkin and Eagle County, School District No. 1, MBIA Insured, Pre-Refunded, 6.60%,
12/15/14 ............................................................................... 3,347,520
6,520,000 Littleton IDR, Porter Memorial Hospital, Medical Office Project, Series 1982, Pre-Refunded,
8.00%, 02/01/12 ........................................................................ 6,847,760
16,500,000 Littleton MFR, Rental Housing, Riverpointe Project I, Series 1985, Mandatory Put 10/01/96,
8.00%, 12/01/22 ........................................................................ 16,515,840
6,500,000 University of Colorado, Hospital Authority Revenue, Series A, AMBAC Insured, 6.40%,.....
11/15/22 ............................................................................... 6,706,440
------------
325,679,100
------------
Connecticut .1%
aConnecticut State GO, Series A,
2,000,000 5.50%, 05/15/14 ...................................................................... 1,942,080
3,985,000 5.50%, 05/15/15 ...................................................................... 3,852,658
------------
5,794,738
------------
Delaware .1%
$ 1,160,000 Delaware State EDA Revenue, Refunding, Water Development, Wilmington, Series B, 6.45%,..
12/01/07 ............................................................................... $ 1,243,102
2,000,000 Delaware State Housing Authority, Refunding, MFMR, Series D, 6.75%, 07/01/06 ........... 2,109,560
------------
3,352,662
------------
District of Columbia .7%
District of Columbia GO,
6,500,000 Series A, Pre-Refunded, 8.00%, 06/01/07 .............................................. 6,857,565
4,000,000 Series E, MBIA Insured, 6.00%, 06/01/13 .............................................. 3,941,000
District of Columbia HFA, MFHR, FHA Insured,
6,110,000 Mayfair Mansions Apartments, 8.85%, 02/01/31 ......................................... 6,332,710
1,870,000 Refunding, Series A, 7.10%, 09/01/12 ................................................. 1,946,483
6,755,000 Refunding, Series A, 7.15%, 03/01/24 ................................................. 6,993,114
4,450,000 District of Columbia Hospital Revenue, Washington Hospital Center Corp., Series A,......
Pre-Refunded, 9.00%, 01/01/08 .......................................................... 5,262,348
1,500,000 District of Columbia Redevelopment Land Agency, Sports Arena, Special Tax Revenue, 5.625%,
11/01/10 ............................................................................... 1,412,820
District of Columbia Revenue,
5,685,000 Association of American Medical Colleges, 7.50%, 02/15/20 ............................ 6,142,245
3,155,000 Carnegie Endowment, 5.75%, 11/15/10 .................................................. 3,109,158
5,265,000 Catholic University of America, 6.45%, 10/01/23 ...................................... 5,436,902
------------
47,434,345
------------
Florida 3.0%
Bay County Resource Recovery Revenue, Refunding, MBIA Insured,
2,100,000 Series A, 6.50%, 07/01/07 ............................................................ 2,282,049
11,020,000 Series B, 6.50%, 07/01/07 ............................................................ 11,975,324
42,650,000 Broward County Resource Recovery Revenue, Broward Waste Energy Co., L.P., North Project,
Series 1984, 7.95%, ....................................................................
12/01/08 .............................................................................. 47,023,331
3,800,000 Dunes Community Development District Revenue, Water and Sewer Project, Pre-Refunded,....
8.25%, 10/01/18 ........................................................................ 4,213,288
Florida State Board Of Education, Capital Outlay, Public Education,
22,475,000 Refunding, Series 1992, 6.40%, 06/01/19 .............................................. 23,565,937
6,800,000 Series C, MBIA Insured, 5.50%, 06/01/23 .............................................. 6,434,092
Florida State Department of General Services, Division of Facilities Management Revenue,.
Florida Facilities Pool, ...............................................................
2,000,000 Pre-Refunded, 8.125%, 09/01/17 ....................................................... 2,210,840
5,000,000 Refunding, Series B, AMBAC Insured, 5.70%, 09/01/20 .................................. 4,877,500
7,125,000 Florida State Department of Transportation, Turnpike Revenue, Series A, Pre-Refunded,...
7.75%, 07/01/09 ........................................................................ 7,956,986
4,075,000 Lakeland Retirement Community, First Mortgage Revenue, Carpenters Home Estate Project,..
9.50%, 09/01/06 ........................................................................ 4,098,635
6,500,000 Manatee County IDR, Manatee Hospital and Health Systems, Inc., Pre-Refunded,............
9.25%, 03/01/21 ........................................................................ 7,851,545
3,500,000 Okeechobee Utilities Systems Authority Revenue, Refunding, Acquisition and Improvement,.
MBIA Insured, 5.60%, 10/01/25 .......................................................... 3,368,155
Orange County Health Facilities Authority Revenue, Pooled Hospital Loan Program,
5,930,000 Refunding, Series 1985-A, FGIC Insured, 7.875%, 12/01/25 ............................. 6,245,120
4,775,000 Series B, BIG Insured, 7.875%, 12/01/25 .............................................. 5,028,744
2,500,000 Santa Rosa County Health Facilities Authority Revenue, Refunding, Gulf Breeze Hospital,.
Inc., Pre-Refunded, 8.70%, .............................................................
10/01/14 .............................................................................. 2,791,275
St. Augustine Water and Sewer Revenue, Refunding, Series A, MBIA Insured,
840,000 8.125%, 10/01/00 ..................................................................... 911,786
890,000 8.125%, 10/01/01 ..................................................................... 972,076
940,000 8.125%, 10/01/02 ..................................................................... 1,029,516
1,005,000 8.125%, 10/01/03 ..................................................................... 1,107,148
1,065,000 8.125%, 10/01/04 ..................................................................... 1,175,270
1,130,000 8.125%, 10/01/05 ..................................................................... 1,246,808
1,200,000 8.125%, 10/01/06 ..................................................................... 1,322,052
1,275,000 8.125%, 10/01/07 ..................................................................... 1,400,039
1,355,000 8.125%, 10/01/08 ..................................................................... 1,487,885
6,300,000 8.125%, 10/01/12 ..................................................................... 6,674,661
Tampa Capital Improvement Program Revenue,
11,010,000 Series A, 8.25%, 10/01/18 ............................................................ 11,748,110
37,250,000 Series B, 8.375%, 10/01/18 ........................................................... 39,376,230
------------
208,374,402
------------
Georgia 3.5%
Burke County Development Authority, PCR, Georgia Power Co., Plant Vogle Project,
$ 3,500,000 First Series, 5.75%, 09/01/23 ........................................................ $ 3,355,625
105,000,000 Series 1984-1, MBIA Insured,6.60%, 07/01/24 .......................................... 110,632,200
8,025,000 Series 1984-7, MBIA Insured, 6.625%, 10/01/24 ........................................ 8,481,462
Fulton County Development Authority, Special Facilities Revenue, Refunding,.............
Delta Air Lines, Inc. Project, .........................................................
3,400,000 6.85%, 11/01/07 ...................................................................... 3,519,272
5,500,000 6.95%, 11/01/12 ...................................................................... 5,674,020
4,800,000 Fulton County School District, 5.625%, 01/01/21 ........................................ 4,617,120
7,975,000 Gainsville and Hall County Hospital Authority Revenue, Anticipation Certificates, Refunding,
Northeast Georgia ......................................................................
Healthcare Project, MBIA Insured, 6.00%, 10/01/25 ..................................... 7,952,590
Georgia Municipal Electric Authority Power Revenue,
14,000,000 Series B, 6.375%, 01/01/16 ........................................................... 14,086,240
6,325,000 Series EE, 6.40%, 01/01/23 ........................................................... 6,717,403
26,000,000 Series EE, AMBAC Insured, 6.65%, 01/01/21 ............................................ 26,714,480
18,500,000 Series O, 8.125%, 01/01/17 ........................................................... 19,826,265
5,385,000 Georgia State HFA Revenue, Homeownership Opportunity Program, Series C, 6.60%, 12/01/23. 5,519,087
Monroe County Development Authority, PCR, Georgia Power Co.,
4,300,000 AMBAC Insured, 6.25%, 07/01/19 ....................................................... 4,373,960
16,000,000 Plant Scherer Project, 8.375%, 07/01/17 .............................................. 16,847,200
10,000,000 Putnam County Development Authority, PCR, Refunding, Georgia Power Co., Plant Branch Project,
8.375%, 07/01/17 ...................................................................... 10,549,800
------------
248,866,724
------------
Hawaii .7%
Hawaii State Airports System Revenue,
1,000,000 FGIC Insured, 7.00%, 07/01/20 ........................................................ 1,083,970
12,000,000 Second Series, 7.00%, 07/01/07 ....................................................... 13,030,200
500,000 Second Series, 6.90%, 07/01/12 ....................................................... 548,275
2,830,000 Second Series, 7.00%, 07/01/18 ....................................................... 3,039,816
Hawaii State Department of Budget and Finance, Special Purposes Mortgage Revenue,.......
200,000 Hawaii Electric Light Co. Project, 7.20%, 12/01/14 ................................... 211,810
1,000,000 Hawaii Electric Light Co. Project, Series A, 7.35%, 01/01/20 ......................... 1,061,810
900,000 Kaiser Hospital, 6.25%, 03/01/21 ..................................................... 916,893
1,000,000 Wahiawa General Hospital Project, 7.50%, 07/01/12 .................................... 1,045,700
aHawaii State Department of Budget and Finance, Special Purposes Revenue,................
1,000,000 6.00%, 07/01/11 ...................................................................... 992,050
2,000,000 6.20%, 07/01/16 ...................................................................... 1,992,940
6,250,000 6.25%, 07/01/21 ...................................................................... 6,225,750
Hawaii State HFC, SFMR,
230,000 Series A, 7.00%, 07/01/11 ............................................................ 237,933
3,350,000 Series A, 7.10%, 07/01/24 ............................................................ 3,445,844
360,000 Series B, 6.90%, 07/01/16 ............................................................ 371,416
11,880,000 Series B, 7.00%, 07/01/31 ............................................................ 12,221,194
Honolulu City and County GO, Series A,
415,000 6.30%, 03/01/08 ...................................................................... 438,547
1,000,000 6.30%, 03/01/12 ...................................................................... 1,038,640
------------
47,902,788
------------
Idaho .1%
2,260,000 Idaho Housing Agency, Refunding, Series D-1, 6.45%, 07/01/19 ........................... 2,315,573
Idaho Housing Agency, SFMR, Senior Bond, Series B-1, FGIC Insured,
1,245,000 7.85%, 07/01/09 ...................................................................... 1,303,776
1,935,000 7.90%, 01/01/21 ...................................................................... 1,992,237
------------
5,611,586
------------
Illinois 6.0%
$ 6,000,000 Berwin Revenue, Refunding, Mac Neal Memorial Hospital Association Project, AMBAC Insured,
5.50%, 06/01/15 ....................................................................... $ 5,616,240
Bryant PCR, Refunding, Central Illinois Light Co. Project,
7,200,000 Series A, 6.50%, 02/01/18 ............................................................ 7,500,888
5,000,000 Series C, 6.50%, 01/01/10 ............................................................ 5,267,650
Chicago Board of Education, Chicago School Reform, MBIA Insured,
9,700,000 6.00%, 12/01/16 ...................................................................... 9,716,393
7,600,000 6.00%, 12/01/26 ...................................................................... 7,463,808
22,000,000 Chicago COP, AMBAC Insured, 7.75%, 07/15/11 ............................................ 24,810,060
7,000,000 Chicago Gas Supply Revenue, Refunding, The Peoples Gas Light, Series A, 6.10%, 06/01/25 6,915,020
Chicago-O'Hare International Airport Revenue, Special Facilities,
11,720,000 American Airlines, Inc. Project, 8.20%, 12/01/24 ..................................... 13,432,995
4,300,000 United Airlines, Inc. Project, 8.45%, 05/01/07 ....................................... 4,711,467
12,305,000 United Airlines, Inc. Project, 8.50%, 05/01/18 ....................................... 13,426,232
465,000 United Airlines, Inc. Project, Series A, 8.40%, 05/01/18 ............................. 503,521
28,785,000 United Airlines, Inc. Project, Series C, 8.20%, 05/01/18 ............................. 31,014,398
10,000,000 Cook County, Orland Park School District No. 135, Refunding, FGIC Insured, .............
5.90%, 12/01/14 ........................................................................ 9,822,400
Illinois Development Finance Authority, PCR,
7,500,000 Commonwealth Edison Co. Project, Series 1991, 7.25%, 06/01/11 ........................ 7,958,175
15,200,000 Refunding, Central Illinois Public Services Co., Series A, 6.375%, 01/01/28 .......... 15,414,016
10,000,000 Refunding, Central Illinois Public Services Co., Series C-2, 5.70%, 08/15/26 ......... 9,462,600
25,960,000 Refunding, Illinois Power Co. Project, Series A, 7.375%, 07/01/21 .................... 28,572,355
Illinois Educational Facilities Authority Revenue,
6,000,000 Shedd Aquarium Society, Series 1987-A, 8.625%, 07/01/17 .............................. 6,345,180
8,575,000 University of Chicago, Series B, 5.60%, 07/01/24 ..................................... 7,968,147
4,250,000 Illinois HDA, Homeowner Mortgage, Series A-1, 6.85%, 08/01/17 .......................... 4,477,418
Illinois HDA, MF Program,
20,000,000 Lawndale Redevelopment Project, 7.10%, 12/01/34 ...................................... 20,766,200
12,915,000 Refunding, Series A, 7.10%, 07/01/26 ................................................. 13,431,342
12,000,000 Series 1, 6.625%, 09/01/12 ........................................................... 12,349,560
7,550,000 Series 1, 6.75%, 09/01/21 ............................................................ 7,730,294
2,265,000 Series C, 7.35%, 07/01/11 ............................................................ 2,317,684
7,065,000 Illinois HDA, RMR, Series B, 7.25%, 08/01/17 ........................................... 7,357,986
Illinois Health Facilities Authority Revenue, Refunding,
2,000,000 Edwards Hospital Project, 7.00%, 02/15/22 ............................................ 2,084,820
3,650,000 Galesburg Cottage Hospital, Pre-Refunded, 9.625%, 05/01/11 ........................... 3,923,969
1,000,000 Servantcor, Series A, Pre-Refunded, 7.875%, 08/15/19 ................................. 1,119,120
3,000,000 Servantcor, Series B, Pre-Refunded, 7.875%, 08/15/19 ................................. 3,357,360
7,000,000 South Suburban Hospital, 7.00%, 02/15/18 ............................................. 7,223,090
6,200,000 Westlake Community Hospital, 7.875%, 01/01/13 ........................................ 6,577,704
2,600,000 Illinois State COP, CGIC Insured, 6.875%, 07/01/07 ..................................... 2,818,790
2,950,000 Illinois State Dedicated Tax Revenue, Civic Center, Series A, AMBAC Insured,............
6.00%, 12/15/15 ....................................................................... 2,954,455
3,985,000 Lake County Community Consolidated School District No. 050, Woodland, MBIA Insured,
5.55%, 01/01/15 ....................................................................... 3,750,841
3,825,000 Lombard, Village of, Revenue, Refunding, Beacon Hill Project, 9.00%, 02/15/08 .......... 3,962,624
Metropolitan Pier and Exposition Authority, Hospitality Facilities Revenue,.............
McCormick Place Convention Center,
1,645,000 5.75%, 07/01/06 ...................................................................... 1,622,480
9,500,000 6.25%, 07/01/17 ...................................................................... 9,112,210
7,500,000 7.00%, 07/01/26 ...................................................................... 7,971,450
Metropolitan Pier and Exposition Authority, State Tax Revenue, Expansion Project A,
7,760,000 6.50%, 06/15/22 ...................................................................... 7,914,114
26,115,000 6.50%, 06/15/27 ...................................................................... 26,543,025
5,860,000 Municipal Electric Agency, Power Supply Systems Revenue, Series A, AMBAC Insured,.......
5.75%, 02/01/21 ........................................................................ 5,657,068
4,350,000 Onterie Center HFC, Mortgage Revenue, Refunding, Series 1989-A, MBIA Insured,...........
7.05%, 07/01/27 ........................................................................ 4,559,670
Regional Transportation Authority,
10,000,000 Refunding, MBIA Insured, 5.60%, 06/01/25 ............................................. 9,220,800
3,970,000 Series A, AMBAC Insured, 6.125%, 06/01/22 ............................................ 3,967,181
Southwestern Illinois Development Authority,
6,200,000 Anderson Hospital Project, Series A, 7.00%, 08/15/22 ................................. 6,089,516
1,825,000 IDR, Spectrulite Consortium, Inc. Project, 6.20%, 02/01/05 ........................... 1,866,774
Southwestern Illinois Development Authority, (cont.)
$ 3,050,000 IDR, Spectrulite Consortium, Inc. Project, 6.625%, 02/01/10 .......................... $ 3,139,853
3,030,000 Private Activity Revenue, Glenmark Recovery, 8.50%, 08/01/10 ......................... 3,352,028
5,500,000 Solid Waste Disposal Revenue, LaCede Steel Co., 8.375%, 08/01/08 ..................... 6,060,395
5,390,000 Solid Waste Disposal Revenue, LaCede Steel Co., 8.50%, 08/01/20 ...................... 5,932,018
------------
425,133,384
------------
Indiana 1.3%
Frankfort Middle School Building Corp., First Mortgage Revenue, Pre-Refunded,...........
605,000 8.00%, 01/01/07 ...................................................................... 621,299
660,000 8.10%, 01/01/08 ...................................................................... 677,886
720,000 8.10%, 01/01/09 ...................................................................... 739,512
785,000 8.10%, 01/01/10 ...................................................................... 806,274
860,000 8.10%, 01/01/11 ...................................................................... 883,306
935,000 8.10%, 01/01/12 ...................................................................... 960,339
17,000,000 Hammond Industrial Sewer and Solid Waste Disposal Revenue, American Maize-Products Co.
Project A, 8.00%, 12/01/24 ............................................................. 18,651,040
2,355,000 Hammond PCR, Stauffer Chemical Project, Guaranteed by Imperial Chemical, Plc., Series 1982,
8.00%, 11/01/12 ........................................................................ 2,637,576
1,155,000 Indiana Bond Bank, Special Program, Series 1988-A, Pre-Refunded, 8.375%, 02/01/18 ...... 1,211,999
3,500,000 Indiana Health Facility Financing Authority, Hospital Revenue, Hancock Memorial Hospital
Project, Series 1990, 8.30%, 08/15/20 .................................................. 3,744,230
3,240,000 Indiana State Educational Facilities Authority Revenue, Manchester College Project, ....
6.85%, 10/01/18 ........................................................................ 3,320,741
Indiana State Housing Financing Authority, SFMR, Refunding, Series A,
3,805,000 6.75%, 01/01/10 ...................................................................... 3,914,965
16,570,000 6.80%, 01/01/17 ...................................................................... 17,047,879
5,000,000 Indiana State Office Building Commission, Correctional Facilities Program Revenue, .....
Series B, Women's Prison, AMBAC Insured, 5.50%, 07/01/20 ............................... 4,634,750
Indianapolis Local Public Improvement,
5,000,000 Refunding, Bond Bank, Series A, FSA Insured, 5.50%, 01/01/15 ......................... 4,737,200
4,625,000 Refunding, Series D, 6.50%, 02/01/22 ................................................. 4,693,496
13,075,000 Series D, 6.75%, 02/01/20 ............................................................ 13,367,226
Indianapolis Resource Recovery Revenue, Ogden Martin System, Inc.,
5,550,000 Series A, 7.90%, 12/01/08 ............................................................ 5,819,675
1,505,000 Series B, 7.90%, 12/01/08 ............................................................ 1,578,128
2,000,000 Muncies Edit Building Corp., First Mortgage, Series A, AMBAC Insured, 6.60%, 12/01/17 .. 2,081,960
------------
92,129,481
------------
Iowa .1%
2,325,000 Carroll Retirement Facility Revenue, Orchard View, Inc. Project, Pre-Refunded,..........
8.25%, 02/01/13 ........................................................................ 2,510,419
4,200,000 Woodbury County Health Systems Revenue, Refunding, St. Lukes Obligated Group, ..........
Series A, MBIA Insured, 5.50%, 09/01/12 ................................................ 3,995,502
------------
6,505,921
------------
Kansas .4%
Merriam Hospital Revenue, Shawnee Medical Center, Inc.
5,815,000 Project A, 7.25%, 09/01/11 ........................................................... 6,096,330
15,215,000 Project A, 7.25%, 09/01/21 ........................................................... 15,869,854
1,560,000 Project B, 7.25%, 09/01/11 ........................................................... 1,635,473
3,580,000 Project B, 7.25%, 09/01/21 ........................................................... 3,734,083
------------
27,335,740
------------
Kentucky 2.1%
3,900,000 Ashland PCR, Refunding, Ashland Oil, Inc. Project, 6.65%, 08/01/09 ..................... 4,083,144
8,405,000 Christian County Hospital Revenue, Refunding, Jennie Stuart Medical Center Project,.....
7.625%, 04/01/10 ....................................................................... 8,640,172
10,000,000 Henderson County Solid Waste Disposal Revenue, MacMillan Bloedel Project, 7.00%, 03/01/25 10,273,600
4,985,000 Jefferson County MFHR, Watterson Park Apartments Project, Series A, 6.35%, 11/15/11 .... 5,016,655
Kenton County Airport Board, Airport Revenue, Special Facilities, Delta Air Lines, Inc.,
20,000,000 7.80%, 12/01/15 ...................................................................... 21,246,600
10,000,000 Project A, 7.50%, 02/01/20 ........................................................... 10,580,800
Kenton County Airport Board, Airport Revenue, Special Facilities, Delta Air Lines, Inc.,
(cont.) ................................................................................
$ 9,330,000 Project A, 7.125%, 02/01/21 .......................................................... $ 9,719,341
3,350,000 Project B, 7.25%, 02/01/22 ........................................................... 3,515,021
Kentucky Housing Corp., Housing Revenue,
1,800,000 Series A, 6.70%, 07/01/17 ............................................................ 1,859,076
4,910,000 Series B, 6.625%, 07/01/14 ........................................................... 5,079,591
700,000 Kentucky State Development Financial Authority, Hospital Revenue, Claire Medical Center.
Project, Pre-Refunded, 7.125%, 09/01/21 ................................................ 783,006
4,500,000 Kentucky State Property and Buildings Commission Revenue, Project No. 48, Pre-Refunded,
8.00%, 08/01/08 ........................................................................ 4,939,020
Mount Sterling Lease Revenue, Kentucky League Cities, Series A,
20,375,000 6.10%, 03/01/08 ...................................................................... 20,790,650
11,765,000 6.20%, 03/01/18 ...................................................................... 11,502,405
27,160,000 Pendleton County, Multi-County Lease Revenue, Kentucky Association of Counties Leasing..
Trust, Series A, 6.50%, 3/01/19 ........................................................ 27,465,278
------------
145,494,359
------------
Louisiana 2.5%
2,000,000 Bastrop PCR, Refunding, International Paper Co. Project, 6.90%, 03/01/07 ............... 2,136,940
14,285,000 Calcasieu Parish IDB, PCR, Refunding, Gulf States Utilities Co. Project, 6.75%, 10/01/12 14,327,569
Calcasieu Parish Memorial Hospital Service District Revenue, Lake Charles Parish .......
Memorial Hospital Project, Series A, CGIC Insured,......................................
4,310,000 6.375%, 12/01/12 ..................................................................... 4,515,027
5,530,000 6.50%, 12/01/18 ...................................................................... 5,840,897
3,145,000 6.65%, 12/01/21 ...................................................................... 3,282,437
Calcasieu Parish Public Transportation Authority Mortgage Revenue, Refunding,...........
4,580,000 Series 1991-A, 7.75%, 06/01/12 ....................................................... 4,814,725
535,000 Series 1992-B, 6.375%, 11/01/02 ...................................................... 556,133
750,000 Series 1992-B, 6.875%, 11/01/12 ...................................................... 771,503
2,500,000 De Soto Parish Environmental Improvement Revenue, International Paper Co. Project,......
Series A, 7.70%, 11/01/18 .............................................................. 2,797,425
2,365,000 Denham Spring-Livingston HFA, 6.80%, 02/01/21 .......................................... 2,442,927
East Baton Rouge Mortgage Financing Authority, SFM,
6,275,000 MBS, Series A, 6.80%, 10/01/28 ....................................................... 6,429,616
3,385,000 Series C, 7.00%, 04/01/32 ............................................................ 3,505,032
4,975,000 Series D, 7.10%, 04/01/32 ............................................................ 5,141,414
2,137,638 Lafayette Public Trust Finance Authority, SFMR, Refunding, Series 1990-A, 8.50%, 11/15/12 2,259,719
Louisiana HFA,
2,095,000 HMR, Refunding, 7.375%, 09/01/13 ..................................................... 2,127,263
2,000,000 SFMR, Series C-1, MBIA Insured, GNMA Secured, 5.75%, 06/01/17 ........................ 1,928,940
3,400,000 Louisiana Office Facility Corp., Capital Facility Bonds, Statewide Lease, 7.75%, 12/01/10 3,732,860
3,500,000 Louisiana Public Facilities Authority Revenue, Refunding, Series B, Alton Ochsner.......
Medical Foundation Project, MBIA Insured, 6.50%, 05/15/22 ............................. 3,614,660
7,815,000 Louisiana Stadium and Expo District, Hotel Occupancy Tax and Stadium Revenue,...........
Series B, FGIC Insured, 5.25%, 07/01/20 ................................................ 7,099,302
New Orleans, Ernest N. Morial Exhbition Hall Authority, Special Tax, Series C, Refunding,
MBIA Insured,
6,615,000 5.50%, 07/15/18 ...................................................................... 6,196,072
10,000,000 5.60%, 07/15/25 ...................................................................... 9,359,700
New Orleans GO, Refunding, AMBAC Insured,
10,275,000 6.125%, 10/01/16 ..................................................................... 10,484,302
8,050,000 6.20%, 10/01/21 ...................................................................... 8,197,718
9,525,000 Orleans Parish, Parishwide School District, FGIC Insured, 5.25%, 09/01/20 .............. 8,368,665
2,200,000 Pointe Coupee Parish PCR, Refunding, Gulf States Utilities Co. Project, 6.70%, 03/01/13 2,202,574
4,000,000 Quachita Parish, Hospital Service District No. 1 Revenue, Glenwood Regional Medical Center,
7.50%, 07/01/21 ........................................................................ 4,253,520
1,900,000 St. James' Parish COP, Pre-Refunded, 7.50%, 07/01/10 ................................... 1,911,894
West Feliciana Parish PCR, Gulf Systems Utilities Co. Project,
2,000,000 7.70%, 12/01/14 ...................................................................... 2,145,800
3,050,000 7.00%, 11/01/15 ...................................................................... 3,109,201
41,050,000 8.00%, 12/01/24 ...................................................................... 43,677,611
------------
177,231,446
------------
Maine 1.2%
$ 5,000,000 Bucksport Solid Waste Disposal Revenue, Champion International Corp. Project,...........
6.25%, 05/01/10 ........................................................................ $ 5,050,000
29,300,000 Maine Financial Authority, Solid Waste Recycling Facilities Revenue,....................
Great Northern Paper Co., Bowater Project, .............................................
7.75%, 10/01/22 ....................................................................... 31,533,539
Maine State Health and Higher Education Facilities Authority Revenue, FSA Insured,
2,445,000 Series B, 7.00%, 07/01/24 ............................................................ 2,652,360
3,400,000 Series D, 5.70%, 07/01/13 ............................................................ 3,334,108
Maine State Housing Authority, Mortgage Purchase,
2,500,000 Series A-5, 6.20%, 11/15/16 .......................................................... 2,503,325
3,700,000 Series C, 6.55%, 11/15/12 ............................................................ 3,830,462
3,500,000 Series C, 6.65%, 11/15/24 ............................................................ 3,611,755
3,540,000 Series D, 6.45%, 11/15/07 ............................................................ 3,583,153
5,800,000 Series D, 6.70%, 11/15/15 ............................................................ 5,996,330
4,800,000 Rumford PCR, Refunding, Boise Cascade Corp. Project, 6.625%, 07/01/20 .................. 4,850,304
4,500,000 Skowhegan PCR, Refunding, Scott Paper Co. Project, Series B, 8.10%, 10/01/15 ........... 4,946,985
10,000,000 Skowhegan Solid Waste Disposal Revenue, S.D. Warren Co. Project,
Series A, 8.40%, 10/01/15 ............................................................. 11,005,900
------------
82,898,221
------------
Maryland 2.0%
Gaithersburg Hospital Facilities Improvement Revenue, Shady Grove Hospital,
10,110,000 Refunding & Improvement, FSA Insured, 6.00%, 09/01/21 ................................ 10,117,178
43,225,000 Series A, Pre-Refunded, 8.25%, 09/01/21 .............................................. 50,829,142
Maryland State Community Development Administration, Department of Housing and Community
Development, ...........................................................................
5,810,000 MFHR, Insured Mortgage, Series G, 6.55%, 05/15/19 .................................... 5,936,949
965,000 SF, 7.25%, 04/01/27 .................................................................. 998,196
4,900,000 Maryland State Health and Higher Educational Facilities Authority Revenue,
Hartford Memorial Hospital and Fallston General Hospital, 8.50%, 07/01/14 .............. 5,107,123
6,500,000 Montgomery County Housing Opportunity Community, SFMR, Refunding, Series B, 6.625%, 07/01/28 6,628,310
Takoma Park Hospital Facilities Revenue, Refunding, Washington Adventist Hospital,......
Series A, ..............................................................................
20,125,000 Sub-Series 1, 8.25%, 09/01/21 ........................................................ 21,568,566
10,930,000 Sub-Series 1, Pre-Refunded, 8.25%, 09/01/21 .......................................... 12,881,114
23,210,000 Sub-Series 2, Pre-Refunded, 8.25%, 09/01/21 .......................................... 27,293,103
------------
141,359,681
------------
Massachusetts 2.7%
10,900,000 Agawam Resource Recovery Revenue, Springfield Resource Recovery Project, Series 1986,
8.50%, 12/01/08 ........................................................................ 11,399,547
3,915,000 Lowell GO, Pre-Refunded, 7.625%, 02/15/10 .............................................. 4,503,229
2,310,000 Massachusetts Health and Educational Facilities Authority Revenue, Notre Dame Health Care
Center, Series A, 7.875%, 10/01/22 ..................................................... 2,366,202
Massachusetts State Consolidated Loan,
7,500,000 Series A, 7.50%, 06/01/04 ............................................................ 8,738,550
5,000,000 Series D, 7.00%, 07/01/07 ............................................................ 5,479,050
21,720,000 Massachusetts State Dedicated Income Tax, Fiscal Recovery Loan, Series A, 7.875%, 06/01/97 22,565,342
5,900,000 Massachusetts State GO, Refunding, Series B, 6.50%, 08/01/08 ........................... 6,464,158
Massachusetts State Health and Educational Facilities Authority Revenue,
9,020,000 Framingham Union Hospital, Series B, Pre-Refunded, 8.50%, 07/01/20 ................... 10,468,161
1,100,000 Melrose-Wakefield Hospital, Series B, Refunding, 6.35%, 07/01/06 ..................... 1,134,452
1,000,000 Sisters Providence Health System, Series A, 6.50%, 11/15/08 .......................... 988,180
12,050,000 Sisters Providence Health System, Series A, 6.625%, 11/15/22 ......................... 11,763,090
5,250,000 Massachusetts State HFA, HDA, Series D, FGIC Insured, 6.875%, 11/15/21 ................. 5,535,863
Massachusetts State HFA, Housing Projects, Refunding, Series A,
25,635,000 6.30%, 10/01/13 ...................................................................... 25,737,027
24,750,000 6.375%, 04/01/21 ..................................................................... 24,701,985
Massachusetts State HFA, Housing Revenue, SF, Series 41,
6,250,000 6.30%, 12/01/14 ...................................................................... 6,289,188
5,750,000 6.35%, 06/01/17 ...................................................................... 5,785,938
2,410,000 Massachusetts State HFA Revenue, SFMR, Series G, 8.10%, 12/01/14 ....................... 2,512,208
Massachusetts State Housing Facilities Authority, FGIC Insured,
9,715,000 Series C, 6.90%, 11/15/21 ............................................................ 10,259,234
250,000 Series D, FGIC Insured, 6.80%, 11/15/12 .............................................. 265,700
$ 6,000,000 Massachusetts State Industrial Finance Agency, First Mortgage Revenue,..................
Brookhaven at Lexington Retirement Project, Pre-Refunded, 10.25%, 01/01/18 ............. $ 6,749,100
3,000,000 Massachusetts State Water Resources Authority, Series A, MBIA Insured, 5.75%, 12/01/21 . 2,894,790
Plymouth County COP, Series A, .........................................................
10,000,000 7.00%, 04/01/12 ...................................................................... 10,885,100
5,000,000 7.00%, 04/01/22 ...................................................................... 5,417,200
------------
192,903,294
------------
Michigan .7%
2,000,000 Battle Creek Tax Increment Finance Authority, 7.40%, 05/01/16 .......................... 2,216,840
2,445,000 Climax-Scotts Community Schools, 6.35%, 05/01/23 ....................................... 2,512,311
Detroit GO,
7,265,000 Refunding, Series B, 6.375, 04/01/06 ................................................. 7,449,458
625,000 Refunding, Series B, 6.25, 04/01/09 .................................................. 630,856
4,550,000 Series A, 6.70%, 04/01/10 ............................................................ 4,735,413
2,250,000 Detroit GO, Self-Insurance, Series A, 5.70%, 05/01/02 .................................. 2,253,375
4,960,000 Detroit GO, Unlimited Tax, Series A, Pre-Refunded, 7.875%, 04/01/08 .................... 5,382,741
Michigan State HDA,
2,500,000 Limited Obligation Revenue, Fraser Woods Project, FSA Insured, 6.625%, 09/15/19 ...... 2,577,975
5,000,000 Rental Housing Revenue, Refunding, Series A, 6.60%, 04/01/12 ......................... 5,099,650
Michigan State HFA, SFMR, Series A,
2,000,000 6.45%, 12/01/14 ...................................................................... 2,042,920
3,055,000 6.875%, 06/01/23 ..................................................................... 3,156,854
Michigan State Hospital Finance Authority Revenue, Presbyterian Villages Obligation Group,
200,000 5.30%, 01/01/99 ...................................................................... 199,298
310,000 5.40%, 01/01/00 ...................................................................... 308,552
310,000 5.70%, 01/01/01 ...................................................................... 308,221
355,000 5.80%, 01/01/02 ...................................................................... 352,604
325,000 5.90%, 01/01/03 ...................................................................... 322,501
390,000 6.00%, 01/01/04 ...................................................................... 386,662
1,000,000 6.40%, 01/01/15 ...................................................................... 968,190
3,500,000 6.50%, 01/01/25 ...................................................................... 3,367,875
5,600,000 St. John's Public School District GO, 5.75%, 05/01/25 .................................. 5,401,200
------------
49,673,496
------------
Minnesota 1.7%
Dakota County Housing, RDA, Limited Annual Appropriation Tax and Revenue,
Development Housing Facilities Project,
515,000 7.25%, 01/01/97 ...................................................................... 517,426
555,000 7.25%, 01/01/98 ...................................................................... 560,167
600,000 7.25%, 01/01/99 ...................................................................... 606,534
645,000 7.25%, 01/01/00 ...................................................................... 652,314
695,000 7.25%, 01/01/01 ...................................................................... 701,985
3,930,000 7.50%, 01/01/06 ...................................................................... 3,972,365
2,445,000 8.00%, 01/01/07 ...................................................................... 2,512,189
5,760,000 Minneapolis CDA, Commercial Development Revenue, WNB & Co. Project, 8.50%, 12/01/15 .... 5,765,760
Minneapolis CDA, Commercial Supported Development Revenue, Refunding,
2,500,000 Limited Tax, Series 1987-3, 8.625%, 12/01/27 ......................................... 2,624,200
1,000,000 Series 1987-1, 8.625%, 12/01/12 ...................................................... 1,059,300
Minneapolis CDA and St. Paul Housing RDA, Homeownership Mortgage Revenue, Joint Housing.
Program, FGIC Insured,
5,000 9.875%, 12/01/15 ..................................................................... 5,047
8,189,000 Phase II, 7.875%, 07/01/17 ........................................................... 8,265,649
Minnesota State HFA, SFM,
3,760,000 Series D-1, 6.45%, 07/01/11 .......................................................... 3,893,142
1,495,000 Series D-1, 6.50%, 01/01/17 .......................................................... 1,537,637
11,500,000 Minnetonka MFR, Rental Housing, Ridgepointe Housing Project, Phase II, Mandatory Put....
10/01/96, 8.00%, 05/15/22 .............................................................. 11,490,915
1,500,000 Red Wing Housing, RDA, Jordan Tower II Project, 7.00%, 01/01/19 ........................ 1,554,570
$14,275,000 Roseville MFR, Rental Housing, Rosepointe No. 1 Project, Mandatory Put 10/01/96,........
8.00%, 10/01/18 ........................................................................ $ 14,565,354
6,000,000 St. Louis Park EDA, Tax Increment Revenue, Refunding, FGIC Insured, Pre-Refunded,.......
8.40%, 09/01/09 ........................................................................ 7,113,000
St. Paul Port Authority,
3,930,000 Energy Park, Tax Increment Revenue, Refunding, Pre-Refunded, 8.00%, 12/01/07 ......... 4,356,562
370,000 Housing and Redevelopment, MFR Rental Housing, Series B, 7.00%, 09/01/97 ............. 111,000
980,000 Housing and Redevelopment, MFR Rental Housing, Series B, 7.25%, 09/01/01 ............. 294,000
14,835,000 Housing and Redevelopment, MFR Rental Housing, Series B, 7.50%, 09/01/22 ............. 4,450,500
3,465,000 IDR, Bandana Square, Series 1989-C, 7.80%, 12/01/12 .................................. 2,901,938
230,000 IDR, Bandana Square, Series C, 7.70%, 12/01/00 ....................................... 220,800
255,000 IDR, Bandana Square, Series C, 7.70%, 12/01/01 ....................................... 242,250
270,000 IDR, Bandana Square, Series C, 7.70%, 12/01/02 ....................................... 256,500
1,690,000 IDR, Bandana Square, Series C, 7.70%, 12/01/07 ....................................... 1,415,375
385,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/96 ........................... 383,857
415,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/97 ........................... 411,207
445,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/98 ........................... 438,352
480,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/99 ........................... 470,261
515,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/00 ........................... 502,001
550,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/01 ........................... 533,610
595,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/02 ........................... 574,770
640,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/03 ........................... 615,750
685,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/04 ........................... 656,593
740,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/05 ........................... 706,863
795,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/06 ........................... 756,975
855,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/07 ........................... 811,694
915,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/08 ........................... 866,276
670,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/09 ........................... 632,715
140,000 IDR, Refunding, Common Bond Fund, Series C, Fort Road Medical Center, 7.95%, 09/01/01 133,000
155,000 IDR, Refunding, Common Bond Fund, Series C, Fort Road Medical Center, 7.95%, 09/01/02 147,250
1,705,000 IDR, Refunding, Common Bond Fund, Series C, Fort Road Medical Center, 7.95%, 09/01/10 1,427,938
105,000 IDR, Refunding, Common Bond Fund, Series F, Ideal Security Hardware Corp., 8.00%, 12/01/01 99,750
115,000 IDR, Refunding, Common Bond Fund, Series F, Ideal Security Hardware Corp., 8.00%, 12/01/02 109,250
1,790,000 IDR, Refunding, Common Bond Fund, Series F, Ideal Security Hardware Corp., 8.00%, 12/01/12 1,499,125
9,750,000 Southern Minnesota Municipal Power Agency, Supply System Revenue, Series A, Pre-Refunded,
8.125%, 01/01/18 ....................................................................... 10,563,638
Washington County Housing RDA,
3,000,000 Housing Development Revenue, Orleans Apartments, Project A, 8.25%, 07/01/21 .......... 2,990,910
5,210,000 Housing Development Revenue, Raymie Johnson Apartments, Pre-Refunded, 7.70%, 12/01/19 6,049,227
10,000,000 Pooled Housing and Redevelopment, 7.20%, 01/01/22 .................................... 10,363,100
------------
123,390,591
------------
Mississippi .4%
Claiborne County PCR, Refunding, Systems Energy Resources, Inc.,
5,700,000 7.30%, 05/01/25 ...................................................................... 5,883,483
14,000,000 6.20%, 02/01/26 ...................................................................... 13,032,600
6,700,000 Mississippi Business Finance Corp., PCR, Refunding, Gulf Power Co., AMBAC Insured,......
5.50%, 02/01/26 ........................................................................ 6,150,600
2,210,000 Mississippi Home Corp., SFR, Refunding, Senior Series A, FGIC Insured, 9.25%, 03/01/12 . 2,375,507
2,490,000 Mississippi State Educational Facilities Authority Revenue,
Private Nonprofit Institutions of Higher Learning,
Tougaloo College Project, Series A, 6.50%, 06/01/18 ................................... 2,430,041
------------
29,872,231
------------
Missouri 1.0%
10,000,000 Kansas City School District Building Corp., Leasehold Revenue, Capital Improvement Project,
Series A, FGIC Insured, Pre-Refunded, 7.90%, 02/01/08 .................................. 10,845,400
1,560,000 Marion County Nursing Home District Revenue, Refunding, Pre-Refunded, 9.00%, 08/01/03 .. 1,673,006
Missouri State Health and Educational Facilities Authority Revenue,
5,000,000 Series B, MBIA Insured, 6.25%, 02/15/12 .............................................. 5,167,200
3,750,000 Sisters of St. Mary's Health Care Project, BIG Insured, Pre-Refunded, 7.75%, 06/01/16 4,088,700
Moberly IDA, Hospital Revenue, Refunding, Moberly Regional Medical Center, Inc., Project,
4,105,000 8.625%, 03/01/02 ..................................................................... 4,342,269
8,955,000 Pre-Refunded, 8.75%, 03/01/16 ........................................................ 9,896,529
$ 4,675,000 Newton County IDA, Hospital Revenue, Refunding, Sale Hospital, Inc. Project, Pre-Refunded,
9.00%, 01/01/05 ........................................................................ $ 5,031,703
16,250,000 St. Louis County IDA, Health Facilities Revenue, Refunding & Improvement, First Mortgage,
Normandy Osteopathic Hospitals Project, 9.125%, 08/01/13 ............................... 17,034,550
6,000,000 St. Louis Parking Facilities Revenue, 6.625%, 12/15/21 ................................. 6,171,720
3,600,000 West Plains IDA, Hospital Revenue, Ozarks Medical Center Project, Series A, 8.625%,.....
09/15/20 ............................................................................... 3,852,828
------------
68,103,905
------------
Montana .4%
10,000,000 Forsyth County PCR, Puget Sound Power and Light Co. Project, AMBAC Insured, 6.80%,......
03/01/22 ............................................................................... 10,692,300
3,250,000 Forsyth PCR, Refunding, The Montana Power Co., Colstrip Project, Series A, 6.125%,......
05/01/23 ............................................................................... 3,139,858
Montana State Board Housing, Refunding, SF Program,
2,835,000 Series A, 6.50%, 12/01/22 ............................................................ 2,870,069
6,800,000 Series B-1, 6.25%, 12/01/21 .......................................................... 6,855,284
2,000,000 Montana State Health Facilities Authority Revenue, Montana Developmental Center Project,
6.40%, 06/01/19 ........................................................................ 2,034,000
------------
25,591,511
------------
Nebraska .1%
6,400,000 Nebraska Investment Financial Authority, 7.00%, 11/01/09 ............................... 6,687,744
------------
Nevada 3.5%
2,000,000 Churchill County Health Care Facilities Revenue, Western Health Network, Series A,
MBIA Insured, 6.25%, 01/01/14 ......................................................... 2,040,460
17,500,000 Clark County Airport System Improvement Revenue, 8.25%, 07/01/15 ....................... 18,651,500
5,110,000 Clark County HFC, MFHR, FHA Insured, 7.75%, 07/01/23 ................................... 5,198,914
Clark County IDR,
12,500,000 Refunding, Nevada Power Co. Project, Series C, 7.20%, 10/01/22 ....................... 13,042,625
18,080,000 Southwest Gas Corp., Series A, 7.30%, 09/01/27 ....................................... 18,761,254
62,470,000 Southwest Gas Corp., Series B, 7.50%, 09/01/32 ....................................... 65,855,874
4,500,000 Humboldt County PCR, Refunding, Sierra Pacific Power Co., Series A, AMBAC Insured,......
6.30%, 07/01/22 ........................................................................ 4,577,175
5,405,000 Nevada Housing Division, Multi-Unit Housing Revenue, Issue B, 6.55%, 10/01/25 .......... 5,531,045
8,210,000 Nevada Housing Division, Refunding, Issue C-2, 6.75%, 10/01/26 ......................... 8,333,643
Nevada Housing Division, SF Program,
3,775,000 Issue 1988-A, FI/GML, 8.30%, 10/01/19 ................................................ 3,861,221
3,705,000 Issue 1988 A-2, FI/GML, 8.375%, 10/01/19 ............................................. 3,787,140
3,900,000 Refunding, Program A-1, 6.25%, 10/01/26 .............................................. 3,925,467
Nevada State Colorado River,
31,345,000 Series 1994, 5.50%, 07/01/27 ......................................................... 29,019,514
4,790,000 Series 1994, Pre-Refunded, 6.50%, 07/01/19 ........................................... 5,298,219
15,915,000 Series 1994, Pre-Refunded, 6.50%, 07/01/24 ........................................... 17,603,582
10,275,000 Nevada State Municipal Bond Bank Project No. 40-41-A, ETM, 6.375%, 12/01/17 ............ 11,253,283
Reno RDA, Tax Allocation,
2,695,000 Downtown Redevelopment Project, Series C, Pre-Refunded, 7.75%, 09/01/05 .............. 3,057,316
8,290,000 Downtown Redevelopment Project, Series D, 7.625%, 09/01/16 ........................... 9,035,022
3,000,000 Refunding, Series A, 6.20%, 06/01/18 ................................................. 2,857,980
5,000,000 Washoe County Gas and Water Facilities Revenue, Refunding, AMBAC Insured, 6.30%, 12/01/14 5,104,750
9,295,000 Washoe County Hospital Facility Revenue, Washoe Medical Center, Inc. Project, Series A,
AMBAC Insured, 6.25%, 06/01/13 ......................................................... 9,489,358
------------
246,285,342
------------
New Hampshire 1.6%
New Hampshire Higher Education and Health Facilities Authority Revenue,
9,730,000 Kendal at Hanover Project, 8.00%, 10/01/19 ........................................... 9,836,933
2,300,000 St. Joseph Hospital, 7.50%, 01/01/16 ................................................. 2,398,509
New Hampshire State HFA,
4,920,000 MFHR, Series 1, 7.10%, 01/01/14 ...................................................... 5,100,466
4,635,000 SF Residential, Series A, 8.50%, 07/01/14 ............................................ 4,841,628
6,925,000 SFMR, Series E, 6.75%, 07/01/19 ...................................................... 7,158,026
5,190,000 SFMR, Series E, 6.80%, 07/01/25 ...................................................... 5,364,228
New Hampshire State IDA,
$ 6,870,000 Pollution Control Public Service Co., Project A, 7.65%, 05/01/21 ..................... $ 7,200,241
50,690,000 Pollution Control Public Service Co., Project B, 7.50%, 05/01/21 ..................... 53,138,327
7,450,000 Pollution Control Public Service Co., Project C, 7.65%, 05/01/21 ..................... 7,808,122
1,820,000 Resource Recovery Revenue, SES Concord Co. Project, 8.15%, 01/01/00 .................. 1,923,540
5,000,000 Resource Recovery Revenue, SES Concord Co. Project, 8.50%, 01/01/09 .................. 5,301,950
------------
110,071,970
------------
New Jersey .2%
4,425,000 New Jersey EDA, First Mortgage, Gross Revenue, Mega Care, Inc. Project, Pre-Refunded,...
8.625%, 08/01/07 ....................................................................... 4,763,291
New Jersey Health Care Facilities, Financing Authority Revenue,.........................
3,975,000 Cathedral Health Service, 7.25%, 02/15/21 ............................................ 4,233,216
900,000 Community Memorial Hospital Association, Series C, 8.00%, 07/01/14 ................... 967,662
4,150,000 Zurbrugg Memorial Hospital Issue, Series C, 8.50%, 07/01/12 .......................... 4,360,779
------------
14,324,948
------------
New Mexico 1.1%
5,000,000 Albuquerque Airport Revenue, Series A, Pre-Refunded, 9.25%, 07/01/19 ................... 5,375,000
10,435,000 Farmington PCR, Refunding, Public Service Co. of New Mexico, Series A, AMBAC Insured,...
6.375%, 12/15/22 ....................................................................... 10,715,597
17,000,000 Lordsburg PCR, Refunding, Phelps Dodge Corp. Project, 6.50%, 04/01/13 .................. 17,555,220
New Mexico State Mortgage Finance Authority, SFM,
17,430,000 Refunding, Series A, 6.85%, 07/01/10 ................................................. 18,144,979
4,165,000 Series G-1, 5.65%, 07/01/27 .......................................................... 3,988,404
17,000,000 University of New Mexico, University Revenue, Series 1989, Pre-Refunded, ...............
7.90%, 06/01/19 ........................................................................ 18,939,530
------------
74,718,730
------------
New York 11.0%
Metropolitan Transportation Authority Revenue, Refunding,
3,000,000 Transit Facilities Obligation, 7.00%, 07/01/09 ....................................... 3,218,220
18,210,000 Transportation Facilities, Series M, 6.00%, 07/01/14 ................................. 17,282,747
1,245,000 New Rochelle IDA, Civic Facilities Revenue, College of New Rochelle Project, 6.625%,....
07/01/12 ............................................................................... 1,272,751
11,895,000 New York and New Jersey Consolidated Port Authority, 112nd Series, MBIA Insured, 5.875%,
10/15/27 ............................................................................... 11,685,291
New York City GO,
5,000,000 Refunding, Series A, 6.25%, 08/01/16 ................................................. 4,876,200
1,500,000 Refunding, Series B, 6.20%, 08/15/06 ................................................. 1,516,860
26,875,000 Refunding, Series B, 6.30%, 08/15/08 ................................................. 27,087,581
21,740,000 Refunding, Series B, 6.375%, 08/15/10 ................................................ 21,815,220
8,500,000 Refunding, Series E, 5.75%, 02/15/09 ................................................. 8,128,635
5,000,000 Refunding, Series H, Subseries H-1, 6.125%, 08/01/11 ................................. 4,881,000
1,795,000 Series 1986-D, Pre-Refunded, 8.50%, 08/01/16 ......................................... 1,852,476
1,180,000 Series 1987-A, Pre-Refunded, 8.50%, 11/01/12 ......................................... 1,275,663
3,355,000 Series 1987-A, Pre-Refunded, 8.50%, 11/01/13 ......................................... 3,626,990
2,805,000 Series 1987-A, Pre-Refunded, 8.75%, 11/01/14 ......................................... 3,040,340
2,040,000 Series 1987-D, Pre-Refunded, 8.50%, 08/01/09 ......................................... 2,194,183
2,610,000 Series 1989-E, 6.50%, 12/01/12 ....................................................... 2,616,395
3,000,000 Series 1990-B, ETM, 8.00%, 06/01/01 .................................................. 3,449,730
6,020,000 Series 1990-B, Pre-Refunded, 7.50%, 10/01/11 ......................................... 6,682,621
9,850,000 Series 1990-B, Pre-Refunded, 7.50%, 10/01/12 ......................................... 10,689,220
10,000,000 Series 1991-A, 7.75%, 08/15/13 ....................................................... 11,082,300
7,000,000 Series 1991-A, 7.75%, 08/15/14 ....................................................... 7,784,770
3,285,000 Series 1991-A, 7.75%, 08/15/17 ....................................................... 3,637,382
5,000 Series 1991-A, 8.00%, 08/15/20 ....................................................... 5,671
15,000 Series 1991-A, 8.00%, 08/15/21 ....................................................... 16,999
1,000,000 Series 1991-A, Pre-Refunded, 8.00%, 03/15/12 ......................................... 1,133,580
13,400,000 Series 1991-A, Pre-Refunded, 8.00%, 03/15/14 ......................................... 15,189,972
1,115,000 Series 1991-A, Pre-Refunded, 8.00%, 03/15/15 ......................................... 1,261,823
3,000,000 Series 1991-A, Pre-Refunded, 8.00%, 03/15/16 ......................................... 3,395,040
895,000 Series 1991-A, Pre-Refunded, 8.00%, 08/15/20 ......................................... 1,044,456
3,165,000 Series 1991-A, Pre-Refunded, 8.00%, 08/15/21 ......................................... 3,693,523
$10,000,000 Series 1991-B, 7.50%, 02/01/04 ....................................................... $ 10,927,200
1,000,000 Series 1991-B, 8.25%, 06/01/05 ....................................................... 1,155,650
15,000,000 Series 1991-B, 7.00%, 02/01/19 ....................................................... 15,727,200
1,760,000 Series 1991-D, 8.00%, 08/01/99 ....................................................... 1,924,384
1,800,000 Series 1991-D, 8.25%, 08/01/11 ....................................................... 2,082,150
490,000 Series 1991-D, 8.25%, 08/01/12 ....................................................... 560,952
145,000 Series 1991-D, 8.25%, 08/01/13 ....................................................... 165,781
85,000 Series 1991-D, 8.25%, 08/01/14 ....................................................... 97,308
50,000 Series 1991-D, 8.00%, 08/01/16 ....................................................... 56,971
100,000 Series 1991-D, 8.00%, 08/01/17 ....................................................... 113,153
50,000 Series 1991-D, 8.00%, 08/01/18 ....................................................... 56,675
30,000 Series 1991-D, 8.00%, 08/01/19 ....................................................... 34,005
240,000 Series 1991-D, ETM, 8.00%, 08/01/99 .................................................. 265,450
10,635,000 Series 1991-D, Pre-Refunded, 8.25%, 08/01/12 ......................................... 12,495,593
7,605,000 Series 1991-D, Pre-Refunded, 8.25%, 08/01/13 ......................................... 8,935,495
4,255,000 Series 1991-D, Pre-Refunded, 8.25%, 08/01/14 ......................................... 4,999,412
2,450,000 Series 1991-D, Pre-Refunded, 8.00%, 08/01/16 ......................................... 2,856,700
4,600,000 Series 1991-D, Pre-Refunded, 8.00%, 08/01/17 ......................................... 5,351,916
3,185,000 Series 1991-D, Pre-Refunded, 8.00%, 08/01/18 ......................................... 3,713,710
1,970,000 Series 1991-D, Pre-Refunded, 8.00%, 08/01/19 ......................................... 2,297,020
5,335,000 Series 1991-F, 8.20%, 11/15/04 ....................................................... 6,229,039
160,000 Series 1991-F, 8.25%, 11/15/15 ....................................................... 184,090
200,000 Series 1991-F, 8.25%, 11/15/17 ....................................................... 229,800
1,840,000 Series 1991-F, Pre-Refunded, 8.25%, 11/15/15 ......................................... 2,181,265
2,300,000 Series 1991-F, Pre-Refunded, 8.25%, 11/15/17 ......................................... 2,726,581
9,300,000 Series 1992-B, 6.75%, 10/01/15 ....................................................... 9,472,143
5,000,000 Series 1992-D, 7.30%, 02/01/01 ....................................................... 5,381,550
9,000,000 Series 1992-D, 7.625%, 02/01/15 ...................................................... 9,769,230
5,000,000 Series 1992-D, 7.50%, 02/01/16 ....................................................... 5,394,900
12,000,000 Series 1992-D, 7.50%, 02/01/17 ....................................................... 12,935,640
3,000,000 Series 1992-H, 7.10%, 02/01/12 ....................................................... 3,157,140
10,000,000 Series 1992-H, 7.20%, 02/01/14 ....................................................... 10,606,200
1,850,000 Series 1993-A, Pre-Refunded, 8.00%, 03/15/13 ......................................... 2,097,123
460,000 Series 1993-B, 8.50%, 08/01/09 ....................................................... 490,677
11,660,000 Series 1993-B, Pre-Refunded, 8.00%, 03/15/17 ......................................... 13,217,543
14,500,000 Series 1994-A, 6.125%, 08/01/06 ...................................................... 14,580,475
21,810,000 Series 1994-A, 6.20%, 08/01/07 ....................................................... 21,889,388
4,390,000 Series 1994-A, 6.25%, 08/01/08 ....................................................... 4,405,936
8,000,000 Series 1994-B, Sub-Series B-1, 7.30%, 08/15/11 ....................................... 8,626,720
3,000,000 Series 1994-B, Sub-Series B-1, 7.00%, 08/15/16 ....................................... 3,157,410
11,750,000 Series 1994-H, Sub-Series H-1, 6.125%, 08/01/09 ...................................... 11,617,578
8,050,000 Series 1995-F, 6.50%, 02/15/07 ....................................................... 8,268,719
7,540,000 Series 1995-F, 6.50%, 02/15/08 ....................................................... 7,715,003
16,000,000 Series 1995-F, 6.60%, 02/15/10 ....................................................... 16,331,840
5,000,000 Series 1995-F, 7.25%, 08/15/24 ....................................................... 5,235,050
720,000 Series B, 8.00, 06/01/98 ............................................................. 770,148
2,325,000 Series B, 8.25%, 06/01/02 ............................................................ 2,647,873
980,000 Series B, 7.50%, 10/01/11 ............................................................ 1,064,456
1,135,000 Series B, 7.50%, 10/01/12 ............................................................ 1,259,929
1,300,000 Series B, 6.75%, 10/01/17 ............................................................ 1,321,541
715,000 Series B, ETM, 8.00, 06/01/98 ........................................................ 769,218
2,175,000 Series B, Pre-Refunded, 8.25%, 06/01/02 .............................................. 2,545,838
1,930,000 Series C, Sub-series C-1, 7.00%, 08/01/17 ............................................ 2,028,237
20,000,000 Series C, Sub-series C-1, 7.00%, 08/01/18 ............................................ 21,018,000
5,000 Series D, 8.50%, 08/01/16 ............................................................ 5,146
7,925,000 Series D, 6.00%, 02/15/25 ............................................................ 7,430,639
4,000,000 Series H, 7.00%, 02/01/16 ............................................................ 4,200,320
New York City Health and Hospital Authority, Local Government Revenue, Series A,........
$ 5,010,000 6.00%, 02/15/07 ...................................................................... $ 4,862,606
17,735,000 6.30%, 02/15/20 ...................................................................... 16,834,239
7,000,000 New York City IDA, Civil Facilities Revenue, Nightingale-Bamford School Project,
5.85%, 01/15/20 ........................................................................ 6,705,370
New York City Municipal Water Finance Authority, Water and Sewer System Revenue,
13,000,000 Refunding, Series A, AMBAC Insured, 5.50%, 06/15/20 .................................. 12,223,250
8,500,000 Series 1987-A, Pre-Refunded, 9.00%, 06/15/17 ......................................... 9,146,000
2,965,000 Series 1989-B, Pre-Refunded, 7.00%, 06/15/19 ......................................... 3,178,243
2,455,000 Series 1994-A, 7.10%, 06/15/12 ....................................................... 2,663,626
4,980,000 Series 1994-A, 7.00%, 06/15/15 ....................................................... 5,358,032
9,000,000 Series B, MBIA Insured, 5.50%, 06/15/19 .............................................. 8,515,710
New York State Dormitory Authority Revenue,
4,000,000 City University General Resources, Series 2, MBIA Insured, 6.25%, 07/01/19 ........... 4,076,280
4,000,000 City University Systems Consolidated, Series A, 5.625%, 07/01/16 ..................... 3,763,240
6,750,000 Our Lady Nursing Home, FHA Insured, 5.90%, 08/01/20 .................................. 6,496,943
4,240,000 State University Educational Facilities, Series B, Refunding, 7.375%, 05/15/14 ....... 4,617,826
2,000,000 State University Educational Facilities, Series B, Refunding, 7.00%, 05/15/16 ........ 2,108,780
New York State Energy Research and Development Authority, Electric Facilities Revenue,
5,000,000 Consolidated Edison Co., Inc. Project B, 9.25%, 09/15/22 ............................. 5,362,650
17,500,000 Long Island Light, Series A, 7.15%, 06/01/20 ......................................... 17,744,475
1,500,000 Long Island Light, Series A, 7.15%, 02/01/22 ......................................... 1,520,955
8,500,000 Refunding, Consolidated Edison Co., Inc., Series A, 6.10%, 08/15/20 .................. 8,498,980
New York State HFA, Service Contract Revenue,
4,675,000 Refunding, Series C, 5.875%, 09/15/14 ................................................ 4,445,504
25,500,000 Refunding, Series C, 6.125%, 03/15/20 ................................................ 24,705,930
3,155,000 Series A, 6.375%, 09/15/14 ........................................................... 3,174,877
3,785,000 Series A, 6.375%, 09/15/16 ........................................................... 3,794,576
10,000,000 Series A, 6.50%, 03/15/25 ............................................................ 10,127,200
14,070,000 New York State HFA, Refunding, Health Facilities, New York City, Series A, .............
5.90%, 05/01/05 ........................................................................ 13,992,474
New York State Local Government Assistance Corp.,
6,000,000 Series A, 6.50%, 04/01/20 ............................................................ 6,267,120
14,530,000 Series C, 5.50%, 04/01/22 ............................................................ 13,260,514
New York State Medical Care Facilities, Financial Agency Revenue,
7,215,000 Hospital and Nursing Home, FSA Mortgage Insured, 6.50%, 02/15/34 ..................... 7,318,247
11,160,000 Hospital and Nursing Home, Refunding, FSA Mortgage Insured, 6.40%, 08/15/14 .......... 11,411,658
7,600,000 Hospital Mortgage, Series A, AMBAC Insured, 6.50%, 08/15/29 .......................... 8,014,960
11,080,000 Refunding, Presbyterian Hospital, Series A, 5.375%, 02/15/25 ......................... 10,023,190
5,000,000 St. Lukes/Roosevelt Hospital, Series A, MBIA Insured, 5.625%, 08/15/18 ............... 4,753,000
12,500,000 The Hospital for Special Surgery, Series A, 6.375%, 08/15/24 ......................... 12,739,125
11,600,000 New York State Tollway Authority, Service Contract Revenue, Local Highway and Bridge,...
6.25%, 04/01/14 ........................................................................ 11,586,776
New York State Urban Development Corp.
7,685,000 Correctional Capital Facilities, Series 5, 6.10%, 01/01/12 ........................... 7,540,061
5,000,000 Refunding, State Facilities, 5.60%, 04/11/15 ......................................... 4,700,050
5,000,000 Warren and Washington Counties IDA Revenue, Refunding, Adirondack Resource Recovery Project,
Series A, 7.90%, 12/15/07 .............................................................. 5,088,700
------------
776,837,916
------------
North Carolina 2.8%
North Carolina Eastern Municipal Power Agency, Power System Revenue,
20,000,000 Refunding, Series 1988-A, Pre-Refunded, 8.00%, 01/01/21 .............................. 21,629,200
3,250,000 Refunding, Series 1989-A, 6.50%, 01/01/24 ............................................ 3,257,443
25,700,000 Refunding, Series 1991-A, 6.50%, 01/01/17 ............................................ 25,897,119
6,875,000 Refunding, Series 1993-B, 6.25%, 01/01/12 ............................................ 6,793,256
39,030,000 Refunding, Series 1993-B, 6.25%, 01/01/23 ............................................ 38,825,093
4,000,000 Refunding, Series 1993-B, FGIC Insured, 6.25%, 01/01/23 .............................. 4,077,160
2,000,000 Series 1993-C, 5.50%%, 01/01/07 ...................................................... 1,932,560
15,960,000 Series 1993-G, 5.875%, 01/01/14 ...................................................... 15,209,082
24,420,000 Series 1993-G, 5.75%, 12/01/16 ....................................................... 22,828,060
North Carolina Eastern Municipal Power Agency, Power System Revenue, (cont.)
$ 1,355,000 Series B, 6.00%, 01/01/05 ............................................................ $ 1,375,881
7,440,000 Series D, 5.875%, 01/01/13 ........................................................... 7,101,108
North Carolina Municipal Power Agency No. 1, Catawba Electric Revenue, Refunding,
12,435,000 5.75%, 01/01/15 ...................................................................... 11,793,727
12,350,000 MBIA Insured, 5.00%, 01/01/18 ........................................................ 11,013,483
15,620,000 Series 1982, 6.25%, 01/01/17 ......................................................... 15,582,356
6,590,000 University of North Carolina, Chapel Hill, Hospital Revenue, 5.25%, 02/15/26 ........... 5,991,826
5,000,000 Wake County IPC, Financing Authority Revenue, Carolina Power and Light, 6.90%, 04/01/09. 5,303,900
------------
198,611,254
------------
North Dakota .4%
7,750,000 Dickinson Health Care Facilities Revenue, BHS Long-Term Care, Inc., 7.625%, 02/15/20 ... 8,255,533
401,000 Ellendale MFHR, Ellendale Manor Apartments Project, 9.75%, 07/01/16 .................... 409,473
Mercer County PCR, Basin Power Corp.,
7,380,000 Second Series, AMBAC Insured, 6.05%, 01/01/19 ........................................ 7,425,313
11,800,000 Series 1984-E, 7.00%, 01/01/19 ....................................................... 12,354,600
839,000 Wahpeton MFHR, Evergreen Apartments Project, 9.75%, 07/01/16 ........................... 856,728
------------
29,301,647
------------
Ohio 1.1%
6,740,000 Franklin County Hospital Facility Mortgage Revenue, Refunding, Presbyterian Retirement
Services, Series 1987-A, 9.00%, 07/01/10 ............................................... 7,081,853
2,865,000 Franklin County Nursing Home, First Mortgage Revenue, Volunteers of America Care
Facilities Project, 8.75%, 11/01/18 .................................................... 3,016,788
Montgomery County Health Systems Revenue, Franciscan Facility, Series B-2,
2,500,000 8.10%, 07/01/01 ...................................................................... 2,652,475
12,000,000 8.10%, 07/01/18 ...................................................................... 13,195,200
1,680,000 Muskingum County Hospital Facilities Revenue, Care One Health System, Bethesda Hospital,
Pre-Refunded, 8.00%, 12/01/16 .......................................................... 1,755,214
Ohio State Air Quality Development Authority Revenue,
12,000,000 Refunding, Dayton Power and Light Co. Project, 6.10%, 09/01/30 ....................... 12,018,120
6,325,000 Toledo Edison, Series B, 8.00%, 05/15/19 ............................................. 6,537,647
1,675,000 Ohio State EDR, Good Samaritan Medical Center, Series 1990-3, 7.875%, 12/01/10 ......... 1,764,546
3,250,000 Ohio State Water Development Authority Revenue, Refunding, Water Development Dayton Power,
Series A, 6.40%, 08/15/27 .............................................................. 3,346,298
Ohio State Water Development Facilities Authority, PCR,
4,000,000 Cleveland Electric Illumination Co. Project, Series A-1, 9.75%, 11/01/22 ............. 4,191,560
10,000,000 Cleveland Electric Illumination Co. Project, Series A-2, 9.75%, 11/01/22 ............. 10,478,900
10,000,000 Toledo Edison, Series A, 8.00%, 05/15/19 ............................................. 10,390,400
------------
76,429,001
------------
Oklahoma 1.3%
Canadian County HFA, SFMR, Series 1990-A,
1,830,000 7.70%, 09/01/05 ...................................................................... 1,888,670
3,800,000 7.80%, 09/01/12 ...................................................................... 3,940,942
6,000,000 Jackson County Memorial Hospital Authority Revenue, Refunding, Jackson Memorial Hospital
Project, Pre-Refunded, 9.00%, 08/01/15 ................................................. 6,489,600
19,700,000 Oklahoma State Turnpike System Authority, First Senior Revenue, Pre-Refunded, 7.875%,...
01/01/21 ............................................................................... 21,762,793
655,000 Tulsa County Home Financial Authority, Mortgage Revenue, Series D, GNMA Insured, 6.95%,
12/01/22 ............................................................................... 672,423
Tulsa County Municipal Airport Revenue,
4,000,000 American Airlines-AMR Corp., 7.35%, 12/01/11 ......................................... 4,285,160
19,030,000 American Airlines, Inc. Project, 6.25%, 06/01/20 ..................................... 18,795,550
11,000,000 American Airlines, Inc. Project, 7.375%, 12/01/20 .................................... 11,621,940
Tulsa County Parking Authority, Series B,
3,000,000 6.90%, 12/01/07 ...................................................................... 3,281,460
5,500,000 7.00%, 12/01/14 ...................................................................... 5,900,565
Tulsa County Public Facilities Authority, Recreation Facility Revenue, Pre-Refunded,
$ 2,000,000 8.875%, 02/01/03 ..................................................................... $ 2,196,240
2,000,000 9.00%, 02/01/08 ...................................................................... 2,200,400
2,740,000 Tulsa Housing Assistance Corp. Revenue, First Lien, Refunding, 6.80%, 07/01/11 ......... 2,824,282
2,000,000 Tulsa Industrial Authority Hospital Revenue, St. John Medical Center Project, Series A,
6.25%, 02/15/14 ........................................................................ 2,026,020
4,000,000 Valley View Hospital Authority Revenue, Refunding, Valley View Regional Medical Center,
6.00%, 08/15/14 ........................................................................ 3,702,880
------------
91,588,925
------------
Oregon .1%
5,500,000 Oregon State EDR, Georgia Pacific Corp., Series CLVII, 6.35%, 08/01/25 ................. 5,377,845
------------
Pennsylvania 3.7%
5,250,000 Allegheny County IDA Revenue, Environmental Improvement, 6.70%, 12/01/20 ............... 5,337,990
14,250,000 Beaver County IDA, PCR, Ohio Edison Co., Beaver Valley Project, Series A, 7.75%, 09/01/24 15,060,683
Cambria County HDA, Hospital Revenue, Conemaugh Valley Memorial Hospital, Refunding,....
Series B,
9,600,000 6.30%, 07/01/08 ...................................................................... 9,964,416
10,740,000 6.375%, 07/01/18 ..................................................................... 10,954,156
3,000,000 Pre-Refunded, 8.875%, 07/01/18 ....................................................... 3,334,800
Delaware County IDA Revenue, Refunding,
6,500,000 Philadelphia Electric, Series 1991, 7.375%, 04/01/21 ................................. 6,923,410
41,300,000 Resource Recovery Project, Series A, 8.10%, 12/01/13 ................................. 42,986,279
22,500,000 Lancaster County Solid Waste Management Authority, Resource Recovery System Revenue,....
Series A, 8.50%, 12/15/10 ............................................................. 23,978,475
4,000,000 Lehigh County IDA, PCR, Refunding, Pennsylvania Power and Light Co. Project, Series A,
MBIA Insured, 6.15%, 08/01/29 .......................................................... 4,054,600
5,000,000 Montgomery County GO, Series A, 6.10%, 10/15/25 ........................................ 5,052,050
5,500,000 Montgomery County Higher Education and Health Authority, Hospital Revenue, Pre-Refunded,
Jeanes Health System Project, 8.75%, 07/01/20 .......................................... 6,423,065
5,000,000 Montgomery County IDA, PCR, Philadelphia Electric Co., Series 1986-A, 8.875%, 06/01/16 . 5,114,300
5,000,000 Pennsylvania EDA, Financing Authority Revenue, Macmillan, L.P. Project, 7.60%, 12/01/20 5,467,700
13,500,000 Pennsylvania EDA, Financing Resources Recovery Revenue, Colver Project, Series D,.......
7.125%, 12/01/15 ....................................................................... 14,063,760
33,280,000 Pennsylvania State Financial Authority Revenue, Refunding, Municipal Capital Improvements
Program, 6.60%, 11/01/09 ............................................................... 35,302,426
Pennsylvania State HFA,
10,590,000 Refunding, Rental Housing, FGIC Insured, 6.40%, 07/01/12 ............................. 10,689,122
4,200,000 SFM, Series 1991, 7.15%, 04/01/15 .................................................... 4,390,050
2,000,000 Pennsylvania State Higher Educational Facilities Authority, College and University
Revenues, Lycoming College, Pre-Refunded, 8.375%, 10/01/18 ............................. 2,218,300
4,445,000 Pennsylvania State Pooled Finance Authority, Lease Revenue, Capital Improvement,
Series B, MBIA Insured, 8.00%, 11/01/09 ................................................ 4,670,939
Philadelphia City GO, Refunding, Series 1987-A,
1,000,000 11.50%, 08/01/97 ..................................................................... 1,081,990
1,545,000 11.50%, 08/01/98 ..................................................................... 1,757,561
2,400,000 11.50%, 08/01/99 ..................................................................... 2,855,136
1,000,000 11.50%, 08/01/00 ..................................................................... 1,228,880
Philadelphia Gas Works Revenue,
2,850,000 Series 13, Pre-Refunded, 7.70%, 06/15/21 ............................................. 3,279,552
3,950,000 Series A, 6.375%, 07/01/26 ........................................................... 3,975,399
11,060,000 Philadelphia Hospital and Higher Education Facilities Authority, Hospital Revenue,......
Albert Einstein Medical Center, 7.50%, 04/01/99 ........................................ 11,695,397
Philadelphia Housing RDA Revenue,
180,000 Sub-Series 2-A, 8.375%, 02/01/14 ..................................................... 181,624
4,140,000 Sub-Series 2-B, 8.625%, 08/01/26 ..................................................... 4,177,591
1,000,000 Philadelphia Municipal Authority, Gas Works Lease Revenue, 7.50%, 05/01/01 ............. 1,083,350
10,890,000 Philadelphia Water and Sewer Revenue, Series 10, ETM, 7.35%, 09/01/04 .................. 12,166,417
3,000,000 Westmoreland County IDA Revenue, Refunding, Citizens General Hospital Project,..........
Series A, 8.25%, 07/01/13 .............................................................. 3,119,580
------------
262,588,998
------------
Puerto Rico 1.2%
$15,750,000 Puerto Rico Commonwealth GO, Series 1994, 6.50%, 07/01/23 .............................. $ 16,462,845
Puerto Rico Commonwealth Highway and Transportation Authority Revenue, Series Y,
59,000,000 5.00%, 07/01/36 ...................................................................... 49,460,290
5,000,000 5.50%, 07/01/36 ...................................................................... 4,565,600
3,200,000 Puerto Rico Commonwealth Urban Renewal and Housing Corp., Refunding, 7.875%, 10/01/04 .. 3,544,416
Puerto Rico Electric Power Authority, Power Revenue, Refunding, Pre-Refunded,
4,000,000 Series 1987-K, 9.375%, 07/01/17 ...................................................... 4,331,960
2,000,000 Series 1988-M, 8.00%, 07/01/08 ....................................................... 2,196,200
5,000,000 Puerto Rico Municipal Finance Agency, Series 1988-A, 8.25%, 07/01/08 ................... 5,394,700
------------
85,956,011
------------
Rhode Island 1.4%
9,900,000 Providence Special Obligation Tax Increment, Series A, 7.65%, 06/01/16 ................. 10,658,538
2,200,000 Rhode Island Clean Water Financial Agency Revenue, Drinking Water Providence,...........
Series A, AMBAC Insured, 6.70%, 01/01/15 ............................................... 2,348,346
Rhode Island Housing and Mortgage Finance Corp., Homeownership Opportunity,
1,925,000 Series 2, 7.75%, 04/01/22 ............................................................ 2,009,777
20,200,000 Series 10-A, 6.50%, 10/01/22 ......................................................... 20,683,992
13,085,000 Series 10-A, 6.50%, 04/01/27 ......................................................... 13,398,517
7,400,000 Series 13, 6.70%, 10/01/15 ........................................................... 7,640,056
4,165,000 Series 13, 6.85%, 04/01/27 ........................................................... 4,315,107
15,000,000 Series 15-A, 6.85%, 10/01/24 ......................................................... 15,667,650
2,720,000 Series 16-A, 6.375%, 10/01/26 ........................................................ 2,720,082
2,320,000 Series 17-A, 6.25%, 04/01/17 ......................................................... 2,321,647
3,000,000 Rhode Island Port Authority and Economic Development Corp., Refunding,
Shepard Building Project, Series B, AMBAC Insured, 6.75%, 06/01/25 ..................... 3,193,800
4,000,000 aRhode Island State Consolidated Capital Development Loan, Series A, MBIA Insured,.......
5.75%, 08/01/15 ....................................................................... 3,953,720
Rhode Island State Health and Educational Building Corp. Revenue,
3,000,000 Health Facilities, Tockwotton Home, 7.25%, 04/15/17 .................................. 3,198,120
955,000 Roger William Realty, FHA Insured, 7.50%, 08/01/29 ................................... 998,013
2,320,000 St. Antoine Residence, 6.70%, 11/15/12 ............................................... 2,439,967
2,750,000 St. Antoine Residence, 6.75%, 11/15/18 ............................................... 2,881,725
------------
98,429,057
------------
South Carolina 1.5%
1,800,000 Berkeley County School District COP, Berkeley School Facilities Group, Inc.,............
AMBAC Insured, 6.30%, 02/01/16 ......................................................... 1,864,710
24,000,000 Charleston County Resource Recovery Revenue, Foster Wheeler, Inc. Project, Series A,....
9.25%, 01/01/10 ........................................................................ 26,081,040
3,555,000 Marion County Hospital District Revenue, Refunding, Connie Lee Insured, 5.375%, 11/01/25 3,213,222
5,000,000 Myrtle Beach COP, Myrtle Beach Convention Center Project, 6.875%, 07/01/17 ............. 5,135,800
Piedmont Municipal Power Agency, South Carolina Electric Revenue, Refunding,
6,700,000 7.25%, 01/01/22 ...................................................................... 6,771,087
5,500,000 6.375%, 01/01/25 ..................................................................... 5,417,500
3,150,000 Series A, 5.75%, 01/01/24 ............................................................ 2,851,884
5,050,000 Series A, AMBAC Insured, 5.75%, 01/01/24 ............................................. 4,764,625
3,000,000 Richland County PCR, Refunding, Union Camp Corp. Project, Series C, 6.55%, 11/01/20 .... 3,138,990
South Carolina State Public Service Authority Revenue, Refunding,
12,765,000 Series A, AMBAC Insured, 6.375%, 07/01/21 ............................................ 13,102,124
23,150,000 Series A, MBIA Insured, 5.75%, 01/01/22 .............................................. 22,542,544
10,000,000 Series B, 6.00%, 07/01/31 ............................................................ 9,617,400
------------
104,500,926
------------
South Dakota .5%
5,000,000 Lawrence County PCR, Refunding, Black Hills Power and Light Co. Project, 6.70%, 06/01/10 5,306,500
South Dakota State HDA, Homeownership Mortgage,
6,000,000 Series A, 6.30%, 05/01/17 ............................................................ 5,992,980
10,580,000 Series A, 7.15%, 05/01/27 ............................................................ 10,949,559
3,205,000 Series B, 7.10%, 05/01/17 ............................................................ 3,326,245
$ 3,480,000 Series D, 6.65%, 05/01/14 ............................................................ $ 3,603,192
5,000,000 Series G, 7.125%, 05/01/14 ........................................................... 5,313,900
------------
34,492,376
------------
Tennessee .8%
6,690,000 Gatlinburg COP, Gatlinburg Convention Center, Inc., Pre-Refunded, 9.25%, 12/01/12 ...... 7,415,464
Hamilton County IDB, MFHR, Patten Towers Apartments, Series A,
2,515,000 6.125%, 08/01/05 ..................................................................... 2,499,835
1,000,000 6.30%, 08/01/07 ...................................................................... 991,150
4,820,000 Knox County Health, Educational and Housing Facilities Board, MFHR, GNMA Secured,.......
East Towne Village Project, 8.20%, 07/01/28 ............................................ 5,009,474
Memphis-Shelby County Airport Authority, Special Facilities and Project Revenue,
Federal Express Corp.
14,690,000 7.875%, 09/01/09 ..................................................................... 16,108,320
6,520,000 6.75%, 09/01/12 ...................................................................... 6,741,158
1,940,000 Metropolitan Nashville Airport Authority, Airport Revenue, Series C, FGIC Insured, 6.60%,
07/01/15 ............................................................................... 2,060,008
1,990,000 Mount Pleasant IDR, PCR, Stauffer Chemical Co. Project, 8.00%, 12/01/12 ................ 2,227,686
5,000,000 Nashville and Davidson County Revenue, IDB, Refunding & Improvement, Osco Treatment, Inc.,
6.00%, 05/01/03 ........................................................................ 4,999,950
Tennessee HDA, Homeownership Program,
2,470,000 Series 1992, 6.80%, 07/01/17 ......................................................... 2,536,492
5,460,000 Series P, 7.70%, 07/01/16 ............................................................ 5,495,435
2,275,000 Tennessee State Local Development Authority Revenue, Community Provider Pooled Loan Program,
6.45%, 10/01/14 ........................................................................ 2,321,478
------------
58,406,450
------------
Texas 7.6%
18,100,000 Austin Combined Utility System Revenue, Series A, Pre-Refunded, 8.00%, 11/15/16 ........ 20,705,676
30,000 Austin HFC, SFMR, Series 1984, 11.25%, 02/01/09 ........................................ 30,530
Austin Utility System Revenue, Refunding,
11,310,000 FGIC Insured, 6.25%, 05/15/16 ........................................................ 11,697,594
25,000,000 MBIA Insured, 5.60%, 05/15/25 ........................................................ 23,863,000
4,500,000 Bexar County Health Facilities Development Corp. Revenue, Incarnate Word Facility,......
FSA Insured, 6.00%, 11/15/15 ........................................................... 4,507,290
1,750,000 Bexar County HFC, MFHR, Sunpark Apartments Project, 6.875%, 12/01/12 ................... 1,779,873
5,000,000 Bexar Metropolitan Water District, Water Works Systems Revenue, Refunding, MBIA Insured,
5.875%, 05/01/22 ....................................................................... 4,976,850
6,100,000 Brazos County Health Facilities Development Corp., Hospital Revenue, St. Joseph Hospital
Project, Pre-Refunded, 10.25%, 10/01/15 ................................................ 6,732,936
Brazos River Authority, Collateralized, PCR, Texas Utilities Electric Co. Project,
2,500,000 Series 1987-A, 9.875%, 10/01/17 ...................................................... 2,689,425
17,550,000 Series 1988-A, 9.25%, 03/01/18 ....................................................... 18,950,315
15,000,000 Series 1989-A, 8.25%, 01/01/19 ....................................................... 16,173,150
Brazos River Authority, Johnson County, Surface Water and Treatment Revenue,
445,000 8.60%, 09/01/96 ...................................................................... 449,058
480,000 8.75%, 09/01/97 ...................................................................... 484,210
520,000 8.90%, 09/01/98 ...................................................................... 524,384
560,000 9.00%, 09/01/99 ...................................................................... 564,441
605,000 9.00%, 09/01/00 ...................................................................... 609,495
655,000 9.00%, 09/01/01 ...................................................................... 659,651
705,000 9.10%, 09/01/02 ...................................................................... 709,998
765,000 9.10%, 09/01/03 ...................................................................... 770,179
825,000 9.10%, 09/01/04 ...................................................................... 830,585
890,000 9.20%, 09/01/05 ...................................................................... 896,159
960,000 9.20%, 09/01/06 ...................................................................... 966,643
1,040,000 9.20%, 09/01/07 ...................................................................... 1,046,854
1,120,000 9.20%, 09/01/08 ...................................................................... 1,127,381
1,210,000 9.25%, 09/01/09 ...................................................................... 1,217,768
1,310,000 9.25%, 09/01/10 ...................................................................... 1,318,410
1,415,000 9.25%, 09/01/11 ...................................................................... 1,423,858
1,525,000 9.25%, 09/01/12 ...................................................................... 1,534,547
$ 1,650,000 9.25%, 09/01/13 ...................................................................... $ 1,660,329
1,780,000 9.25%, 09/01/14 ...................................................................... 1,791,143
1,670,000 9.25%, 09/01/15 ...................................................................... 1,680,454
3,470,000 Dallas County Flood Control District No. 1, Refunding, Pre-Refunded, 9.25%, 04/01/10 ... 3,635,970
Dallas-Fort Worth, International Airport Facilities, Improvement Corp. Revenue,
American Airlines, Inc.,
99,000,000 8.00%, 11/01/24 ....................................................................... 107,118,000
23,200,000 Refunding, 6.00%, 11/01/14 ........................................................... 22,445,768
5,615,000 El Paso HFC, SFMR, Series 1991-A, 8.75%, 10/01/11 ...................................... 6,066,221
2,700,000 Grand Prairie Health Facilities Development Corp., Hospital Revenue, Refunding,
Dallas/Ft. Worth Medical Center Project, AMBAC Insured, 6.875%, 11/01/10 ............... 2,958,174
1,340,000 Grand Prairie HFC, SFMR, 10.75%, 09/01/14 .............................................. 1,362,592
20,250,000 Harris County IDR, Marine Terminal Revenue, Refunding, 6.95%, 02/01/22 ................. 21,182,918
Harris County Toll Road, Multiple Mode, Senior Lien Revenue, Pre-Refunded,
2,100,000 Refunding, Series 1987, 8.70%, 08/15/17 .............................................. 2,286,123
9,000,000 Series B, 8.625%, 08/15/07 ........................................................... 9,789,300
18,710,000 Series B, 8.70%, 08/15/17 ............................................................ 20,368,267
3,500,000 Series C, 8.125%, 08/15/17 ........................................................... 3,837,190
4,000,000 Series D, 8.25%, 08/15/07 ............................................................ 4,453,240
5,000,000 Series D, 8.30%, 08/15/17 ............................................................ 5,571,950
Houston Water and Sewer System Revenue, Refunding,
22,500,000 Junior Lien, Series A, MBIA Insured, 6.20%, 12/01/20 ................................. 23,020,200
21,000,000 Series B, 6.375%, 12/01/14 ........................................................... 21,662,550
6,730,000 aJoshua Independent School District, Refunding, Series B, 6.125%, 02/15/26 ............. 6,661,085
Matagorda County Navigation District No. 1, PCR, Collateralized, Refunding,
6,500,000 Central Power and Light Co. Project, MBIA Insured, 6.10%, 07/01/28 ................... 6,505,915
10,000,000 Houston Lighting and Power Co., 6.00%, 07/01/28 ...................................... 9,803,500
5,500,000 Houston Lighting and Power Co., Series A, AMBAC Insured, 6.70%, 03/01/27 ............. 5,876,475
40,975,000 Houston Lighting and Power Co., Series B, 7.70%, 02/01/19 ............................ 43,427,764
1,350,000 Mesquite HFC, SFMR, Series 1983, 10.75%, 09/01/14 ...................................... 1,345,289
Sabine River Authority PCR, Texas Utilities Electric Co. Project, Refunding,
7,700,000 6.55%, 10/01/22 ...................................................................... 8,053,507
7,000,000 Series A, 5.85%, 05/01/22 ............................................................ 6,880,650
18,990,000 San Antonio Hotel Occupancy Revenue, Henry B. Gonzalez Convention Center Project,.......
FGIC Insured, 5.70%, 08/15/26 .......................................................... 18,248,061
5,000,000 San Antonio Water Revenue, Refunding, MBIA Insured, 6.50%, 05/15/10 .................... 5,334,400
Texas Housing Agency, Residential Development Mortgage Revenue, Series D,
1,705,000 8.35%, 01/01/08 ...................................................................... 1,761,640
3,400,000 8.35%, 07/01/08 ...................................................................... 3,512,948
Texas Housing Agency, SFMR,
14,395,000 Series 1986-B, 7.50%, 09/01/17 ....................................................... 14,603,440
3,160,000 Series 1988-B, 8.20%, 03/01/16 ....................................................... 3,236,978
2,500,000 Texas Water Development Board Revenue, State Revolving Fund, 6.00%, 07/15/13 ........... 2,532,000
2,490,000 Texas Water Resources Finance Authority Revenue, 7.625%, 08/15/08 ...................... 2,680,684
5,580,000 Travis County HFC, SFMR, Refunding, Series A, 6.95%, 10/01/27 .......................... 5,858,163
------------
534,453,148
------------
U.S. Territories
750,000 Virgin Islands HFA, HMR, Series B, GNMA Secured, 8.10%, 12/01/18 ....................... 773,505
------------
Utah 1.7%
5,050,000 Carbon County, Solid Waste Disposal Revenue, Refunding, Laidlaw, Inc. Project,..........
Series A, 7.50%, 02/01/10 .............................................................. 5,463,848
Intermountain Power Agency, Special Obligation,
13,450,000 First Crossover, Series 86-B, 7.875%, 07/01/14 ....................................... 13,794,993
9,500,000 Refunding, Fifth Crossover, Series 87-B, 7.20%, 07/01/19 ............................. 9,945,550
Intermountain Power Agency, Supply Revenue,
34,805,000 Refunding, Series B, 7.75%, 07/01/20 ................................................. 37,372,217
5,500,000 Second Crossover, Series 86-C, 5.75%, 07/01/20 ....................................... 5,304,860
1,805,000 Second Crossover, Series 86-C, FGIC Insured, 7.25%, 07/01/17 ......................... 1,849,385
$ 2,945,000 Utah State HFA, Refunding, Series A, 6.50%, 05/01/19 ................................... $ 2,964,997
Utah State HFA, SFM,
2,845,000 Refunding, 6.80%, 01/01/12 ........................................................... 2,945,343
965,000 Series A, 8.50%, 07/01/19 ............................................................ 982,534
4,855,000 Series B, 6.55%, 07/01/19 ............................................................ 4,911,852
4,805,000 Series B, 6.55%, 07/01/26 ............................................................ 4,893,604
415,000 Series C-1, 6.80%, 07/01/12 .......................................................... 429,637
3,745,000 Series C-1, 8.375%, 07/01/19 ......................................................... 3,973,482
910,000 Series D, 8.60%, 07/01/19 ............................................................ 951,196
3,510,000 Series E-1, 6.65%, 07/01/20 .......................................................... 3,577,041
1,705,000 Series G-1, 8.10%, 07/01/16 .......................................................... 1,752,570
Utah State School District Finance Cooperative Revenue, Financing Pool, Series 1988,
2,450,000 8.375%, 02/15/10 ..................................................................... 2,612,950
1,730,000 8.375%, 02/15/10 ..................................................................... 1,848,903
1,435,000 8.375%, 02/15/10 ..................................................................... 1,522,506
1,420,000 8.375%, 02/15/10 ..................................................................... 1,520,763
1,340,000 8.375%, 02/15/10 ..................................................................... 1,438,075
1,245,000 8.375%, 02/15/10 ..................................................................... 1,338,910
1,210,000 8.375%, 02/15/10 ..................................................................... 1,283,786
1,195,000 8.375%, 02/15/10 ..................................................................... 1,287,816
1,190,000 8.375%, 02/15/10 ..................................................................... 1,283,760
1,160,000 8.375%, 02/15/10 ..................................................................... 1,232,024
1,065,000 8.375%, 02/15/10 ..................................................................... 1,132,297
1,040,000 8.375%, 02/15/10 ..................................................................... 1,105,624
1,030,000 8.375%, 02/15/10 ..................................................................... 1,096,229
635,000 8.375%, 02/15/10 ..................................................................... 653,707
------------
120,470,459
------------
Vermont .1%
9,400,000 Vermont HFA, SF, Series 5, 7.00%, 11/01/27 ............................................. 9,631,334
------------
Virginia .5%
Danville IDA Revenue, Regional Medical Center, FGIC Insured,
5,885,000 6.50%, 10/01/19 ...................................................................... 6,164,126
5,840,000 6.50%, 10/01/24 ...................................................................... 6,097,194
7,250,000 Henrico County IDA, Public Facilities Lease Revenue, Henrico County Regional Jail Project,
6.00%, 08/01/15 ........................................................................ 7,295,168
Virginia State HDA, Commonwealth Mortgage,
5,120,000 Series 1994-C, Sub-Series C-6, 6.25%, 01/01/15 ....................................... 5,161,728
5,500,000 Series B, Sub-Series B-1, 7.20%, 07/01/17 ............................................ 5,852,330
4,755,000 Series H, Sub-Series H-2, 6.55%, 01/01/17 ............................................ 4,890,375
------------
35,460,921
------------
Washington 4.4%
5,000,000 Chelan County PUD No. 1, Cheland Hydro Consolidated System Revenue, 9.30%, 07/01/62 .... 5,405,100
32,480,000 Pierce County EDC, Refunding, Solid Waste-Steilacoom Revenue, 6.60%, 08/01/22 .......... 33,515,787
Port Moses Lake Public Corp., Washington PCR, Union Carbide Corp.,
2,100,000 7.50%, 08/01/04 ...................................................................... 2,131,563
1,000,000 7.875%, 08/01/06 ..................................................................... 1,040,930
2,760,000 Seatac GO, Series 1994, 6.50%, 12/01/13 ................................................ 2,902,361
Seattle Municipality, Metropolitan Seattle Sewer Revenue,
9,680,000 Refunding, Series V, 6.20%, 01/01/32 ................................................. 9,596,462
2,500,000 Series W, MBIA Insured, 6.25%, 01/01/21 .............................................. 2,543,175
7,000,000 Snohomish County USD No. 6, 6.50%, 12/01/11 ............................................ 7,505,120
4,000,000 University of Washington Alumni Association Lease Revenue, Medical Center Roosevelt II,
6.30%, 08/15/14 ........................................................................ 4,124,200
4,835,000 Washington State Housing Finance Commission, MFMR, Refunding, Series A, 7.90%, 07/01/30 4,999,342
Washington State Public Power Supply System Revenue, Nuclear Project No. 1, Refunding,
18,330,000 Series A, 6.00%, 07/01/09 ............................................................ 18,404,970
1,500,000 Series A, 7.00%, 07/01/11 ............................................................ 1,578,495
22,400,000 Series A, 6.00%, 07/01/12 ............................................................ 21,989,184
$35,355,000 Series A, 6.05%, 07/01/12 ............................................................ $ 34,885,486
16,150,000 Series A, 6.25%, 07/01/12 ............................................................ 16,219,930
34,070,000 Series A, 6.50%, 07/01/15 ............................................................ 34,976,262
19,250,000 Series A, 6.00%, 07/01/17 ............................................................ 18,512,725
23,205,000 Series A, 6.25%, 07/01/17 ............................................................ 23,752,870
5,900,000 Series A, 6.875%, 07/01/17 ........................................................... 6,185,796
14,720,000 Series B, 5.60%, 07/01/15 ............................................................ 14,021,242
Washington State Public Power Supply System Revenue, Nuclear Project No. 2, Refunding,..
Series A,
7,700,000 6.30%, 07/01/12 ...................................................................... 7,992,754
4,735,000 7.00%, 07/01/12 ...................................................................... 5,074,689
Washington State Public Power Supply System Revenue, Nuclear Project No. 3, Refunding,
6,750,000 Series 1989-B, 5.50%, 07/01/17 ....................................................... 6,100,988
13,350,000 Series A, 6.50%, 07/01/18 ............................................................ 13,709,115
3,500,000 Series A, BIG Insured, 6.00%, 07/01/18 ............................................... 3,501,645
12,945,000 Series B, 5.70%, 07/01/10 ............................................................ 12,528,818
------------
313,199,009
------------
West Virginia .8%
3,500,000 Braxton County, Solid Waste Disposal Revenue, Weyerhaeuser Co. Project, 6.50%, 04/01/25 3,559,885
New Martinsville Building Commission Revenue, City of New Martinsville Project,.........
Series A, Pre-Refunded,
2,685,000 8.50%, 11/01/03 ...................................................................... 2,904,767
4,250,000 8.75%, 11/01/09 ...................................................................... 4,680,185
2,400,000 Taylor County PCR, Union Carbide Corp., 7.625%, 08/01/05 ............................... 2,707,848
7,000,000 West Virginia State Hospital Financing Authority Revenue, Refunding & Improvement,......
Logan General Hospital, Project, 7.25%, 07/01/20 ....................................... 7,073,640
West Virginia State Housing Development Fund, Housing Finance, Series D,
6,000,000 7.00%, 05/01/17 ...................................................................... 6,260,580
9,000,000 7.05%, 11/01/24 ...................................................................... 9,418,770
11,750,000 West Virginia State School Building Authority Revenue, Capital Improvement, Series A,...
MBIA Insured, 6.25%, 07/01/22 .......................................................... 12,286,504
5,000,000 West Virginia State Water Development Authority Revenue, Loan Program II, Series 1988-A,
Pre-Refunded, 8.625%, 11/01/28 ......................................................... 5,596,250
------------
54,488,429
------------
Wisconsin 1.4%
2,200,000 Janesville IDR, Simmons Manufacturing Co., 7.00%, 10/15/17 ............................. 2,204,180
4,220,000 Madison Industrial Gas and Electric Co. Project, Series A, 6.75%, 04/01/27 ............. 4,352,423
Wisconsin Center District Tax Revenue, Series B,
8,625,000 5.70%, 12/15/20 ...................................................................... 8,093,785
10,660,000 5.75%, 12/15/27 ...................................................................... 9,914,332
Wisconsin Housing and EDA, Homeownership Revenue,
9,190,000 Refunding, Series A, 6.10%, 11/01/10 ................................................. 9,285,391
10,230,000 Series 1, 6.75%, 09/01/15 ............................................................ 10,664,672
3,000,000 Series 1, 6.75%, 09/01/17 ............................................................ 3,117,690
2,250,000 Series A, 6.90%, 03/01/16 ............................................................ 2,369,474
5,500,000 Series A, 6.45%, 03/01/17 ............................................................ 5,607,524
11,330,000 Series A, 7.10%, 03/01/23 ............................................................ 11,817,982
3,000,000 Series B, 7.05%, 11/01/22 ............................................................ 3,111,810
Wisconsin State Health and Educational Facilities Authority Revenue,
14,995,000 Lindengrove, Inc. Project, Pre-Refunded, 10.00%, 10/01/17 ............................ 16,761,261
6,500,000 Mercy Health Systems Corp., AMBAC Insured, 6.125%, 08/15/13 .......................... 6,597,110
7,500,000 Mercy Health Systems Corp., AMBAC Insured, 6.125%, 08/15/17 .......................... 7,550,774
------------
101,448,408
------------
Wyoming .1%
Wyoming CDA, MF Mortgage, Series A,
1,545,000 6.90%, 06/01/12 ...................................................................... 1,597,931
3,530,000 6.95%, 06/01/24 ...................................................................... 3,650,725
Wyoming CDA, SFM,
$ 2,500,000 Series A, 7.25%, 06/01/21 ............................................................ $ 2,651,000
1,730,000 Series G, 7.375%, 06/01/17 ........................................................... 1,808,680
------------
9,708,336
------------
Total Bonds (Cost $6,558,243,671)................................................. 6,840,431,980
------------
Zero Coupon Bonds 1.5%
11,040,000 Calcasieu Parish Memorial Hospital Service District Revenue, Lake Charles Parish Memorial
Hospital Project, Series A, (original accretion rate 5.59%), 12/01/22 ................. 6,111,743
19,625,000 Chicago Residential Mortgage Revenue, Refunding, Series B, MBIA Insured,
(original accretion rate 7.30%), 10/01/09 ............................................. 7,699,280
5,935,000 Coldwater Community Schools, MBIA Insured, (original accretion rate 6.794%), 05/01/18 .. 1,469,505
Colorado Springs Airport Revenue, Series C,
1,660,000 (original accretion rate 6.86%), 01/01/03 ............................................ 1,124,002
1,610,000 (original accretion rate 6.966%), 01/01/05 ........................................... 953,554
1,675,000 (original accretion rate 7.07%), 01/01/07 ............................................ 861,033
800,000 (original accretion rate 7.07%), 01/01/08 ............................................ 382,015
1,450,000 (original accretion rate 7.176%), 01/01/11 ........................................... 556,466
Cook County Community Consolidated School District No. 54, Schaumburg Township,
Series B, FGIC Insured, Pre-Refunded,
3,505,000 (original accretion rate 6.50%), 01/01/07 ............................................ 1,966,130
4,800,000 (original accretion rate 6.55%), 01/01/08 ............................................ 2,519,567
4,380,000 (original accretion rate 6.60%), 01/01/09 ............................................ 2,149,396
5,760,000 (original accretion rate 6.60%), 01/01/10 ............................................ 2,648,851
6,000,000 Harrison Community Schools, AMBAC Insured, (original accretion rate 6.90%), 05/01/20 ... 1,290,720
Jefferson County, Capital Projects Corp., Lease Revenue, Refunding, Series A,
1,640,000 (original accretion rate 6.75%), 08/15/07 ............................................ 879,416
4,505,000 (original accretion rate 6.80%), 08/15/08 ............................................ 2,258,761
4,580,000 (original accretion rate 6.87%), 08/15/09 ............................................ 2,143,027
4,620,000 (original accretion rate 6.85%), 08/15/10 ............................................ 2,013,487
6,825,000 (original accretion rate 6.95%), 08/15/13 ............................................ 2,387,657
6,860,000 (original accretion rate 6.95%), 08/15/14 ............................................ 2,242,464
7,005,000 (original accretion rate 7.00%), 08/15/16 ............................................ 1,986,757
7,115,000 (original accretion rate 7.00%), 08/15/17 ............................................ 1,896,431
Metropolitan Pier and Exposition Authority Dedicated State Tax Revenue, Expansion
Project A, FGIC Insured,
5,650,000 (original accretion rate 1.97%), 06/15/07 ............................................ 5,645,818
8,500,000 (original accretion rate 6.526%), 06/15/08 ........................................... 4,312,050
11,000,000 (original accretion rate 6.677%), 06/15/09 ........................................... 5,209,490
8,000,000 (original accretion rate 6.628%), 06/15/10 ........................................... 3,530,160
9,690,000 (original accretion rate 6.629%), 06/15/11 ........................................... 3,976,291
11,800,000 (original accretion rate 3.193%), 06/15/12 ........................................... 8,414,697
5,250,000 Owensboro Electric Light and Power Revenue, Series B, AMBAC Insured,
(original accretion rate 6.85%), 01/01/08 ............................................ 2,747,692
Shreveport Water and Sewer Revenue, Series B, FGIC Insured,
490,000 (original accretion rate 7.05%), 12/01/07 ............................................ 248,200
2,530,000 (original accretion rate 7.05%), 12/01/08 ............................................ 1,188,871
4,080,000 (original accretion rate 7.05%), 12/01/09 ............................................ 1,748,197
5,630,000 (original accretion rate 7.05%), 12/01/10 ............................................ 2,243,667
7,000,000 Spring ISD, Refunding, FGIC Insured, Pre-Refunded, (original accretion rate 7.80%), 08/15/08 3,174,360
14,250,000 University of Illinois, University Revenues, AMBAC Insured, (original accretion rate 7.187%),
04/01/10 .............................................................................. 6,337,687
11,000,000 Washington State Public Power Supply System Revenue, Nuclear Project No. 2, Refunding,
Series A, (original accretion rate 7.33%), 07/01/13 .................................... 3,682,030
Washington State Public Power Supply System Revenue, Nuclear Project No. 3, Refunding,
Series 1990-B,
6,400,000 (original accretion rate 6.751%), 07/01/12 ........................................... 2,301,311
15,000,000 (original accretion rate 7.25%), 07/01/14 ............................................ 4,669,500
------------
Total Zero Coupon Bonds (Cost $95,837,410)........................................ 104,970,283
------------
Total Long Term Investments (Cost $6,654,081,081) ................................ 6,945,402,263
------------
Short Term Investments .1%
$ 6,000,000 bNew York City Municipal Water Financing Authority, Water and Sewer Systems Revenue,....
FGIC Insured, Daily VRDN and Put, Series C, 4.00%, 06/15/23 ........................... $ 6,000,000
3,000,000 bPort St. Helens, Oregon, PCR, Portland General Electric Co., Series A, Daily VRDN and Put,
4.00%, 04/01/10 ....................................................................... 3,000,000
1,000,000 bWashington State Health Care Facilities Authority Revenue, Sisters of Providence Facility,
Series B, Daily VRDN and Put, 4.10%, 10/01/05 ......................................... 1,000,000
------------
Total Short Term Investments (Cost $10,000,000) .................................. 10,000,000
------------
Total Investments (Cost $6,664,081,081) 98.7% ............................... 6,955,402,263
Other Assets and Liabilities, Net 1.3% ...................................... 91,307,966
------------
Net Assets 100.0% ........................................................... $7,046,710,229
============
At April 30, 1996, the net unrealized appreciation based on the
cost of investments for income tax purposes of $6,664,081,081 was as follows:
Aggregate gross unrealized appreciation for all investments in which there was an
excess of value over tax cost ....................................................... $ 337,461,540
Aggregate gross unrealized depreciation for all investments in which there was an
excess of tax cost over value (46,140,358)
------------
Net unrealized appreciation .......................................................... $ 291,321,182
============
PORTFOLIO ABBREVIATIONS :
AMBAC - American Municipal Bond Assurance Corp.
BIG - Bond Investors Guaranty Insurance Co.
CDA - Community Development Authority/Agency
CGIC - Capital Guaranty Insurance Co.
COP - Certificate of Participation
EDA - Economic Development Authority/Agency
EDC - Economic Development Corp.
EDR - Economic Development Revenue
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Corp.
FHA - Federal Housing Authority
FI/GML - Federally Insured or Guaranteed Mortgage Loan
FSA - Financial Security Assistance
GNMA - Government National Mortgage Association
GO - General Obligation
HDA - Housing Development Authority
HFA - Housing Finance Agency
HFC - Housing Finance Corp.
HMR - Home Mortgage Revenue
IDA - Industrial Development Authority/Agency
IDB - Industrial Development Board
IDR - Industrial Development Revenue
IPC - Industrial Pollution Control
L.P. - Limited Partnership
MBIA - Municipal Bond Investors Assurance Corp.
MBS - Mortgage Backed Securities
MF - Multi-Family
MFHR - Multi-Family Housing Revenue
MFMR - Multi-Family Mortgage Revenue
MFR - Multi-Family Revenue
MUD - Municipal Utility District
PCC - Pollution Control Corp.
PCR - Pollution Control Revenue
PUD - Public Utility District
RDA - Redevelopment Authority/Agency
RMR - Residential Mortgage Revenue
SF - Single Family
SFM - Single Family Mortgage
SFMR - Single Family Mortgage Revenue
SFR - Single Family Revenue
USD - Unified School District
aSee Note 1(f) regarding securities purchased on a when-issued basis.
bVariable rate demand notes (VRDN's) are tax-exempt obligations which contain a
floating or variable interest rate adjustment formula and an unconditional right
of demand to receive payment of the principal balance plus accrued interest upon
short notice prior to specified dates. The interest rate may change on specified
dates in relationship with changes in a designated rate (such as the prime
interest rate or U.S. Treasury bills rate).
The accompanying notes are an integral part of these financial statements.
</TABLE>
FINANCIAL STATEMENTS
Franklin Federal Tax-Free Income Fund
Statement of Assets and Liabilities
April 30, 1996
Assets:
Investments in securities, at value
(identified cost $6,664,081,081) $6,955,402,263
Cash 351,176
Receivables:
Interest 139,081,437
Investment securities sold 887,082
Capital shares sold 8,777,547
-------------
Total assets 7,104,499,505
-------------
Liabilities:
Payables:
Investment securities purchased:
Regular delivery 8,762,700
When-issued basis (Note 1) 31,515,060
Capital shares repurchased 13,298,175
Management fees 2,665,720
Distribution fees 1,254,720
Shareholder servicing costs 147,000
Accrued expenses and other liabilities 145,901
-------------
Total liabilities 57,789,276
-------------
Net assets, at value 7,046,710,229
=============
Net assets consist of:
Net unrealized appreciation on investments$ 291,321,182
Net realized loss (64,288,434)
Class I capital shares 6,785,190,448
Class II capital shares 34,487,033
-------------
Net assets, at value $7,046,710,229
=============
Class I shares:
Net assets, at value $7,012,600,721
=============
Shares outstanding 592,693,405
=============
Net asset value per share* $11.83
=============
Maximum offering price (100/95.75 of $11.83) $12.36
=============
Class II shares:
Net assets, at value $ 34,109,508
=============
Shares outstanding 2,884,610
=============
Net asset value per share* $11.82
=============
Maximum offering price (100/99 of $11.82) $11.94
=============
Statement of Operations
for the year ended April 30, 1996
Investment income:
Interest (Note 1) $478,741,417
Expenses:
Management fees (Note 5) 32,164,702
Distribution fees - Class I (Note 5) 4,323,220
Distribution fees - Class II (Note 5) 98,017
Shareholder servicing costs (Note 5) 1,793,175
Reports to shareholders 659,081
Custodian fees 493,807
Directors' fees and expenses 145,047
Professional fees 126,967
Registration fees 97,241
Other 243,157
-------------
Total expenses 40,144,414
-------------
Net investment income 438,597,003
-------------
Realized and unrealized gain (loss)
on investments:
Net realized gain 72,837,068
Net unrealized depreciation (11,834,809)
-------------
Net realized and unrealized gain on
investments 61,002,259
-------------
Net increase in net assets resulting
from operations $499,599,262
=============
*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
<TABLE>
<CAPTION>
Statements of Changes in Net Assets
for the years ended April 30, 1996 and 1995
1996 1995
------------ ------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C>
Net investment income................................................................. $ 438,597,003 $ 438,214,189
Net realized gain (loss) from investments............................................. 72,837,068 (52,320,273)
Net unrealized appreciation (depreciation) on investments............................. (11,834,809) 20,943,713
------------ ------------
Net increase in net assets resulting from operations............................. 499,599,262 406,837,629
Distributions to shareholders:
From undistributed net investment income:
Class I.............................................................................. (438,791,296) (452,534,171)
Class II............................................................................. (780,115) --
Increase in net assets from capital share transactions (Note 2)........................ 99,741,632 128,375,448
------------ ------------
Net increase in net assets....................................................... 159,769,483 82,678,906
Net assets:
Beginning of year..................................................................... 6,886,940,746 6,804,261,840
------------ ------------
End of year........................................................................... $7,046,710,229 $6,886,940,746
============ ============
Undistributed net investment income included in net assets:
Beginning of year..................................................................... $ 974,408 $ 15,294,390
============ ============
End of year........................................................................... $ -- $ 974,408
============ ============
The accompanying notes are an integral part of these financial statements.
</TABLE>
NOTES TO FINANCIAL STATEMENTS
Franklin Federal Tax-Free Income Fund
1. SIGNIFICANT ACCOUNTING POLICIES
Franklin Federal Tax-Free Income Fund (the Fund) is an open-end, diversified
management investment company (mutual fund) registered under the Investment
Company Act of 1940, as amended. The investment objective of the Fund seeks to
provide high current income exempt from regular federal income tax through a
nationally diversified portfolio consisting primarily of municipal securities.
The Fund offers two classes of shares, Class I and Class II. Class I shares are
sold with a higher front-end sales charge than Class II shares. Each class of
shares may be subject to a contingent deferred sales charge and has the same
rights, except with respect to the effect of the respective sales charges, the
distribution fees borne by each class, voting rights on matters affecting a
single class, and the exchange privilege of each class.
The offering of Class II shares began on May 1, 1995, at which time all
previously outstanding shares became Class I shares. Realized and unrealized
gains or losses and net investment income, other than class specific expenses,
are allocated daily to each class of shares based upon the relative proportion
of net assets of each class.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
policies are in conformity with generally accepted accounting principles for
investment companies.
a. Security Valuation:
Tax-free bonds generally trade in the over-the-counter market rather than on a
national securities exchange. In the absence of a sale or reported bid and asked
prices, information with respect to bond and note transactions, quotations from
bond dealers, market transactions in comparable securities, and various
relationships between securities are used to determine the value of the
security. The Fund may utilize a pricing service, bank or broker/dealer
experienced in such matters to perform any of the pricing functions under
procedures approved by the Board of Directors (the Board). Securities for which
market quotations are not available are valued in accordance with procedures
established by the Board.
b. Municipal Bonds or Notes with "Puts":
The Fund has purchased municipal bonds or notes with the right to resell the
bonds or notes to the seller at an agreed upon price or yield on a specified
date or within a specified period (which will be prior to the maturity of the
bonds or notes). Such a right to resell is commonly known as a "put".
c. Income Taxes:
The Fund intends to continue to qualify for the tax treatment applicable to
regulated investment companies under the Internal Revenue Code (the Code) and to
make the requisite distributions to its shareholders which will be sufficient to
relieve the Fund from income and excise taxes.
d. Security Transactions:
Security transactions are accounted for on the date the securities are purchased
or sold (trade date). Realized gains and losses on security transactions are
determined on the basis of specific identification.
e. Investment Income, Expenses and Distributions:
Distributions to shareholders are recorded on the ex-dividend date. Interest
income and estimated expenses are accrued daily. Bond discount and premium are
amortized as required by the Code.
f. Securities Purchased on a When-Issued or Delayed Delivery Basis:
The Fund maypurchase securities on a when-issued or delayed delivery basis, with
payment and delivery scheduled for a future date. These transactions are subject
to market fluctuations and are subject to the risk that the value at delivery
may be more or less than the trade date purchase price. Although the Fund will
generally purchase these securities with the intention of holding the
securities, it may sell the securities before the settlement date. These
securities are identified on the accompanying Statement of Investments in
Securities and Net Assets. The Fund has set aside sufficient investment
securities as collateral for these purchase commitments.
g. Accounting Estimates
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities at the date of the
financial statements and the amounts of income and expense during the reporting
period. Actual results could differ from those estimates.
<TABLE>
<CAPTION>
2. CAPITAL STOCK
At April 30, 1996, there were 10,000,000,000 shares of no par value capital
stock authorized, of which 3,000,000,000 each have been allocated to class I and
class II. Transactions in the Fund's shares for the years ended April 30, 1996
and 1995 were as follows:
1996 1995
---------------------- ------------------------
Class I shares: Shares Amount Shares Amount
---------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Shares sold.................................................. 70,993,778 $847,089,902 96,952,810 $1,121,545,276
Shares issued in reinvestment of distributions............... 14,001,002 166,964,403 14,353,408 165,824,077
Shares redeemed.............................................. (79,499,754) (948,799,706) (100,449,733) (1,158,993,905)
---------- ----------- ---------- ------------
Net increase................................................. 5,495,026 $ 65,254,599 10,856,485 $ 128,375,448
========== =========== ========== ============
Class II shares:
Shares sold.................................................. 3,046,996 $ 36,418,313
Shares issued in reinvestment of distributions............... 38,262 458,678
Shares redeemed.............................................. (200,657) (2,389,958)
---------- -----------
Net increase................................................. 2,884,601 $ 34,487,033
========== ===========
</TABLE>
3. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS
At April 30, 1996, for tax purposes, the Fund had accumulated net capital loss
carryovers as follows:
Capital loss carryovers expiring in: 2000....................... $ 1,342,936
2002....................... 10,591,976
2003....................... 52,353,522
-----------
$64,288,434
===========
For income tax purposes, the aggregate cost of securities and unrealized
appreciation are the same as for financial reporting purposes at April 30, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding purchases and sales of short-term
securities) for the year ended April 30, 1996 aggregated $1,851,998,310 and
$1,755,440,078, respectively.
5. TRANSACTIONS WITH AFFILIATES AND RELATED PARTIES
a. Management Agreement:
Under the terms of a management agreement, Franklin Advisers, Inc. (Advisers),
provides investment advice, administrative services, office space and facilities
to the Fund, and receives fees computed monthly on the net assets of the Fund on
the last day of the month as follows:
Annualized Fee Rate Month End Net Assets
------------------- -----------------------------------------
0.625% First $100 million
0.50% Over $100 million up to and including $250 million
0.45% Over $250 million up to and including $10 billion
Fees are further reduced on net assets over $10 billion. The terms of the
management agreement provide that annual aggregate expenses of the Fund be
limited to the extent necessary to comply with the limitations set forth in the
laws, regulations, and administrative interpretations of the states in which the
Fund's shares are registered. For the year ended April 30, 1996, the Fund's
expenses did not exceed these limitations.
b. Shareholder Services Agreement:
Under the terms of a shareholder services agreement with Franklin/Templeton
Investor Services, Inc. (Investor Services), the Fund pays costs on a per
shareholder account basis. Shareholder servicing costs incurred by the Fund for
the year ended April 30, 1996 aggregated $1,793,175, of which $1,502,698 was
paid to Investor Services.
c. Distribution Plans and Underwriting Agreement:
Under the terms of distribution plans pursuant to Rule 12b-1 of the Investment
Company Act of 1940 (the Plans), the Fund reimburses Franklin/Templeton
Distributors, Inc. (Distributors), in an amount up to a maximum of 0.10% per
annum for Class I and 0.65% per annum for Class II, of the average daily net
assets of such class of the Fund for costs incurred in the promotion, offering
and marketing of the Fund's shares. The Plans do not permit nor require payments
of excess costs after termination. Fees incurred by the Fund under the Plans
aggregated $4,421,237 for the year ended April 30, 1996.
In its capacity as underwriter for the shares of the Fund, Distributors receives
commissions on sales of the Fund's capital stock. Commissions are deducted from
the gross proceeds received from the sale of the capital stock of the Fund, and
as such are not expenses of the Fund. Distributors may also make payments, out
of its own resources, to the dealers for certain sales of the Fund's shares.
Commissions received by Distributors and the amount paid to other dealers for
the year ended April 30, 1996 amounted to $17,594,884 and $17,354,275,
respectively. Distributors also received contingent deferred sales charges
relating to redemption transactions in the Fund's shares of $11,378.
d. Other Affiliated Parties and Transactions:
Certain officers and directors of the Fund are also officers and/or directors of
Distributors, Advisers, and Investor Services, all wholly-owned subsidiaries of
Franklin Resources, Inc.
6. SUBSEQUENT EVENTS
On April 18, 1996 and May 14, 1996 the Board declared distributions per share,
as follows:
Record Payment From Undistributed
Date Date Net Investment Income
---- ---- --------------
Class I.......................... 4/30 5/15 0.062
Class II......................... 4/30 5/15 0.056
Class I.......................... 5/31 6/14 0.062
Class II......................... 5/31 6/14 0.056
7. CREDIT RISK
Although the Fund has a diversified portfolio, it has investments in excess of
10% of its total net assets in the state of New York. Such concentration may
subject the Fund more significantly to economic changes occurring within that
state.
The Fund has 4.63% of its portfolio invested in lower rated and comparable
quality unrated high yield securities. Investments in higher yield securities
are accompanied by a greater degree of credit risk and such lower quality
securities tend to be more sensitive to economic conditions than higher rated
securities. The risk of loss due to default by the issuer may be significantly
greater for the holders of high yield securities, because such securities are
generally unsecured and are often subordinated to other creditors of the issuer.
<TABLE>
<CAPTION>
8. FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout the period are
as follows:
Period ended April 30,
----------------------------------------------
Class I Shares 1996 1995 1994 1993 1992
-------- -------- -------- -------- --------
Per Share Operating Performance
<S> <C> <C> <C> <C> <C>
Net asset value at beginning of period........................ $11.73 $11.81 $12.24 $11.68 $11.40
-------- -------- -------- -------- --------
Net investment income......................................... .74 .75 .77 .80 .82
Net realized and unrealized gain (loss) on securities......... .104 (.053) (.415) .576 .302
-------- -------- -------- -------- --------
Total from investment operations.............................. .844 .697 .355 1.376 1.122
Distributions from net investment income...................... (.744) (.777) (.785) (.816) (.842)
-------- -------- -------- -------- --------
Net asset value at end of period.............................. $11.83 $11.73 $11.81 $12.24 $11.68
======== ======== ======== ======== ========
Total Return*................................................. 7.33% 6.21% 2.58% 11.89% 9.90%
Ratios/Supplemental Data
Net assets at end of period (in 000's)........................ $7,012,601 $6,886,941 $6,804,262 $6,414,739 $5,184,214
Ratio of expenses to average net assets....................... .57% .59% .52% .51% .51%
Ratio of net investment income to average net assets.......... 6.20% 6.47% 6.27% 6.68% 7.70%
Portfolio turnover rate....................................... 25.10% 19.88% 24.59% 13.30% 14.94%
</TABLE>
Period ended
Class II Shares April 30, 1996
--------
Per Share Operating Performance
Net asset value at beginning of period......................... $11.73+
--------
Net investment income.......................................... .68
Net realized and unrealized gain on securities................. .091
--------
Total from investment operations............................... .771
Distributions from net investment income....................... (.681)
--------
Net asset value at end of period............................... $11.82
========
Total Return*.................................................. 6.68%
Ratios/Supplemental Data
Net assets at end of period (in 000's)......................... $34,110
Ratio of expenses to average net assets........................ 1.15%
Ratio of net investment income to average net assets........... 5.68%
Portfolio turnover rate........................................ 25.10%
*Total return measures the change in value of an investment over the periods
indicated. It is not annualized. It does not include the maximum front-end sales
charge or contingent deferred sales charge, and assumes reinvestment of
dividends and capital gains at net assets value. Prior to May 1, 1994, dividends
were reinvested at the maximum offering price, and capital gains at net asset
value. Effective May 1, 1994, with the implementation of the Rule 12b-1
distribution plan for Class I shares, the sales charge on reinvested dividends
was eliminated. The total return may differ from that reported in the Manager's
Discussion due to differences between the net asset values quoted and the net
asset values calculated for financial reporting purposes.
+The Fund paid a dividend to shareholders of record on the beginning of
business, May 1, 1995 in the amount of $0.062 per share. The net asset value per
share at beginning of period includes this dividend.
During this fiscal year, the Fund paid distributions from undistributed net
investment income in the amounts shown in the Statement of Changes in Net
Assets. The Fund hereby designates 100% of these distributions as
exempt-interest dividends under Section 852(b)(5) of the Internal Revenue Code.
REPORT OF INDEPENDENT AUDITORS
Franklin Federal Tax-Free Income Fund
To the Shareholders and Board of Directors of Franklin Federal Tax-Free Income
Fund:
We have audited the accompanying statement of assets and liabilities of the
Franklin Federal Tax-Free Income Fund (the Fund), including the statement of
investments in securities and net assets, as of April 30, 1996, and the related
statement of operations for the year then ended, the statements of changes in
net assets for each of the two years in the period then ended, and the financial
highlights for each of the periods indicated thereon. These financial statements
and financial highlights are the responsibility of the Fund's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1996, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Franklin Federal Tax-Free Income Fund as of April 30, 1996, the results of its
operation for the year then ended, the changes in its net assets for each of the
two years in the period then ended, and the financial highlights for each of the
periods indicated thereon, in conformity with generally accepted accounting
principles.
COOPERS & LYBRAND L.L.P.
San Francisco, California
June 6, 1996
Franklin Federal Tax-Free Income Fund Annual Report 4/30/96.
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING
(PURSUANT TO ITEM 304 (a) OF REGULATION S-T)
GRAPHIC MATERIAL (1)
This line graph shows the price fluctuation of the Bond Buyer Municipal Bond
Index over a one-year period from 11/30/94 through 12/31/95.
<TABLE>
<CAPTION>
Period Ending Price
<S> <C>
11/30/94 88.69
12/31/94 92.76
1/31/95 96.16
2/28/95 99.01
3/31/95 99.45
4/30/95 98.50
5/31/95 101.13
6/30/95 98.19
7/31/95 96.02
8/31/95 96.09
9/30/95 96.72
10/31/95 98.26
11/30/95 99.96
12/31/95 98.10
</TABLE>
GRAPHIC MATERIAL (2)
This bar chart shows that 37% insured municipal bonds and 63% non-insured
municipal bonds were issued in 1994, compared to 44% insured municipal bonds and
56% non-insured municipal bonds issued in 1995.
GRAPHIC MATERIAL (3)
This bar chart compares the dollar amount of new long-term municipal bond
issuance from 1987 ($105 billion), 1988 ($118 billion), 1989 ($125 billion),
1990 ($128 billion), 1991 ($174 billion), 1992 ($235 billion), 1993 ($292
billion), 1994 ($164 billion), and 1995 ($156 billion).
GRAPHIC MATERIAL (4)
This chart shows in pie chart format the income and capital appreciation of the
Lehman Brothers 20-Year Municipal Bond Index for the 15-year period ended
12/31/95.
<TABLE>
<CAPTION>
Income: An Important Component of Total Return
<S> <C>
Income 88.45%
Capital Appreciation 11.55%
</TABLE>
GRAPHIC MATERIAL (5)
This chart shows in pie chart format the fund'securities breakdown by sector as
a percentage of the fund's total net assets.
<TABLE>
<CAPTION>
Quality Breakdown on 4/30/96
<S> <C>
AAA 30.4%
AA 17.3%
A 20.6%
BBB 28.7%
Below Investment Grade 3.0%
</TABLE>
GRAPHIC MATERIAL (6)
This bar chart shows the comparison between the fund's disribution rate of 6.02%
and the taxable equivalent distribution rate of 9.97%, for Class I shares.
GRAPHIC MATERIAL (7)
The following line graph hypothetically compares the performance of the fund's
Class I Shares with the Consumer Price Index (CPI) and the Lehman Brothers
Municipal Bond Index, based on a $10,000 investment from 5/1/86 to 4/30/96.
<TABLE>
<CAPTION>
Period Ending Fund Index Index
<S> <C> <C> <C> <C> <C>
5/1/86 10,000 10,000
9,572
5/31/86 9,385 -1.63% 9,837 0.28% 10,028
6/30/86 9,489 0.95% 9,930 0.55% 10,083
7/31/86 9,601 0.61% 9,991 0.00% 10,083
8/31/86 10,070 4.48% 10,439 0.18% 10,101
9/30/86 10,074 0.25% 10,465 0.46% 10,148
10/31/86 10,352 1.73% 10,646 0.09% 10,157
11/30/86 10,476 1.98% 10,857 0.09% 10,166
12/31/86 10,525 -0.28% 10,826 0.09% 10,175
1/31/87 10,750 3.01% 11,152 0.63% 10,239
2/28/87 10,827 0.49% 11,207 0.36% 10,276
3/31/87 10,744 -1.06% 11,088 0.45% 10,322
4/30/87 9,989 -5.02% 10,531 0.54% 10,378
5/31/87 9,834 -0.50% 10,479 0.35% 10,414
6/30/87 10,031 2.94% 10,787 0.35% 10,451
7/31/87 10,110 1.02% 10,897 0.26% 10,478
8/31/87 10,200 0.22% 10,921 0.53% 10,534
9/30/87 9,707 -3.69% 10,518 0.52% 10,588
10/31/87 9,714 0.35% 10,555 0.26% 10,616
11/30/87 10,020 2.61% 10,830 0.09% 10,625
12/31/87 10,244 1.45% 10,987 0.00% 10,625
1/31/88 10,697 3.56% 11,378 0.26% 10,653
2/29/88 10,905 1.06% 11,499 0.26% 10,681
3/31/88 10,661 -1.16% 11,365 0.43% 10,727
4/30/88 10,697 0.76% 11,452 0.52% 10,783
5/31/88 10,743 -0.29% 11,419 0.34% 10,819
6/30/88 10,957 1.46% 11,585 0.43% 10,866
7/31/88 11,004 0.65% 11,661 0.42% 10,911
8/31/88 11,081 0.09% 11,671 0.42% 10,957
9/30/88 11,340 1.81% 11,882 0.67% 11,031
10/31/88 11,601 1.76% 12,091 0.33% 11,067
11/30/88 11,475 -0.92% 11,980 0.08% 11,076
12/31/88 11,668 1.02% 12,102 0.17% 11,095
1/31/89 11,851 2.07% 12,353 0.50% 11,150
2/28/89 11,775 -1.14% 12,212 0.41% 11,196
3/31/89 11,744 -0.24% 12,183 0.58% 11,261
4/30/89 11,989 2.37% 12,472 0.65% 11,334
5/31/89 12,192 2.08% 12,731 0.57% 11,399
6/30/89 12,332 1.36% 12,904 0.24% 11,426
7/31/89 12,419 1.36% 13,080 0.24% 11,453
8/31/89 12,377 -0.98% 12,951 0.16% 11,472
9/30/89 12,323 -0.30% 12,913 0.32% 11,508
10/31/89 12,434 1.22% 13,070 0.48% 11,564
11/30/89 12,612 1.75% 13,299 0.24% 11,591
12/31/89 12,724 0.82% 13,408 0.16% 11,610
1/31/90 12,636 -0.47% 13,345 1.03% 11,730
2/28/90 12,783 0.89% 13,464 0.47% 11,785
3/31/90 12,750 0.03% 13,468 0.55% 11,849
4/30/90 12,637 -0.72% 13,371 0.16% 11,868
5/31/90 12,948 2.18% 13,662 0.23% 11,896
6/30/90 13,065 0.88% 13,782 0.54% 11,960
7/31/90 13,287 1.48% 13,986 0.38% 12,005
8/31/90 13,042 -1.45% 13,784 0.92% 12,116
9/30/90 13,008 0.06% 13,792 0.84% 12,218
10/31/90 13,151 1.81% 14,041 0.60% 12,291
11/30/90 13,414 2.01% 14,324 0.22% 12,318
12/31/90 13,427 0.44% 14,387 0.00% 12,318
1/31/91 13,645 1.34% 14,579 0.60% 12,392
2/28/91 13,707 0.87% 14,706 0.15% 12,410
3/31/91 13,781 0.04% 14,712 0.15% 12,429
4/30/91 14,028 1.34% 14,909 0.15% 12,448
5/31/91 14,129 0.89% 15,042 0.30% 12,485
6/30/91 14,155 -0.10% 15,027 0.29% 12,521
7/31/91 14,382 1.22% 15,210 0.15% 12,540
8/31/91 14,522 1.32% 15,411 0.29% 12,576
9/30/91 14,739 1.30% 15,611 0.44% 12,632
10/31/91 14,829 0.90% 15,752 0.15% 12,651
11/30/91 14,907 0.28% 15,796 0.29% 12,687
12/31/91 15,203 2.15% 16,136 0.07% 12,696
1/31/92 15,241 0.23% 16,173 0.15% 12,715
2/29/92 15,253 0.03% 16,178 0.36% 12,761
3/31/92 15,318 0.04% 16,184 0.51% 12,826
4/30/92 15,462 0.89% 16,328 0.14% 12,844
5/31/92 15,686 1.18% 16,521 0.14% 12,862
6/30/92 15,913 1.68% 16,798 0.36% 12,908
7/31/92 16,450 3.00% 17,302 0.21% 12,936
8/31/92 16,232 -0.98% 17,133 0.28% 12,972
9/30/92 16,244 0.65% 17,244 0.28% 13,008
10/31/92 16,023 -0.98% 17,075 0.35% 13,054
11/30/92 16,408 1.79% 17,381 0.14% 13,072
12/31/92 16,656 1.02% 17,558 -0.07% 13,063
1/31/93 16,859 1.16% 17,762 0.49% 13,127
2/28/93 17,288 3.62% 18,405 0.35% 13,173
3/31/93 17,211 -1.06% 18,210 0.35% 13,219
4/30/93 17,348 1.01% 18,394 0.28% 13,256
5/31/93 17,456 0.56% 18,497 0.14% 13,274
6/30/93 17,736 1.67% 18,805 0.14% 13,293
7/31/93 17,759 0.13% 18,830 0.00% 13,293
8/31/93 18,057 2.08% 19,222 0.28% 13,330
9/30/93 18,241 1.14% 19,441 0.21% 13,358
10/31/93 18,277 0.19% 19,478 0.41% 13,413
11/30/93 18,197 -0.88% 19,306 0.07% 13,422
12/31/93 18,529 2.11% 19,714 0.00% 13,422
1/31/94 18,685 1.14% 19,938 0.27% 13,459
2/28/94 18,364 -2.59% 19,422 0.34% 13,504
3/31/94 17,802 -4.07% 18,631 0.34% 13,550
4/30/94 17,841 0.85% 18,790 0.14% 13,569
5/31/94 17,970 0.87% 18,953 0.07% 13,579
6/30/94 17,901 -0.61% 18,838 0.34% 13,625
7/31/94 18,154 1.83% 19,182 0.27% 13,662
8/31/94 18,223 0.35% 19,249 0.40% 13,716
9/30/94 18,045 -1.47% 18,967 0.27% 13,753
10/31/94 17,788 -1.78% 18,629 0.07% 13,763
11/30/94 17,483 -1.81% 18,292 0.13% 13,781
12/31/94 17,837 2.20% 18,694 0.00% 13,781
1/31/95 18,290 2.86% 19,229 0.40% 13,836
2/28/95 18,729 2.91% 19,788 0.40% 13,891
3/31/95 18,881 1.15% 20,016 0.33% 13,937
4/30/95 18,949 0.12% 20,040 0.33% 13,983
5/31/95 19,391 3.19% 20,679 0.20% 14,011
6/30/95 19,329 -0.87% 20,499 0.20% 14,039
7/31/95 19,480 0.95% 20,694 0.00% 14,039
8/31/95 19,664 1.27% 20,957 0.26% 14,076
9/30/95 19,767 0.63% 21,089 0.20% 14,104
10/31/95 20,020 1.45% 21,395 0.33% 14,150
11/30/95 20,325 1.66% 21,750 -0.07% 14,140
12/31/95 20,530 0.96% 21,959 -0.07% 14,131
1/31/96 20,618 0.76% 22,126 0.59% 14,214
2/29/96 20,537 -0.68% 21,975 0.30% 14,257
3/31/96 20,351 -1.28% 21,694 0.52% 14,331
4/30/96 20,338 -0.28% 21,633 0.39% 14,387
Total Return 103.38% 116.33% 43.87%
</TABLE>
GRAPHIC MATERIAL (8)
This bar chart shows the comparison between the fund's disribution rate of 5.97%
and the taxable equivalent distribution rate of 9.88%, for Class II shares.
GRAPHIC MATERIAL (9)
The following line graph hypothetically compares the performance of the fund's
Class II Shares with the Consumer Price Index (CPI) and the Lehman Brothers
Municipal Bond Index, based on a $10,000 investment from 5/1/95 to 4/30/96.
<TABLE>
<CAPTION>
Period Ending Fund Index Index
<S> <C> <C> <C> <C> <C>
5/1/95 9898 $10,000 $10,000
5/31/95 10,181 3.19% 10,319 0.20% 10,020
6/30/95 10,143 -0.87% 10,229 0.20% 10,040
7/31/95 10,217 0.95% 10,326 0.00% 10,040
8/31/95 10,309 1.27% 10,458 0.26% 10,066
9/30/95 10,358 0.63% 10,523 0.20% 10,086
10/31/95 10,485 1.45% 10,676 0.33% 10,120
11/30/95 10,630 1.66% 10,853 -0.07% 10,112
12/31/95 10,741 0.96% 10,957 -0.07% 10,105
1/31/96 10,782 0.76% 11,041 0.59% 10,165
2/29/96 10,734 -0.68% 10,966 0.30% 10,196
3/31/96 10,632 -1.28% 10,825 0.52% 10,249
4/30/96 10,514 -0.28% 10,795 0.39% 10,289
Total Return 5.14% 7.95% 2.89%
</TABLE>
