MESSAGE FROM THE CHAIRMAN
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Table of Contents
Page
Message from the Chairman 1
Special Feature:
Interview with Tom Kenny,
Senior Vice President, Franklin
Municipal Bond Department 3
Manager's Discussion 9
Performance Summaries
Class I Shares 11
Class II Shares 13
Statement of Investments 15
Financial Statements 56
Notes to Financial Statements 58
December 13, 1996
Dear Shareholder:
It's a pleasure to bring you the Franklin Federal Tax-Free Income Fund's
semi-annual report for the period ended October 31, 1996.
The reporting period might well be described as six months of frequent
interest-rate fluctuations, with the 30-year U.S. Treasury bond's yield bouncing
between 6.89% and 7.13%.* Some of this movement can be attributed to speculation
on the direction of short-term interest rates by market participants. Indeed,
newspaper headlines in the last six months declared the economy was overheating
one day and stalling the next -- all of which seems to suggest a slow growth
trend.
We expect that the Franklin Federal Tax-Free Income Fund should perform well in
this relatively slow growth environment. Although the economy appears stable at
the moment, market uncertainties persist.
*Source: Micropal.
For this reason, we encourage individual investors to maintain a long-term
perspective. It is prudent to periodically consult with your investment
representative to ensure your investments match these goals. This long-term
orientation will help minimize undue concern caused by short-term market
volatility.
As a Franklin Templeton fund shareholder, you receive the benefits of
professional management and dedicated service. Should you have any questions
concerning the Franklin Federal Tax-Free Income Fund, we welcome the opportunity
to answer them.
We appreciate your support, welcome new shareholders and look forward to serving
your investment needs in the years ahead.
Sincerely,
Charles B. Johnson
Chairman
Franklin Federal Tax-Free Income Fund
Glossary of Investment Terms
Call Protection: The length of time during which a bond cannot be redeemed by
its issuer.
Coupon: The interest rate on a bond the issuer promises to pay to the holder
until the bond matures.
Full Coupon Bond: A bond with a coupon rate that is near or above current market
interest rates.
High Grade Bond/High Quality Bond: A bond rated AAA or AA by Standard &
Poor's(R) or Moody's rating services.
Investment Grade Bond: A bond with a rating of AAA to BBB.
Pre-Refunded Bond: When a second bond is issued to pay off the original bond at
the original's first call date, the original bond is termed "pre-refunded" to
the call date.
SPECIAL FEATURE: INTERVIEW WITH TOM KENNY
Tom Kenny, director of Franklin's Municipal
Bond Department, discusses several current
topics, including interest rates and his
outlook for the municipal bond market.
GRAPHIC PICTURE OMITTED
Tom Kenny
Senior Vice President and
Director of Franklin's Municipal
Bond Department
Tom, purchasing a municipal bond is considered a relatively safe investment. In
the last few years, however, we've experienced a certain amount of volatility in
bond markets. Is this going to subside in the future, or is this the new way for
bond markets?
It's an interesting observation and -- you're right -- the bond markets didn't
seem to be as volatile a few years back. If you look at the recent bond market,
say since 1992-1993, you'll see that we've had three consecutive years of 200
basis point swings in opposite directions (See Fig. 1). Historically, that level
of volatility is unusual.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Fig. 1
I think there are several reasons for the increased volatility. First, we need
to look at the Federal Reserve Board. The Federal Reserve Board has been slow to
adjust short-term rates in response to economic conditions, which has increased
uncertainty and speculation within the fixed-income markets. Thus, market
participants have reacted toward short-term economic data rather than focusing
on the big picture. Since the Fed has not made frequent adjustments to
short-term rates, the increased speculation has created a pendulum effect where
the market tends to overreact in the adjustment of long-term rates.
So the Federal Reserve Board's restraint has helped to cause some unpredictable
market movement?
Just look at the number of times recently where market expectations of both
growth and inflation have changed dramatically. Earlier this year, nine out of
ten economists said we were going to be in a recession by the end of the first
quarter. Weeks later, they changed their outlook and expected growth at a 4%-5%
annual rate with fears of an over heating economy. Just in the last few weeks,
we've heard, "Well, maybe the economy is not growing that fast after all." So
the market's become very short-term focused -- that's one reason we're seeing
increased volatility.
Second, we are part of a much more global market today than ever before. Funds
tend to flow very freely from market to market.
Third, we have seen an increased use of hedge funds, which often take large
risks with speculative strategies. They've become very popular over the last two
to three years. Hedge fund managers tend to be very short-term focused, trying
to take advantage of undervalued situations. So they're in and out of markets
very quickly.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Fig. 2
Last, I think the creation and use of derivatives, where speculators can control
huge amounts of bonds with very little capital at risk, has also caused some of
this volatility.
The increased volatility will probably remain as long as these themes exist.
Have these factors affected your investment strategy?
We try to stay abreast of economic conditions and interest rates in general, but
we don't try to second-guess the market in terms of the direction of rates, or
alter our fundamental philosophy and strategy because of short-term economic
changes.
Our approach is straightforward. With few exceptions, we seek credit safety and
income. I don't think shareholders want the volatility that might be generated
by chasing capital appreciation. If you look at the interest rate chart (Fig. 1)
and think of the number of times you had to be right if you were speculating on
the direction and absolute change in interest rates, you may have called one
swing correctly; but if you missed the other leg of it, you may have given away
everything you gained on the way up or down.
We have a well-seasoned portfolio management team that manages our funds for
tax-free income.
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Fig. 3
We believe that over the long term, income drives total return. Total return is
important. But how you achieve total return is even more important. Income has
been responsible for more than 90% of the total return of municipal bonds over
the last 10 years (Fig. 2), as measured by the unmanaged Lehman Brothers 20-year
Municipal Bond Index. So, by consistently investing for income, we hope to
generate good total return performance. We think our shareholders, particularly
those in tax-free funds, are better served by using this consistent,
long-term-oriented approach. It is what distinguishes Franklin from most of its
peers.
We have seen more insured bonds, particularly in California. Is this a long-term
industry trend?
I believe so, but it's more pronounced in California. The national percentage of
insured issues now coming to market is in the 54%-55% range. In California, it's
a little bit ahead of that (Fig. 3).
Why are there more insured issues now?
It's a function of a couple of things, I think. Supply is still relatively low
when compared with 1992-1993, when we had record volume of long-term bonds
coming to the market. Overall supply dropped more than 45% from 1993, into the
$155-$160 billion range last year. This year, it's probably going to be up
somewhat -- maybe in the 10%-15% range (Fig. 4).
Since we haven't seen a heavy supply of bonds coming to market, some insurance
companies have become very aggressive in trying to gain market share. They have
the capital, the capacity, the staffing, and the willingness to price their
premiums aggressively. As a result, it's been comparatively cheap for issuers to
obtain insurance.
How much has pre-refunding influenced your investment strategy recently, and can
you briefly describe what pre-refunding is?
A pre-refunded bond is one that will be paid off at its first call date, using
the proceeds of a second bond carrying a lower interest rate. Let's say a
municipality issued a bond paying 8% interest that will mature in 2025. Some
time later, interest rates drop significantly, as they did in the late 1980's
and in the 1992-1993 period, and comparable bonds are now paying, say, 6%.
Naturally, the issuer would prefer to pay this new, lower rate on its debt, just
as you or I would want to refinance our home mortgage.
One way issuers can reduce their borrowing expense is to refund higher-paying
bonds before they mature. To raise money to refund the higher-rate bonds, they
issue a second bond at the market's now, lower interest rate. The proceeds of
the second bond are invested in U.S. Treasuries, set to mature at the original
bond's first call date, which may be only five or six years away. The bond is
then termed "pre-refunded" to the call date.
When the bond becomes pre-refunded, the price can rise dramatically -- providing
an opportunity to sell it at a premium. Generally, a pre-refunded bond will
maximize its value when there is approximately five years remaining to the call
date.
That first bond sells at a premium now because it's backed by U.S. Treasuries
and it's still paying the higher interest rate?
Yes -- in addition, it is now a bond with a much shorter maturity -- i.e., the
call date versus the original maturity date.
What if you don't sell it?
Well, we know that in five years that bond will be called at 100%-102% of par.
It's currently selling at a premium of, say, 115% of par. If we do nothing right
now, the price of that bond will decline, from 115% of par to the call price,
thereby eroding its value over the next five years. No matter what interest
rates do, that bond price is going down.
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Fig. 4
Generally, when a bond hits the five-year mark, we look for an opportunity to
sell it, capture the premium, then reinvest the proceeds in the current interest
rate environment.
How does this benefit shareholders?
Shareholders can benefit in a couple of ways. We may purchase a new bond that
can't be called for at least 10 years -- so we've extended our call protection.
Also, if we can capture that premium, we can now buy 115% worth of new bonds at
today's current interest rates. We've protected the fund's share value from
eroding and also helped maintain the earning power of the fund over the long
term.
What sets your municipal bond department apart from others in the industry?
We use a very consistent, team-oriented approach to portfolio management. All of
our managers are using the same consistent strategy in our efforts to meet the
same overall investment objectives. Many times you'll see some other fund
companies where each manager operates on his/her own strategy.
Also, we're one of the few companies that truly manages for income. We believe
Franklin understands fixed-income and what investors look for.
Many of our competitors have come from an equity-oriented background and then
added a fixed-income side in recent years to round out their product line. We
think this perspective is important. Some of our competitors direct their
portfolio managers toward a total return-oriented strategy on a quarterly basis.
We don't.
Why not?
We believe if you're a fixed-income portfolio manager who is focused on
quarterly total return, you're probably going to be more inclined to make
short-term bets and take risks that you might not take otherwise. So your
interests may not be clearly aligned with the shareholders' goals. It does
really make a big difference.
Another thing that sets us apart is our research staff. Since we purchase over
95% of our portfolio holdings in the primary market, we spend a lot of time
analyzing credits up front, such as performing site visits, addressing legal
issues, and structuring issues to meet both our credit and portfolio
requirements.
Tom, thanks for your time.
My pleasure.
MANAGER'S DISCUSSION
Your Fund's 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.*
During the period, municipal bonds in general continued to provide higher total
returns than U.S. government bonds. Muni bond prices have been buoyed by two key
factors -- a low supply of bonds coupled with high demand and the dwindling fear
of a flat tax. In our recent experience, AAA-rated, 30-year municipal bond
yields were about 84% of those of 30-year U.S. Treasury bonds. On the other
hand, the ratio last year was around 94%. Higher yields generally mean lower
prices, and lower yields mean higher prices.
Fear of a flat tax, which was prevalent in early 1996, has since subsided. This
fear drove down muni prices and raised their yields to a level that was close to
government bonds. Now that a flat tax seems unlikely, greater confidence in
municipal bonds, and their limited supply, have pushed prices back up.
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.
During the past six months, we continued to purchase "essential service" bonds
which tend to have a relatively reliable income stream generated from defined
sources such as hospitals, utilities and transportation projects. Budgetary and
political changes tend to have limited effects on such bonds, and we believe
they are attractive investments, particularly in the municipal cost-cutting
environment we have seen in 1996.
The quality of the bonds purchased for the portfolio remained consistent over
the six months. Sixty-four percent of our bond investments on October 31, 1996,
were rated A or higher. Our continued emphasis on high quality bonds can help
protect the fund against credit risk (the risk that a bond issuer will default
on its loan payment).
Looking ahead, we believe the supply of municipal bonds will continue to be low
and demand constant. We intend to continue our policy of purchasing
investment-grade, essential-purpose bonds, seeking high current income and good
credit quality.
Franklin Federal Tax-Free Income Fund
Portfolio Breakdown on October 31, 1996
Based on Total Long-Term Investments
% of Total
Long-Term
Sector Investments
-------------------------------------------------
Utilities 30.0%
Housing 13.0%
Transportation 13.0%
Pre-Refunded 10.6%
General Obligations 8.6%
Hospitals 6.4%
Industrial 5.0%
Other Revenue 4.1%
Certificates of Participation 4.0%
Education 3.3%
Health Care 1.0%
Tax Allocation Bonds 0.6%
Sales Tax Revenue 0.4%
For a complete list of portfolio holdings, please see page 15 of this report.
PERFORMANCE SUMMARY
Class I
We are pleased to report that the Franklin Federal Tax-Free Income Fund's share
price, as measured by net asset value, increased 14 cents, from $11.83 on April
30, 1996, to $11.97 on October 31, 1996.
At the end of this reporting period, the fund's distribution rate was 5.66%,
based on an annualization of October's dividend of 5.9 cents ($0.059) per share
and the maximum offering price of $12.50 on October 31, 1996. This tax-free rate
is generally higher than the after-tax return on a comparable taxable
investment. For example, an investor in the maximum federal income tax bracket
of 39.6% would need to earn 9.37% from a taxable investment to match the fund's
tax-free distribution rate.
Franklin Federal Tax-Free Income
Class I
Dividend Distributions 5/1/96 - 10/31/96
Dividend
Month per Share
-----------------------------------------
May 6.2 cents
June 6.2 cents
July 5.9 cents
August 5.9 cents
September 5.9 cents
October 5.9 cents
Total 36.0 cents
GRAPHIC MATERIAL 6 OMITTED - SEE APPENDIX AT END OF DOCUMENT
<TABLE>
<CAPTION>
Franklin Federal Tax-Free Income Fund -- Class I
Periods ended October 31, 1996
1-Year 5-Year 10-Year
------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Cumulative Total Return1 5.97% 43.06% 104.94%
Average Annual Total Return2 1.49% 6.49% 6.98%
Distribution Rate3 5.66%
Taxable Equivalent
Distribution Rate4 9.37%
30-Day Standardized Yield5 5.10%
Taxable Equivalent Yield4 8.44%
------------------------------------------------------------------------------
</TABLE>
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include sales charges. See Note below.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the maximum 4.25% initial
sales charge. See Note below.
3. Based on an annualization of the current 5.9 cent per share monthly dividend
and the maximum offering price of $12.50 on October 31, 1996.
4. Taxable equivalent distribution rate and yield assume the 1996 maximum
federal income tax bracket 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 October 31, 1996.
Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge with dividends reinvested at the 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, and 12b-1
fees from the date of the plan's implementation. Your 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.
Class II
We are pleased to report that the Franklin Federal Tax-Free Income Fund's share
price, as measured by net asset value, increased 15 cents, from $11.82 on April
30, 1996, to $11.97 on October 31, 1996.
At the end of this reporting period, the fund's distribution rate was 5.28%,
based on an annualization of the current monthly dividend of 5.32 cents
($0.0532) per share and the offering price of $12.09 on October 31, 1996. This
tax-free rate is generally higher than the after-tax return on a comparable
taxable investment. For example, an investor in the maximum federal income tax
bracket of 39.6% would need to earn 8.74% from a taxable investment to match the
fund's tax-free distribution rate.
Franklin Federal Tax-Free Income
Class II
Dividend Distributions 5/1/96 - 10/31/96
Dividend
Month per Share
------------------------------------------
May 5.60 cents
June 5.60 cents
July 5.32 cents
August 5.32 cents
September 5.32 cents
October 5.32 cents
Total 32.48 cents
GRAPHIC MATERIAL 7 OMITTED - SEE APPENDIX AT END OF DOCUMENT
Franklin Federal Tax-Free Income Fund -- Class II
Periods ended October 31, 1996
Since
Inception
1-Year (5/1/95)
------------------------------------------------------------------------
Cumulative Total Return1 5.37% 11.61%
Average Annual Total Return2 3.34% 6.22%
Distribution Rate3 5.28%
Taxable Equivalent Distribution Rate4 8.74%
30-Day Standardized Yield5 4.69%
Taxable Equivalent Yield4 7.76%
------------------------------------------------------------------------
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include sales charges. See Note below.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated. It includes the 1.0% initial sales
charge and the 1.0% Contingent Deferred Sales Charge (CDSC), applicable to
shares redeemed within the first 18 months of investment. See Note below.
3. Based on an annualization of the current 5.32 cent per share monthly dividend
and the offering price of $12.09 on October 31, 1996.
4. Taxable equivalent distribution rate and yield assume the 1996 maximum
federal income tax bracket 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 October 31, 1996.
Note: All total return calculations assume reinvestment of dividends and capital
gains at net asset value. Your 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.
<TABLE>
<CAPTION>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Statement of Investments in Securities and Net Assets, October 31, 1996 (unaudited)
Face Value
Amount (Note 1)
------------------------------------------------------------------------------------------------------------
Long Term Investments 99.0%
Bonds 97.4%
Alabama 0.8%
<C> <C>
$ 6,400,000 Alabama Water Pollution Control Authority, Revolving Fund, Series B, 7.75%,
08/15/12 .................................................................... $ 6,825,088
5,000,000 Birmingham GO, Street Improvement Warrants, Pre-Refunded, 8.00%, 07/01/13 .... 5,397,900
1,000,000 Citronelle IDB, PCR, Stauffer Chemical Project, Guaranteed by Imperial Chemical,
Plc., Series 1982, 8.00%, 12/01/12 .......................................... 1,119,640
18,830,000 Columbia IDB, PCR, Refunding, Alabama Power Co. Project, AMBAC Insured,
6.50%, 09/01/23 ............................................................. 19,697,686
12,000,000 Courtland IDB, IDR, Refunding, Champion International Corp., Series A, 7.20%,
12/01/13 .................................................................... 13,054,920
5,000,000 Courtland IDB, PCR, Refunding, Champion International Corp. Project, 6.15%,
06/01/19 .................................................................... 5,057,800
5,385,000 Montgomery Medical Clinic Board, Health Care Facilities Revenue, Refunding,
Jackson Hospital and Clinic, AMBAC Insured, 6.00%, 03/01/26 ................. 5,486,400
------------
56,639,434
------------
Alaska 1.4%
1,775,000 Alaska Industrial Development and Export Authority, Revolving Fund, Series A,
7.95%, 04/01/10 ............................................................. 1,924,491
Alaska State HFC,
4,120,000 Collateralized Home Mortgage, Series A-1, 6.75%, 12/01/32 ................ 4,272,646
630,000 Collateralized Home Mortgage, Series A-3, 7.70%, 12/01/13 ................ 648,610
8,825,000 Refunding, Mortgage Insured, Program 1, Series 1990-B, 7.80%, 12/01/30 ... 9,085,338
4,565,000 Refunding, Mortgage, Series A, MBIA Insured, 6.00%, 12/01/15 ............. 4,554,455
17,875,000 Refunding, Series A, MBIA Insured, 5.875%, 12/01/24 ...................... 17,740,401
11,600,000 Refunding, Series A, MBIA Insured, 5.875%, 12/01/30 ...................... 11,422,984
8,000,000 Series A, 6.60%, 12/01/23 ................................................ 8,870,320
20,980,000 Veterans Mortgage Program, MBIA Insured, 6.75%, 12/01/25 ................. 21,817,731
Anchorage Parking Authority Revenue, Refunding, 5th Avenue Garage Lease Project,
3,360,000 6.50%, 12/01/02 .......................................................... 3,561,466
3,500,000 6.75%, 12/01/08 .......................................................... 3,681,790
13,870,000 Valdez Marine Terminal Revenue, Refunding, BP Pipelines, Inc. Project, Series B,
5.50%, 10/01/28 ............................................................. 13,151,950
------------
100,732,182
------------
Arizona 0.5%
Salt River Project, Agricultural Improvement and Power District, Electrical Systems
Revenue, Series D, Refunding,
$ 15,000,000 5.50%, 01/01/25 .......................................................... $ 14,499,000
14,000,000 5.00%, 01/01/30 .......................................................... 12,357,940
5,620,000 Tempe IDA, Residential Care Facilities Revenue, Volunteers of America Care
Facilities, 9.00%, 06/01/18 ................................................. 5,886,669
------------
32,743,609
------------
Arkansas 1.2%
Arkansas State Development Financing Authority, Waste Water Systems Revenue,
Revolving Loan Fund, Series A,
2,600,000 5.70%, 12/01/12 .......................................................... 2,629,276
3,130,000 5.85%, 12/01/19 .......................................................... 3,182,678
2,700,000 Desha County Residential Housing Facilities Board, SFMR, Refunding, 7.50%,
04/01/11 .................................................................... 2,879,307
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 ............................................................. 3,444,474
1,465,000 Jefferson County PCR, Refunding, Arkansas Power and Light Co. Project, 6.30%,
06/01/18 .................................................................... 1,509,463
1,500,000 Jonesboro Residential Housing and Health Care Facilities Board, Hospital Revenue,
Refunding, St. Bernard's Regional Medical Center, Series B, AMBAC Insured,
5.90%, 07/01/16 ............................................................. 1,540,590
Pope County PCR, Refunding, Power and Light Co. Project,
2,600,000 6.30%, 12/01/16 .......................................................... 2,646,540
60,000,000 6.30%, 11/01/20 .......................................................... 61,134,600
University of Central Arkansas, AMBAC Insured,
855,000 Academic Facilities Revenue, Series B, 5.875%, 04/01/16 .................. 876,743
1,000,000 Academic Facilities Revenue, Series B, 6.00%, 04/01/21 ................... 1,029,070
1,000,000 Athletic Facilities Revenue, Series C, 6.00%, 04/01/21 ................... 1,029,070
825,000 Athletic Facilities Revenue, Series C, 6.125%, 04/01/26 .................. 850,559
1,500,000 Refunding, Housing System Revenue, Series A, 5.875%, 04/01/16 ............ 1,538,145
1,000,000 Refunding, Housing System Revenue, Series A, 6.00%, 04/01/21 ............. 1,029,070
------------
85,319,585
------------
California 7.3%
Alhambra COP, Clubhouse Facility Project,
410,000 11.25%, 01/01/08 ......................................................... 421,824
455,000 11.25%, 01/01/09 ......................................................... 468,049
500,000 11.25%, 01/01/10 ......................................................... 514,255
$ 5,325,000 Burbank RDA, Refunding, Tax Allocation, Series A, 6.25%, 12/01/24 ............ $ 5,413,022
2,800,000 California Health Facilities, Financing Authority Revenue, Refunding, St. Francis
Medical Center, Series H, AMBAC Insured, 6.30%, 10/01/15 .................... 2,974,608
California State Educational Facilities Authority Revenue,
3,580,000 National University, Connie Lee Insured, 6.00%, 05/01/09 ................. 3,727,031
1,000,000 Pooled College and University Financing, Refunding, Series B, 5.70%, 06/01/01
1,019,660
6,025,000 Pooled College and University Projects, Series B, 6.00%, 12/01/20 ........ 5,794,966
California State GO,
11,000,000 FGIC Insured, 6.00%, 08/01/19 ............................................ 11,259,380
3,070,000 Series 1994, 5.90%, 05/01/08 ............................................. 3,224,636
7,000,000 Series 1994, 6.00%, 05/01/18 ............................................. 7,245,490
12,500,000 Series 1994, FGIC Insured, 6.00%, 05/01/20 ............................... 12,790,125
11,750,000 Various Purposes, 5.90%, 04/01/23 ........................................ 11,927,895
California State GO, Veterans Bonds,
1,000,000 Series BC, 6.00%, 02/01/10 ............................................... 1,032,180
33,195,000 Series BD, BE, and BF, 6.55%, 02/01/25 ................................... 34,044,460
California State Public Works Board, Lease Revenue,
5,500,000 Series A, 5.75%, 09/01/21 ................................................ 5,527,005
3,500,000 Various University of California Projects, Series A, 6.625%, 10/01/10 .... 3,733,275
4,000,000 Various University of California Projects, Series A, 6.375%, 10/01/14 .... 4,165,040
2,000,000 Various University of California Projects, Series A, 6.375%, 10/01/19 .... 2,074,900
450,000 Various University of California Projects, Series B, 5.50%, 06/01/19 ..... 429,296
14,750,000 California Statewide Communities Development Authority Revenue, COP, Sutter
Health Obligation Group, MBIA Insured, 6.00%, 08/15/25 ...................... 15,124,945
8,250,000 Chino USD, COP, Refunding, FSA Insured, 5.90%, 09/01/15 ...................... 8,394,458
1,020,000 Coalinga Public Finance Authority Revenue, Series B, 6.25%, 09/15/07 ......... 1,026,487
1,000,000 Commerce, Refuse to Energy Authority Revenue, Refunding, Series 1994, 8.75%,
07/01/10 .................................................................... 1,123,740
9,000,000 Contra Costa County COP, Refunding, Consolidated Capital Facilities Project,
AMBAC Insured, 5.60%, 06/01/19 .............................................. 8,965,260
5,000,000 Contra Costa Water District, Water Revenue, Series G, MBIA Insured, 5.50%,
10/01/19 .................................................................... 4,916,600
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue, Senior Lien,
3,000,000 Series A, 6.00%, 01/01/16 ................................................ 2,979,450
59,240,000 Series A, 6.50%, 01/01/32 ................................................ 60,513,068
3,000,000 Series B, 5.00%, 01/01/35 ................................................ 2,528,790
Forty-Niner Shops, Inc., Auxiliary Organization, California State Long Beach Project,
1,090,000 6.875%, 04/01/07 ......................................................... 1,148,925
1,565,000 6.875%, 04/01/12 ......................................................... 1,616,535
$ 3,000,000 Los Angeles County Transportation Commission, Sales Tax Revenue, Proposition C,
Series A, MBIA Insured, 6.00%, 07/01/23 ..................................... $ 3,049,350
3,180,000 Los Angeles CRDA, Housing Revenue, Refunding, Series A, AMBAC Insured,
6.55%, 01/01/27 ............................................................. 3,287,611
Los Angeles Department of Water and Power, Electric Plant Revenue,
14,925,000 Refunding, 6.40%, 11/01/31 ............................................... 15,671,549
3,000,000 Refunding, MBIA Insured, 6.00%, 02/01/28 ................................. 3,087,390
6,550,000 Second Issue, 5.40%, 11/15/31 ............................................ 6,168,397
10,500,000 Second Issue, MBIA Insured, 6.40%, 11/01/31 .............................. 11,100,495
8,100,000 Los Angeles GO, Series A, FGIC Insured, 6.20%, 09/01/14 ...................... 8,459,964
Los Angeles Regional Airport Improvements Corp., Lease Revenue, Refunding,
18,500,000 Facilities Sub-Lease, International Airport, 6.35%, 11/01/25 ............. 18,969,900
8,400,000 United Airlines, Inc. Project, 6.875%, 11/15/12 .......................... 8,889,972
24,270,000 Madera County COP, Valley Children's Hospital, MBIA Insured, 5.75%, 03/15/28 . 24,305,434
4,000,000 Pomona Public Financing Authority Revenue, Series Q, MBIA Insured, 5.90%,
12/01/25 .................................................................... 4,038,640
6,480,000 Sacramento County Airport Systems Revenue, Sub-Series D, MBIA Insured, 6.00%,
07/01/16 .................................................................... 6,710,299
33,315,000 San Bernardino County COP, Medical Center Financing Project, Series A, 5.875%,
08/01/26 .................................................................... 33,561,864
7,080,000 San Francisco City and County RDA Revenue, George Moscone Convention Center,
Lease Revenue, 6.75%, 07/01/24 .............................................. 7,799,186
12,680,000 San Francisco City and County RDA Revenue, Tax Allocation Redevelopment
Project, 6.50%, 08/01/22 .................................................... 13,104,019
10,380,000 San Francisco City and County Sewer Revenue, Series A, FGIC Insured, 5.90%,
10/01/20 .................................................................... 10,573,483
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue,
18,795,000 7.00%, 01/01/30 .......................................................... 19,978,709
44,325,000 6.75%, 01/01/32 .......................................................... 46,410,491
5,000,000 5.00%, 01/01/33 .......................................................... 4,323,450
3,150,000 Santa Barbara County COP, Refunding, Montecito Retirement Revenue, 5.80%,
04/01/18 .................................................................... 3,096,734
5,330,000 Southern California Public Power Authority Revenue, Multiple Projects,
AMBAC Insured, Custodial Receipts, 5.50%, 07/01/20 .......................... 5,171,806
26,780,000 University of California Revenues, Research Facilities, Series B, 6.55%, 09/01/24 27,942,252
2,405,000 Windsor RDA Revenue, Tax Allocation, Windsor Project, 7.00%, 09/01/24 ........ 2,515,846
------------
514,342,196
------------
Colorado 4.7%
Colorado GO, HFA, Series A,
$ 1,595,000 7.50%, 05/01/29 .......................................................... $ 1,668,896
2,710,000 Pre-Refunded, 8.375%, 01/01/30 ........................................... 2,892,519
Denver City and County Airport System Revenue,
12,405,000 Refunding, Series D, MBIA Insured, 5.875%, 11/15/16 ...................... 12,482,283
16,645,000 Series A, 8.875%, 11/15/12 ............................................... 19,683,212
5,000,000 Series A, 8.00%, 11/15/17 ................................................ 5,258,350
11,460,000 Series A, 7.75%, 11/15/21 ................................................ 12,689,429
2,650,000 Series A, 7.25%, 11/15/23 ................................................ 2,865,127
16,520,000 Series A, 7.50%, 11/15/23 ................................................ 18,163,244
79,945,000 Series A, 8.50%, 11/15/23 ................................................ 91,441,890
24,325,000 Series A, 8.00%, 11/15/25 ................................................ 27,375,632
11,200,000 Series A, Pre-Refunded, 7.50%, 11/15/12 .................................. 12,998,608
24,525,000 Series A, Pre-Refunded, 7.25%, 11/15/25 .................................. 28,121,100
10,010,000 Series D, 7.00%, 11/15/25 ................................................ 10,412,302
5,000,000 aDenver City and County School District No. 1, Denver School Facilities Leasing Corp.,
AMBAC Insured, 5.70%, 12/15/11 .............................................. 5,037,850
47,980,000 Denver City and County Special Facilities, Airport Revenue, United Airlines, Inc.
Project, Series A, 6.875%, 10/01/32 ......................................... 49,342,632
6,520,000 Littleton IDR, Porter Memorial Hospital, Medical Office Project, Series 1982,
Pre-Refunded, 8.00%, 02/01/12 ............................................... 6,716,056
16,500,000 Littleton MFR, Rental Housing, Riverpointe Project I, Series 1985, 8.00%,
12/01/22 .................................................................... 16,804,590
6,500,000 University of Colorado Hospital Authority Revenue, Series A, AMBAC Insured,
6.40%, 11/15/22 ............................................................. 6,853,860
------------
330,807,580
------------
Delaware 0.1%
1,160,000 Delaware State EDA Revenue, Refunding, Water Development, Wilmington,
Series B, 6.45%, 12/01/07 ................................................... 1,280,837
2,000,000 Delaware State Housing Authority, Refunding, MFMR, Series D, 6.75%, 07/01/06 . 2,131,140
------------
3,411,977
------------
District of Columbia 0.7%
District of Columbia GO,
6,500,000 Series A, Pre-Refunded, 8.00%, 06/01/07 .................................. 6,746,285
4,000,000 Series E, MBIA Insured, 6.00%, 06/01/13 .................................. 4,069,400
District of Columbia HFA, MFHR, FHA Insured,
$ 6,110,000 Mayfair Mansions Apartments, 8.85%, 02/01/31 ............................. $ 6,354,767
1,830,000 Refunding, Series A, 7.10%, 09/01/12 ..................................... 1,916,779
6,600,000 Refunding, Series A, 7.15%, 03/01/24 ..................................... 6,877,530
4,450,000 District of Columbia Hospital Revenue, Washington Hospital Center Corp., Series A,
Pre-Refunded, 9.00%, 01/01/08 ............................................... 5,219,138
1,500,000 District of Columbia Redevelopment Land Agency, Sports Arena, Special Tax
Revenue, 5.625%, 11/01/10 ................................................... 1,459,665
District of Columbia Revenue,
5,685,000 Association of American Medical Colleges, 7.50%, 02/15/20 ................ 6,159,072
3,155,000 Carnegie Endowment, 5.75%, 11/15/10 ...................................... 3,163,077
5,265,000 Catholic University of America, 6.45%, 10/01/23 .......................... 5,571,318
------------
47,537,031
------------
Florida 3.0%
Bay County Resource Recovery Revenue, Refunding, MBIA Insured,
2,100,000 Series A, 6.50%, 07/01/07 ................................................ 2,294,901
11,020,000 Series B, 6.50%, 07/01/07 ................................................ 12,042,766
42,650,000 Broward County Resource Recovery Revenue, Broward Waste Energy Co., L.P.,
North Project, Series 1984, 7.95%, 12/01/08 ................................. 47,043,803
1,000,000 Callaway/Bay County Waste Water Systems Revenue, Series A, FGIC Insured,
6.00%, 09/01/26 ............................................................. 1,006,630
3,800,000 Dunes Community Development District Revenue, Water and Sewer Project,
Pre-Refunded, 8.25%, 10/01/18 ............................................... 4,152,640
22,475,000 Florida State Board Of Education, Capital Outlay, Public Education, Refunding,
Series 1992, 6.40%, 06/01/19 ................................................ 23,932,953
Florida State Department of General Services, Division of Facilities Management
Revenue, Florida Facilities Pool,
2,000,000 Pre-Refunded, 8.125%, 09/01/17 ........................................... 2,178,780
4,000,000 Refunding, Series B, AMBAC Insured, 5.70%, 09/01/20 ...................... 4,020,520
7,125,000 Florida State Department of Transportation, Turnpike Revenue, Series A,
Pre-Refunded, 7.75%, 07/01/09 ............................................... 7,871,843
3,850,000 Lakeland Retirement Community, First Mortgage Revenue, Carpenters Home Estate
Project, 9.50%, 09/01/06 .................................................... 3,874,178
6,500,000 Manatee County IDR, Manatee Hospital and Health Systems, Inc., Pre-Refunded,
9.25%, 03/01/21 ............................................................. 7,764,380
5,000,000 Manatee County School Board COP, MBIA Insured, 6.125%, 07/01/16 .............. 5,204,650
Orange County Health Facilities Authority Revenue, Pooled Hospital Loan Program,
$ 5,925,000 Refunding, Series 1985-A, FGIC Insured, 7.875%, 12/01/25 ................. $ 6,168,458
4,760,000 Series B, BIG Insured, 7.875%, 12/01/25 .................................. 4,955,588
7,280,000 Orlando Utilities Commission, Water and Electric Revenue, Series A, 5.50%,
10/01/26 .................................................................... 7,021,123
2,500,000 Santa Rosa County Health Facilities Authority Revenue, Refunding, Gulf Breeze
Hospital, Inc., Pre-Refunded, 8.70%, 10/01/14 ............................... 2,747,550
St. Augustine Water and Sewer Revenue, Refunding, Series A, MBIA Insured,
840,000 6.20%, 10/01/00 .......................................................... 890,576
890,000 6.20%, 10/01/01 .......................................................... 951,846
940,000 6.20%, 10/01/02 .......................................................... 1,011,919
1,005,000 6.20%, 10/01/03 .......................................................... 1,086,817
1,065,000 6.20%, 10/01/04 .......................................................... 1,154,780
1,130,000 6.20%, 10/01/05 .......................................................... 1,226,434
1,200,000 6.20%, 10/01/06 .......................................................... 1,301,580
1,275,000 6.20%, 10/01/07 .......................................................... 1,380,035
1,355,000 6.20%, 10/01/08 .......................................................... 1,454,945
6,300,000 6.20%, 10/01/12 .......................................................... 6,636,546
Tampa Capital Improvement Program Revenue,
11,010,000 Series A, 8.25%, 10/01/18 ................................................ 11,668,288
37,250,000 Series B, 8.375%, 10/01/18 ............................................... 39,311,043
------------
210,355,572
------------
Georgia 3.0%
Burke County Development Authority, PCR, Georgia Power Co., Plant Vogle Project,
MBIA Insured,
105,000,000 Series 1984-1, 6.60%, 07/01/24 ........................................... 111,096,300
8,025,000 Series 1984-7, 6.625%, 10/01/24 .......................................... 8,523,353
Fulton County Development Authority, Special Facilities Revenue, Refunding, Delta
Air Lines, Inc. Project,
3,400,000 6.85%, 11/01/07 .......................................................... 3,592,304
5,500,000 6.95%, 11/01/12 .......................................................... 5,827,690
7,975,000 Gainsville and Hall County Hospital Authority Revenue, Anticipation Certificates,
Refunding, Northeast Georgia Healthcare Project, MBIA Insured, 6.00%,
10/01/25 .................................................................... 8,166,799
Georgia Municipal Electric Authority Power Revenue,
14,000,000 Series B, 6.375%, 01/01/16 ............................................... 14,424,200
6,325,000 Series EE, 6.40%, 01/01/23 ............................................... 6,856,806
18,500,000 Series O, 8.125%, 01/01/17 ............................................... 19,596,495
Georgia (cont.)
$ 4,825,000 Georgia State HFA Revenue, Homeownership Opportunity Program, Series C, 6.60%,
12/01/23 .................................................................... $ 5,029,725
Monroe County Development Authority, PCR, Georgia Power Co.,
4,300,000 AMBAC Insured, 6.25%, 07/01/19 ........................................... 4,458,799
16,000,000 Plant Scherer Project, 8.375%, 07/01/17 .................................. 16,654,720
10,000,000 Putnam County Development Authority, PCR, Refunding, Georgia Power Co., Plant
Branch Project, 8.375%, 07/01/17............................................. 10,420,800
------------
214,647,991
------------
Hawaii 0.8%
Hawaii State Airports System Revenue,
1,000,000 FGIC Insured, 7.00%, 07/01/20 ............................................ 1,096,200
12,000,000 Second Series, 7.00%, 07/01/07 ........................................... 13,164,960
500,000 Second Series, 6.90%, 07/01/12 ........................................... 563,210
2,830,000 Second Series, 7.00%, 07/01/18 ........................................... 3,067,833
Hawaii State Department of Budget and Finance, Special Purposes Mortgage
Revenue,
200,000 Hawaii Electric Light Co. Project, 7.20%, 12/01/14 ....................... 213,790
1,000,000 Hawaii Electric Light Co. Project, Series A, 7.35%, 01/01/20 ............. 1,066,070
900,000 Kaiser Hospital, 6.25%, 03/01/21 ......................................... 930,699
2,600,000 Refunding, Kapiolani Health Care System, 6.00%, 07/01/19 ................. 2,610,192
1,000,000 Wahiawa General Hospital Project, 7.50%, 07/01/12 ........................ 1,062,530
Hawaii State Department of Budget and Finance, Special Purposes Revenue,
1,000,000 6.00%, 07/01/11 .......................................................... 1,019,220
2,000,000 6.20%, 07/01/16 .......................................................... 2,046,460
6,250,000 6.25%, 07/01/21 .......................................................... 6,394,813
7,500,000 Refunding, The Queens Health System, Series A, 5.75%, 07/01/26 ........... 7,467,525
Hawaii State HFC, SFMR,
230,000 Series A, 7.00%, 07/01/11 ................................................ 242,057
3,350,000 Series A, 7.10%, 07/01/24 ................................................ 3,506,412
360,000 Series B, 6.90%, 07/01/16 ................................................ 376,920
11,880,000 Series B, 7.00%, 07/01/31 ................................................ 12,436,578
Honolulu City and County GO, Series A,
415,000 6.30%, 03/01/08 .......................................................... 440,651
1,000,000 6.30%, 03/01/12 .......................................................... 1,052,510
------------
58,758,630
------------
Idaho 0.1%
$ 2,260,000 Idaho Housing Agency, Refunding, Series D-1, 6.45%, 07/01/19 ................. $ 2,341,857
Idaho Housing Agency, SFMR, Senior Bond, Series B-1, FGIC Insured,
1,165,000 7.85%, 07/01/09 .......................................................... 1,220,838
1,800,000 7.90%, 01/01/21 .......................................................... 1,862,442
------------
5,425,137
------------
Illinois 5.9%
Bryant PCR, Refunding, Central Illinois Light Co. Project,
7,200,000 Series A, 6.50%, 02/01/18 ................................................ 7,624,368
5,000,000 Series C, 6.50%, 01/01/10 ................................................ 5,351,150
Chicago Board of Education, Chicago School Reform, MBIA Insured,
9,700,000 6.00%, 12/01/16 .......................................................... 9,942,403
7,600,000 6.00%, 12/01/26 .......................................................... 7,723,576
21,600,000 Chicago COP, AMBAC Insured, 7.75%, 07/15/11 .................................. 24,756,840
7,000,000 Chicago Gas Supply Revenue, Refunding, The Peoples Gas Light, Series A, 6.10%,
06/01/25 .................................................................... 7,125,090
Chicago-O'Hare International Airport Revenue, Special Facilities,
11,720,000 American Airlines, Inc. Project, 8.20%, 12/01/24 ......................... 13,759,514
4,300,000 United Airlines, Inc. Project, 8.45%, 05/01/07 ........................... 4,721,357
12,305,000 United Airlines, Inc. Project, 8.50%, 05/01/18 ........................... 13,505,476
465,000 United Airlines, Inc. Project, Series A, 8.40%, 05/01/18 ................. 506,897
28,785,000 United Airlines, Inc. Project, Series C, 8.20%, 05/01/18 ................. 31,246,693
10,000,000 Cook County Capital Improvement, Refunding, FGIC Insured, 5.875%, 11/15/22 ... 10,029,700
10,000,000 Cook County, Orland Park School District No. 135, Refunding, FGIC Insured, 5.90%,
12/01/14 .................................................................... 10,170,200
8,750,000 Cook County School District No. 140, Tinley Park, Refunding, Series A, AMBAC
Insured, 6.00%, 12/01/15 .................................................... 8,984,063
Illinois Development Finance Authority, PCR,
7,500,000 Commonwealth Edison Co. Project, Series 1991, 7.25%, 06/01/11 ............ 8,030,700
15,200,000 Refunding, Central Illinois Public Services Co., Series A, 6.375%, 01/01/28
15,650,680
26,550,000 Refunding, Illinois Power Co. Project, Series A, 7.375%, 07/01/21 ........ 29,806,092
6,000,000 Illinois Educational Facilities Authority Revenue, Shedd Aquarium Society,
Series 1987-A, 8.625%, 07/01/17 ............................................. 6,254,040
4,250,000 Illinois HDA, Homeowner Mortgage, Series A-1, 6.85%, 08/01/17 ................ 4,526,208
Illinois HDA, MF Program,
20,000,000 Lawndale Redevelopment Project, 7.10%, 12/01/34 .......................... 21,016,000
12,915,000 Refunding, Series A, 7.10%, 07/01/26 ..................................... 13,541,378
12,000,000 Series 1, 6.625%, 09/01/12 ............................................... 12,468,360
Illinois HDA, MF Program, (cont.)
$ 7,550,000 Series 1, 6.75%, 09/01/21 ................................................ $ 7,806,021
2,265,000 Series C, 7.35%, 07/01/11 ................................................ 2,337,820
7,065,000 Illinois HDA, RMR, Series B, 7.25%, 08/01/17 ................................. 7,408,218
Illinois Health Facilities Authority Revenue, Refunding,
2,000,000 Edwards Hospital Project, 7.00%, 02/15/22 ................................ 2,117,500
3,650,000 Galesburg Cottage Hospital, Pre-Refunded, 9.625%, 05/01/11 ............... 3,827,317
1,000,000 Servantcor, Series A, Pre-Refunded, 7.875%, 08/15/19 ..................... 1,108,940
3,000,000 Servantcor, Series B, Pre-Refunded, 7.875%, 08/15/19 ..................... 3,326,820
7,000,000 South Suburban Hospital, 7.00%, 02/15/18 ................................. 7,339,780
6,200,000 Westlake Community Hospital, 7.875%, 01/01/13 ............................ 6,572,496
2,600,000 Illinois State COP, CGIC Insured, 6.875%, 07/01/07 ........................... 2,832,284
2,950,000 Illinois State Dedicated Tax Revenue, Civic Center, Series A, AMBAC Insured,
6.00%, 12/15/15 ............................................................. 2,993,660
3,825,000 Lombard, Village of, Revenue, Refunding, Beacon Hill Project, 9.00%, 02/15/08 3,926,516
Metropolitan Pier and Exposition Authority, Hospitality Facilities Revenue,
McCormick Place Convention Center,
1,645,000 5.75%, 07/01/06 .......................................................... 1,638,831
9,500,000 6.25%, 07/01/17 .......................................................... 9,561,465
12,000,000 7.00%, 07/01/26 .......................................................... 13,381,920
Metropolitan Pier and Exposition Authority, State Tax Revenue, Expansion Project A,
7,760,000 6.50%, 06/15/22 .......................................................... 8,091,430
26,115,000 6.50%, 06/15/27 .......................................................... 28,517,580
5,860,000 Municipal Electric Agency, Power Supply Systems Revenue, Series A, AMBAC
Insured, 5.75%, 02/01/21 .................................................... 5,859,355
4,350,000 Onterie Center HFC, Mortgage Revenue, Refunding, Series 1989-A, MBIA Insured,
7.05%, 07/01/27 ............................................................. 4,587,336
3,970,000 Regional Transportation Authority, Series A, AMBAC Insured, 6.125%, 06/01/22 . 4,036,101
Southwestern Illinois Development Authority,
6,200,000 Anderson Hospital Project, Series A, 7.00%, 08/15/22 ..................... 6,374,654
1,825,000 IDR, Spectrulite Consortium, Inc. Project, 6.20%, 02/01/05 ............... 1,904,844
3,050,000 IDR, Spectrulite Consortium, Inc. Project, 6.625%, 02/01/10 .............. 3,230,652
2,925,000 Private Activity Revenue, Glenmark Recovery, 8.50%, 08/01/10 ............. 3,243,240
5,255,000 Solid Waste Disposal Revenue, LaCede Steel Co., 8.375%, 08/01/08 ......... 5,811,767
5,390,000 Solid Waste Disposal Revenue, LaCede Steel Co., 8.50%, 08/01/20 .......... 5,954,549
------------
420,531,881
------------
Indiana 1.1%
$ 17,000,000 Hammond Industrial Sewer and Solid Waste Disposal Revenue, American
Maize-Products Co. Project, Series A, 8.00%, 12/01/24 ....................... $ 19,034,560
2,355,000 Hammond PCR, Stauffer Chemical Project, Guaranteed by Imperial Chemical, Plc.,
Series 1982, 8.00%, 11/01/12 ................................................ 2,632,231
1,155,000 Indiana Bond Bank, Special Program, Series 1988-A, Pre-Refunded, 8.375%,
02/01/18 .................................................................... 1,186,312
3,500,000 Indiana Health Facility Financing Authority, Hospital Revenue, Hancock Memorial
Hospital Project, Series 1990, 8.30%, 08/15/20 .............................. 3,745,420
3,240,000 Indiana State Educational Facilities Authority Revenue, Manchester College Project,
6.85%, 10/01/18 ............................................................. 3,384,180
Indiana State Housing Financing Authority, SFMR, Refunding, Series A,
2,940,000 6.75%, 01/01/10 .......................................................... 3,082,619
12,835,000 6.80%, 01/01/17 .......................................................... 13,321,061
Indianapolis Local Public Improvement, Series D,
13,075,000 6.75%, 02/01/20 .......................................................... 13,790,333
4,625,000 Refunding, 6.50%, 02/01/22 ............................................... 4,695,763
Indianapolis Resource Recovery Revenue, Ogden Martin System, Inc.,
Pre-Refunded,
5,550,000 Series A, 7.90%, 12/01/08 ................................................ 5,733,594
1,505,000 Series B, 7.90%, 12/01/08 ................................................ 1,554,785
2,000,000 Muncies Edit Building Corp., First Mortgage, Series A, AMBAC Insured, 6.60%,
12/01/17 .................................................................... 2,134,300
6,000,000 aSullivan PCR, Refunding, Indiana-Michigan Power Co. Project, Series C, 5.95%,
05/01/09 .................................................................... 6,035,640
------------
80,330,798
------------
Iowa
2,325,000 Carroll Retirement Facility Revenue, Orchard View, Inc. Project, Pre-Refunded,
8.25%, 02/01/13 ............................................................. 2,469,731
------------
Kansas 0.4%
Merriam Hospital Revenue, Shawnee Medical Center, Inc.
5,815,000 Project A, 7.25%, 09/01/11 ............................................... 6,177,042
15,215,000 Project A, 7.25%, 09/01/21 ............................................... 16,099,448
1,560,000 Project B, 7.25%, 09/01/11 ............................................... 1,657,126
3,580,000 Project B, 7.25%, 09/01/21 ............................................... 3,788,105
------------
27,721,721
------------
Kentucky 2.1%
$ 3,900,000 Ashland PCR, Refunding, Ashland Oil, Inc. Project, 6.65%, 08/01/09 ........... $ 4,143,828
8,405,000 Christian County Hospital Revenue, Refunding, Jennie Stuart Medical Center Project,
7.625%, 04/01/10 ............................................................ 8,613,444
10,000,000 Henderson County Solid Waste Disposal Revenue, MacMillan Bloedel Project,
7.00%, 03/01/25 ............................................................. 10,570,800
4,965,000 Jefferson County MFHR, Watterson Park Apartments Project, Series A, 6.35%,
11/15/11 .................................................................... 5,053,476
Kenton County Airport Board, Airport Revenue, Special Facilities,
Delta Air Lines, Inc.,
20,000,000 7.80%, 12/01/15 .......................................................... 21,328,600
10,000,000 Project A, 7.50%, 02/01/20 ............................................... 10,745,700
9,330,000 Project A, 7.125%, 02/01/21 .............................................. 9,864,889
3,350,000 Project B, 7.25%, 02/01/22 ............................................... 3,576,762
Kentucky Housing Corp., Housing Revenue,
1,375,000 Series A, 6.70%, 07/01/17 ................................................ 1,420,471
4,910,000 Series B, 6.625%, 07/01/14 ............................................... 5,065,254
700,000 Kentucky State Development Financial Authority, Hospital Revenue, Claire Medical
Center Project, Pre-Refunded, 7.125%, 09/01/21 .............................. 781,998
4,500,000 Kentucky State Property and Buildings Commission Revenue, Project No. 48,
Pre-Refunded, 8.00%, 08/01/08 ............................................... 4,871,070
Mount Sterling Lease Revenue, Kentucky League Cities, Series A,
20,375,000 6.10%, 03/01/08 .......................................................... 21,015,998
11,765,000 6.20%, 03/01/18 .......................................................... 11,946,887
27,160,000 Pendleton County, Multi-County Lease Revenue, Kentucky Association of Counties
Leasing Trust, Series A, 6.50%, 03/01/19 .................................... 28,216,524
------------
147,215,701
------------
Louisiana 2.0%
2,000,000 Bastrop PCR, Refunding, International Paper Co. Project, 6.90%, 03/01/07 ..... 2,161,280
14,285,000 Calcasieu Parish IDB, PCR, Refunding, Gulf States Utilities Co. Project, 6.75%,
10/01/12 .................................................................... 14,601,984
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 ......................................................... 4,613,295
5,530,000 6.50%, 12/01/18 .......................................................... 6,029,967
3,145,000 6.65%, 12/01/21 .......................................................... 3,352,727
Calcasieu Parish Public Transportation Authority Mortgage Revenue, Refunding,
$ 4,125,000 Series 1991-A, 7.75%, 06/01/12 ........................................... $ 4,373,614
475,000 Series 1992-B, 6.375%, 11/01/02 .......................................... 496,698
720,000 Series 1992-B, 6.875%, 11/01/12 .......................................... 748,274
2,500,000 De Soto Parish Environmental Improvement Revenue, International Paper Co.
Project, Series A, 7.70%, 11/01/18........................................... 2,842,250
2,365,000 Denham Spring-Livingston HFA, 6.80%, 02/01/21 ................................ 2,471,070
East Baton Rouge Mortgage Financing Authority, SFM,
6,275,000 MBS, Series A, 6.80%, 10/01/28 ........................................... 6,503,096
3,080,000 Series C, 7.00%, 04/01/32 ................................................ 3,215,027
4,720,000 Series D, 7.10%, 04/01/32 ................................................ 4,917,674
1,898,599 Lafayette Public Trust Finance Authority, SFMR, Refunding, Series 1990-A, 8.50%,
11/15/12 .................................................................... 2,008,491
1,860,000 Louisiana HFA, HMR, Refunding, 7.375%, 09/01/13 .............................. 1,912,229
3,400,000 Louisiana Office Facility Corp., Capital Facility Bonds, Statewide Lease, 7.75%,
12/01/10 .................................................................... 3,751,152
3,500,000 Louisiana Public Facilities Authority Revenue, Refunding, Series B, Alton Ochsner
Medical Foundation Project, MBIA Insured, 6.50%, 05/15/22 ................... 3,684,660
New Orleans GO, Refunding, AMBAC Insured,
10,275,000 6.125%, 10/01/16 ......................................................... 10,759,775
8,050,000 6.20%, 10/01/21 .......................................................... 8,412,894
2,200,000 Pointe Coupee Parish PCR, Refunding, Gulf States Utilities Co. Project, 6.70%,
03/01/13 .................................................................... 2,246,772
4,000,000 Quachita Parish Hospital Service District No. 1 Revenue, Glenwood Regional
Medical Center, Pre-Refunded, 7.50%, 07/01/21 ............................... 4,536,520
West Feliciana Parish PCR, Gulf Systems Utilities Co. Project,
2,000,000 7.70%, 12/01/14 .......................................................... 2,168,180
3,050,000 7.00%, 11/01/15 .......................................................... 3,173,586
41,050,000 8.00%, 12/01/24 .......................................................... 43,824,980
------------
142,806,195
------------
Maine 1.1%
5,000,000 Bucksport Solid Waste Disposal Revenue, Champion International Corp. Project,
6.25%, 05/01/10 ............................................................. 5,147,250
29,300,000 Maine Financial Authority, Solid Waste Recycling Facilities Revenue, Great Northern
Paper Co., Bowater Project, 7.75%, 10/01/22 ................................. 31,923,229
2,445,000 Maine State Health and Higher Education Facilities Authority Revenue, FSA Insured,
Series B, 7.00%, 07/01/24 ................................................... 2,705,295
Maine State Housing Authority, Mortgage Purchase,
$ 2,500,000 Series A-5, 6.20%, 11/15/16 .............................................. $ 2,531,275
3,700,000 Series C, 6.55%, 11/15/12 ................................................ 3,862,652
3,500,000 Series C, 6.65%, 11/15/24 ................................................ 3,642,520
3,540,000 Series D, 6.45%, 11/15/07 ................................................ 3,617,207
5,800,000 Series D, 6.70%, 11/15/15 ................................................ 6,063,204
4,800,000 Rumford PCR, Refunding, Boise Cascade Corp. Project, 6.625%, 07/01/20 ........ 5,006,256
4,500,000 Skowhegan PCR, Refunding, Scott Paper Co. Project, Series B, 8.10%, 10/01/15 . 4,965,255
10,000,000 Skowhegan Solid Waste Disposal Revenue, S.D. Warren Co. Project, Series A,
8.40%, 10/01/15 ............................................................. 11,045,000
------------
80,509,143
------------
Maryland 2.0%
Gaithersburg Hospital Facilities Improvement Revenue, Shady Grove Hospital,
10,110,000 Refunding & Improvement, FSA Insured, 6.00%, 09/01/21 .................... 10,335,049
43,225,000 Series A, Pre-Refunded, 8.25%, 09/01/21 .................................. 50,565,902
Maryland State Community Development Administration, Department of Housing
and Community Development,
5,705,000 MFHR, Insured Mortgage, Series G, 6.55%, 05/15/19 ........................ 5,882,254
965,000 SF, 7.25%, 04/01/27 ...................................................... 1,005,926
4,900,000 Maryland State Health and Higher Educational Facilities Authority Revenue, Hartford
Memorial Hospital and Fallston General Hospital, 8.50%, 07/01/14 ............ 5,070,226
6,500,000 Montgomery County Housing Opportunity Community, SFMR, Refunding, Series B,
6.625%, 07/01/28 ............................................................ 6,689,540
Takoma Park Hospital Facilities Revenue, Refunding, Washington Adventist Hospital,
Series A,
20,125,000 Sub-Series 1, 8.25%, 09/01/21 ............................................ 21,682,273
10,930,000 Sub-Series 1, Pre-Refunded, 8.25%, 09/01/21 .............................. 12,812,255
23,210,000 Sub-Series 2, Pre-Refunded, 8.25%, 09/01/21 .............................. 27,151,754
------------
141,195,179
------------
Massachusetts 3.3%
10,900,000 Agawam Resource Recovery Revenue, Springfield Resource Recovery Project,
Series 1986, 8.50%, 12/01/08 ................................................ 11,248,909
3,915,000 Lowell GO, Pre-Refunded, 7.625%, 02/15/10 .................................... 4,482,949
2,310,000 Massachusetts Health and Educational Facilities Authority Revenue, Notre Dame
Health Care Center, Series A, 7.875%, 10/01/22 .............................. 2,378,284
Massachusetts State Consolidated Loan,
$ 7,500,000 Series A, 7.50%, 06/01/04 ................................................ $ 8,736,300
5,000,000 Series D, 7.00%, 07/01/07 ................................................ 5,507,350
21,720,000 Massachusetts State Dedicated Income Tax, Fiscal Recovery Loan, Series A,
7.875%, 06/01/97 ............................................................ 22,241,280
5,900,000 Massachusetts State GO, Refunding, Series B, 6.50%, 08/01/08 ................. 6,556,021
Massachusetts State Health and Educational Facilities Authority Revenue,
9,020,000 Framingham Union Hospital, Series B, Pre-Refunded, 8.50%, 07/01/20 ....... 10,376,067
1,100,000 Melrose-Wakefield Hospital, Series B, Refunding, 6.35%, 07/01/06 ......... 1,154,175
1,000,000 Sisters Providence Health System, Series A, 6.50%, 11/15/08 .............. 1,007,420
12,050,000 Sisters Providence Health System, Series A, 6.625%, 11/15/22 ............. 12,083,017
5,250,000 Massachusetts State HFA, HDA, Series D, FGIC Insured, 6.875%, 11/15/21 ....... 5,577,023
Massachusetts State HFA, Housing Projects, Refunding, Series A,
25,635,000 6.30%, 10/01/13 .......................................................... 26,016,705
24,750,000 6.375%, 04/01/21 ......................................................... 24,996,263
Massachusetts State HFA, Housing Revenue, SF, Series 41,
6,250,000 6.30%, 12/01/14 .......................................................... 6,380,125
5,750,000 6.35%, 06/01/17 .......................................................... 5,882,940
2,410,000 Massachusetts State HFA Revenue, SFMR, Series G, 8.10%, 12/01/14 ............. 2,531,199
Massachusetts State Housing Facilities Authority, FGIC Insured,
9,715,000 Series C, 6.90%, 11/15/21 ................................................ 10,334,817
250,000 Series D, 6.80%, 11/15/12 ................................................ 267,278
6,000,000 Massachusetts State Industrial Finance Agency, First Mortgage Revenue,
Brookhaven at Lexington Retirement Project, Pre-Refunded, 10.25%, 01/01/18 .. 6,583,380
41,565,000 aMassachusetts State Water Resources Authority, General Series A, FGIC Insured,
5.60%, 11/01/26 ............................................................. 40,678,003
Plymouth County COP, Series A,
10,000,000 7.00%, 04/01/12 .......................................................... 11,003,900
5,000,000 7.00%, 04/01/22 .......................................................... 5,499,250
------------
231,522,655
------------
Michigan 0.9%
2,000,000 Battle Creek Tax Increment Finance Authority, 7.40%, 05/01/16 ................ 2,304,020
3,805,000 Belding Area Schools, Refunding, FGIC Insured, 6.10%, 05/01/26 ............... 3,964,544
2,445,000 Climax-Scotts Community Schools, 6.35%, 05/01/23 ............................. 2,563,851
Detroit GO,
7,265,000 Refunding, Series B, 6.375%, 04/01/06 .................................... 7,677,289
625,000 Refunding, Series B, 6.25%, 04/01/09 ..................................... 644,725
4,550,000 Series A, 6.70%, 04/01/10 ................................................ 4,865,998
$ 2,250,000 Detroit GO, Self-Insurance, Series A, 5.70%, 05/01/02 ........................ $ 2,282,738
4,960,000 Detroit GO, Unlimited Tax, Series A, Pre-Refunded, 7.875%, 04/01/08 .......... 5,313,698
15,650,000 Michigan State Building Authority Revenue, Series II, 6.25%, 10/01/20 ........ 15,902,748
Michigan State HDA,
2,500,000 Limited Obligation Revenue, Fraser Woods Project, FSA Insured, 6.625%,
09/15/19 ................................................................ 2,604,200
5,000,000 Rental Housing Revenue, Refunding, Series A, 6.60%, 04/01/12 ............. 5,148,250
Michigan State HFA, SFMR, Series A,
2,000,000 6.45%, 12/01/14 .......................................................... 2,066,160
3,055,000 6.875%, 06/01/23 ......................................................... 3,183,524
Michigan State Hospital Finance Authority Revenue, Presbyterian Villages
Obligation Group,
200,000 5.30%, 01/01/99 .......................................................... 200,186
310,000 5.40%, 01/01/00 .......................................................... 310,419
310,000 5.70%, 01/01/01 .......................................................... 310,539
355,000 5.80%, 01/01/02 .......................................................... 355,749
325,000 5.90%, 01/01/03 .......................................................... 326,632
390,000 6.00%, 01/01/04 .......................................................... 392,211
1,000,000 6.40%, 01/01/15 .......................................................... 1,007,820
3,500,000 6.50%, 01/01/25 .......................................................... 3,527,195
------------
64,952,496
------------
Minnesota 1.6%
9,100,000 aCloquet PCR, Refunding, Potlach Corp. Projects, 5.90%, 10/01/26 .............. 9,130,212
Dakota County Housing, RDA, Limited Annual Appropriation Tax and Revenue,
Development Housing Facilities Project,
515,000 7.25%, 01/01/97 .......................................................... 515,628
555,000 7.25%, 01/01/98 .......................................................... 559,795
600,000 7.25%, 01/01/99 .......................................................... 607,638
645,000 7.25%, 01/01/00 .......................................................... 654,856
695,000 7.25%, 01/01/01 .......................................................... 706,064
3,930,000 7.50%, 01/01/06 .......................................................... 4,006,714
2,445,000 8.00%, 01/01/07 .......................................................... 2,522,629
Minneapolis CDA, Commercial Supported Development Revenue, Refunding,
2,500,000 Limited Tax, Series 1987-3, 8.625%, 12/01/27 ............................. 2,604,875
1,000,000 Series 1987-1, 8.625%, 12/01/12 .......................................... 1,048,570
5,000 Minneapolis CDA and St. Paul Housing RDA, Homeownership Mortgage Revenue,
Joint Housing Program, FGIC Insured, 9.875%, 12/01/15........................ 5,052
Minnesota State HFA, SFM, Series D-1,
$ 3,690,000 6.45%, 07/01/11 .......................................................... $ 3,851,032
1,465,000 6.50%, 01/01/17 .......................................................... 1,514,400
11,370,000 Minnetonka MFR, Rental Housing, Ridgepointe Housing Project, Phase II, 8.00%,
05/15/22 .................................................................... 11,587,394
1,500,000 Red Wing Housing, RDA, Jordan Tower II Project, 7.00%, 01/01/19 .............. 1,566,570
14,040,000 Roseville MFR, Rental Housing, Rosepointe No. 1 Project, 8.00%, 10/01/18 ..... 14,299,178
6,000,000 St. Louis Park EDA, Tax Increment Revenue, Refunding, FGIC Insured,
Pre-Refunded, 8.40%, 09/01/09 ............................................... 7,071,780
St. Paul Port Authority,
3,930,000 Energy Park, Tax Increment Revenue, Refunding, Pre-Refunded, 8.00%,
12/01/07 ................................................................ 4,303,586
3,465,000 IDR, Bandana Square, Series 1989-C, 7.80%, 12/01/12 ...................... 2,675,223
230,000 IDR, Bandana Square, Series C, 7.70%, 12/01/00 ........................... 223,569
255,000 IDR, Bandana Square, Series C, 7.70%, 12/01/01 ........................... 245,728
270,000 IDR, Bandana Square, Series C, 7.70%, 12/01/02 ........................... 260,469
1,690,000 IDR, Bandana Square, Series C, 7.70%, 12/01/07 ........................... 1,387,118
415,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/97 ............... 413,066
445,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/98 ............... 440,857
480,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/99 ............... 473,467
515,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/00 ............... 505,941
550,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/01 ............... 538,307
595,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/02 ............... 580,327
640,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/03 ............... 622,208
685,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/04 ............... 663,971
740,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/05 ............... 715,299
795,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/06 ............... 766,491
855,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/07 ............... 822,382
915,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/08 ............... 878,153
670,000 IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/09 ............... 641,706
140,000 IDR, Refunding, Common Bond Fund, Series C, Fort Road Medical Center,
7.95%, 09/01/01 ......................................................... 134,875
155,000 IDR, Refunding, Common Bond Fund, Series C, Fort Road Medical Center,
7.95%, 09/01/02 ......................................................... 149,487
1,705,000 IDR, Refunding, Common Bond Fund, Series C, Fort Road Medical Center,
7.95%, 09/01/10 ......................................................... 1,368,058
105,000 IDR, Refunding, Common Bond Fund, Series F, Ideal Security Hardware
Corp., 8.00%, 12/01/01 .................................................. 101,169
St. Paul Port Authority, (cont.)
$ 115,000 IDR, Refunding, Common Bond Fund, Series F, Ideal Security Hardware
Corp., 8.00%, 12/01/02 .................................................. $ 110,922
1,790,000 IDR, Refunding, Common Bond Fund, Series F, Ideal Security Hardware
Corp., 8.00%, 12/01/12 .................................................. 1,408,999
9,750,000 Southern Minnesota Municipal Power Agency, Supply System Revenue, Series A,
Pre-Refunded, 8.125%, 01/01/18............................................... 10,385,213
Washington County Housing RDA,
3,000,000 Housing Development Revenue, Orleans Apartments, Project A, 8.25%,
07/01/21 ................................................................ 3,024,240
5,210,000 Housing Development Revenue, Raymie Johnson Apartments, Pre-Refunded,
7.70%, 12/01/19 ......................................................... 6,028,595
10,000,000 Pooled Housing and Redevelopment, 7.20%, 01/01/22 ........................ 10,455,800
------------
112,577,613
------------
Mississippi 0.6%
Claiborne County PCR, Refunding, Systems Energy Resources, Inc.,
5,700,000 7.30%, 05/01/25 .......................................................... 5,979,813
30,500,000 a6.20%, 02/01/26 .......................................................... 30,011,085
1,990,000 Mississippi Home Corp., SFR, Refunding, Senior Series A, FGIC Insured, 9.25%,
03/01/12 .................................................................... 2,143,031
2,440,000 Mississippi State Educational Facilities Authority Revenue, Private Nonprofit
Institutions of Higher Learning, Tougaloo College Project, Series A, 6.50%,
06/01/18 .................................................................... 2,373,730
------------
40,507,659
------------
Missouri 1.0%
3,000,000 Hazelwood IDA, MFHR, Refunding, Lakes Apartments Project, Series A, 6.10%,
09/20/26 .................................................................... 3,045,330
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 .............. 10,668,900
1,415,000 Marion County Nursing Home District Revenue, Refunding, Pre-Refunded, 9.00%,
08/01/03 .................................................................... 1,498,627
Missouri State Health and Educational Facilities Authority Revenue,
5,000,000 Series B, MBIA Insured, 6.25%, 02/15/12 .................................. 5,240,200
3,750,000 Sisters of St. Mary's Health Care Project, BIG Insured, Pre-Refunded, 7.75%,
06/01/16 ................................................................ 4,035,488
Moberly IDA, Hospital Revenue, Refunding, Moberly Regional Medical Center, Inc.
Project,
$ 4,105,000 8.625%, 03/01/02 ......................................................... $ 4,271,827
8,955,000 Pre-Refunded, 8.75%, 03/01/16 ............................................ 9,709,101
4,675,000 Newton County IDA, Hospital Revenue, Refunding, Sale Hospital, Inc. Project,
Pre-Refunded, 9.00%, 01/01/05................................................ 4,951,106
16,250,000 St. Louis County IDA, Health Facilities Revenue, Refunding & Improvement,
First Mortgage, Normandy Osteopathic Hospitals Project, 9.125%, 08/01/13 .... 16,999,125
6,000,000 St. Louis Parking Facilities Revenue, 6.625%, 12/15/21 ....................... 6,210,300
3,600,000 West Plains IDA, Hospital Revenue, Ozarks Medical Center Project, Series A,
8.625%, 09/15/20 ............................................................ 3,867,336
------------
70,497,340
------------
Montana 0.7%
Forsyth County PCR,
10,000,000 Puget Sound Power and Light Co. Project, AMBAC Insured, 6.80%, 03/01/22 .. 10,838,100
3,250,000 Refunding, The Montana Power Co. Colstrip Project, Series A, 6.125%,
05/01/23 ................................................................ 3,261,668
4,225,000 Refunding, The Montana Power Co., Series B, AMBAC Insured, 5.90%,
12/01/23 ................................................................ 4,260,152
20,385,000 Refunding, The Montana Power Co., Series B, MBIA Insured, 5.90%,
12/01/23 ................................................................ 20,554,603
2,000,000 Montana State Health Facilities Authority Revenue, Montana Developmental Center
Project, 6.40%, 06/01/16 .................................................... 2,078,140
Montana State Housing Board, Refunding, SF Program,
2,835,000 Series A, 6.50%, 12/01/22 ................................................ 2,899,014
6,800,000 Series B-1, 6.25%, 12/01/21 .............................................. 6,902,680
------------
50,794,357
------------
Nebraska 0.1%
6,160,000 Nebraska Investment Financial Authority, 7.00%, 11/01/09 6,422,108
------------
Nevada 3.4%
2,000,000 Churchill County Health Care Facilities Revenue, Western Health Network, Series A,
MBIA Insured, 6.25%,01/01/14................................................. 2,093,400
17,500,000 Clark County Airport System Improvement Revenue, 8.25%, 07/01/15 ............. 18,543,700
5,105,000 Clark County HFC, MFHR, FHA Insured, 7.75%, 07/01/23 ......................... 5,232,778
Clark County IDR,
$ 12,500,000 Refunding, Nevada Power Co. Project, Series C, 7.20%, 10/01/22 ........... $ 13,270,875
18,080,000 Southwest Gas Corp., Series A, 7.30%, 09/01/27 ........................... 19,089,406
62,470,000 Southwest Gas Corp., Series B, 7.50%, 09/01/32 ........................... 66,876,009
4,500,000 Humboldt County PCR, Refunding, Sierra Pacific Power Co., Series A, AMBAC
Insured, 6.30%, 07/01/22 .................................................... 4,696,245
5,405,000 Nevada Housing Division, Multi-Unit Housing Revenue, Issue B, 6.55%, 10/01/25 5,600,607
8,210,000 Nevada Housing Division, Refunding, Issue C-2, 6.75%, 10/01/26 ............... 8,474,362
Nevada Housing Division, SF Program,
3,500,000 Issue 1988-A, FI/GML, 8.30%, 10/01/19 .................................... 3,650,535
3,335,000 Issue 1988 A-2, FI/GML, 8.375%, 10/01/19 ................................. 3,475,737
3,900,000 Refunding, Program A-1, 6.25%, 10/01/26 .................................. 3,971,838
Nevada State Colorado River, Series 1994,
31,345,000 5.50%, 07/01/27 .......................................................... 30,219,088
15,915,000 Pre-Refunded, 6.50%, 07/01/24 ............................................ 17,686,658
10,275,000 Nevada State Municipal Bond Bank Project No. 40-41-A, ETM, 6.375%, 12/01/17 .. 11,280,614
Reno RDA, Tax Allocation,
2,695,000 Downtown Redevelopment Project, Series C, Pre-Refunded, 7.75%, 09/01/05 .. 3,039,556
8,290,000 Downtown Redevelopment Project, Series D, 7.625%, 09/01/16 ............... 9,097,529
3,000,000 Refunding, Series A, 6.20%, 06/01/18 ..................................... 3,008,070
5,000,000 Washoe County Gas and Water Facilities Revenue, Refunding, AMBAC Insured,
6.30%, 12/01/14 ............................................................. 5,230,450
9,295,000 Washoe County Hospital Facility Revenue, Washoe Medical Center, Inc. Project,
Series A, AMBAC Insured, 6.25%, 06/01/13 .................................... 9,709,464
------------
244,246,921
------------
New Hampshire 1.6%
New Hampshire Higher Education and Health Facilities Authority Revenue,
9,580,000 Kendal at Hanover Project, 8.00%, 10/01/19 ............................... 10,102,589
4,560,000 Saint Anselm College, MBIA Insured, 5.75%, 07/01/26 ...................... 4,559,590
2,300,000 St. Joseph Hospital, 7.50%, 01/01/16 ..................................... 2,427,880
New Hampshire State HFA,
4,920,000 MFHR, Series 1, 7.10%, 01/01/14 .......................................... 5,136,136
4,535,000 SF Residential, Series A, 8.50%, 07/01/14 ................................ 4,742,113
6,855,000 SFMR, Series E, 6.75%, 07/01/19 .......................................... 7,177,322
5,135,000 SFMR, Series E, 6.80%, 07/01/25 .......................................... 5,375,883
New Hampshire State IDA,
6,870,000 Pollution Control Public Service Co., Project A, 7.65%, 05/01/21 ......... 7,041,819
50,690,000 Pollution Control Public Service Co., Project B, 7.50%, 05/01/21 ......... 52,633,455
New Hampshire State IDA, (cont.)
$ 7,450,000 Pollution Control Public Service Co., Project C, 7.65%, 05/01/21 ......... $ 7,636,325
1,820,000 Resource Recovery Revenue, SES Concord Co. Project, 8.15%, 01/01/00 ...... 1,910,618
5,000,000 Resource Recovery Revenue, SES Concord Co. Project, 8.50%, 01/01/09 ...... 5,261,350
------------
114,005,080
------------
New Jersey 0.2%
4,425,000 New Jersey EDA, First Mortgage, Gross Revenue, Mega Care, Inc. Project,
Pre-Refunded, 8.625%, 08/01/07 .............................................. 4,671,473
New Jersey Health Care Facilities, Financing Authority Revenue,
3,975,000 Cathedral Health Service, 7.25%, 02/15/21 ................................ 4,283,699
900,000 Community Memorial Hospital Association, Series C, 8.00%, 07/01/14 ....... 961,110
4,150,000 Zurbrugg Memorial Hospital Issue, Series C, 8.50%, 07/01/12 .............. 4,310,315
------------
14,226,597
------------
New Mexico 1.0%
5,000,000 Albuquerque Airport Revenue, Series A, Pre-Refunded, 9.25%, 07/01/19 ......... 5,254,200
10,435,000 Farmington PCR, Refunding, Public Service Co. of New Mexico, Series A,
AMBAC Insured, 6.375%, 12/15/22 ............................................. 10,962,489
17,000,000 Lordsburg PCR, Refunding, Phelps Dodge Corp. Project, 6.50%, 04/01/13 ........ 17,908,650
17,095,000 New Mexico State Mortgage Financal Authority, SFM, Refunding, Series A, 6.85%,
07/01/10 .................................................................... 17,942,570
17,000,000 University of New Mexico Revenue, Series 1989, Pre-Refunded, 7.90%, 06/01/19 . 18,757,120
------------
70,825,029
------------
New York 12.2%
Metropolitan Transportation Authority Revenue,
8,950,000 Commuter Facilities, Series A, FGIC Insured, 6.00%, 07/01/16 ............. 9,275,870
9,225,000 Commuter Facilities, Series A, FGIC Insured, 6.00%, 07/01/21 ............. 9,520,938
11,050,000 Commuter Facilities, Series A, FGIC Insured, 6.10%, 07/01/26 ............. 11,450,231
3,000,000 Refunding, Transit Facilities Obligation, 7.00%, 07/01/09 ................ 3,239,220
18,210,000 Refunding, Transportation Facilities, Series M, 6.00%, 07/01/14 .......... 17,974,181
3,630,000 Transport Facilities, Series A, FSA Insured, 6.00%, 07/01/16 ............. 3,762,168
6,260,000 Transport Facilities, Series A, FSA Insured, 6.10%, 07/01/21 ............. 6,513,843
1,245,000 New Rochelle IDA, Civic Facilities Revenue, College of New Rochelle Project,
6.625%, 07/01/12 ............................................................ 1,292,073
New York City GO,
5,000,000 Refunding, Series A, 6.25%, 08/01/16 ..................................... 5,002,400
1,500,000 Refunding, Series B, 6.20%, 08/15/06 ..................................... 1,539,630
26,875,000 Refunding, Series B, 6.30%, 08/15/08 ..................................... 27,526,450
New York (cont.)
$ 21,740,000 Refunding, Series B, 6.375%, 08/15/10 .................................... $ 22,221,758
8,500,000 Refunding, Series E, 5.75%, 02/15/09 ..................................... 8,323,540
5,000,000 Refunding, Series H, Subseries H-1, 6.125%, 08/01/11 ..................... 5,012,100
1,180,000 Series 1987-A, Pre-Refunded, 8.50%, 11/01/12 ............................. 1,252,157
3,355,000 Series 1987-A, Pre-Refunded, 8.50%, 11/01/13 ............................. 3,560,158
2,805,000 Series 1987-A, Pre-Refunded, 8.75%, 11/01/14 ............................. 2,983,258
2,040,000 Series 1987-D, Pre-Refunded, 8.50%, 08/01/09 ............................. 2,152,567
2,610,000 Series 1989-E, 6.50%, 12/01/12 ........................................... 2,635,056
3,000,000 Series 1990-B, ETM, 8.00%, 06/01/01 ...................................... 3,422,760
6,020,000 Series 1990-B, Pre-Refunded, 7.50%, 10/01/11 ............................. 6,620,314
3,285,000 Series 1991-A, 7.75%, 08/15/17 ........................................... 3,658,767
5,000 Series 1991-A, 8.00%, 08/15/20 ........................................... 5,678
15,000 Series 1991-A, 8.00%, 08/15/21 ........................................... 17,006
1,000,000 Series 1991-A, Pre-Refunded, 8.00%, 03/15/12 ............................. 1,122,540
13,400,000 Series 1991-A, Pre-Refunded, 8.00%, 03/15/14 ............................. 15,042,036
1,115,000 Series 1991-A, Pre-Refunded, 8.00%, 03/15/15 ............................. 1,249,770
3,000,000 Series 1991-A, Pre-Refunded, 8.00%, 03/15/16 ............................. 3,362,610
895,000 Series 1991-A, Pre-Refunded, 8.00%, 08/15/20 ............................. 1,036,983
3,165,000 Series 1991-A, Pre-Refunded, 8.00%, 08/15/21 ............................. 3,667,096
1,000,000 Series 1991-B, 8.25%, 06/01/05 ........................................... 1,162,120
15,000,000 Series 1991-B, 7.00%, 02/01/19 ........................................... 15,773,700
1,760,000 Series 1991-D, 8.00%, 08/01/99 ........................................... 1,909,318
145,000 Series 1991-D, 8.25%, 08/01/13 ........................................... 166,170
85,000 Series 1991-D, 8.25%, 08/01/14 ........................................... 97,526
50,000 Series 1991-D, 8.00%, 08/01/16 ........................................... 57,006
100,000 Series 1991-D, 8.00%, 08/01/17 ........................................... 113,332
50,000 Series 1991-D, 8.00%, 08/01/18 ........................................... 56,757
30,000 Series 1991-D, 8.00%, 08/01/19 ........................................... 34,054
240,000 Series 1991-D, ETM, 8.00%, 08/01/99 ...................................... 262,363
10,880,000 Series 1991-D, Pre-Refunded, 8.25%, 08/01/12 ............................. 12,684,013
7,605,000 Series 1991-D, Pre-Refunded, 8.25%, 08/01/13 ............................. 8,865,985
4,255,000 Series 1991-D, Pre-Refunded, 8.25%, 08/01/14 ............................. 4,960,522
2,450,000 Series 1991-D, Pre-Refunded, 8.00%, 08/01/16 ............................. 2,836,096
4,600,000 Series 1991-D, Pre-Refunded, 8.00%, 08/01/17 ............................. 5,314,242
3,185,000 Series 1991-D, Pre-Refunded, 8.00%, 08/01/18 ............................. 3,686,924
1,970,000 Series 1991-D, Pre-Refunded, 8.00%, 08/01/19 ............................. 2,280,452
160,000 Series 1991-F, 8.25%, 11/15/15 ........................................... 184,040
200,000 Series 1991-F, 8.25%, 11/15/17 ........................................... 230,146
New York (cont.)
$ 1,840,000 Series 1991-F, Pre-Refunded, 8.25%, 11/15/15 ............................. $ 2,164,870
2,300,000 Series 1991-F, Pre-Refunded, 8.25%, 11/15/17 ............................. 2,700,407
10,000,000 Series 1992-B, 7.50%, 02/01/04 ........................................... 10,939,600
9,300,000 Series 1992-B, 6.75%, 10/01/15 ........................................... 9,591,648
5,000,000 Series 1992-D, 7.30%, 02/01/01 ........................................... 5,431,850
5,000,000 Series 1992-D, 7.50%, 02/01/16 ........................................... 5,520,050
3,000,000 Series 1992-H, 7.10%, 02/01/12 ........................................... 3,179,100
10,000,000 Series 1992-H, 7.20%, 02/01/14 ........................................... 10,776,900
1,850,000 Series 1993-A, Pre-Refunded, 8.00%, 03/15/13 ............................. 2,076,699
460,000 Series 1993-B, 8.50%, 08/01/09 ........................................... 482,802
11,660,000 Series 1993-B, Pre-Refunded, 8.00%, 03/15/17 ............................. 13,088,816
14,500,000 Series 1994-A, 6.125%, 08/01/06 .......................................... 14,802,035
21,810,000 Series 1994-A, 6.20%, 08/01/07 ........................................... 22,238,348
4,390,000 Series 1994-A, 6.25%, 08/01/08 ........................................... 4,472,795
8,000,000 Series 1994-B, Sub-Series B-1, 7.30%, 08/15/11 ........................... 8,714,320
3,000,000 Series 1994-B, Sub-Series B-1, 7.00%, 08/15/16 ........................... 3,177,900
11,750,000 Series 1994-H, Sub-Series H-1, 6.125%, 08/01/09 .......................... 11,821,323
8,050,000 Series 1995-F, 6.50%, 02/15/07 ........................................... 8,390,032
7,540,000 Series 1995-F, 6.50%, 02/15/08 ........................................... 7,831,044
16,000,000 Series 1995-F, 6.60%, 02/15/10 ........................................... 16,614,560
7,415,000 Series A, 7.75%, 08/15/13 ................................................ 8,242,069
400,000 Series A, 7.75%, 08/15/14 ................................................ 443,900
2,585,000 Series A, Pre-Refunded, 7.75%, 08/15/13 .................................. 2,961,635
6,600,000 Series A, Pre-Refunded, 7.75%, 08/15/14 .................................. 7,592,310
15,000 Series B, 8.00, 06/01/98 ................................................. 15,820
410,000 Series B, 8.25%, 06/01/02 ................................................ 466,580
980,000 Series B, 7.50%, 10/01/11 ................................................ 1,052,922
9,850,000 Series B, 7.50%, 10/01/12 ................................................ 10,571,907
1,300,000 Series B, 6.75%, 10/01/17 ................................................ 1,340,768
1,420,000 Series B, ETM, 8.00, 06/01/98 ............................................ 1,504,533
4,090,000 Series B, Pre-Refunded, 8.25%, 06/01/02 .................................. 4,758,061
1,135,000 Series B, Pre-Refunded, 7.50%, 10/01/12 .................................. 1,248,182
4,845,000 Series C, 7.25%, 08/15/24 ................................................ 5,140,109
155,000 Series C, Pre-Refunded, 7.25%, 08/15/24 .................................. 172,774
1,860,000 Series C, Sub-Series C-1, 7.00%, 08/01/17 ................................ 1,960,477
20,000,000 Series C, Sub-Series C-1, 7.00%, 08/01/18 ................................ 21,080,400
70,000 Series C, Sub-Series C-1, Pre-Refunded, 7.00%, 08/01/17 .................. 79,002
8,430,000 Series D, 7.625%, 02/01/15 ............................................... 9,277,299
New York City GO, (cont.)
$ 5,000 Series D, 8.50%, 08/01/16 ................................................ $ 5,144
11,400,000 Series D, 7.50%, 02/01/17 ................................................ 12,558,354
7,925,000 Series D, 6.00%, 02/15/25 ................................................ 7,683,129
775,000 Series D, Group B, 8.25%, 08/01/11 ....................................... 886,383
245,000 Series D, Group B, 8.25%, 08/01/12 ....................................... 282,115
1,025,000 Series D, Group B, Pre-Refunded, 8.25%, 08/01/11 ......................... 1,194,955
570,000 Series D, Pre-Refunded, 7.625%, 02/01/15 ................................. 654,702
600,000 Series D, Pre-Refunded, 7.50%, 02/01/17 .................................. 685,710
1,765,000 Series F, 8.20%, 11/15/04 ................................................ 1,986,984
3,570,000 Series F, Pre-Refunded, 8.20%, 11/15/04 .................................. 4,183,576
4,000,000 Series H, 7.00%, 02/01/16 ................................................ 4,202,640
New York City Health and Hospital Authority Local Government Revenue, Series A,
5,010,000 6.00%, 02/15/07 .......................................................... 5,038,607
17,735,000 6.30%, 02/15/20 .......................................................... 17,456,383
New York City Municipal Water Finance Authority, Water and Sewer System
Revenue,
12,275,000 Refunding, Series A, 5.50%, 06/15/20 ..................................... 11,773,321
13,000,000 Refunding, Series A, AMBAC Insured, 5.50%, 06/15/20 ...................... 12,598,430
8,500,000 Series 1987-A, Pre-Refunded, 9.00%, 06/15/17 ............................. 8,943,360
2,965,000 Series 1989-B, Pre-Refunded, 7.00%, 06/15/19 ............................. 3,143,997
2,455,000 Series 1994-A, 7.10%, 06/15/12 ........................................... 2,705,631
4,980,000 Series 1994-A, 7.00%, 06/15/15 ........................................... 5,457,233
4,000,000 Series B, 5.875%, 06/15/26 ............................................... 4,001,240
3,000,000 Series B, MBIA Insured, 5.75%, 06/15/26 .................................. 2,991,300
New York State Dormitory Authority Revenue,
4,000,000 City University General Resources, Series 2, MBIA Insured, 6.25%, 07/01/19 4,164,760
16,860,000 City University System, Third Generation Resources, Series 2, 6.00%,
07/01/20 ................................................................ 16,774,014
6,750,000 Our Lady Nursing Home, FHA Insured, 5.90%, 08/01/20 ...................... 6,754,590
18,650,000 Refunding, City University System, Third Generation Resources, Series 2,
6.00%, 07/01/26 ......................................................... 18,545,747
4,240,000 Refunding, State University Educational Facilities, Series B, 7.375%, 05/15/14 4,625,925
2,000,000 Refunding, State University Educational Facilities, Series B, 7.00%, 05/15/16 2,120,060
5,000,000 State University Educational Facilities, 6.00%, 05/15/18 ................. 4,964,050
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 ................ 5,281,400
17,500,000 Long Island Light, Series A, 7.15%, 06/01/20 ............................. 17,846,150
New York State Energy Research and Development Authority, Electric Facilities
Revenue, (cont.)
$ 1,500,000 Long Island Light, Series A, 7.15%, 02/01/22 ............................. $ 1,529,670
8,500,000 Refunding, Consolidated Edison Co., Inc., Series A, 6.10%, 08/15/20 ...... 8,673,060
14,070,000 New York State HFA, Refunding, Health Facilities, New York City, Series A, 5.90%,
05/01/05 .................................................................... 14,285,412
New York State HFA, Refunding, Housing Project Mortgage, Series A, FSA Insured,
5,550,000 6.10%, 11/01/15 .......................................................... 5,697,519
4,250,000 6.125%, 11/01/20 ......................................................... 4,336,020
New York State HFA, Service Contract Revenue,
4,675,000 Refunding, Series C, 5.875%, 09/15/14 .................................... 4,585,988
25,500,000 Refunding, Series C, 6.125%, 03/15/20 .................................... 25,540,545
3,155,000 Series A, 6.375%, 09/15/14 ............................................... 3,229,994
3,785,000 Series A, 6.375%, 09/15/16 ............................................... 3,860,889
10,000,000 Series A, 6.50%, 03/15/25 ................................................ 10,273,300
New York State Local Government Assistance Corp.,
6,000,000 Series A, 6.50%, 04/01/20 ................................................ 6,347,760
23,715,000 Series C, 5.50%, 04/01/22 ................................................ 22,988,135
New York State Medical Care Facilities, Financial Agency Revenue,
7,215,000 Hospital and Nursing Home, FSA Mortgage Insured, 6.50%, 02/15/34 ......... 7,473,153
7,600,000 Hospital Mortgage, Series A, AMBAC Insured, 6.50%, 08/15/29 .............. 8,195,992
11,095,000 Refunding, Hospital and Nursing Home, FSA Mortgage Insured, 6.40%,
08/15/14 ................................................................ 11,593,609
12,500,000 The Hospital for Special Surgery, Series A, 6.375%, 08/15/24 ............. 13,019,750
New York State Tollway Authority, Service Contract Revenue, Local Highway
and Bridge,
11,600,000 6.25%, 04/01/14 .......................................................... 11,938,836
13,200,000 5.75%, 04/01/16 .......................................................... 13,002,000
7,685,000 New York State Urban Development Corp., Correctional Capital Facilities, Series 5,
6.10%, 01/01/12 ............................................................. 7,812,110
5,000,000 Warren and Washington Counties IDA Revenue, Refunding, Adirondack Resource
Recovery Project, Series A, 7.90%, 12/15/07 ................................. 5,119,350
------------
866,054,753
------------
North Carolina 3.3%
$ 9,900,000 Charlotte-Mecklenberg Hospital Authority, Health Care System Revenue, Series A,
5.90%, 01/15/16 ............................................................. $ 10,077,606
North Carolina Eastern Municipal Power Agency, Power System Revenue,
20,000,000 Refunding, Series 1988-A, Pre-Refunded, 8.00%, 01/01/21 .................. 21,275,000
3,250,000 Refunding, Series 1989-A, 6.50%, 01/01/24 ................................ 3,269,045
25,700,000 Refunding, Series 1991-A, 6.50%, 01/01/17 ................................ 26,241,242
6,875,000 Refunding, Series 1993-B, 6.25%, 01/01/12 ................................ 6,926,631
39,030,000 Refunding, Series 1993-B, 6.25%, 01/01/23 ................................ 39,940,960
4,000,000 Refunding, Series 1993-B, FGIC Insured, 6.25%, 01/01/23 .................. 4,097,000
11,925,000 Refunding, Series A, MBIA Insured, 5.625%, 01/01/24 ...................... 11,483,179
1,250,000 Refunding, Series B, 6.00%, 01/01/22 ..................................... 1,230,738
11,175,000 Refunding, Series B, MBIA Insured, 5.80%, 01/01/16 ....................... 11,063,250
13,325,000 Refunding, Series B, MBIA Insured, 5.875%, 01/01/21 ...................... 13,230,659
2,000,000 Series 1993-C, 5.50%, 01/01/07 ........................................... 1,982,960
15,960,000 Series 1993-G, 5.875%, 01/01/14 .......................................... 15,448,003
24,420,000 Series 1993-G, 5.75%, 12/01/16 ........................................... 23,220,245
1,355,000 Series B, 6.00%, 01/01/05 ................................................ 1,389,078
7,440,000 Series D, 5.875%, 01/01/13 ............................................... 7,246,411
North Carolina Municipal Power Agency No. 1, Catawba Electric Revenue,
Refunding,
12,435,000 5.75%, 01/01/15 .......................................................... 12,012,832
15,620,000 Series 1982, 6.25%, 01/01/17 ............................................. 15,757,144
5,000,000 Wake County IPC, Financing Authority Revenue, Carolina Power and Light, 6.90%,
04/01/09 .................................................................... 5,365,250
------------
231,257,233
------------
North Dakota 0.4%
7,750,000 Dickinson Health Care Facilities Revenue, BHS Long-Term Care, Inc., 7.625%,
02/15/20 .................................................................... 8,246,310
358,000 Ellendale MFHR, Ellendale Manor Apartments Project, 9.75%, 07/01/16 .......... 363,180
Mercer County PCR, Basin Power Corp.,
9,130,000 Second Series, AMBAC Insured, 6.05%, 01/01/19 ............................ 9,394,222
11,800,000 Series 1984-E, 7.00%, 01/01/19 ........................................... 12,397,198
800,000 Wahpeton MFHR, Evergreen Apartments Project, 9.75%, 07/01/16 ................. 811,576
------------
31,212,486
------------
Ohio 1.2%
Dayton Special Facilities Revenue, Refunding, Emery Air Freight Corp., Emery
Worldwide Air, Inc.,
$ 4,000,000 Series E, 6.05%, 10/01/09 ................................................ $ 4,060,600
2,750,000 Series F, 6.05%, 10/01/09 ................................................ 2,791,663
6,740,000 Franklin County Hospital Facility Mortgage Revenue, Refunding, Presbyterian
Retirement Services, Series 1987-A, 9.00%, 07/01/10 ......................... 7,056,713
2,820,000 Franklin County Nursing Home, First Mortgage Revenue, Volunteers of America
Care Facilities Project, 8.75%, 11/01/18 .................................... 2,960,351
Montgomery County Health Systems Revenue, Franciscan Facility, Series B-2,
2,200,000 8.10%, 07/01/01 .......................................................... 2,350,964
12,000,000 8.10%, 07/01/18 .......................................................... 13,442,640
1,680,000 Muskingum County Hospital Facilities Revenue, Care One Health System, Bethesda
Hospital, Pre-Refunded, 8.00%, 12/01/16 ..................................... 1,718,942
Ohio State Air Quality Development Authority Revenue,
12,000,000 Refunding, Dayton Power and Light Co. Project, 6.10%, 09/01/30 ........... 12,324,000
6,325,000 Toledo Edison, Series B, 8.00%, 05/15/19 ................................. 6,700,009
1,645,000 Ohio State EDR, Good Samaritan Medical Center, Series 1990-3, 7.875%,
12/01/10 .................................................................... 1,747,582
3,250,000 Ohio State Water Development Authority Revenue, Refunding, Water Development
Dayton Power, Series A, 6.40%, 08/15/27 ..................................... 3,407,593
Ohio State Water Development Facilities Authority, PCR,
4,000,000 Cleveland Electric Illumination Co. Project, Series A-1, 9.75%, 11/01/22 . 4,147,720
10,000,000 Cleveland Electric Illumination Co. Project, Series A-2, 9.75%, 11/01/22 . 10,369,300
10,000,000 Toledo Edison, Series A, 8.00%, 05/15/19 ................................. 10,592,900
------------
83,670,977
------------
Oklahoma 1.4%
Canadian County HFA, SFMR, Series 1990-A,
1,755,000 7.70%, 09/01/05 .......................................................... 1,823,673
3,640,000 7.80%, 09/01/12 .......................................................... 3,799,650
6,000,000 Jackson County Memorial Hospital Authority Revenue, Refunding, Jackson
Memorial Hospital Project, Pre-Refunded, 9.00%, 08/01/15 .................... 6,352,680
19,700,000 Oklahoma State Turnpike System Authority, First Senior Revenue, Pre-Refunded,
7.875%, 01/01/21 ............................................................ 21,504,712
615,000 Tulsa County Home Financial Authority, Mortgage Revenue, Series D, GNMA
Insured, 6.95%, 12/01/22 .................................................... 637,614
Tulsa County Municipal Airport Revenue,
$ 4,000,000 American Airlines-AMR Corp., 7.35%, 12/01/11 ............................. $ 4,339,800
28,530,000 American Airlines, Inc. Project, 6.25%, 06/01/20 ......................... 28,725,431
11,000,000 American Airlines, Inc. Project, 7.375%, 12/01/20 ........................ 11,690,910
Tulsa County Parking Authority, Series B,
3,000,000 6.90%, 12/01/07 .......................................................... 3,293,220
5,500,000 7.00%, 12/01/14 .......................................................... 5,955,290
Tulsa County Public Facilities Authority, Recreation Facility Revenue, Pre-Refunded,
2,000,000 8.875%, 02/01/03 ......................................................... 2,153,300
2,000,000 9.00%, 02/01/08 .......................................................... 2,156,280
2,740,000 Tulsa Housing Assistance Corp. Revenue, First Lien, Refunding, 6.80%, 07/01/11 2,848,833
2,000,000 Tulsa Industrial Authority, Hospital Revenue, St. John Medical Center Project,
Series A, 6.25%, 02/15/14 ................................................... 2,069,440
4,000,000 Valley View Hospital Authority Revenue, Refunding, Valley View Regional Medical
Center, 6.00%, 08/15/14 ..................................................... 3,831,080
------------
101,181,913
------------
Oregon 0.1%
5,500,000 Oregon State EDR, Georgia Pacific Corp., Series CLVII, 6.35%, 08/01/25 ....... 5,599,220
------------
Pennsylvania 3.7%
5,250,000 Allegheny County IDA Revenue, Environmental Improvement, 6.70%, 12/01/20 ..... 5,460,105
14,250,000 Beaver County IDA, PCR, Ohio Edison Co., Beaver Valley Project, Series A, 7.75%,
09/01/24 .................................................................... 14,957,228
Cambria County HDA, Hospital Revenue, Conemaugh Valley Memorial Hospital,
Refunding, Series B,
9,600,000 6.30%, 07/01/08 .......................................................... 10,147,392
10,740,000 6.375%, 07/01/18 ......................................................... 11,190,436
3,000,000 Pre-Refunded, 8.875%, 07/01/18 ........................................... 3,280,290
Delaware County IDA Revenue, Refunding,
6,500,000 Philadelphia Electric, Series 1991, 7.375%, 04/01/21 ..................... 6,980,415
41,300,000 Resource Recovery Project, Series A, 8.10%, 12/01/13 ..................... 42,782,670
22,500,000 Lancaster County Solid Waste Management Authority, Resource Recovery System
Revenue, Series A, 8.50%, 12/15/10 .......................................... 23,826,150
4,000,000 Lehigh County IDA, PCR, Refunding, Pennsylvania Power and Light Co. Project,
Series A, MBIA Insured, 6.15%, 08/01/29 ..................................... 4,181,880
5,000,000 Montgomery County GO, Series A, 6.10%, 10/15/25 .............................. 5,099,550
5,500,000 Montgomery County Higher Education and Health Authority, Hospital Revenue,
Pre-Refunded, Jeanes Health System Project, 8.75%, 07/01/20 ................. 6,362,620
$ 5,000,000 Pennsylvania EDA, Financing Authority Revenue, Macmillan, L.P. Project, 7.60%,
12/01/20 .................................................................... $ 5,574,300
13,500,000 Pennsylvania EDA, Financing Resources Recovery Revenue, Colver Project,
Series D, 7.125%, 12/01/15 .................................................. 14,258,565
33,280,000 Pennsylvania State Financial Authority Revenue, Refunding, Municipal Capital
Improvements Program, 6.60%, 11/01/09 ...................................... 35,556,685
Pennsylvania State HFA,
10,590,000 Refunding, Rental Housing, FGIC Insured, 6.40%, 07/01/12 ................. 10,898,169
3,775,000 SFM, Series 1991, 7.15%, 04/01/15 ........................................ 3,970,017
2,000,000 Pennsylvania State Higher Educational Facilities Authority, College and University
Revenues, Lycoming College, Pre-Refunded, 8.375%, 10/01/18 .................. 2,188,200
4,445,000 Pennsylvania State Pooled Finance Authority, Lease Revenue, Capital Improvement,
Series B, MBIA Insured, 8.00%, 11/01/09 ..................................... 4,665,828
Philadelphia Gas Works Revenue,
2,850,000 Series 13, Pre-Refunded, 7.70%, 06/15/21 ................................. 3,265,758
3,950,000 Series A, 6.375%, 07/01/26 ............................................... 4,056,492
Philadelphia GO, Refunding, Series 1987-A,
1,000,000 11.50%, 08/01/97 ......................................................... 1,050,740
1,545,000 11.50%, 08/01/98 ......................................................... 1,714,100
2,400,000 11.50%, 08/01/99 ......................................................... 2,794,944
1,000,000 11.50%, 08/01/00 ......................................................... 1,209,500
11,060,000 Philadelphia Hospital and Higher Education Facilities Authority, Hospital Revenue,
Albert Einstein Medical Center, 7.50%, 04/01/99 ............................. 11,670,954
4,140,000 Philadelphia Housing RDA Revenue, Sub-Series 2-B, 8.625%, 08/01/26 ........... 4,191,336
1,000,000 Philadelphia Municipal Authority, Gas Works Lease Revenue, 7.50%, 05/01/01 ... 1,076,480
10,845,000 Philadelphia Water and Sewer Revenue, Series 10, ETM, 7.35%, 09/01/04 ........ 12,282,071
5,000,000 aSouth Fork Municipal Authority, Hospital Revenue, Conemaugh Valley Memorial
Hospital Project, Series A, MBIA Insured, 5.75%, 07/01/26 ................... 4,971,350
3,000,000 Westmoreland County IDA Revenue, Refunding, Citizens General Hospital Project,
Series A, 8.25%, 07/01/13 ................................................... 3,100,080
------------
262,764,305
------------
Puerto Rico 1.3%
15,750,000 Puerto Rico Commonwealth GO, Series 1994, 6.50%, 07/01/23 .................... 16,836,908
Puerto Rico Commonwealth Highway and Transportation Authority Revenue,
Series Y,
59,000,000 5.00%, 07/01/36 .......................................................... 51,864,540
7,000,000 5.50%, 07/01/36 .......................................................... 6,695,710
$ 3,200,000 Puerto Rico Commonwealth Urban Renewal and Housing Corp., Refunding, 7.875%,
10/01/04 .................................................................... $ 3,515,776
Puerto Rico Electric Power Authority Revenue, Refunding, Pre-Refunded,
4,000,000 Series 1987-K, 9.375%, 07/01/17 .......................................... 4,230,200
2,000,000 Series 1988-M, 8.00%, 07/01/08 ........................................... 2,165,900
5,000,000 Puerto Rico Municipal Finance Agency, Series 1988-A, 8.25%, 07/01/08 ......... 5,399,200
------------
90,708,234
------------
Rhode Island 1.3%
9,900,000 Providence Special Obligation Tax Increment, Series A, 7.65%, 06/01/16 ....... 10,862,775
2,200,000 Rhode Island Clean Water Financial Agency Revenue, Drinking Water Providence,
Series A, AMBAC Insured, 6.70%, 01/01/15 .................................... 2,398,154
Rhode Island Housing and Mortgage Finance Corp., Homeownership Opportunity,
1,895,000 Series 2, 7.75%, 04/01/22 ................................................ 1,988,329
20,200,000 Series 10-A, 6.50%, 10/01/22 ............................................. 20,878,114
13,085,000 Series 10-A, 6.50%, 04/01/27 ............................................. 13,524,263
7,400,000 Series 13, 6.70%, 10/01/15 ............................................... 7,725,896
4,050,000 Series 13, 6.85%, 04/01/27 ............................................... 4,242,335
15,000,000 Series 15-A, 6.85%, 10/01/24 ............................................. 15,827,850
2,720,000 Series 16-A, 6.375%, 10/01/26 ............................................ 2,728,214
2,320,000 Series 17-A, 6.25%, 04/01/17 ............................................. 2,351,691
3,000,000 Rhode Island Port Authority and Economic Development Corp., Refunding, Shepard
Building Project, Series B, AMBAC Insured, 6.75%, 06/01/25 .................. 3,267,360
Rhode Island State Health and Educational Building Corp. Revenue,
3,000,000 Health Facilities, Tockwotton Home, 7.25%, 04/15/17 ...................... 3,208,830
940,000 Roger William Realty, FHA Insured, 7.50%, 08/01/29 ....................... 985,872
2,320,000 St. Antoine Residence, 6.70%, 11/15/12 ................................... 2,458,388
2,750,000 St. Antoine Residence, 6.75%, 11/15/18 ................................... 2,903,835
------------
95,351,906
------------
South Carolina 1.7%
1,800,000 Berkeley County School District COP, Berkeley School Facilities Group, Inc.,
AMBAC Insured, 6.30%, 02/01/16 .............................................. 1,911,060
24,000,000 Charleston County Resource Recovery Revenue, Foster Wheeler, Inc. Project,
Series A, 9.25%, 01/01/10 ................................................... 25,808,640
5,000,000 Myrtle Beach COP, Myrtle Beach Convention Center Project, 6.875%, 07/01/17 ... 5,227,450
Piedmont Municipal Power Agency, South Carolina Electric Revenue, Refunding,
18,115,000 6.55%, 01/01/16 .......................................................... 18,212,640
25,505,000 6.60%, 01/01/21 .......................................................... 25,642,472
6,700,000 7.25%, 01/01/22 .......................................................... 6,810,349
Piedmont Municipal Power Agency, South Carolina Electric Revenue,
Refunding, (cont.)
$ 5,500,000 6.375%, 01/01/25 ......................................................... $ 5,595,480
3,150,000 Series A, 5.75%, 01/01/24 ................................................ 3,004,313
5,050,000 Series A, AMBAC Insured, 5.75%, 01/01/24 ................................. 4,974,503
3,000,000 Richland County PCR, Refunding, Union Camp Corp. Project, Series C, 6.55%,
11/01/20 .................................................................... 3,183,510
South Carolina State Public Service Authority Revenue, Refunding,
12,765,000 Series A, AMBAC Insured, 6.375%, 07/01/21 ................................ 13,364,827
10,000,000 Series B, 6.00%, 07/01/31 ................................................ 10,059,400
------------
123,794,644
------------
South Dakota 0.4%
5,000,000 Lawrence County PCR, Refunding, Black Hills Power and Light Co. Project, 6.70%,
06/01/10 .................................................................... 5,378,200
South Dakota State HDA, Homeownership Mortgage,
4,130,000 Series A, 6.30%, 05/01/17 ................................................ 4,180,469
10,580,000 Series A, 7.15%, 05/01/27 ................................................ 11,024,254
3,115,000 Series B, 7.10%, 05/01/17 ................................................ 3,254,427
3,480,000 Series D, 6.65%, 05/01/14 ................................................ 3,664,962
3,435,000 Series G, 7.125%, 05/01/14 ............................................... 3,685,789
------------
31,188,101
------------
Tennessee 0.8%
6,690,000 Gatlinburg COP, Gatlinburg Convention Center, Inc., Pre-Refunded, 9.25%,
12/01/12 .................................................................... 7,269,421
Hamilton County IDB, MFHR, Patten Towers Apartments, Series A,
2,515,000 6.125%, 08/01/05 ......................................................... 2,529,059
1,000,000 6.30%, 08/01/07 .......................................................... 1,004,520
4,800,000 Knox County Health, Educational and Housing Facilities Board, MFHR, GNMA
Secured, East Towne Village Project, 8.20%, 07/01/28 ........................ 5,001,024
Memphis-Shelby County Airport Authority, Special Facilities and Project Revenue,
Federal Express Corp.,
14,690,000 7.875%, 09/01/09 ......................................................... 16,243,027
6,520,000 6.75%, 09/01/12 .......................................................... 6,866,668
1,940,000 Metropolitan Nashville Airport Authority Revenue, Series C, FGIC Insured, 6.60%,
07/01/15 .................................................................... 2,082,241
1,990,000 Mount Pleasant IDR, PCR, Stauffer Chemical Co. Project, 8.00%, 12/01/12 ...... 2,224,422
5,000,000 Nashville and Davidson County Revenue, IDB, Refunding & Improvement,
Osco Treatment, Inc., 6.00%, 05/01/03........................................ 5,088,500
Tennessee HDA, Homeownership Program,
$ 2,360,000 Series 1992, 6.80%, 07/01/17 ............................................. $ 2,445,007
4,845,000 Series P, 7.70%, 07/01/16 ................................................ 4,922,617
2,275,000 Tennessee State Local Development Authority Revenue, Community Provider Pooled
Loan Program, 6.45%, 10/01/14 ............................................... 2,372,893
------------
58,049,399
------------
Texas 7.9%
18,100,000 Austin Combined Utility System Revenue, Series A, Pre-Refunded, 8.00%,
11/15/16 .................................................................... 20,589,112
15,000 Austin HFC, SFMR, Series 1984, 11.25%, 02/01/09 .............................. 15,122
Austin Utility System Revenue, Refunding,
11,310,000 FGIC Insured, 6.25%, 05/15/16 ............................................ 11,939,062
10,000,000 MBIA Insured, 5.60%, 05/15/25 ............................................ 9,831,900
4,500,000 Bexar County Health Facilities Development Corp. Revenue, Incarnate Word Facility,
FSA Insured, 6.00%, 11/15/15................................................. 4,601,880
1,745,000 Bexar County HFC, MFHR, Sunpark Apartments Project, 6.875%, 12/01/12 ......... 1,787,805
5,000,000 Bexar Metropolitan Water District, Water Works Systems Revenue, Refunding,
MBIA Insured, 5.875%, 05/01/22............................................... 5,088,050
6,100,000 Brazos County Health Facilities Development Corp., Hospital Revenue, St. Joseph
Hospital Project, Pre-Refunded, 10.25%, 10/01/15 ............................ 6,567,321
Brazos River Authority, Collateralized, PCR, Texas Utilities Electric Co. Project,
2,500,000 Series 1987-A, 9.875%, 10/01/17 .......................................... 2,654,400
17,550,000 Series 1988-A, 9.25%, 03/01/18 ........................................... 18,744,453
15,000,000 Series 1989-A, 8.25%, 01/01/19 ........................................... 16,118,250
Brazos River Authority, Johnson County, Surface Water and Treatment Revenue,
480,000 8.75%, 09/01/97 .......................................................... 484,618
520,000 8.90%, 09/01/98 .......................................................... 525,247
560,000 9.00%, 09/01/99 .......................................................... 565,830
605,000 9.00%, 09/01/00 .......................................................... 611,298
655,000 9.00%, 09/01/01 .......................................................... 661,819
705,000 9.10%, 09/01/02 .......................................................... 712,558
765,000 9.10%, 09/01/03 .......................................................... 773,201
825,000 9.10%, 09/01/04 .......................................................... 833,844
890,000 9.20%, 09/01/05 .......................................................... 899,817
960,000 9.20%, 09/01/06 .......................................................... 970,589
1,040,000 9.20%, 09/01/07 .......................................................... 1,051,471
1,120,000 9.20%, 09/01/08 .......................................................... 1,132,354
1,210,000 9.25%, 09/01/09 .......................................................... 1,223,540
County, Surface Water and Treatment Revenue,
(cont.)
$ 1,310,000 9.25%, 09/01/10 .......................................................... $ 1,324,659
1,415,000 9.25%, 09/01/11 .......................................................... 1,430,834
1,525,000 9.25%, 09/01/12 .......................................................... 1,542,065
1,650,000 9.25%, 09/01/13 .......................................................... 1,668,464
1,780,000 9.25%, 09/01/14 .......................................................... 1,799,918
1,670,000 9.25%, 09/01/15 .......................................................... 1,688,687
3,470,000 Dallas County Flood Control District No. 1, Refunding, Pre-Refunded, 9.25%,
04/01/10 .................................................................... 3,547,902
Dallas-Fort Worth International Airport Facilities, Improvement Corp. Revenue,
American Airlines, Inc.,
99,000,000 8.00%, 11/01/24 .......................................................... 107,714,970
29,400,000 aRefunding, 6.00%, 11/01/14 ............................................... 29,144,514
5,275,000 El Paso HFC, SFMR, Series 1991-A, 8.75%, 10/01/11 ............................ 5,715,146
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 .... 3,013,335
1,190,000 Grand Prairie HFC, SFMR, 10.75%, 09/01/14 .................................... 1,216,192
20,250,000 Harris County IDR, Marine Terminal Revenue, Refunding, 6.95%, 02/01/22 ....... 21,530,003
Harris County Toll Road Revenue, Multiple Mode, Senior Lien, Pre-Refunded,
2,100,000 Refunding, Series 1987, 8.70%, 08/15/17 .................................. 2,242,485
9,000,000 Series B, 8.625%, 08/15/07 ............................................... 9,605,520
18,710,000 Series B, 8.70%, 08/15/17 ................................................ 19,979,474
3,500,000 Series C, 8.125%, 08/15/17 ............................................... 3,775,275
4,000,000 Series D, 8.25%, 08/15/07 ................................................ 4,393,040
5,000,000 Series D, 8.30%, 08/15/17 ................................................ 5,495,550
Houston Water and Sewer System Revenue, Refunding,
22,500,000 Junior Lien, Series A, MBIA Insured, 6.20%, 12/01/20 ..................... 23,497,650
21,000,000 Series B, 6.375%, 12/01/14 ............................................... 22,099,770
6,730,000 Joshua ISD, Refunding, Series B, 6.125%, 02/15/26 ............................ 6,792,387
Matagorda County Navigation District No. 1, PCR, Collateralized, Refunding,
25,300,000 Central Power and Light Co. Project, MBIA Insured, 6.10%, 07/01/28 ....... 25,707,836
19,200,000 Houston Lighting and Power Co., 6.00%, 07/01/28 .......................... 19,378,560
5,500,000 Houston Lighting and Power Co., Series A, AMBAC Insured, 6.70%, 03/01/27 . 5,957,105
40,975,000 Houston Lighting and Power Co., Series B, 7.70%, 02/01/19 ................ 43,130,285
1,185,000 Mesquite HFC, SFMR, Series 1983, 10.75%, 09/01/14 ............................ 1,215,218
5,000,000 Red River Pollution Control Authority, Refunding, West Texas Utilities Co. Project,
MBIA Insured, 6.00%, 06/01/20 ............................................... 5,117,050
Sabine River Authority PCR, Refunding,
$ 4,000,000 Southwestern Electric Power Co., MBIA Insured, 6.10%, 04/01/18 ........... $ 4,142,760
7,700,000 Texas Utilities Electric Co. Project, 6.55%, 10/01/22 .................... 8,234,380
18,990,000 San Antonio Hotel Occupancy Revenue, Henry B. Gonzalez Convention Center
Project, FGIC Insured, 5.70%, 08/15/26 ...................................... 18,933,980
5,000,000 San Antonio Water Revenue, Refunding, MBIA Insured, 6.50%, 05/15/10 .......... 5,386,500
Texas Housing Agency, Residential Development Mortgage Revenue, Series D,
1,610,000 8.35%, 01/01/08 .......................................................... 1,667,831
3,200,000 8.35%, 07/01/08 .......................................................... 3,314,944
Texas Housing Agency, SFMR, Series 1986-B,
2,705,000 8.20%, 03/01/16 .......................................................... 2,777,710
13,775,000 7.50%, 09/01/17 .......................................................... 13,924,046
2,500,000 Texas Water Development Board Revenue, State Revolving Fund, 6.00%, 07/15/13 . 2,583,650
2,485,000 Texas Water Resources Finance Authority Revenue, 7.625%, 08/15/08 ............ 2,667,921
5,580,000 Travis County HFC, SFMR, Refunding, Series A, 6.95%, 10/01/27 ................ 5,923,337
------------
557,664,494
------------
U.S. Territories
690,000 Virgin Islands HFA, HMR, Series B, GNMA Secured, 8.10%, 12/01/18 ............. 714,219
------------
Utah 1.8%
5,050,000 Carbon County, Solid Waste Disposal Revenue, Refunding, Laidlaw, Inc. Project,
Series A, 7.50%, 02/01/10 ................................................... 5,563,383
Intermountain Power Agency, Power Supply Revenue,
25,000,000 Refunding, Series A, 6.15%, 07/01/14 ..................................... 26,011,000
34,805,000 Refunding, Series B, 7.75%, 07/01/20 ..................................... 37,164,083
5,500,000 Second Crossover, Series 86-C, 5.75%, 07/01/20 ........................... 5,499,175
9,500,000 Intermountain Power Agency, Special Obligation, Refunding, Fifth Crossover,
Series 87-B, 7.20%, 07/01/19 ................................................ 9,858,910
2,945,000 Utah State HFA, Refunding, Series A, 6.50%, 05/01/19 ......................... 2,993,740
Utah State HFA, SFM,
2,445,000 Refunding, 6.80%, 01/01/12 ............................................... 2,552,727
760,000 Series A, 8.50%, 07/01/19 ................................................ 788,758
4,525,000 Series B, 6.55%, 07/01/19 ................................................ 4,631,654
4,585,000 Series B, 6.55%, 07/01/26 ................................................ 4,723,284
390,000 Series C-1, 6.80%, 07/01/12 .............................................. 407,183
3,310,000 Series C-1, 8.375%, 07/01/19 ............................................. 3,573,377
675,000 Series D, 8.60%, 07/01/19 ................................................ 719,145
Utah State HFA, SFM, (cont.)
$ 3,340,000 Series E-1, 6.65%, 07/01/20 .............................................. $ 3,442,705
1,450,000 Series G-1, 8.10%, 07/01/16 .............................................. 1,518,426
Utah State School District Finance, Cooperative Revenue, Financing Pool,
Series 1988,
2,450,000 8.375%, 02/15/10 ......................................................... 2,584,407
1,730,000 8.375%, 02/15/10 ......................................................... 1,827,918
1,435,000 8.375%, 02/15/10 ......................................................... 1,507,496
1,420,000 8.375%, 02/15/10 ......................................................... 1,502,857
1,340,000 8.375%, 02/15/10 ......................................................... 1,420,534
1,245,000 8.375%, 02/15/10 ......................................................... 1,322,016
1,210,000 8.375%, 02/15/10 ......................................................... 1,271,129
1,195,000 8.375%, 02/15/10 ......................................................... 1,271,026
1,190,000 8.375%, 02/15/10 ......................................................... 1,266,755
1,160,000 8.375%, 02/15/10 ......................................................... 1,219,601
1,065,000 8.375%, 02/15/10 ......................................................... 1,120,646
1,040,000 8.375%, 02/15/10 ......................................................... 1,089,379
1,030,000 8.375%, 02/15/10 ......................................................... 1,084,714
635,000 8.375%, 02/15/10 ......................................................... 641,871
------------
128,577,899
------------
Vermont 0.1%
9,400,000 Vermont HFA, SF, Series 5, 7.00%, 11/01/27 ................................... 9,741,220
------------
Virginia 0.5%
Danville IDA Revenue, Regional Medical Center, FGIC Insured,
5,885,000 6.50%, 10/01/19 .......................................................... 6,296,126
5,840,000 6.50%, 10/01/24 .......................................................... 6,228,652
7,250,000 Henrico County IDA, Public Facilities Lease Revenue, Henrico County Regional
Jail Project, 6.00%, 08/01/15 ............................................... 7,422,333
Virginia State HDA, Commonwealth Mortgage,
5,120,000 Series 1994-C, Sub-Series C-6, 6.25%, 01/01/15 ........................... 5,212,826
5,500,000 Series B, Sub-Series B-1, 7.20%, 07/01/17 ................................ 5,919,155
4,755,000 Series H, Sub-Series H-2, 6.55%, 01/01/17 ................................ 4,951,239
------------
36,030,331
------------
Washington 4.6%
$ 5,000,000 Chelan County PUD No. 1, Cheland Hydro Consolidated System Revenue,
Pre-Refunded, 9.30%, 07/01/62 ............................................... $ 5,323,850
32,480,000 Pierce County EDC, Refunding, Solid Waste-Steilacoom Revenue, 6.60%,
08/01/22 .................................................................... 33,749,643
Port Moses Lake Public Corp., Washington PCR, Union Carbide Corp.,
2,100,000 7.50%, 08/01/04 .......................................................... 2,112,264
1,000,000 7.875%, 08/01/06 ......................................................... 1,032,030
2,760,000 Seatac GO, Series 1994, 6.50%, 12/01/13 ...................................... 2,963,053
Seattle Municipality, Metropolitan Seattle Sewer Revenue,
9,680,000 Refunding, Series V, 6.20%, 01/01/32 ..................................... 9,840,882
2,500,000 Series W, MBIA Insured, 6.25%, 01/01/21 .................................. 2,600,025
4,810,000 Seattle Special Obligation, Chinatown International District, 5.90%, 08/01/26 4,776,090
7,000,000 Snohomish County USD No. 6, 6.50%, 12/01/11 .................................. 7,680,260
4,000,000 University of Washington Alumni Association Lease Revenue, Medical Center
Roosevelt II, 6.30%, 08/15/14 ............................................... 4,225,720
4,825,000 Washington State Housing Finance Commission, MFMR, Refunding, Series A,
7.90%, 07/01/30 ............................................................. 4,998,797
Washington State Public Power Supply System Revenue, Nuclear Project No. 1,
Refunding,
18,330,000 Series A, 6.00%, 07/01/09 ................................................ 18,699,899
22,400,000 Series A, 6.00%, 07/01/12 ................................................ 22,460,704
35,355,000 Series A, 6.05%, 07/01/12 ................................................ 35,635,365
16,150,000 Series A, 6.25%, 07/01/12 ................................................ 16,462,664
34,070,000 Series A, 6.50%, 07/01/15 ................................................ 35,460,056
19,250,000 Series A, 6.00%, 07/01/17 ................................................ 19,068,280
23,205,000 Series A, 6.25%, 07/01/17 ................................................ 23,812,043
13,100,000 Series A, MBIA Insured, 5.75%, 07/01/10 .................................. 13,220,651
1,500,000 Series A, Pre-Refunded, 7.00%, 07/01/11 .................................. 1,650,480
5,900,000 Series A, Pre-Refunded, 6.875%, 07/01/17 ................................. 6,551,773
2,500,000 Series B, Booneville Power Administration, 5.70%, 07/01/10 ............... 2,488,050
Washington State Public Power Supply System Revenue, Nuclear Project No. 2,
Refunding, Series A,
7,700,000 6.30%, 07/01/12 .......................................................... 8,190,028
4,735,000 Pre-Refunded, 7.00%, 07/01/12 ............................................ 5,210,015
Washington State Public Power Supply System Revenue, Nuclear Project No. 3,
Refunding,
6,750,000 Series 1989-B, 5.50%, 07/01/17 ........................................... 6,292,350
13,350,000 Series A, 6.50%, 07/01/18 ................................................ 13,948,347
Washington State Public Power Supply System Revenue, Nuclear Project No. 3,
Refunding, (cont.)
$ 3,500,000 Series A, BIG Insured, 6.00%, 07/01/18 ................................... $ 3,510,710
12,945,000 Series B, 5.70%, 07/01/10 ................................................ 12,883,123
------------
324,847,152
------------
West Virginia 0.8%
3,500,000 Braxton County Solid Waste Disposal Revenue, Weyerhaeuser Co. Project, 6.50%,
04/01/25 .................................................................... 3,622,780
New Martinsville Building Commission Revenue, City of New Martinsville Project,
Series A, Pre-Refunded,
2,435,000 8.50%, 11/01/03 .......................................................... 2,595,393
4,250,000 8.75%, 11/01/09 .......................................................... 4,597,735
2,400,000 Taylor County PCR, Union Carbide Corp., 7.625%, 08/01/05 ..................... 2,753,400
7,000,000 West Virginia State Hospital Financing Authority Revenue, Refunding & Improvement,
Logan General Hospital Project, 7.25%, 07/01/20 ............................. 7,155,260
West Virginia State Housing Development Fund, Housing Finance, Series D,
6,000,000 7.00%, 05/01/17 .......................................................... 6,309,660
9,000,000 7.05%, 11/01/24 .......................................................... 9,491,220
11,750,000 West Virginia State School Building Authority Revenue, Capital Improvement,
Series A, MBIA Insured, 6.25%, 07/01/22 ..................................... 12,452,885
5,000,000 West Virginia State Water Development Authority Revenue, Loan Program II,
Series 1988-A, Pre-Refunded, 8.625%, 11/01/28 ............................... 5,515,050
------------
54,493,383
------------
Wisconsin 1.2%
2,200,000 Janesville IDR, Simmons Manufacturing Co., 7.00%, 10/15/17 ................... 2,248,290
4,220,000 Madison Industrial Gas and Electric Co. Project, Series A, 6.75%, 04/01/27 ... 4,427,244
Wisconsin Housing and EDA, Homeownership Revenue,
9,190,000 Refunding, Series A, 6.10%, 11/01/10 ..................................... 9,405,965
10,230,000 Series 1, 6.75%, 09/01/15 ................................................ 10,751,935
3,000,000 Series 1, 6.75%, 09/01/17 ................................................ 3,143,670
2,120,000 Series A, 6.90%, 03/01/16 ................................................ 2,256,655
5,500,000 Series A, 6.45%, 03/01/17 ................................................ 5,670,170
11,330,000 Series A, 7.10%, 03/01/23 ................................................ 11,907,830
3,000,000 Series B, 7.05%, 11/01/22 ................................................ 3,136,680
Wisconsin State Health and Educational Facilities Authority Revenue,
3,170,000 Gunderson Clinic, La Crosse, Inc., FSA Insured, 5.625%, 12/01/25 ......... 3,083,649
14,785,000 Lindengrove, Inc. Project, Pre-Refunded, 10.00%, 10/01/17 ................ 16,156,900
Wisconsin (cont.)
Wisconsin State Health and Educational Facilities Authority Revenue, (cont.)
$ 6,500,000 Mercy Health Systems Corp., AMBAC Insured, 6.125%, 08/15/13 .............. $ 6,740,695
7,500,000 Mercy Health Systems Corp., AMBAC Insured, 6.125%, 08/15/17 .............. 7,747,125
------------
86,676,808
------------
Wyoming 0.1%
Wyoming CDA, MF Mortgage, Series A,
1,520,000 6.90%, 06/01/12 .......................................................... 1,546,722
3,530,000 6.95%, 06/01/24 .......................................................... 3,608,753
Wyoming CDA, SFM,
2,500,000 Series A, 7.25%, 06/01/21 ................................................ 2,671,500
1,730,000 Series G, 7.375%, 06/01/17 ............................................... 1,822,052
------------
9,649,027
------------
Total Bonds (Cost $6,519,899,672 )...................................... 6,913,306,832
------------
Zero Coupon Bonds 1.6%
11,040,000 Calcasieu Parish, Louisiana, Memorial Hospital Service District Revenue, Lake
Charles Parish Memorial Hospital Hospital Project, Series A, (original accretion rate
5.59%), 12/01/22 ............................................................ 6,457,185
16,405,000 Chicago RMR, Refunding, Series B, MBIA Insured, (original accretion rate 7.30%),
10/01/09 .................................................................... 6,708,661
5,935,000 Coldwater, Michigan, Community Schools, MBIA Insured, (original accretion rate
6.794%), 05/01/18 ........................................................... 1,575,385
Colorado Springs Airport Revenue, Series C,
1,660,000 (original accretion rate 6.86%), 01/01/03 ................................ 1,168,905
1,610,000 (original accretion rate 6.966%), 01/01/05 ............................... 995,687
1,675,000 (original accretion rate 7.07%), 01/01/07 ................................ 902,757
800,000 (original accretion rate 7.07%), 01/01/08 ................................ 401,335
1,450,000 (original accretion rate 7.176%), 01/01/11 ............................... 587,902
Cook County, Illinois, 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 ................................ 2,034,546
4,800,000 (original accretion rate 6.55%), 01/01/08 ................................ 2,607,311
4,380,000 (original accretion rate 6.60%), 01/01/09 ................................ 2,224,207
5,760,000 (original accretion rate 6.60%), 01/01/10 ................................ 2,741,068
6,000,000 Harrison, Michigan, Community Schools, AMBAC Insured, (original accretion rate
6.90%), 05/01/20 ............................................................ 1,383,540
Jefferson County, Kentucky, Capital Projects Corp., Lease Revenue, Refunding,
Series A,
$ 1,640,000 (original accretion rate 6.75%), 08/15/07 ................................ $ 916,726
4,505,000 (original accretion rate 6.80%), 08/15/08 ................................ 2,358,727
4,580,000 (original accretion rate 6.87%), 08/15/09 ................................ 2,241,772
4,620,000 (original accretion rate 6.85%), 08/15/10 ................................ 2,124,091
6,825,000 (original accretion rate 6.95%), 08/15/13 ................................ 2,568,656
6,860,000 (original accretion rate 6.95%), 08/15/14 ................................ 2,439,964
7,005,000 (original accretion rate 7.00%), 08/15/16 ................................ 2,155,017
7,115,000 (original accretion rate 7.00%), 08/15/17 ................................ 2,062,211
Metropolitan Pier and Exposition Authority, Illinois, Dedicated State Tax Revenue,
Expansion Project A, FGIC Insured,
5,650,000 (original accretion rate 1.97%), 06/15/07 ................................ 5,908,035
8,500,000 (original accretion rate 6.526%), 06/15/08 ............................... 4,496,414
11,000,000 (original accretion rate 6.677%), 06/15/09 ............................... 5,441,260
8,000,000 (original accretion rate 6.628%), 06/15/10 ............................... 3,717,760
9,690,000 (original accretion rate 6.629%), 06/15/11 ............................... 4,226,486
11,800,000 (original accretion rate 3.193%), 06/15/12 ............................... 8,773,536
5,250,000 Owensboro, Kentucky, Electric Light and Power Revenue, Series B, AMBAC Insured,
(original accretion rate 6.85%), 01/01/08 ................................... 2,862,982
Shreveport, Louisiana, Water and Sewer Revenue, Series B, FGIC Insured,
490,000 (original accretion rate 7.05%), 12/01/07 ................................ 257,038
2,530,000 (original accretion rate 7.05%), 12/01/08 ................................ 1,231,755
4,080,000 (original accretion rate 7.05%), 12/01/09 ................................ 1,814,457
5,630,000 (original accretion rate 7.05%), 12/01/10 ................................ 2,329,300
7,000,000 Spring, Texas, ISD, Refunding, FGIC Insured, Pre-Refunded, (original accretion rate
7.80%), 08/15/08 ............................................................ 3,262,210
14,250,000 University of Illinois Revenues, AMBAC Insured, (original accretion rate 7.187%),
04/01/10 .................................................................... 6,673,274
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 .............. 4,017,310
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 ............................... 2,502,015
15,000,000 (original accretion rate 7.25%), 07/01/14 ................................ 5,156,700
------------
Total Zero Coupon Bonds (Cost $97,830,857).............................. 109,326,185
------------
Total Long Term Investments (Cost $6,617,730,529) ...................... 7,022,633,017
------------
bShort Term Investments 0.6%..................................................
California PCFA, PCR, Refunding, Daily VRDN and Put,
$ 4,000,000 Shell Oil Co. Project, Series B, 3.50%, 10/01/11 ......................... $ 4,000,000
5,300,000 Southern California Edison, Series D, 3.55%, 02/28/08 .................... 5,300,000
1,000,000 Dade County, Florida, Health Facilities Authority, Hospital Revenue, Miami Children's
Hospital Project, Daily VRDN and Put, 3.60%, 09/01/20 ....................... 1,000,000
100,000 Hapeville, Georgia, Development Authority, IDR, Hapeville Hotel, Ltd., Daily VRDN
and Put, 3.55%, 11/01/15 .................................................... 100,000
5,900,000 Jackson County, Mississippi, PCR, Refunding, Chevron U.S.A., Inc. Project, Daily
VRDN and Put, 3.55%, 12/01/16 ............................................... 5,900,000
100,000 Louisiana Public Facilities Authority, IDR, Kenner Hotel, Ltd., Daily VRDN and Put,
3.55%, 12/01/15 ............................................................. 100,000
3,700,000 Massachusetts State Health and Educational Facilities Authority Revenue, Capital
Asset Program, Series G-1, MBIA Insured, Weekly VRDN and Put, 3.35%,
01/01/19 .................................................................... 3,700,000
3,100,000 New Jersey EDA, El Dorado Terminal, Series 1984-A, Daily VRDN and Put, 3.50%,
05/01/21 .................................................................... 3,100,000
6,800,000 New York City Municipal Water Financing Authority, Water and Sewer Systems
Revenue, FGIC Insured, Series C, Daily VRDN and Put, 3.55%, 06/15/23 ........ 6,800,000
10,000,000 New York State Local Government Assistance Corp., Series F, Weekly VRDN and
Put, 3.40%, 04/01/25 ........................................................ 10,000,000
900,000 Putnam County, Georgia, Development Authority, PCR, Georgia Power Co. Plant,
Refunding, First Series, Daily VRDN and Put, 3.55%, 06/01/23 ................ 900,000
3,100,000 Uinta County, Wyoming, PCR, Refunding, Chevron U.S.A., Inc. Project, Daily VRDN
and Put, 3.55%, 08/15/20 .................................................... 3,100,000
------------
Total Short Term Investments (Cost $44,000,000)........................ 44,000,000
------------
Total Investments (Cost $6,661,730,529) 99.6% ..................... 7,066,633,017
Other Assets and Liabilities, Net 0.4% ............................ 29,621,050
------------
Net Assets 100.0% ................................................. $7,096,254,067
============
At October 31, 1996, the net unrealized appreciation based on
the cost of investments for income tax purposes of $6,661,730,529 was as follows:
Aggregate gross unrealized appreciation for all investments in which there
was an excess of value over tax cost ...................................... $ 409,347,033
Aggregate gross unrealized depreciation for all investments in which there
was an excess of tax cost over value....................................... (4,444,545)
------------
Net unrealized appreciation ................................................ $ 404,902,488
============
</TABLE>
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
CRDA - Community Redevelopment Authority/Agency
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
ISD - Independent School District
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
PCFA - Pollution Control Financing Authority
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 (VRDNs) 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).
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Statements
Statement of Assets and Liabilities
October 31, 1996 (unaudited)
Assets:
Investments in securities:
At identified cost $6,661,730,529
=============
At value 7,066,633,017
Cash 977,123
Receivables:
Interest 138,378,880
Investment securities sold 8,661,204
Capital shares sold 3,165,467
-------------
Total assets 7,217,815,691
-------------
Liabilities:
Payables:
Investment securities purchased:
Regular delivery
When-issued basis (Note 1) 115,359,205
Capital shares repurchased 1,594,051
Management fees 2,681,811
Distribution fees 1,302,904
Shareholder servicing costs 284,702
Accrued expenses and other liabilities 338,951
-------------
Total liabilities 121,561,624
-------------
Net assets, at value $7,096,254,067
=============
Net assets consist of:
Accumulated distributions in excess
of net investment income (1,478,463)
Net unrealized appreciation on
investments 404,902,488
Net realized loss (94,165,785)
Class I capital shares 6,733,875,544
Class II capital shares 53,120,283
-------------
Net assets, at value $7,096,254,067
=============
Class I shares:
Net assets, at value $7,042,852,717
=============
Shares outstanding 588,334,219
=============
Net asset value per share* $11.97
=============
Class II shares:
Net assets, at value $ 53,401,350
=============
Shares outstanding 4,462,414
=============
Net asset value per share* $11.97
=============
Statement of Operations
for the six months ended October 31, 1996 (unaudited)
Investment income:
Interest $233,309,923
-------------
Expenses:
Management fees (Note 5) 15,977,887
Distribution fees- Class I
(Note 5) 2,428,043
Distribution fees- Class II
(Note 5) 141,765
Shareholder servicing costs
(Note 5) 1,077,450
Reports to shareholders 755,450
Custodian fees 148,381
Directors' fees and expenses 74,729
Professional fees 66,475
Registration and filing fees 25,503
Other 260,250
------------
Total expenses 20,955,933
------------
Net investment income 212,353,990
------------
Realized and unrealized gain (loss) on investments:
Net realized loss (29,877,351)
Net unrealized appreciation 113,581,303
------------
Net realized and unrealized
gain on investments 83,703,952
------------
Net increase in net assets
resulting from operations $296,057,942
============
*Redemption price per share is equal to net asset value less any applicable
contingent deferred sales charge.
<TABLE>
<CAPTION>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Statements (cont.)
Statements of Changes in Net Assets for the six months ended October 31, 1996
(unaudited) and the year ended April 30, 1996
Six months Year Ended
Ended 10/31/96 04/30/96
------------ ------------
Increase (decrease) in net assets:
Operations:
<S> <C> <C>
Net investment income..................................................... $ 212,353,990 $ 438,597,003
Net realized gain (loss) from security transactions....................... (29,877,351) 72,837,068
Net unrealized appreciation (depreciation) on investments................. 113,581,303 (11,834,809)
------------ ------------
Net increase in net assets resulting from operations.................. 296,057,942 499,599,262
------------ ------------
Distributions to shareholders:
From undistributed net investment income:
Class I................................................................... (211,196,626) (438,791,296)
Class II.................................................................. (1,157,364) (780,115)
In excess of net investment income ......................................... (1,478,463) --
Increase (decrease) in net assets from capital share transactions (Note 2).. (32,681,651) 99,741,632
------------ ------------
Net increase in net assets............................................ 49,543,838 159,769,483
Net assets:
Beginning of period........................................................ 7,046,710,229 6,886,940,746
------------ ------------
End of period.............................................................. 7,096,254,067 7,046,710,229
============ ============
Undistributed net investment income (accumulated distributions in excess of net
investment income) included in net assets:
Beginning of period....................................................... $-- $ 974,408
============ ============
End of period............................................................. $ (1,478,463) $--
============ ============
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Notes to Financial Statements (unaudited)
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 Fund seeks to provide tax-free income.
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.
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 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 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. Original issue discount and
premium are amortized as required by the Internal Revenue Code. 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.
Net realized capital gains and losses differ for financial statement and tax
purposes primarily due to differing treatment of wash sale transactions.
1. SIGNIFICANT ACCOUNTING POLICIES (cont.)
f. Securities Purchased on a When-Issued or Delayed Delivery Basis:
The Fund may purchase 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 October 31, 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 each of the Fund's shares were as follows:
Six Months Ended Year Ended
October 31, 1996 April 30, 1996
--------------------- ---------------------
Class I shares: Shares Amount Shares Amount
--------- ----------- --------- -----------
<S> <C> <C> <C> <C>
Shares sold ........................................... 28,629,620 $338,707,777 70,993,778 $847,089,902
Shares issued in reinvestment of distributions ....... 6,967,126 82,135,466 14,001,002 166,964,403
Shares redeemed ...................................... (39,955,932) (472,158,144) (79,499,754) (948,799,706)
--------- ----------- --------- -----------
Net increase .......................................... (4,359,186) $ (51,314,901) 5,495,026 $ 65,254,599
========= =========== ========= ===========
Class II shares:
Shares sold ........................................... 1,696,681 $ 20,043,437 3,046,996 $ 36,418,313
Shares issued in reinvestment of distributions ....... 59,510 701,966 38,262 458,678
Shares redeemed ...................................... (178,387) (2,112,153) (200,657) (2,389,958)
--------- ----------- --------- -----------
Net increase .......................................... 1,577,804 $ 18,633,250 2,884,601 $ 34,487,033
========= =========== ========= ===========
</TABLE>
<TABLE>
<CAPTION>
3. DISTRIBUTIONS AND CAPITAL LOSS CARRYOVERS
At April 30, 1996, for tax purposes, the Fund had capital loss carryovers as
follows:
<S> <C> <C>
Capital loss carryovers expiring in : 2000 .......................... $ 1,342,936
2002 .......................... 10,591,976
2003 .......................... 52,353,522
------------
$64,288,434
============
</TABLE>
For tax purposes, the aggregate cost of securities and unrealized appreciation
are the same for financial reporting purposes at October 31, 1996.
4. PURCHASES AND SALES OF SECURITIES
Purchases and sales of securities (excluding purchases and sales of short-term
securities) for the six months ended October 31, 1996 aggregated $695,245,875
and $705,509,600 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 six months ended October 31, 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 six months ended October 31, 1996 aggregated $1,077,450, of which $864,704
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 $2,569,808 for the six months ended October 31, 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 six months ended October 31, 1996 amounted to $6,465,154 and $6,452,572,
respectively. Distributors also received contingent deferred sales charges
relating to redemption transactions in the Fund's shares of $13,718.
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. 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 4.44% of its portfolio invested in lower rated and comparable
quality unrated high yield securities. Investments in high 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>
7. FINANCIAL HIGHLIGHTS
Selected data for a share of capital stock outstanding throughout the period are
as follows:
Six Months Ended Year Ended April 30,
Class I Shares: October 31, 1996 1996 1995 1994 1993 1992
----------- -------- -------- -------- -------- --------
Per Share Operating Performance
<S> <C> <C> <C> <C> <C> <C>
Net asset value at beginning of period $11.83 $11.73 $11.81 $12.24 $11.68 $11.40
----------- -------- -------- -------- -------- --------
Net investment income............... .36 .74 .75 .77 .80 .82
Net realized and unrealized gain (loss)
on securities...................... .140 .104 (.053) (.415) .576 .302
----------- -------- -------- -------- -------- --------
Total from investment operations.... .500 .844 .697 .355 1.376 1.122
Distributions from net investment
income............................. (.360) (.744) (.777) (.785) (.816) (.842)
----------- -------- -------- -------- -------- --------
Net asset value at end of period.... $11.97 $11.83 $11.73 $11.81 $12.24 $11.68
=========== ======== ======== ======== ======== ========
Total Return*....................... 4.31% 7.33% 6.21% 2.58% 11.89% 9.90%
Ratios/Supplemental Data
Net assets at end of period (in 000's) $7,042,853 $7,012,601 $6,886,941 $6,804,262 $6,414,739 $5,184,214
Ratio of expenses to average net
assets............................. .59%** .57% .59% .52% .51% .51%
Ratio of net investment income to
average net assets................. 6.03%** 6.20% 6.47% 6.27% 6.68% 7.70%
Portfolio turnover rate............. 10.01% 25.10% 19.88% 24.59% 13.30% 14.94%
</TABLE>
7. FINANCIAL HIGHLIGHTS (cont.)
Six Months Ended Period Ended
Class II Shares: October 31, 1996April 30, 1996
----------- ---------
Per Share Operating Performance
Net asset value at beginning of period $11.82 $11.73+
----------- ---------
Net investment income............... .33 .68
Net realized and unrealized gain
on securities...................... .145 .091
----------- ---------
Total from investment operations.... .475 .771
Distributions from net investment
income............................. (.325) (.681)
----------- ---------
Net asset value at end of period.... $11.97 $11.82
=========== =========
Total Return*....................... 4.09% 6.68%
Ratios/Supplemental Data
Net assets at end of period (in 000's) $53,401 $34,110
Ratio of expenses to average net
assets............................. 1.17%** 1.15%
Ratio of net investment income to
average net assets................. 5.48%** 5.68%
Portfolio turnover rate............. 10.01% 25.10%
*Total return measures the changes 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 asset 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 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.
**Annualized.
Franklin Federal Tax-Free Income Fund Semi-Annual Report October 31, 1996.
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 9/1/93 through 8/31/96.
<TABLE>
<CAPTION>
Period Ending Price
<S> <C> <C>
Sep-93 6.04% 5.47%
Oct-93 5.96% 5.48%
Nov-93 6.29% 5.65%
Dec-93 6.35% 5.52%
Jan-94 6.23% 5.45%
Feb-94 6.67% 5.77%
Mar-94 7.10% 6.36%
Apr-94 7.22% 6.37%
May-94 7.39% 6.40%
Jun-94 7.63% 6.47%
Jul-94 7.39% 6.33%
Aug-94 7.46% 6.36%
Sep-94 7.82% 6.58%
Oct-94 7.97% 6.85%
Nov-94 7.99% 7.16%
Dec-94 7.89% 6.92%
Jan-95 7.71% 6.66%
Feb-95 7.46% 6.42%
Mar-95 7.44% 6.37%
Apr-95 7.34% 6.35%
May-95 6.67% 6.10%
Jun-95 6.63% 6.28%
Jul-95 6.86% 6.19%
Aug-95 6.65% 6.11%
Sep-95 6.49% 6.07%
Oct-95 6.34% 5.91%
Nov-95 6.14% 5.74%
Dec-95 5.96% 5.56%
Jan-96 6.03% 5.57%
Feb-96 6.48% 5.71%
Mar-96 6.67% 5.96%
Apr-96 6.89% 6.05%
May-96 7.00% 6.09%
Jun-96 6.90% 6.01%
Jul-96 6.96% 5.98%
Aug-96 7.13% 6.02%
</TABLE>
GRAPHIC MATERIAL (2)
This chart shows in pie chart format the income and capital appreciation of the
Lehman Brothers 20-Year Municipal Bond Index for the 10-year period ended
8/31/96.
<TABLE>
<CAPTION>
Income: An Important Component of Total Return
<S> <C>
Income 90.83%
Capital Appreciation 9.17%
</TABLE>
GRAPHIC MATERIAL (3)
This bar chart shows that 37% insured municipal bonds and 63% non-insured
municipal bonds were issued in 1994, 43% insured municipal bonds and 57%
non-insured municipal bonds issued in 1995, and 48% insured municipal bonds and
52% non-insured municipal bonds issued in 1996.
GRAPHIC MATERIAL (4)
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), 1995 ($156 billion), and 1996 (105 billion).
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 October 31, 1996
<S> <C>
AAA 30.6%
AA 16.3%
A 17.4%
BBB 32.4%
Below Investment Grade 3.3%
</TABLE>
GRAPHIC MATERIAL (6)
This bar chart shows the comparison between the fund's disribution rate of 5.66%
and the taxable equivalent distribution rate of 9.37%, for Class I shares.
GRAPHIC MATERIAL (7)
This bar chart shows the comparison between the fund's disribution rate of 5.28%
and the taxable equivalent distribution rate of 8.74%, for Class II shares.