Franklin Federal Tax-Free Income Fund
Semi Annual Report
October 31, 1997
Charles B. Johnson
Chairman
Franklin Federal
Tax-Free Income Fund
Thomas J. Kenny
Director
Franklin Municipal
Bond Department
CONTENTS
Shareholder Letter 1
Manager's Discussion 4
Performance Summary 7
Financial Highlights &
Statement of Investments 11
Financial Statements 42
Notes to
Financial Statements 45
SHAREHOLDER LETTER
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, 1997.
During the six months under review, the U.S. economy continued its six year long
expansion since the recession in 1990-1991. Investor concern over wage and price
inflation helped push interest rates to their highest point of the year in
April. Despite these concerns, a number of economic reports released later in
the period showed the U.S. economy continued to experience above average growth
with few, if any inflation pressures. Additionally, the U.S. deficit for the
1997 fiscal year amounted to only $23 billion, which is much lower than most
market participants anticipated. These conditions were very favorable for the
bond market and, as a result, yields on the 30-year Treasury bond declined from
6.95% at the beginning of the period and finished at 6.17% on October 31, 1997.1
1. Source: Micropal; Federal Reserve H15 Report, 10/31/97.
The municipal bond market in general has benefited from the healthy U.S.
economy. State and local governments have also enjoyed healthy growth with many
realizing revenue increases in excess of budgeted amounts. At the same time,
voter resistance toward higher taxes helped restrain government spending. As a
result, many state and local government fiscal positions have improved, leading
to more credit rating upgrades than downgrades during the period. The supply of
new municipal bonds increased with a significant number issued for refinancing
purposes in order to allow the issuers to take advantage of the decline in
interest rates. A record percentage of these new bonds came to market with
municipal bond insurance. Increased competition among the insurance companies
combined with the strong fiscal results due to the healthy economy have helped
drive insurance premiums to their lowest levels in many years. Overall,
municipal issuers favored insured bonds because of their stronger market appeal,
and we expect this trend to continue going forward.
The Federal Tax-Free Income Fund performed as expected during the period. The
fund continued to pay out above average income to our shareholders, while it
maintained one of the lowest risk profiles as compared to its peer group
averages. We continue to stress a long-term investment perspective and attempt
to invest the portfolio in securities with the greatest value, in our opinion,
on a daily basis. The high level of stock market volatility witnessed toward the
end of the reporting period serves to highlight our conviction that financial
markets will be subject to daily fluctuations. No one can predict the future
performance of the securities markets, but history has shown that, over the long
term, stocks and bonds have delivered impressive results when income is left to
compound. We encourage you to review your investment program periodically with
your investment representative, and focus on your continuing long-term goals. If
you have any questions concerning the Franklin Federal Tax-Free Income Fund, we
welcome the opportunity to answer them.
Sincerely,
Charles B. Johnson
Chairman
Franklin Federal Tax-Free Income Fund
/s/Thomas J. Kenny
Director
Franklin Municipal Bond Department
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 OF MUNICIPAL SECURITIES.1
1. For investors subject to the federal alternate 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.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
MUNICIPAL OVERVIEW
During the six-month period, there remained little difference between the prices
of high- and low-quality municipal bonds. We have concentrated on taking
advantage of the narrow price differential by buying many high-quality municipal
securities. The fund's holdings of AAA-rated issues increased by 3.3%, from
30.2% at the beginning of the period, to 33.5% on October 31, 1997.
PORTFOLIO UPDATE
We continue to manage the fund with the goal of generating tax-free income for
our shareholders, while attempting to maintain a stable net asset value. The
direction of interest rates, however, greatly influences the fund's share price,
and over the six-month period, the fund benefited from the general decrease in
interest rates. The Franklin Federal Tax-Free Income Fund's net asset value
increased 34 cents, from $11.90 on April 30, 1997 to $12.24 on October 31, 1997.
In addition, we continue to focus on purchasing current coupon bonds. Such
securities support the fund's objectives of stable share price and income, since
they are less volatile and offer higher income than deep discount bonds.
Although the drop in interest rates provided deep discount bonds greater price
gains than the fund's current coupon bonds; we generally avoid deep discount
securities because of their higher volatility and lower income.
During the reporting period, we acted on opportunities in the municipal bond
market, and purchased a significant amount f New York and California municipal
securities. Generally, when a state issues a large supply of bonds in a short
period of time, the single state municipal bond funds are not able to absorb all
of the securities brought to the market. Therefore, such securities are often
undervalued and attractively priced in the national market.
We took advantage of heavy supply in the New York and California municipal bond
markets over the six-month period by buying many bonds, which we believed, were
undervalued. As of October 31, 1997, these two states represent the fund's
largest state positions, and among the new issues the fund purchased were: New
York City general obligation bonds, New York Metropolitan Transit Authority
bonds, and San Joaquin Toll Road bonds.
Although the fund has its largest holdings in securities issued by California
and New York, we sought diversification with investments in all fifty states and
Puerto Rico. In addition, as the chart to the left shows, the fund was invested
across a broad range of sectors on October 31, 1997.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
PORTFOLIO BREAKDOWN
10/31/97
% OF TOTAL
LONG-TERM
SECTOR INVESTMENTS
Utilities 27.5%
Housing 13.9%
Transportation 12.3%
Prerefunded 12.2%
General Obligations 10.0%
Hospitals 6.9%
Industria 5.1%
Other Revenue 4.1%
Education 3.0%
Certificates of
Participation 2.6%
Health Care 1.6%
Tax-Allocation 0.7%
Sales Tax Revenue 0.1%
For a complete list of portfolio holdings, please see page 13.
PERFORMANCE SUMMARY
CLASS I
Franklin Federal Tax-Free Income Fund - Class I share price, as measured by net
asset value, increased 34.0 cents, from $11.90 on April 30, 1997, to $12.24 on
October 31, 1997.
During the reporting period, shareholders received per share distributions of
34.8 cents ($0.348) in dividend income. Distributions will vary depending on
income earned by the fund and any profits realized from the sale of securities
in the portfolio as well as the fund's operating expenses.
At the end of this reporting period, the fund's distribution rate was 5.45%,
based on an annualization of October's monthly dividend of 5.8 cents ( $0.058)
per share and the maximum offering price of $12.78 on October 31, 1997. 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 9.02% from a taxable investment to match the
fund's tax-free distribution rate.
CLASS I
DIVIDEND DISTRIBUTIONS
5/1/97 - 10/31/97
DIVIDEND
MONTH PER SHARE
May 5.8 cents
June 5.8 cents
July 5.8 cents
August 5.8 cents
September 5.8 cents
OCTOBER 5.8 CENTS
TOTAL 34.8 CENTS
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
CLASS I
PERIODS ENDED 10/31/97
SINCE
INCEPTION
1-YEAR 5-YEAR 10-YEAR (10/7/83)
Cumulative Total Return1 8.40% 43.52% 136.74% 246.78%
Average Annual Total Return2 3.80% 7.36% 8.53% 8.90%
Distribution Rate3 5.45%
Taxable Equivalent Distribution Rate4 9.02%
30-Day Standardized Yield5 4.54%
Taxable Equivalent Yield4 7.52%
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include the sales charge.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the current, maximum 4.25%
initial sales charge.
3. Based on an annualization of October's 5.8 cents per share monthly dividend
and the maximum offering price of $12.78 on October 31, 1997.
4. Equivalent taxable distribution rate and yield assume the 1997 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, 1997.
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
would differ. Effective May 1, 1994, the fund eliminated the sales charge on
reinvested dividends and implemented a Rule 12b-1 plan, which affects subsequent
performance.
All total return calculations assume reinvestment of dividends and any 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.
CLASS II
Franklin Federal Tax-Free Income Fund - Class II share price, as measured by net
asset value, increased 33.0 cents, from $11.90 on April 30, 1997, to $12.23 on
October 31, 1997.
During the reporting period, shareholders received per share distributions of
31.42 cents ($0.3142) in dividend income. Distributions will vary depending on
income earned by the fund and any profits realized from the sale of securities
in the portfolio as well as the fund's operating expenses.
At the end of this reporting period, the fund's distribution rate was 5.04%
based on an annualization of October's monthly dividend of 5.19 cents ($0.0519)
per share and the offering price of $12.35 on October 31, 1997. This tax-free
rate is generally higher than the after-tax return on a comparable taxable
investment. For example, an investor in the maximum combined federal income tax
bracket of 39.6% would need to earn 8.34% from a taxable investment to match the
fund's tax-free distribution rate.
CLASS II
DIVIDEND DISTRIBUTIONS
5/1/97 - 10/31/97
DIVIDEND
MONTH PER SHARE
May 5.21 cents
June 5.21 cents
July 5.27 cents
August 5.27 cents
September 5.27 cents
OCTOBER 5.19 CENTS
TOTAL 31.42 CENTS
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
CLASS II
PERIODS ENDED 10/31/97
SINCE
INCEPTION
1-YEAR (5/1/95)
Cumulative Total Return1 7.70% 19.57%
Average Annual Total Return2 5.64% 6.97%
Distribution Rate3 5.04%
Taxable Equivalent Distribution Rate4 8.34%
30-Day Standardized Yield5 4.12%
Taxable Equivalent Yield4 6.82%
1. Cumulative total returns measure the change in value of an investment over
the periods indicated and do not include sales charges.
2. Average annual total returns represent the average annual change in value of
an investment over the specified periods and reflect the 1.0% initial sales
charge and the 1.0% contingent deferred sales charge, applicable to shares
redeemed within 18 months of investment.
3. Based on an annualization of October's 5.19 cents per share monthly dividend
and the maximum offering price of $12.35 on October 31, 1997.
4. Equivalent taxable distribution rate and yield assume the 1997 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, 1997.
All total return calculations assume reinvestment of dividends and any 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.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Highlights
<TABLE>
<CAPTION>
CLASS I
---------------------------------------------------------------------------------------
SIX MONTHS ENDED
OCTOBER 31, 1997 YEAR ENDED APRIL 30,
--------------------
(UNAUDITED) 1997 1996 1995 1994 1993
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Per share operating performance
(for a share outstanding throughout the period)
Net asset value, beginning of period $11.90 $11.83 $11.73 $11.81 $12.24 $11.68
----------------------------------------------------------------------------------
Income from investment operations:
Net investment income .35 .71 .74 .75 .77 .80
Net realized and unrealized gains (losses) .34 .07 .10 (.05) (.41)
------------------------------------------------------------------------------------
.58
Total from investment operations .69 .78 .84 .70 .36 1.38
Less distributions from net investment income (.35) (.71) (.74) (.78) (.78) (.82)
-------------------------------------------------------------------------------------
Net asset value, end of period $12.24 $11.90 $11.83 $11.73 $11.81 $12.24
===================================================================================
Total Return* 5.87% 6.81% 7.33% 6.21% 2.58% 11.89%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $7,050,479 $6,905,488 $7,012,601 $6,886,941 $6,804,262 $6,414,739
Ratios to average net assets:
Expenses .60%** .58% .57% .59% .52% .51%
Net investment income 5.80%** 6.00% 6.20% 6.47% 6.27% 6.68%
Portfolio turnover rate 6.44% 16.43% 25.10% 19.88% 24.59% 13.30%
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized. Prior to May 1, 1994, dividends from net
investment income were reinvested at the offering price.
**Annualized
<TABLE>
<CAPTION>
CLASS II
SIX MONTHS ENDED
OCTOBER 31, 1997 YEAR ENDED APRIL 30,
(UNAUDITED) 1997 1996
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
PER SHARE OPERATING PERFORMANCE
(for a share outstanding throughout the period)
Net asset value, beginning of period $11.90 $11.82 $11.73***
-------------------------------------------------
Income from investment operations:
Net investment income .32 .66 .68
Net realized and unrealized gains .32 .06 .09
----------------------------------------------
Total from investment operations .64 .72 .77
Less distributions from net
investment income (.31) (.64) (.68)
-----------------------------------------------
Net asset value, end of period $12.23 $11.90 $11.82
==============================================
Total Return* 5.48% 6.28% 6.68%
RATIOS/SUPPLEMENTAL DATA
Net assets, end of period (000's) $102,194 $71,944 $34,110
Ratios to average net assets:
Expenses 1.18%** 1.16% 1.15%
Net investment income 5.22%** 5.42% 5.68%
Portfolio turnover rate 6.44% 16.43% 25.10%
</TABLE>
*Total return does not reflect sales commissions or the contingent deferred
sales charge, and is not annualized.
**Annualized
***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.
See notes to financial statements.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
STATEMENT OF INVESTMENTS, OCTOBER 31, 1997 (UNAUDITED)
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<S> <C> <C>
LONG TERM INVESTMENTS 97.8%
BONDS 95.8%
ALABAMA 1.2%
Alabama HFA, SFMR, Collateralized Home Mortgage, Series D-2, 5.75%, 10/01/23 $ 5,400,000 $ 5,464,638
Alabama Water Pollution Control Authority, Revolving Fund, Series B,
Pre-Refunded, 7.75%, 8/15/12 6,180,000 6,808,877
Birmingham GO, Street Improvement, Warrants, Pre-Refunded, 8.00%, 7/01/13 5,000,000 5,231,850
Citronelle IDB, PCR, Stauffer Chemical Project, Guaranteed by Imperial Chemical,
Plc., Series 1982, 8.00%,
12/01/12 1,000,000 1,103,400
Courtland IDB, PCR, Refunding, Champion International Corp. Project, 6.15%, 6/01/19 5,000,000 5,212,650
Courtland IDBR, Refunding, Champion International Corp., Series A, 7.20%, 12/01/13 12,000,000 13,343,280
Jefferson County Sewer Revenue, Warrants, FGIC Insured,
Refunding, Series A, 5.625%, 2/01/22 4,000,000 4,064,600
Series D, 5.75%, 2/01/22 15,995,000 16,555,945
Series D, 5.75%. 2/01/27 19,715,000 20,322,222
Montgomery Medical Clinic Board, Health Care Facilities Revenue, Refunding,
Jackson Hospital and Clinic,
AMBAC Insured, 6.00%, 3/01/26 5,385,000 5,646,280
---------
83,753,742
---------
ALASKA 2.1%
Alaska Industrial Development and Export Authority,
Revolving Fund, Series A, 7.95%, 4/01/10 1,775,000 1,912,758
Alaska State HFC,
Collateralized Home Mortgage, Series A-1, 6.75%, 12/01/32 4,005,000 4,253,871
Refunding, Mortgage, Series A, MBIA Insured, 6.00%, 12/01/15 4,565,000 4,764,491
Refunding, Mortgage, Series A, MBIA Insured, 6.10%, 12/01/37 34,000,000 35,431,740
Refunding, Series A, MBIA Insured, 5.875%, 12/01/24 17,875,000 18,457,010
Refunding, Series A, MBIA Insured, 5.875%, 12/01/30 11,600,000 11,905,312
Series A, 6.60%, 12/01/23 8,000,000 8,862,400
Veterans Mortgage Program, MBIA Insured, 6.75%, 12/01/25 20,980,000 22,485,525
Anchorage Parking Authority Revenue, Refunding, 5th Avenue Garage Lease Project,
6.50%, 12/01/02 3,360,000 3,595,570
6.75%, 12/01/08 3,500,000 3,750,740
Valdez Marine Terminal Revenue, Refunding, BP Pipelines, Inc. Project,
Series A, 5.85%, 8/01/25 25,000,000 25,448,250
Series B, 5.50%, 10/01/28 9,455,000 9,371,134
Series C, 5.65%, 12/01/28 500,000 502,870
---------
150,741,671
---------
ARIZONA .1%
Tempe IDA, Residential Care Facilities Revenue, Volunteers of America
Care Facilities, 9.00%, 6/01/18 5,540,000 5,727,307
---------
ARKANSAS 1.1%
Arkansas State Development Financing Authority, Driver's License Revenue,
State Police Headquarters,
Wireless Data, FGIC Insured, 5.40%, 6/01/18 4,000,000 4,068,600
Desha County Residential Housing Facilities Board, SFMR, Refunding, 7.50%, 4/01/11 2,285,000 2,438,438
Independence County Public Health and Education Facilities Board, Capital Revenue,
Refunding & Improvement,
White River Control Project, Pre-Refunded, 8.00%, 6/01/09 3,115,000 3,358,936
Jefferson County PCR, Refunding, Arkansas Power and
Light Co. Project, 6.30%, 6/01/18 1,465,000 1,563,770
Pope County PCR, Refunding, Power and Light Co. Project,
6.30%, 12/01/16 2,600,000 2,740,504
6.30%, 11/01/20 60,000,000 62,413,200
University of Central Arkansas, AMBAC Insured,
Academic Facilities Revenue, Series B, 5.875%, 4/01/16 $ 250,000 $ 262,800
Academic Facilities Revenue, Series B, 6.00%, 4/01/21 1,000,000 1,065,260
Athletic Facilities Revenue, Series C, 6.00%, 4/01/21 1,000,000 1,065,260
Athletic Facilities Revenue, Series C, 6.125%, 4/01/26 825,000 874,789
Refunding, Housing System Revenue, Series A, 6.00%, 4/01/21 1,000,000 1,065,260
---------
80,916,817
---------
CALIFORNIA 6.9%
Alhambra COP, Clubhouse Facility Project,
11.25%, 1/01/08 410,000 420,189
11.25%, 1/01/09 455,000 466,270
11.25%, 1/01/10 500,000 512,300
Burbank RDA, Refunding, Tax Allocation, Series A, 6.25%, 12/01/24 5,325,000 5,621,283
California Health Facilities, Financing Authority Revenue, Refunding,
St. Francis Medical Center, Series H,
AMBAC Insured, 6.30%, 10/01/15 2,800,000 3,069,164
California State Educational Facilities Authority Revenue,
National University, Connie Lee Insured, 6.00%, 5/01/09 3,580,000 3,859,276
Pooled College and University Projects, Series B, 6.00%, 12/01/20 6,025,000 6,317,032
California State GO,
FGIC Insured, 6.00%, 8/01/19 11,000,000 11,650,210
Series 1994, 5.90%, 5/01/08 3,070,000 3,314,004
Series 1994, 6.00%, 5/01/18 7,000,000 7,350,910
Series 1994, FGIC Insured, 6.00%, 5/01/20 12,500,000 13,223,125
Various Purposes, 5.90%, 4/01/23 11,750,000 12,161,955
California State GO, Veterans Bonds,
Series BC, 6.00%, 2/01/10 1,000,000 1,024,440
Series BD, BE, and BF, 6.55%, 2/01/25 33,195,000 34,049,771
California State Public Works Board, Lease Revenue, Various
University of California Projects, Series A,
6.375%, 10/01/14 4,000,000 4,389,280
6.375%, 10/01/19 2,000,000 2,192,160
California Statewide Communities Development Authority Revenue,
COP, Sutter Health Obligation Group,
MBIA Insured, 6.00%, 8/15/25 14,750,000 15,620,840
Chino USD, COP, Refunding, FSA Insured, 5.90%, 9/01/15 8,250,000 8,676,113
Coalinga Public Finance Authority Revenue, Series B, 6.25%, 9/15/07 1,020,000 1,043,970
Commerce, Refuse to Energy Authority Revenue,
Refunding, Series 1994, 8.75%, 7/01/10 1,000,000 1,164,620
Foothill/Eastern Transportation Corridor Agency,
Toll Road Revenue, Senior Lien,
Series A, 6.50%, 1/01/32 59,240,000 63,539,047
Series B, 5.00%, 1/01/35 3,000,000 2,741,370
Forty-Niner Shops, Inc., Auxiliary Organization,
California State Long Beach Project,
6.875%, 4/01/07 1,090,000 1,171,674
6.875%, 4/01/12 1,565,000 1,647,851
Los Angeles County Transportation Commission, Sales Tax Revenue,
Proposition C, Series A, MBIA Insured,
6.00%, 7/01/23 3,000,000 3,129,900
Los Angeles CRDA, Housing Revenue, Refunding, Series A,
AMBAC Insured, 6.55%, 1/01/27 3,180,000 3,424,637
Los Angeles Department of Water and Power, Electric Plant Revenue,
Refunding, 6.40%, 11/01/31 $14,925,000 $ 15,894,827
Refunding, MBIA Insured, 6.00%, 2/01/28 3,000,000 3,141,720
Second Issue, MBIA Insured, 6.40%, 11/01/31 10,500,000 11,288,865
Los Angeles GO, Series A, FGIC Insured, 6.20%, 9/01/14 8,100,000 8,700,939
Los Angeles Regional Airport Improvements Corp., Lease Revenue, Refunding,
Facilities Sub-Lease, International Airport, 6.35%, 11/01/25 18,500,000 19,954,655
United Airlines, Inc. Project, 6.875%, 11/15/12 8,400,000 9,239,160
Pomona Public Financing Authority Revenue, Series Q, MBIA Insured, 5.90%, 12/01/25 4,000,000 4,194,800
Sacramento County Airport Systems Revenue, Sub-Series D, MBIA Insured, 6.00%, 7/01/16 6,480,000 6,888,564
San Bernardino County COP, Medical Center Financing Project, Series A, 5.875%, 8/01/26 33,315,000 34,702,903
San Francisco City and County RDA Revenue, George Moscone
Convention Center, Lease Revenue, 6.75%, 7/01/24 7,080,000 7,952,610
San Francisco City and County RDA Revenue,
Tax Allocation Redevelopment Project, 6.50%, 8/01/22 12,680,000 13,644,694
San Francisco City and County Sewer Revenue, Series A, FGIC Insured, 5.90%, 10/01/20 10,380,000 10,831,841
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue,
5.00%, 1/01/33 5,000,000 4,605,300
Pre-Refunded, 7.00%, 1/01/30 18,795,000 21,024,087
Pre-Refunded, 6.75%, 1/01/32 44,325,000 50,007,465
University of California Revenues,
Hospital Facilities, U.C. Davis Medical Center, AMBAC Insured, 5.75%, 7/01/24 25,000,000 25,863,750
Research Facilities, Series B, 6.55%, 9/01/24 26,780,000 28,663,437
Windsor RDA Revenue, Tax Allocation, Windsor Project, 7.00%, 9/01/24 2,405,000 2,599,396
---------
490,980,404
---------
COLORADO 4.4%
Colorado GO, HFA, Series A,
7.50%, 5/01/29 1,595,000 1,688,004
Pre-Refunded, 8.375%, 1/01/30 2,690,000 2,762,253
Colorado Post-Secondary Educational Facilities Authority Revenue,
Refunding & Improvement,University of Denver
Project, MBIA Insured, 5.375%, 3/01/18 6,000,000 6,039,660
Denver City and County Airport Revenue,
Series A, 8.875%, 11/15/12 12,130,000 14,145,278
Series A, 8.00%, 11/15/17 5,000,000 5,104,800
Series A, 7.50%, 11/15/23 13,590,000 15,556,201
Series A, 8.50%, 11/15/23 72,960,000 82,076,352
Series A, 8.00%, 11/15/25 21,785,000 24,209,996
Series A, Pre-Refunded, 7.50%, 11/15/12 11,200,000 12,985,616
Series A, Pre-Refunded, 8.875%, 11/15/12 4,515,000 5,329,009
Series A, Pre-Refunded, 7.50%, 11/15/23 2,930,000 3,468,094
Series A, Pre-Refunded, 8.50%, 11/15/23 6,985,000 7,921,549
Series A, Pre-Refunded, 7.25%, 11/15/25 24,525,000 28,160,586
Series A, Pre-Refunded, 8.00%, 11/15/25 2,540,000 2,850,877
Series B, 7.25%, 11/15/23 2,120,000 2,357,758
Series B, Pre-Refunded, 7.25%, 11/15/23 530,000 603,394
Series D, 7.75%, 11/15/21 8,950,000 10,019,167
Series D, 7.00%, 11/15/25 7,835,000 8,403,038
Denver City and County Airport Revenue, (cont.)
Series D, Pre-Refunded, 7.75%, 11/15/21 $ 2,510,000 $ 2,859,342
Series D, Pre-Refunded, 7.00%, 11/15/25 2,175,000 2,381,603
Denver City and County Special Facilities, Airport Revenue,
United Airlines, Inc. Project, Series A, 6.875%, 10/01/32 47,980,000 52,381,685
Littleton MFR, Rental Housing, Riverpointe Project I, Series 1985, 8.00%, 12/01/22 16,310,000 16,684,641
University of Colorado Hospital Authority Revenue,
Series A, AMBAC Insured, 6.40%, 11/15/22 6,500,000 7,058,935
---------
315,047,838
---------
DELAWARE
Delaware State EDA Revenue, Refunding, Water Development,
Wilmington, Series B, 6.45%, 12/01/07 1,160,000 1,316,356
Delaware State Housing Authority, Refunding, MFMR, Series D, 6.75%, 7/01/06 2,000,000 2,193,220
---------
3,509,576
DISTRICT OF COLUMBIA .6%
District of Columbia GO, Series E, MBIA Insured, 6.00%, 6/01/13 4,000,000 4,175,120
District of Columbia HFA, MFHR, FHA Insured,
Mayfair Mansions Apartments, 8.85%, 2/01/31 6,110,000 6,310,714
Refunding, Series A, 7.10%, 9/01/12 1,830,000 1,948,566
Refunding, Series A, 7.15%, 3/01/24 6,575,000 6,969,566
District of Columbia HFA, SFMR, Refunding, Series B, 5.85%, 12/01/18 2,830,000 2,875,054
District of Columbia Hospital Revenue, Washington Hospital Center Corp.,
Series A, Pre-Refunded, 9.00%,
1/01/08 4,220,000 4,859,246
District of Columbia Redevelopment Land Agency,
Sports Arena, Special Tax Revenue, 5.625%, 11/01/10 1,430,000 1,453,066
District of Columbia Revenue,
Association of American Medical Colleges, Pre-Refunded, 7.50%, 2/15/20 5,685,000 6,167,998
Catholic University of America, 6.45%, 10/01/23 5,265,000 5,673,406
---------
40,432,736
---------
FLORIDA 2.6%
Bay County Resource Recovery Revenue, Refunding, MBIA Insured,
Series A, 6.50%, 7/01/07 2,100,000 2,323,587
Series B, 6.50%, 7/01/07 11,020,000 12,193,299
Broward County Resource Recovery Revenue, Broward Waste Energy Co.,
L.P., North Project, Series 1984, 7.95%, 12/01/08 40,950,000 44,619,530
Callaway/Bay County Waste Water Systems Revenue, Series A,
FGIC Insured, 6.00%, 9/01/26 1,000,000 1,079,240
Dunes Community Development District Revenue, Water and Sewer Project,
Pre-Refunded, 8.25%, 10/01/18 3,800,000 4,022,338
Florida State Board Of Education, Capital Outlay, Public Education, Refunding,
Series 1992, 6.40%, 6/01/19 22,475,000 24,259,290
Florida State Department of General Services, Division of Facilities
Management Revenue, Florida Facilities Pool,
Pre-Refunded, 8.125%, 9/01/17 2,000,000 2,108,820
Florida State Department of Transportation, Turnpike Revenue,
Series A, Pre-Refunded, 7.75%, 7/01/09 7,125,000 7,681,748
Lakeland Retirement Community, First Mortgage Revenue,
Carpenters Home Estate Project, 9.50%, 9/01/06 3,600,000 3,629,808
Manatee County IDR, Manatee Hospital and Health Systems, Inc.,
Pre-Refunded, 9.25%, 3/01/21 6,500,000 7,609,420
Manatee County School Board COP, MBIA Insured, 6.125%, 7/01/16 5,000,000 5,408,300
Santa Rosa County Health Facilities Authority Revenue, Refunding,
Gulf Breeze Hospital, Inc., Pre-Refunded,
8.70%, 10/01/14 2,500,000 2,657,350
St. Augustine Water and Sewer Revenue, Refunding, Series A, MBIA Insured,
6.20%, 10/01/00 $ 840,000 $ 888,283
6.20%, 10/01/01 890,000 952,460
6.20%, 10/01/02 940,000 1,016,892
6.20%, 10/01/03 1,005,000 1,096,495
6.20%, 10/01/04 1,065,000 1,169,402
6.20%, 10/01/05 1,130,000 1,250,209
6.20%, 10/01/06 1,200,000 1,336,152
6.20%, 10/01/07 1,275,000 1,423,946
6.20%, 10/01/08 1,355,000 1,501,855
6.20%, 10/01/12 6,300,000 6,886,593
Tampa Capital Improvement Program Revenue,
Series A, 8.25%, 10/01/18 11,010,000 11,370,578
Series B, 8.375%, 10/01/18 37,250,000 38,510,540
----------
184,996,135
---------
GEORGIA 2.6%
Burke County Development Authority, PCR, Georgia Power Co.,
Plant Vogle Project, MBIA Insured,
Series 1984-1, 6.60%, 7/01/24 105,000,000 110,318,250
Series 1984-7, 6.625%, 10/01/24 8,025,000 8,470,949
Fulton County Development Authority, Special Facilities Revenue,
Refunding, Delta Air Lines, Inc. Project,
6.85%, 11/01/07 3,400,000 3,668,294
6.95%, 11/01/12 5,500,000 5,970,360
Gainsville and Hall County Hospital Authority Revenue, Anticipation Certificates,
Refunding, Northeast Georgia
Healthcare Project, MBIA Insured, 6.00%, 10/01/25 7,975,000 8,381,566
Georgia Municipal Electric Authority Power Revenue,
Series B, 6.375%, 1/01/16 14,000,000 14,723,660
Series EE, 6.40%, 1/01/23 6,325,000 6,942,130
Series O, Pre-Refunded, 8.125%, 1/01/17 18,500,000 18,989,880
Georgia State HFA Revenue, Homeownership Opportunity Program,
Series C, 6.60%, 12/01/23 4,010,000 4,280,154
Monroe County Development Authority, PCR, Georgia Power Co.,
AMBAC Insured, 6.25%, 7/01/19 4,300,000 4,475,397
---------
186,220,640
---------
HAWAII 1.1%
Hawaii State Airports System Revenue,
FGIC Insured, 7.00%, 7/01/20 1,000,000 1,096,400
Second Series, 7.00%, 7/01/07 12,000,000 13,148,280
Second Series, 6.90%, 7/01/12 500,000 583,005
Second Series, 7.00%, 7/01/18 2,830,000 3,069,899
Hawaii State Department of Budget and Finance, Special Purposes Mortgage Revenue,
Hawaii Electric Light Co. Project, 7.20%, 12/01/14 200,000 213,312
Hawaii Electric Light Co. Project, Series A, 7.35%, 1/01/20 1,000,000 1,068,530
Hawaiin Electric Co., Inc., Series A, MBIA Insured, 5.65%, 10/01/27 20,000,000 20,420,600
Kaiser Hospital, 6.25%, 3/01/21 900,000 946,125
Refunding, Kapiolani Health Care System, 6.00%, 7/01/19 2,600,000 2,683,382
Wahiawa General Hospital Project, 7.50%, 7/01/12 1,000,000 1,102,230
Hawaii State Department of Budget and Finance, Special Purposes Revenue,
6.00%, 7/01/11 $ 1,000,000 $ 1,050,530
6.20%, 7/01/16 2,000,000 2,101,680
6.25%, 7/01/21 6,250,000 6,567,000
Refunding, The Queens Health System, Series A, 5.75%, 7/01/26 5,800,000 5,901,210
Hawaii State SFMR,
HFC, Series A, 7.00%, 7/01/11 230,000 244,876
HFC, Series A, 7.10%, 7/01/24 3,350,000 3,554,719
HFC, Series B, 6.90%, 7/01/16 360,000 382,108
HFC, Series B, 7.00%, 7/01/31 11,880,000 12,607,769
Housing and Development Corp., Purchase Revenue, Series A, 5.75%, 7/01/30 1,000,000 1,006,660
Honolulu City and County GO, Series A,
6.30%, 3/01/08 415,000 449,325
6.30%, 3/01/12 1,000,000 1,061,220
---------
79,258,860
---------
IDAHO .1%
Idaho Housing Agency, Refunding, Series D-1, 6.45%, 7/01/19 2,260,000 2,415,691
Idaho Housing Agency, SFMR, Senior Bond, Series B-1, FGIC Insured,
7.85%, 7/01/09 1,035,000 1,082,051
7.90%, 1/01/21 1,590,000 1,651,772
Power County PCR, Refunding, FMC Corp. Project, 5.625%, 10/01/14 2,200,000 2,208,382
---------
7,357,896
---------
ILLINOIS 6.0%
Bryant PCR, Refunding, Central Illinois Light Co. Project,
Series A, 6.50%, 2/01/18 7,200,000 7,726,896
Series C, 6.50%, 1/01/10 5,000,000 5,400,100
Chicago Board of Education, School Reform, MBIA Insured,
6.00%, 12/01/16 9,700,000 10,279,381
6.00%, 12/01/26 7,600,000 7,988,892
Chicago COP, AMBAC Insured, 7.75%, 7/15/11 20,800,000 24,791,104
Chicago Gas Supply Revenue, Refunding, The Peoples Gas Light, Series A, 6.10%, 6/01/25 12,000,000 12,611,640
Chicago-O'Hare International Airport Revenue, Special Facilities,
American Airlines, Inc. Project, 8.20%, 12/01/24 11,720,000 14,150,376
United Airlines, Inc. Project, 8.45%, 5/01/07 4,300,000 4,747,931
United Airlines, Inc. Project, 8.50%, 5/01/18 12,305,000 13,601,086
United Airlines, Inc. Project, Series A, 8.40%, 5/01/18 460,000 495,751
United Airlines, Inc. Project, Series C, 8.20%, 5/01/18 28,220,000 30,333,114
Chicago SFMR, Collateralized, Series A, 7.25%, 9/01/28 4,000,000 4,517,200
Cook County, Orland Park School District No. 135, Refunding,
FGIC Insured, 5.90%, 12/01/14 10,000,000 10,518,900
Cook County, Refunding,
Capital Improvement, FGIC Insured, 5.875%, 11/15/22 10,000,000 10,365,400
Series A, MBIA Insured, 5.625%, 11/15/22 20,000,000 20,252,600
Cook County School District No. 140, Tinley Park, Refunding,
Series A, AMBAC Insured, 6.00%, 12/01/15 8,750,000 9,325,575
Illinois Development Finance Authority, PCR,
Commonwealth Edison Co. Project, Series 1991, 7.25%, 6/01/11 $ 7,500,000 $ 8,132,625
Refunding, Central Illinois Public Services Co., Series A, 6.375%, 1/01/28 15,200,000 15,949,816
Refunding, Illinois Power Co. Project, Series A, 7.375%, 7/01/21 26,550,000 30,370,014
Illinois HDA, Homeowner Mortgage, Series A-1, 6.85%, 8/01/17 4,245,000 4,645,601
Illinois HDA, MF Program,
Lawndale Redevelopment Project, 7.10%, 12/01/34 20,000,000 21,786,000
Refunding, Series A, 7.10%, 7/01/26 12,915,000 13,798,903
Series 1, 6.625%, 9/01/12 12,000,000 12,788,400
Series 1, 6.75%, 9/01/21 7,550,000 8,013,721
Series C, 7.35%, 7/01/11 2,265,000 2,394,535
Illinois HDA, RMR, Series B, 7.25%, 8/01/17 7,065,000 7,508,258
Illinois Health Facilities Authority Revenue,
Refunding, Edwards Hospital Project, Pre-Refunded, 7.00%, 2/15/22 2,000,000 2,237,940
Refunding, Loyola University Health System, Series A,
MBIA Insured, 5.625%, 7/01/18 9,195,000 9,284,283
Refunding, Servantcor, Series A, Pre-Refunded, 7.875%, 8/15/19 1,000,000 1,082,600
Refunding, Servantcor, Series B, Pre-Refunded, 7.875%, 8/15/19 3,000,000 3,247,800
Refunding, Westlake Community Hospital, 7.875%, 1/01/13 6,200,000 6,530,026
South Suburban Hospital, ETM, 7.00%, 2/15/18 4,200,000 5,104,050
South Suburban Hospital, Pre-Refunded, 7.00%, 2/15/18 2,800,000 3,133,116
bVictory Health Services, Series A, 5.75%, 8/15/27 8,015,000 8,014,118
Illinois State COP, FSA Insured, 6.875%, 7/01/07 2,600,000 2,890,680
Illinois State Dedicated Tax Revenue, Civic Center, Series A,
AMBAC Insured, 6.00%, 12/15/15 2,950,000 3,007,466
Metropolitan Pier and Exposition Authority, Dedicated State Tax Revenue,
McCormick Place Expansion Project,
Series A,
6.50%, 6/15/22 5,000 5,433
6.50%, 6/15/27 555,000 602,530
FGIC Insured, 6.50%, 6/15/07 5,000 5,563
Pre-Refunded, 6.50%, 6/15/07 5,645,000 6,331,827
Metropolitan Pier and Exposition Authority, Hospitality Facilities Revenue,
McCormick Place Convention Center,
5.75%, 7/01/06 1,645,000 1,699,055
6.25%, 7/01/17 9,500,000 10,036,465
7.00%, 7/01/26 12,000,000 14,188,800
Onterie Center HFC, Mortgage Revenue, Refunding, Series A,
MBIA Insured, 7.05%, 7/01/27 4,350,000 4,657,371
Regional Transportation Authority, Series A, AMBAC Insured, 6.125%, 6/01/22 3,970,000 4,089,894
Southwestern Illinois Development Authority,
Anderson Hospital Project, Series A, 7.00%, 8/15/22 6,200,000 6,576,154
IDR, Spectrulite Consortium, Inc. Project, 6.20%, 2/01/05 1,825,000 1,947,330
IDR, Spectrulite Consortium, Inc. Project, 6.625%, 2/01/10 3,050,000 3,269,112
Private Activity Revenue, Glenmark Recovery, 8.50%, 8/01/10 2,815,000 3,093,291
Solid Waste Disposal Revenue, LaCede Steel Co., 8.375%, 8/01/08 4,985,000 5,508,076
Solid Waste Disposal Revenue, LaCede Steel Co., 8.50%, 8/01/20 5,390,000 5,965,221
Will County Exempt Facilities Revenue, Mobil Oil Refining Corp. Project, 6.00%, 2/01/27 7,130,000 7,321,227
---------
432,323,247
---------
INDIANA 1.1%
Carmel Industrial RDA, County Option, Income Tax Lease, Rent Revenue, MBIA Insured,
5.25%, 1/01/18 $ 1,090,000 $ 1,079,220
Hammond Industrial Sewer and Solid Waste Disposal Revenue,
American Maize-Products Co., Project A, 8.00%, 12/01/24 17,000,000 19,791,060
Hammond PCR, Stauffer Chemical Project, Guaranteed by Imperial Chemical,
Plc., Series 1982, 8.00%, 11/01/12 2,355,000 2,592,408
Indiana Bond Bank, Special Program, Series A, 8.375%, 2/01/18 1,155,000 1,188,842
Indiana Health Facility Financing Authority, Hospital Revenue,
Hancock Memorial Hospital Project, Series 1990,
Pre-Refunded, 8.30%, 8/15/20 3,500,000 3,929,625
Indiana State Educational Facilities Authority Revenue, Manchester College Project,
6.85%, 10/01/18 3,240,000 3,421,667
Indiana State Housing Financing Authority, SFMR, Refunding, Series A,
6.75%, 1/01/10 2,940,000 3,149,563
6.80%, 1/01/17 12,835,000 13,748,595
Indianapolis Local Public Improvement, Series D,
6.75%, 2/01/20 13,075,000 14,073,669
Refunding, 6.50%, 2/01/22 4,625,000 4,644,980
Muncies Edit Building Corp., First Mortgage, Series A, AMBAC Insured, 6.60%, 12/01/17 2,000,000 2,177,960
Sullivan PCR, Refunding, Indiana-Michigan Power Co. Project, Series C, 5.95%, 5/01/09 6,000,000 6,197,280
---------
75,994,869
---------
IOWA .2%
Carroll Retirement Facility Revenue, Orchard View, Inc. Project, Pre-Refunded, 8.25%, 2/01/13 2,260,000 2,325,563
Iowa Financing Authority, SFMR, Series F, 5.70%, 1/01/27 10,780,000 10,898,041
----------
13,223,604
---------
KENTUCKY 2.1%
Ashland PCR, Refunding, Ashland Oil, Inc. Project, 6.65%, 8/01/09 3,900,000 4,197,258
Henderson County Solid Waste Disposal Revenue, MacMillan Bloedel Project, 7.00%, 3/01/25 10,000,000 10,944,900
Jefferson County MFHR, Watterson Park Apartments Project, Series A, 6.35%, 11/15/11 4,965,000 5,209,526
Kenton County Airport Board Revenue, Special Facilities, Delta Air Lines, Inc.,
7.80%, 12/01/15 20,000,000 21,474,000
Project A, 7.50%, 2/01/20 10,000,000 11,085,100
Project A, 7.125%, 2/01/21 9,330,000 10,135,832
Project B, 7.25%, 2/01/22 3,350,000 3,668,485
bKentucky Economic Development Financing Agency, Hospital Systems Revenue,
Refunding & Improvement,
Appalachian Regional Facility,
5.80%, 10/01/12 1,000,000 997,950
5.85%, 10/01/17 5,615,000 5,601,468
Kentucky Housing Corp. Revenue,
Series A, 6.70%, 7/01/17 975,000 1,036,289
Series B, 6.625%, 7/01/14 4,910,000 5,188,741
Kentucky State Development Financing Authority, Hospital Revenue,
Claire Medical Center Project, Pre-Refunded, 7.125%, 9/01/21 700,000 782,173
Kentucky State Property and Buildings Commission Revenue,
Project No. 48, Pre-Refunded, 8.00%, 8/01/08 4,500,000 4,721,805
Mount Sterling Lease Revenue, Kentucky League Cities, Series A,
6.10%, 3/01/08 $20,375,000 $ 21,541,469
6.20%, 3/01/18 11,765,000 12,326,896
Pendleton County, Multi-County Lease Revenue, Kentucky
Association of Counties Leasing Trust, Series A, 6.50%, 3/01/19 27,160,000 29,524,821
----------
148,436,713
---------
LOUISIANA 2.0%
Bastrop PCR, Refunding, International Paper Co. Project, 6.90%, 3/01/07 2,000,000 2,177,380
Calcasieu Parish IDB, PCR, Refunding, Gulf States Utilities Co. Project, 6.75%, 10/01/12 14,285,000 15,006,964
Calcasieu Parish Memorial Hospital Service District Revenue,
Lake Charles Parish Memorial Hospital Project,
Series A, FSA Insured,
6.375%, 12/01/12 4,310,000 4,791,341
6.50%, 12/01/18 5,530,000 6,229,545
6.65%, 12/01/21 3,145,000 3,389,964
Calcasieu Parish Public Transportation Authority Mortgage Revenue, Refunding,
Series A, 7.75%, 6/01/12 3,405,000 3,648,015
Series B, 6.375%, 11/01/02 355,000 376,957
Series B, 6.875%, 11/01/12 655,000 700,110
De Soto Parish Environmental Improvement Revenue, International Paper Co. Project, Series
A, 7.70%, 11/01/18 2,500,000 2,916,475
East Baton Rouge Mortgage Financing Authority, SFM,
MBS, Series A, 6.80%, 10/01/28 6,275,000 6,749,139
Series C, 7.00%, 4/01/32 2,525,000 2,686,474
Series D, 7.10%, 4/01/32 3,850,000 4,090,856
Lafayette Public Trust Finance Authority, SFMR, Refunding, Series A, 8.50%, 11/15/12 1,660,341 1,754,533
Louisiana HFA Mortgage Revenue, Refunding,
7.375%, 9/01/13 1,560,000 1,635,800
SF, Series B-2, 5.75%, 12/01/28 2,890,000 2,923,958
Louisiana Office Facility Corp., Capital Facility Bonds, Statewide Lease, 7.75%, 12/01/10 3,400,000 3,769,172
Louisiana Public Facilities Authority Revenue, Refunding, MBIA Insured,
Alton Ochsner Medical Foundation Project, Series B, 6.50%, 5/15/22 3,500,000 3,731,000
Xavier University of Louisiana Project, 5.25%, 9/01/27 3,000,000 2,986,320
New Orleans GO, Refunding, AMBAC Insured,
6.125%, 10/01/16 10,275,000 11,056,311
6.20%, 10/01/21 8,050,000 8,617,525
Pointe Coupee Parish PCR, Refunding, Gulf States Utilities Co. Project, 6.70%, 3/01/13 2,200,000 2,328,898
Quachita Parish Hospital Service District No. 1 Revenue, Glenwood
Regional Medical Center, Pre-Refunded, 7.50%, 7/01/21 4,000,000 4,496,880
West Feliciana Parish PCR, Gulf Systems Utilities Co. Project,
7.70%, 12/01/14 2,000,000 2,263,980
7.00%, 11/01/15 3,050,000 3,349,388
8.00%, 12/01/24 41,050,000 44,167,337
----------
145,844,322
---------
MAINE .9%
Bucksport Solid Waste Disposal Revenue, Champion International Corp. Project, 6.25%, 5/01/10 $ 5,000,000
$ 5,255,100
Maine Financial Authority, Solid Waste Recycling Facilities Revenue,
Great Northern Paper Co., Bowater Project,
7.75%, 10/01/22 29,300,000 32,802,815
Maine State Health and Higher Education Facilities Authority Revenue, FSA Insured,
Series B, 7.00%, 7/01/24 2,445,000 2,777,789
Maine State Housing Authority, Mortgage Purchase,
Series A-5, 6.20%, 11/15/16 2,500,000 2,606,625
Series C, 6.55%, 11/15/12 3,700,000 3,940,796
Series C, 6.65%, 11/15/24 3,500,000 3,719,835
Series D, 6.45%, 11/15/07 3,540,000 3,707,654
Series D, 6.70%, 11/15/15 5,800,000 6,248,514
Rumford PCR, Refunding, Boise Cascade Corp. Project, 6.625%, 7/01/20 4,800,000 5,158,944
---------
66,218,072
---------
MARYLAND 2.0%
Gaithersburg Hospital Facilities Improvement Revenue, Shady Grove Hospital,
Refunding & Improvement, FSA Insured, 6.00%, 9/01/21 10,110,000 10,606,098
Series A, Pre-Refunded, 8.25%, 9/01/21 43,225,000 50,080,917
Maryland State Community Development Administration,
Department of Housing and Community Development,
MFHR, Mortgage Insured, Series G, 6.55%, 5/15/19 5,595,000 5,913,411
SF, 7.25%, 4/01/27 965,000 1,018,886
Maryland State Health and Higher Educational Facilities Authority Revenue,
Hartford Memorial Hospital and
Fallston General Hospital, 8.50%, 7/01/14 4,900,000 5,026,567
Montgomery County Housing Opportunity Community, SFMR,
Refunding, Series B, 6.625%, 7/01/28 6,500,000 6,854,250
Takoma Park Hospital Facilities Revenue, Refunding,
Washington Adventist Hospital, Series A,
Sub-Series 1, 8.25%, 9/01/21 23,210,000 26,936,133
Sub-Series 1, Pre-Refunded, 8.25%, 9/01/21 10,930,000 12,663,607
Sub-Series 2, Pre-Refunded, 8.25%, 9/01/21 20,125,000 22,311,984
----------
141,411,853
---------
MASSACHUSETTS 2.7%
Agawam Resource Recovery Revenue, Springfield Resource Recovery Project,
Series 1986, 8.50%, 12/01/08 10,900,000 11,144,051
Massachusetts Health and Educational Facilities Authority Revenue,
Notre Dame Health Care Center, Series A,
7.875%, 10/01/22 2,310,000 2,479,415
Massachusetts State Consolidated Loan,
Series A, 7.50%, 6/01/04 7,500,000 8,701,800
Series D, Pre-Refunded, 7.00%, 7/01/07 5,000,000 5,555,350
Massachusetts State GO, Refunding, Series B, 6.50%, 8/01/08 5,900,000 6,754,792
Massachusetts State Health and Educational Facilities Authority Revenue,
Framingham Union Hospital, Series B, Pre-Refunded, 8.50%, 7/01/20 9,020,000 10,157,873
Melrose-Wakefield Hospital, Series B, Refunding, 6.35%, 7/01/06 1,100,000 1,171,291
Sisters Providence Health System, Series A, 6.50%, 11/15/08 1,000,000 1,045,770
Sisters Providence Health System, Series A, 6.625%, 11/15/22 12,050,000 12,794,208
Massachusetts State HFA, HDA, Series D, FGIC Insured, 6.875%, 11/15/21 5,250,000 5,666,115
Massachusetts State HFA, Housing Projects, Refunding, Series A,
6.30%, 10/01/13 25,635,000 27,072,611
6.375%, 4/01/21 24,750,000 26,220,893
Massachusetts State HFA Revenue, SF, Series 41,
6.30%, 12/01/14 $ 6,250,000 $ 6,656,188
6.35%, 6/01/17 5,750,000 6,092,068
Massachusetts State HFA Revenue, SFMR, Series G, 8.10%, 12/01/14 2,410,000 2,491,940
Massachusetts State Housing Facilities Authority, FGIC Insured,
Series C, 6.90%, 11/15/21 9,715,000 10,642,977
Series D, 6.80%, 11/15/12 250,000 271,705
Massachusetts State Industrial Finance Agency, First Mortgage Revenue,
Brookhaven at Lexington Retirement
Project, Pre-Refunded, 10.25%, 1/01/18 6,000,000 6,237,540
Massachusetts State Industrial Finance Agency, Health Care Facilities Revenue,
Jewish Geriatric Services, Inc., Series B,
5.375%, 5/15/17 1,965,000 1,935,780
5.50%, 5/15/27 5,000,000 4,928,050
Massachusetts State Industrial Finance Agency Revenue, D. Youville Senior Care,
5.65%, 10/01/17 2,295,000 2,294,839
5.70%, 10/01/27 7,375,000 7,374,484
Massachusetts State Port Authority Revenue, Special Facilities, Bosfuel
Project, MBIA Insured, 5.75%, 7/01/39 11,750,000 11,928,483
Plymouth County COP, Series A,
7.00%, 4/01/12 10,000,000 11,076,800
7.00%, 4/01/22 5,000,000 5,513,050
---------
196,208,073
---------
MICHIGAN 1.4%
Battle Creek Tax Increment Finance Authority, 7.40%, 5/01/16 2,000,000 2,322,460
Belding Area Schools, Refunding, FGIC Insured, 6.10%, 5/01/26 3,805,000 4,075,726
Climax-Scotts Community Schools, 6.35%, 5/01/23 2,445,000 2,634,610
Detroit GO,
Refunding, Series B, 6.375%, 4/01/06 7,265,000 7,936,286
Refunding, Series B, 6.25%, 4/01/09 625,000 668,350
Series A, 6.70%, 4/01/10 4,550,000 5,019,469
Detroit GO, Self-Insurance, Series A, 5.70%, 5/01/02 2,250,000 2,329,043
Detroit GO, Unlimited Tax, Series A, Pre-Refunded, 7.875%, 4/01/08 4,960,000 5,139,899
Detroit Sewage Disposal Revenue, Series A, MBIA Insured, 5.50%, 7/01/20 29,200,000 29,473,020
Kalamazoo EDC Revenue, Refunding, Limited Obligation,
Friendship Village, Series A, 6.25%, 5/15/27 2,000,000 2,034,460
Michigan State Building Authority Revenue, Series II, 6.25%, 10/01/20 15,650,000 16,483,519
Michigan State HDA,
Limited Obligation Revenue, Fraser Woods Project, FSA Insured, 6.625%, 9/15/19 2,500,000 2,675,925
Rental Housing Revenue, Refunding, Series A, 6.60%, 4/01/12 5,000,000 5,279,800
Michigan State HFA, SFMR, Series A,
6.45%, 12/01/14 2,000,000 2,131,180
6.875%, 6/01/23 2,870,000 3,053,049
Michigan State Hospital Finance Authority Revenue, Presbyterian Villages Obligation Group,
5.30%, 1/01/99 200,000 201,476
5.40%, 1/01/00 310,000 313,934
5.70%, 1/01/01 310,000 315,605
5.80%, 1/01/02 355,000 363,240
5.90%, 1/01/03 325,000 334,851
Michigan State Hospital Finance Authority Revenue,
Presbyterian Villages Obligation Group, (cont.)
6.00%, 1/01/04 $ 390,000 $ 403,732
6.375%, 1/01/15 275,000 280,803
6.40%, 1/01/15 1,000,000 1,047,810
6.50%, 1/01/25 3,500,000 3,666,530
---------
98,184,777
---------
MINNESOTA 1.9%
Cloquet PCR, Refunding, Potlach Corp. Projects, 5.90%, 10/01/26 9,100,000 9,417,590
Dakota County Housing, RDA, Limited Annual Appropriation Tax and Revenue,
Development Housing Facilities Project,
7.25%, 1/01/98 555,000 555,966
7.25%, 1/01/99 600,000 607,380
7.25%, 1/01/00 645,000 658,132
7.25%, 1/01/01 695,000 713,146
7.50%, 1/01/06 3,930,000 4,076,746
8.00%, 1/01/07 2,300,000 2,376,820
Minneapolis CDA, Supported Commercial Development Revenue, Refunding,
Limited Tax, Series 1987-3, 8.625%, 12/01/27 2,500,000 2,558,275
Series 1987-1, 8.625%, 12/01/12 1,000,000 1,022,170
Minneapolis CDA and St. Paul Housing RDA, Homeownership Mortgage Revenue,
Joint Housing Program, FGIC Insured, 9.875%, 12/01/15 5,000 5,004
Minnesota Agricultural and Economic Development Board Revenue,
Refunding, Health Care System, Fairview
Hospital, Series A, MBIA Insured, 5.75%, 11/15/26 25,810,000 26,670,247
Minnesota State HFA, SFM, Series D-1,
6.45%, 7/01/11 3,580,000 3,824,657
6.50%, 1/01/17 1,420,000 1,508,935
Minnetonka MFR, Rental Housing, Ridgepointe Housing Project, Phase II, 8.00%, 5/15/22 11,230,000 11,481,889
Red Wing Housing, RDA, Jordan Tower II Project, 7.00%, 1/01/19 1,500,000 1,594,275
Roseville MFR, Rental Housing, Rosepointe No. 1 Project, 8.00%, 10/01/18 13,785,000 14,101,641
Southern Minnesota Municipal Power Agency, Supply System Revenue, Series A,
Pre-Refunded, 8.125%, 1/01/18 9,750,000 10,008,960
St. Louis Park EDA, Tax Increment Revenue, Refunding, FGIC Insured,
Pre-Refunded, 8.40%, 9/01/09 6,000,000 6,983,100
St. Paul Port Authority,
Energy Park, Tax Increment Revenue, Refunding, Pre-Refunded, 8.00%, 12/01/07 3,730,000 3,964,542
IDR, Bandana Square, Series C, 7.70%, 12/01/00 230,000 228,105
IDR, Bandana Square, Series C, 7.70%, 12/01/01 255,000 251,695
IDR, Bandana Square, Series C, 7.70%, 12/01/02 270,000 267,389
IDR, Bandana Square, Series C, 7.70%, 12/01/07 1,690,000 1,478,513
IDR, Bandana Square, Series C, 7.80%, 12/01/12 3,465,000 2,896,186
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/98 445,000 444,604
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/99 480,000 479,194
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/00 515,000 513,754
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/01 550,000 548,295
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/02 595,000 592,775
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/03 640,000 637,229
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/04 685,000 681,657
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/05 740,000 741,228
St. Paul Port Authority, (cont.)
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/06 $ 795,000 $ 796,447
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/07 855,000 856,676
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/08 915,000 916,922
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/09 670,000 671,494
IDR, Refunding, Common Bond Fund, Series C, Fort Road Medical Center, 7.95%, 9/01/01 140,000 138,061
IDR, Refunding, Common Bond Fund, Series C, Fort Road Medical Center, 7.95%, 9/01/02 155,000 153,345
IDR, Refunding, Common Bond Fund, Series C, Fort Road Medical Center, 7.95%, 9/01/10 1,705,000 1,463,862
IDR, Refunding, Common Bond Fund, Series F, Ideal Security Hardware Corp., 8.00%, 12/01/01 105,000 103,611
IDR, Refunding, Common Bond Fund, Series F, Ideal Security Hardware Corp., 8.00%, 12/01/02 115,000 113,848
IDR, Refunding, Common Bond Fund, Series F, Ideal Security Hardware Corp., 8.00%, 12/01/12 1,790,000 1,523,845
Washington County Housing RDA,
Housing Development Revenue, Orleans Apartments, Project A, 8.25%, 7/01/21 3,000,000 3,052,500
Housing Development Revenue, Raymie Johnson Apartments, Pre-Refunded, 7.70%, 12/01/19 5,210,000 5,973,734
Pooled Housing and Redevelopment, 7.20%, 1/01/22 10,000,000 10,690,100
----------
138,344,544
---------
MISSISSIPPI .7%
Claiborne County PCR, Refunding, Systems Energy Resources, Inc.,
7.30%, 5/01/25 5,700,000 6,055,680
6.20%, 2/01/26 36,500,000 37,229,635
Mississippi Home Corp., SFR, Refunding, Senior Series A, FGIC Insured, 9.25%, 3/01/12 1,610,000 1,736,063
Mississippi State Educational Facilities Authority Revenue,
Private Nonprofit Institutions of Higher Learning,
Tougaloo College Project, Series A, 6.50%, 6/01/18 2,390,000 2,451,495
---------
47,472,873
---------
MISSOURI .7%
Hazelwood IDA, MFHR, Refunding, Lakes Apartments Project, Series A, 6.10%, 9/20/26 3,000,000 3,168,270
Kansas City School District Building Corp., Leasehold Revenue, Capital Improvement Project,
Series A, FGIC Insured,
Pre-Refunded, 7.90%, 2/01/08 10,000,000 10,297,100
Missouri State Health and Educational Facilities Authority Revenue,
Series B, MBIA Insured, 6.25%, 2/15/12 5,000,000 5,382,750
Sisters of St. Mary's Health Care Project, BIG Insured, Pre-Refunded, 7.75%, 6/01/16 3,750,000 3,909,563
Moberly IDA, Hospital Revenue, Refunding, Moberly Regional Medical Center, Inc. Project,
8.625%, 3/01/02 3,530,000 3,660,328
Pre-Refunded, 8.75%, 3/01/16 8,955,000 9,318,573
Newton County IDA, Hospital Revenue, Refunding, Sale Hospital, Inc. Project, Pre-Refunded, 9.00%,
1/01/05 4,315,000 4,426,154
St. Louis Parking Facilities Revenue, Pre-Refunded, 6.625%, 12/15/21 6,000,000 6,744,900
West Plains IDA, Hospital Revenue, Ozarks Medical Center Project, Series A, 8.625%, 9/15/20 3,550,000 3,908,337
---------
50,815,975
---------
MONTANA .7%
Forsyth County PCR,
Puget Sound Power and Light Co. Project, AMBAC Insured, 6.80%, 3/01/22 10,000,000 10,897,400
Refunding, The Montana Power Co. Colstrip Project, Series A, 6.125%, 5/01/23 3,250,000 3,369,243
Refunding, The Montana Power Co., Series B, AMBAC Insured, 5.90%, 12/01/23 4,225,000 4,434,771
Refunding, The Montana Power Co., Series B, MBIA Insured, 5.90%, 12/01/23 20,385,000 21,397,115
Montana State Health Facilities Authority Revenue, Montana Developmental Center
Project, 6.40%, 6/01/19 2,000,000 2,147,860
Montana State Housing Board, Refunding, SF Program,
Series A, 6.50%, 12/01/22 $ 2,835,000 $ 2,977,090
Series B-1, 6.25%, 12/01/21 6,720,000 7,084,157
---------
52,307,636
---------
NEBRASKA .1%
Nebraska Investment Financial Authority, 7.00%, 11/01/09 5,885,000 6,017,295
---------
NEVADA 3.2%
Churchill County Health Care Facilities Revenue, Western Health Network, Series A, MBIA
Insured, 6.25%, 1/01/14 2,000,000 2,149,360
Clark County Airport System Improvement Revenue, 8.25%, 7/01/15 17,500,000 18,292,575
Clark County HFC, MFHR, FHA Insured, 7.75%, 7/01/23 5,085,000 5,288,654
Clark County IDR,
Refunding, Nevada Power Co. Project, Series C, 7.20%, 10/01/22 12,500,000 13,803,750
Southwest Gas Corp., Series A, 7.30%, 9/01/27 18,080,000 20,018,718
Southwest Gas Corp., Series A, 6.50%, 12/01/33 10,000,000 10,744,900
Southwest Gas Corp., Series B, 7.50%, 9/01/32 62,470,000 69,412,291
Humboldt County PCR, Refunding, Sierra Pacific Power Co., Series A, AMBAC Insured,
6.30%, 7/01/22 4,500,000 4,757,490
Nevada Housing Division, Multi-Unit Housing Revenue, Issue B, 6.55%, 10/01/25 5,405,000 5,799,457
Nevada Housing Division, Refunding, Issue C-2, 6.75%, 10/01/26 8,190,000 8,757,403
Nevada Housing Division, SF Program,
Issue A, FI/GML, 8.30%, 10/01/19 3,260,000 3,547,304
Issue A-2, FI/GML, 8.375%, 10/01/19 2,965,000 3,241,605
Refunding, Program A-1, 6.25%, 10/01/26 3,900,000 4,099,836
Nevada State Colorado River, Series 1994, Pre-Refunded, 6.50%, 7/01/24 15,915,000 17,894,030
Nevada State Municipal Bond Bank Project No. 40-41-A, ETM, 6.375%, 12/01/17 10,275,000 11,339,490
Reno RDA, Tax Allocation,
Downtown Redevelopment Project, Series C, Pre-Refunded, 7.75%, 9/01/05 2,695,000 2,990,992
Downtown Redevelopment Project, Series D, 7.625%, 9/01/16 4,255,000 4,636,844
Downtown Redevelopment Project, Series D, Pre-Refunded, 7.625%, 9/01/16 4,035,000 4,537,156
Refunding, Series A, 6.20%, 6/01/18 3,000,000 3,068,550
Washoe County Gas and Water Facilities Revenue, Refunding, AMBAC Insured, 6.30%, 12/01/14 5,000,000 5,374,150
Washoe County Hospital Facility Revenue, Washoe Medical Center, Inc. Project,
Series A, AMBAC Insured, 6.25%, 6/01/13 9,295,000 10,083,867
----------
229,838,422
---------
NEW HAMPSHIRE 1.7%
Nashua Housing Authority, MFR, Refunding, Clocktower Project, FGIC Insured, 6.25%, 6/20/33 6,198,000 6,452,242
New Hampshire Higher Education and Health Facilities Authority Revenue,
Kendal at Hanover Project, Pre-Refunded, 8.00%, 10/01/19 9,410,000 10,249,748
New Hampshire Catholic Charities, 5.80%, 8/01/22 1,000,000 988,240
St. Joseph Hospital, 7.50%, 1/01/16 2,300,000 2,487,519
The Hitchcock Clinic, MBIA Insured, 6.00%, 7/01/27 4,275,000 4,467,974
New Hampshire State HFA,
MFHR, Series 1, 7.10%, 1/01/14 4,920,000 5,212,297
SF Residential, Series A, 8.50%, 7/01/14 3,515,000 3,653,526
SFMR, Series E, 6.75%, 7/01/19 6,730,000 7,266,987
SFMR, Series E, 6.80%, 7/01/25 5,040,000 5,441,335
New Hampshire State IDA,
Pollution Control Public Service Co., Project A, 7.65%, 5/01/21 $ 6,870,000 $ 7,286,940
Pollution Control Public Service Co., Project B, 7.50%, 5/01/21 50,690,000 53,694,903
Pollution Control Public Service Co., Project C, 7.65%, 5/01/21 7,450,000 7,902,141
Resource Recovery Revenue, SES Concord Co. Project, 8.15%, 1/01/00 1,820,000 1,864,881
Resource Recovery Revenue, SES Concord Co. Project, 8.50%, 1/01/09 5,000,000 5,125,000
---------
122,093,733
---------
NEW JERSEY .2%
Mercer County Improvement Authority, Refunding, Solid Waste, 5.75%, 9/15/16 2,500,000 2,604,650
New Jersey Health Care Facilities, Financing Authority Revenue,
Cathedral Health Service, 7.25%, 2/15/21 3,975,000 4,324,641
Community Memorial Hospital Association, Series C, 8.00%, 7/01/14 900,000 938,718
Zurbrugg Memorial Hospital Issue, Series C, 8.50%, 7/01/12 4,150,000 4,254,082
---------
12,122,091
---------
NEW MEXICO .9%
Farmington PCR, Refunding, Public Service Co. of New Mexico, Series A, AMBAC Insured,
6.375%, 12/15/22 10,435,000 11,148,650
Lordsburg PCR, Refunding, Phelps Dodge Corp. Project, 6.50%, 4/01/13 17,000,000 18,336,540
New Mexico State Mortgage Financial Authority, SFM, Refunding, Series A, 6.85%, 7/01/10 15,320,000 16,324,073
University of New Mexico Revenue, Series 1989, Pre-Refunded, 7.90%, 6/01/19 17,000,000 18,292,000
----------
64,101,263
---------
NEW YORK 15.1%
Metropolitan Transportation Authority Revenue,
Commuter Facilities, Series A, FGIC Insured, 6.00%, 7/01/16 8,950,000 9,612,748
Commuter Facilities, Series A, FGIC Insured, 6.00%, 7/01/21 9,225,000 9,798,887
Commuter Facilities, Series A, FGIC Insured, 6.10%, 7/01/26 11,050,000 11,845,490
Refunding, Transit Facilities, Series M, 6.00%, 7/01/14 18,210,000 18,611,348
Service Contract, Transit Facilities, Series 6, 7.00%, 7/01/09 3,000,000 3,259,560
Transit Facilities, Series A, FSA Insured, 6.00%, 7/01/16 3,630,000 3,880,289
Transit Facilities, Series A, FSA Insured, 6.10%, 7/01/21 6,260,000 6,705,336
Transit Facilities, Series C-1, 5.625%, 7/01/27 10,800,000 10,821,924
New Rochelle IDA, Civic Facilities Revenue, College of New Rochelle Project,
6.625%, 7/01/12 1,245,000 1,311,433
New York City GO,
Refunding, Series A, 6.25%, 8/01/16 5,000,000 5,229,050
Refunding, Series B, 6.20%, 8/15/06 1,500,000 1,639,080
Refunding, Series B, 6.30%, 8/15/08 26,875,000 29,067,194
Refunding, Series B, 6.375%, 8/15/10 21,740,000 23,399,414
Refunding, Series E, 5.75%, 2/15/09 8,500,000 8,843,230
Refunding, Series F, 6.00%, 8/01/13 14,000,000 14,653,100
Refunding, Series H, 6.25%, 8/01/15 13,035,000 13,870,413
Refunding, Series H, 6.125%, 8/01/25 65,785,000 68,662,436
Refunding, Series H, Sub-Series H-1, 6.125%, 8/01/11 5,000,000 5,277,600
Refunding, Series J, 6.00%, 8/01/21 28,260,000 29,269,165
Series A, 6.125%, 8/01/06 14,500,000 15,742,940
Series A, 6.20%, 8/01/07 21,810,000 23,511,180
Series A, 6.25%, 8/01/08 4,390,000 4,716,133
New York City GO, (cont.)
Series A, 7.75%, 8/15/14 $ 245,000 $ 273,917
Series A, 7.75%, 8/15/17 105,000 117,007
Series A, 8.00%, 8/15/20 5,000 5,605
Series A, 8.00%, 8/15/21 15,000 16,816
Series A, Pre-Refunded, 8.00%, 3/15/12 1,000,000 1,101,420
Series A, Pre-Refunded, 8.00%, 3/15/13 1,850,000 2,037,627
Series A, Pre-Refunded, 7.75%, 8/15/13 4,810,000 5,473,048
Series A, Pre-Refunded, 8.00%, 3/15/14 13,400,000 14,759,028
Series A, Pre-Refunded, 8.00%, 3/15/15 1,115,000 1,228,083
Series A, Pre-Refunded, 8.00%, 3/15/16 3,000,000 3,304,260
Series A, Pre-Refunded, 7.75%, 8/15/17 3,180,000 3,619,412
Series B, 8.00%, 6/01/98 15,000 15,354
Series B, 8.25%, 6/01/02 205,000 232,283
Series B, 7.50%, 2/01/04 10,000,000 11,154,200
Series B, 8.25%, 6/01/05 1,000,000 1,216,110
Series B, 7.50%, 10/01/11 190,000 203,735
Series B, 7.50%, 10/01/12 630,000 675,543
Series B, 6.75%, 10/01/15 9,300,000 10,185,732
Series B, 6.75%, 10/01/17 1,300,000 1,382,160
Series B, 7.00%, 2/01/19 15,000,000 16,362,150
Series B, 6.00%, 8/15/26 2,000,000 2,062,240
Series B, ETM, 8.00%, 6/01/98 1,420,000 1,454,350
Series B, ETM, 8.00%, 6/01/01 3,000,000 3,381,780
Series B, Pre-Refunded, 8.25%, 6/01/02 4,295,000 4,932,550
Series B, Pre-Refunded, 7.50%, 10/01/11 6,810,000 7,340,090
Series B, Pre-Refunded, 7.50%, 10/01/12 10,355,000 11,161,033
Series B, Pre-Refunded, 8.00%, 3/15/17 11,660,000 12,842,557
Series B, Sub-Series B-1, 7.00%, 8/15/16 2,600,000 2,910,986
Series B, Sub-Series B-1, Pre-Refunded, 7.00%, 8/15/16 400,000 463,832
Series B-1, Pre-Refunded, 7.30%, 8/15/11 8,000,000 9,195,781
Series C, 7.25%, 8/15/24 3,540,000 3,846,210
Series C, Pre-Refunded, 7.25%, 8/15/24 1,305,000 1,445,953
Series C, Sub-Series C-1, 7.00%, 8/01/17 1,860,000 2,047,879
Series C, Sub-Series C-1, 7.00%, 8/01/18 14,545,000 16,436,286
Series C, Sub-Series C-1, Pre-Refunded, 7.00%, 8/01/17 70,000 79,102
Series C, Sub-Series C-1, Pre-Refunded, 7.00%, 8/01/18 5,455,000 5,993,845
Series D, 8.00%, 8/01/99 1,760,000 1,876,635
Series D, 7.30%, 2/01/01 5,000,000 5,439,050
Series D, 8.25%, 8/01/13 145,000 164,433
Series D, 8.25%, 8/01/14 85,000 96,392
Series D, 7.625%, 2/01/15 700,000 782,971
Series D, 8.00%, 8/01/16 50,000 56,186
Series D, 7.50%, 2/01/17 865,000 963,428
Series D, 8.00%, 8/01/17 100,000 112,554
Series D, 8.00%, 8/01/18 50,000 56,186
Series D, 8.00%, 8/01/19 30,000 33,602
Series D, 6.00%, 2/15/25 $31,300,000 $ 32,170,140
Series D, ETM, 8.00%, 8/01/99 240,000 255,823
Series D, Group B, 8.25%, 8/01/11 160,000 181,443
Series D, Group B, 8.25%, 8/01/12 245,000 277,835
Series D, Pre-Refunded, 8.25%, 8/01/12 10,880,000 12,557,261
Series D, Pre-Refunded, 8.25%, 8/01/13 7,605,000 8,777,387
Series D, Pre-Refunded, 8.25%, 8/01/14 4,255,000 4,902,909
Series D, Pre-Refunded, 7.625%, 2/01/15 8,300,000 9,486,485
Series D, Pre-Refunded, 7.50%, 2/01/16 5,000,000 5,684,490
Series D, Pre-Refunded, 7.50%, 2/01/17 11,135,000 12,673,189
Series E, 6.50%, 12/01/12 2,610,000 2,650,820
Series E, 6.00%, 8/01/26 3,000,000 3,093,090
Series F, 8.20%, 11/15/04 835,000 953,787
Series F, 6.50%, 2/15/07 8,050,000 8,829,321
Series F, 6.50%, 2/15/08 7,540,000 8,217,017
Series F, 6.60%, 2/15/10 16,000,000 17,380,480
Series F, 8.25%, 11/15/15 160,000 182,483
Series F, 8.25%, 11/15/17 200,000 228,498
Series F, Pre-Refunded, 8.20%, 11/15/04 4,500,000 5,230,350
Series F, Pre-Refunded, 8.25%, 11/15/15 1,840,000 2,142,018
Series F, Pre-Refunded, 8.25%, 11/15/17 2,300,000 2,677,522
Series G, 6.00%, 10/15/26 15,335,000 15,849,796
Series H, 7.10%, 2/01/12 330,000 363,079
Series H, 7.20%, 2/01/14 1,040,000 1,148,618
Series H, 7.00%, 2/01/16 1,455,000 1,589,471
Series H, Pre-Refunded, 7.10%, 2/01/12 2,670,000 2,992,269
Series H, Pre-Refunded, 7.20%, 2/01/14 8,960,000 10,057,331
Series H, Pre-Refunded, 7.00%, 2/01/16 2,545,000 2,842,434
Series H, Sub-Series H-1, 6.125%, 8/01/09 11,750,000 12,491,660
Series I, 6.25%, 4/15/13 36,610,000 39,052,253
Series I, 6.25%, 4/15/27 7,000,000 7,413,700
New York City Health and Hospital Authority Local Government Revenue, Series A,
6.00%, 2/15/07 5,010,000 5,246,723
6.30%, 2/15/20 18,235,000 19,009,440
New York City Municipal Water Finance Authority, Water and Sewer System Revenue,
Series A, 7.10%, 6/15/12 2,455,000 2,691,466
Series A, 7.00%, 6/15/15 4,980,000 5,434,525
Series B, 5.875%, 6/15/26 6,500,000 6,733,610
Series B, 5.75%, 6/15/29 15,000,000 15,357,900
Series B, MBIA Insured, 5.75%, 6/15/26 3,000,000 3,095,880
Series B, Pre-Refunded, 7.00%, 6/15/19 2,965,000 3,067,263
New York City Transitional Financing Authority Revenue,
Secured Future Tax, Series A, 5.125%, 8/15/21 5,000,000 4,882,050
New York State Dormitory Authority Revenue,
City University General Resources, Series 2, MBIA Insured, 6.25%, 7/01/19 4,000,000 4,242,640
City University System, Third Generation Resources, Series 2, 6.00%, 7/01/20 16,860,000 17,407,781
Mental Health Services Facilities, Series A, 6.00%, 8/15/17 18,000,000 18,716,400
New York State Dormitory Authority Revenue, (cont.)
Mental Health Services Facilities, Series A, 5.75%, 2/15/27 $ 5,000,000 $ 5,069,950
Our Lady Nursing Home, FHA Insured, 5.90%, 8/01/20 6,750,000 7,017,908
Refunding, City University System, Third Generation Resources, Series 2, 6.00%, 7/01/26 19,650,000 20,304,345
Refunding, State University Educational Facilities, Series B, 7.375%, 5/15/14 4,240,000 4,591,114
Refunding, State University Educational Facilities, Series B, 7.00%, 5/15/16 2,000,000 2,140,980
State University Educational Facilities, 6.00%, 5/15/18 5,000,000 5,213,900
New York State Energy Research and Development Authority, Electric Facilities Revenue,
Consolidated Edison Co., Inc., Project B, 9.25%, 9/15/22 5,000,000 5,184,750
Long Island Light, Series A, 7.15%, 6/01/20 17,500,000 18,977,175
Long Island Light, Series A, 7.15%, 2/01/22 1,500,000 1,626,615
Refunding, Consolidated Edison Co., Inc., Series A, 6.10%, 8/15/20 8,500,000 9,016,120
New York State HFA, Refunding, Health Facilities, New York City, Series A, 5.90%, 5/01/05 14,070,000 14,798,967
New York State HFA, Refunding, Housing Project Mortgage, Series A, FSA Insured,
6.10%, 11/01/15 5,550,000 5,830,719
6.125%, 11/01/20 4,250,000 4,456,083
New York State HFA, Service Contract Revenue,
Refunding, Series C, 5.875%, 9/15/14 4,675,000 4,788,275
Refunding, Series C, 6.125%, 3/15/20 25,500,000 26,290,755
Series A, 6.375%, 9/15/14 3,155,000 3,382,886
Series A, 6.375%, 9/15/16 3,785,000 4,017,210
Series A, 6.50%, 3/15/25 10,000,000 10,713,100
New York State Local Government Assistance Corp., Series A, 6.50%, 4/01/20 6,000,000 6,406,980
New York State Medical Care Facilities, Financial Agency Revenue,
Hospital and Nursing Home, FSA Mortgage Insured, 6.50%, 2/15/34 7,065,000 7,558,066
Hospital Mortgage, Series A, AMBAC Insured, 6.50%, 8/15/29 7,600,000 8,403,548
Refunding, Hospital and Nursing Home, FSA Mortgage Insured, 6.40%, 8/15/14 10,930,000 11,922,881
The Hospital for Special Surgery, Series A, 6.375%, 8/15/24 12,500,000 13,460,500
New York State Tollway Authority, Service Contract Revenue, Local Highway and Bridge,
6.25%, 4/01/14 11,600,000 12,407,244
5.75%, 4/01/16 13,200,000 13,510,464
New York State Urban Development Corp., Correctional Capital Facilities, Series 5, 6.10%, 1/01/12 7,685,000 8,057,569
New York State Urban Development Corp. Revenue, Youth Facilities, 6.00%, 4/01/17 11,720,000 12,200,754
Warren and Washington Counties IDA Revenue, Refunding,
Adirondack Resource Recovery Project, Series A, 7.90%, 12/15/07 4,800,000 4,980,528
---------
1,078,835,374
---------
NORTH CAROLINA 2.9%
Charlotte-Mecklenberg Hospital Authority, Health Care System Revenue, Series A,
5.90%, 1/15/16 9,900,000 10,394,109
5.875%, 1/15/26 5,000,000 5,160,100
North Carolina Eastern Municipal Power Agency, Power System Revenue,
Refunding, Series A, 6.50%, 1/01/17 25,700,000 26,738,794
Refunding, Series A, 6.50%, 1/01/24 3,250,000 3,275,448
Refunding, Series A, Pre-Refunded, 8.00%, 1/01/21 20,000,000 20,527,400
Refunding, Series B, 6.25%, 1/01/12 6,875,000 7,089,913
Refunding, Series B, 6.00%, 1/01/22 1,250,000 1,310,550
North Carolina Eastern Municipal Power Agency, Power System Revenue, (cont.)
Refunding, Series B, 6.25%, 1/01/23 $39,030,000 $ 42,260,903
Refunding, Series B, FGIC Insured, 6.25%, 1/01/23 4,000,000 4,301,600
Refunding, Series B, MBIA Insured, 5.80%, 1/01/16 11,175,000 11,611,496
Refunding, Series B, MBIA Insured, 5.875%, 1/01/21 13,325,000 13,826,420
Series B, 6.00%, 1/01/05 1,355,000 1,428,888
Series D, 5.875%, 1/01/13 7,440,000 7,510,606
Series G, 5.75%, 12/01/16 14,420,000 14,402,696
North Carolina Municipal Power Agency No. 1, Catawba Electric Revenue, Refunding,
5.75%, 1/01/15 12,435,000 12,439,352
Series 1982, 6.25%, 1/01/17 15,620,000 16,473,789
Wake County IPC, Financing Authority Revenue, Carolina Power and Light, 6.90%, 4/01/09 5,000,000 5,361,450
---------
204,113,514
---------
NORTH DAKOTA .4%
Dickinson Health Care Facilities Revenue, BHS Long-Term Care, Inc., 7.625%, 2/15/20 7,750,000 8,220,348
Ellendale MFHR, Ellendale Manor Apartments Project, 9.75%, 7/01/16 310,000 313,032
Mercer County PCR, Basin Power Corp.,
Second Series, AMBAC Insured, 6.05%, 1/01/19 9,130,000 9,716,237
Series E, 7.00%, 1/01/19 11,675,000 12,296,344
Wahpeton MFHR, Evergreen Apartments Project, 9.75%, 7/01/16 757,000 764,358
-------
31,310,319
---------
OHIO 1.1%
Dayton Special Facilities Revenue, Refunding, Emery Air Freight Corp., Emery Worldwide Air, Inc.,
Series E, 6.05%, 10/01/09 4,000,000 4,271,600
Series F, 6.05%, 10/01/09 2,750,000 2,936,725
Franklin County Hospital Facility Mortgage Revenue, Refunding,
Presbyterian Retirement Services, Series A, 9.00%, 7/01/10 6,740,000 6,975,159
Franklin County Nursing Home, First Mortgage Revenue, Volunteers of America
Care Facilities Project, 8.75%, 11/01/18 2,775,000 2,889,719
Montgomery County Health Systems Revenue, Franciscan Facility, Series B-2,
8.10%, 7/01/01 1,800,000 1,924,020
8.10%, 7/01/18 12,000,000 14,256,120
Ohio HFA, Residential Mortgage Revenue, Series C, 5.75%, 9/01/28 7,760,000 7,858,940
Ohio State Air Quality Development Authority Revenue,
Refunding, Dayton Power and Light Co. Project, 6.10%, 9/01/30 12,000,000 12,707,760
Toledo Edison, Series B, 8.00%, 5/15/19 6,325,000 6,825,371
Ohio State EDR, Good Samaritan Medical Center, Series 1990-3, 7.875%, 12/01/10 1,585,000 1,687,137
Ohio State Water Development Authority Revenue, Refunding,
Dayton Power, Series A, 6.40%, 8/15/27 3,250,000 3,506,685
Ohio State Water Development Facilities Authority, PCR, Toledo Edison,
Series A, 8.00%, 5/15/19 10,000,000 10,766,400
----------
76,605,636
---------
OKLAHOMA 1.3%
Canadian County HFA, SFMR, Series A,
7.70%, 9/01/05 1,575,000 1,653,246
7.80%, 9/01/12 3,290,000 3,461,837
Oklahoma State Turnpike System Authority, First Senior Revenue,
Pre-Refunded, 7.875%, 1/01/21 19,700,000 20,934,776
Stillwater Medical Center Authority Revenue,
Series A, 6.10%, 5/15/09 $ 3,440,000 $ 3,566,798
Series B, 6.35%, 5/15/12 1,235,000 1,296,787
Series B, 6.50%, 5/15/19 3,390,000 3,602,045
Tulsa County Home Financial Authority, Mortgage Revenue, Series D,
GNMA Insured, 6.95%, 12/01/22 530,000 561,201
Tulsa County Municipal Airport Revenue,
American Airlines-AMR Corp., 7.35%, 12/01/11 4,000,000 4,461,440
American Airlines, Inc. Project, 6.25%, 6/01/20 18,530,000 19,524,320
American Airlines, Inc. Project, 7.375%, 12/01/20 11,000,000 12,006,280
Tulsa County Parking Authority, Series B,
6.90%, 12/01/07 3,000,000 3,319,080
7.00%, 12/01/14 5,500,000 5,982,350
Tulsa County Public Facilities Authority, Recreation Facility Revenue, Pre-Refunded,
8.875%, 2/01/03 2,000,000 2,063,500
9.00%, 2/01/08 2,000,000 2,064,080
Tulsa Housing Assistance Corp. Revenue, First Lien, Refunding, 6.80%, 7/01/11 2,740,000 2,911,716
Tulsa Industrial Authority, Hospital Revenue, St. John Medical
Center Project, Series A, 6.25%, 2/15/14 2,000,000 2,138,220
Valley View Hospital Authority Revenue, Refunding, Valley View
Regional Medical Center, 6.00%, 8/15/14 4,000,000 4,072,640
---------
93,620,316
---------
OREGON .2%
Oregon State Department of Administrative Services COP,
Series A, AMBAC Insured, 5.80%, 5/01/24 5,000,000 5,240,150
Oregon State EDR, Georgia Pacific Corp., Series CLVII, 6.35%, 8/01/25 5,500,000 5,753,880
---------
10,994,030
---------
PENNSYLVANIA 3.4%
Allegheny County Hospital Development Authority Revenue, Refunding,
University of Pittsburgh Health Center,
Series A, MBIA Insured, 5.625%, 4/01/27 6,550,000 6,629,321
Allegheny County IDA Revenue, Environmental Improvement, 6.70%, 12/01/20 5,250,000 5,672,783
Beaver County IDA, PCR, Ohio Edison Co., Beaver Valley Project, Series A, 7.75%, 9/01/24 14,250,000 15,093,458
Cambria County HDA, Hospital Revenue, Conemaugh Valley Memorial Hospital, Refunding, Series B,
6.30%, 7/01/08 9,600,000 10,376,832
6.375%, 7/01/18 10,740,000 11,378,171
Pre-Refunded, 8.875%, 7/01/18 3,000,000 3,155,910
Delaware County IDA Revenue, Refunding, Philadelphia Electric, Series 1991, 7.375%, 4/01/21 6,500,000 7,089,485
Delaware River Port Authority Revenue, Pennsylvania and New Jersey, Series 1995, FGIC Insured,
5.50%, 1/01/26 5,000,000 5,065,600
Delaware Valley Regional Finance Authority, Local Government Revenue,
Series B, AMBAC Insured, 5.60%, 7/01/17 5,000,000 5,262,950
Lancaster County Solid Waste Management Authority,
Resource Recovery System Revenue, Series A, 8.50%, 12/15/10 22,500,000 23,416,650
Lehigh County IDA, PCR, Refunding, Pennsylvania Power and Light Co. Project,
Series A, MBIA Insured, 6.15%, 8/01/29 4,000,000 4,246,280
Montgomery County Higher Education and Health Authority,
Hospital Revenue, Pre-Refunded, Jeanes Health System Project, 8.75%, 7/01/20 5,500,000 6,220,610
Pennsylvania EDA, Financing Authority Revenue, Macmillan, L.P. Project, 7.60%, 12/01/20 5,000,000 5,762,550
Pennsylvania EDA, Financing Resources Recovery Revenue,
Colver Project, Series D, 7.125%, 12/01/15 13,500,000 14,870,520
Pennsylvania State Financial Authority Revenue, Refunding,
Municipal Capital Improvements Program, 6.60%, 11/01/09 $33,280,000 $ 36,190,669
Pennsylvania State HFA,
Refunding, Rental Housing, FGIC Insured, 6.40%, 7/01/12 10,590,000 11,168,426
SFM, Series 1991, 7.15%, 4/01/15 3,635,000 3,861,642
Pennsylvania State Higher Educational Facilities Authority,
College and University Revenues, Lycoming College,
Pre-Refunded, 8.375%, 10/01/18 2,000,000 2,118,300
Pennsylvania State Pooled Finance Authority, Lease Revenue,
Capital Improvement, Series B, MBIA Insured, 8.00%, 11/01/09 4,445,000 4,662,449
Philadelphia Gas Works Revenue,
Series 13, Pre-Refunded, 7.70%, 6/15/21 2,850,000 3,229,848
Series A, 6.375%, 7/01/26 3,950,000 4,140,588
Philadelphia GO, Refunding, Series A,
11.50%, 8/01/98 1,545,000 1,625,742
11.50%, 8/01/99 2,400,000 2,670,768
11.50%, 8/01/00 1,000,000 1,169,600
Philadelphia Hospital and Higher Education Facilities Authority Revenue,
Albert Einstein Medical Center, 7.50%, 4/01/99 7,635,000 7,905,126
Philadelphia Hospitals and Higher Education Facilities Authority Revenue,
Temple University Hospital, 5.875%, 11/15/23 5,000,000 5,074,850
Philadelphia Housing RDA Revenue, Sub-Series 2-B, 8.625%, 8/01/26 3,840,000 3,883,469
Philadelphia Municipal Authority, Gas Works Lease Revenue, 7.50%, 5/01/01 1,000,000 1,060,250
Philadelphia School District, Series B, AMBAC Insured, 5.375%, 4/01/19 7,000,000 7,002,170
Philadelphia Water and Sewer Revenue, Series 10, ETM, 7.35%, 9/01/04 10,790,000 12,366,851
South Fork Municipal Authority, Hospital Revenue,
Conemaugh Valley Memorial Hospital Project, Series A,
MBIA Insured, 5.75%, 7/01/26 5,000,000 5,127,750
Westmoreland County IDA Revenue, Refunding, Citizens General Hospital Project,
Series A, 8.25%, 7/01/13 3,000,000 3,073,710
---------
240,573,328
---------
PUERTO RICO 1.0%
Puerto Rico Commonwealth Highway and Transportation Authority Revenue, Series Y,
5.00%, 7/01/36 59,000,000 55,637,000
5.50%, 7/01/36 7,000,000 7,089,320
Puerto Rico Commonwealth Urban Renewal and Housing Corp., Refunding, 7.875%, 10/01/04 3,200,000 3,452,480
Puerto Rico Electric Power Authority Revenue, Refunding, Pre-Refunded, Series M, 8.00%, 7/01/08 2,000,000 2,095,420
Puerto Rico Municipal Finance Agency, Series A, Pre-Refunded, 8.25%, 7/01/08 5,000,000 5,244,900
---------
73,519,120
---------
RHODE ISLAND 1.4%
Providence Special Obligation Tax Increment, Series A, 7.65%, 6/01/16 9,900,000 11,078,991
Rhode Island Clean Water Financial Agency Revenue,
Drinking Water Providence, Series A, AMBAC Insured, 6.70%, 1/01/15 2,200,000 2,443,518
Rhode Island Housing and Mortgage Finance Corp., Homeownership Opportunity,
Series 2, 7.75%, 4/01/22 1,895,000 1,993,559
Series 10-A, 6.50%, 10/01/22 20,200,000 21,405,738
Series 10-A, 6.50%, 4/01/27 13,085,000 13,835,163
Series 13, 6.70%, 10/01/15 7,400,000 7,965,878
Rhode Island (cont.)
Rhode Island Housing and Mortgage Finance Corp., Homeownership Opportunity, (cont.)
Series 13, 6.85%, 4/01/27 $ 3,910,000 $ 4,218,812
Series 15-A, 6.85%, 10/01/24 15,000,000 16,240,950
Series 16-A, 6.375%, 10/01/26 2,720,000 2,724,488
Series 17-A, 6.25%, 4/01/17 2,320,000 2,322,645
Rhode Island Port Authority and Economic Development Corp.,
Refunding, Shepard Building Project, Series B,
AMBAC Insured, 6.75%, 6/01/25 3,000,000 3,316,410
Rhode Island State Health and Educational Building Corp. Revenue,
Health Facilities, Tockwotton Home, Pre-Refunded, 7.25%, 4/15/17 3,000,000 3,397,590
Roger William Realty, FHA Insured, 7.50%, 8/01/29 940,000 983,917
St. Antoine Residence, 6.70%, 11/15/12 2,320,000 2,504,533
St. Antoine Residence, 6.75%, 11/15/18 2,750,000 2,960,980
---------
97,393,172
---------
SOUTH CAROLINA 1.8%
Berkeley County School District COP, Berkeley School Facilities Group, Inc., AMBAC Insured,
6.30%, 2/01/16 1,800,000 1,945,332
Charleston County Resource Recovery Revenue, Foster Wheeler, Inc. Project, Series A, 9.25%, 1/01/10 24,000,000 24,894,000
Myrtle Beach COP, Myrtle Beach Convention Center Project, 6.875%, 7/01/17 5,000,000 5,324,300
Piedmont Municipal Power Agency, South Carolina Electric Revenue, Refunding,
6.55%, 1/01/16 18,115,000 18,135,651
6.60%, 1/01/21 25,505,000 25,534,076
6.375%, 1/01/25 5,500,000 5,705,315
Series A, 5.75%, 1/01/24 3,150,000 3,137,054
Series A, AMBAC Insured, 5.75%, 1/01/24 5,050,000 5,050,909
Richland County PCR, Refunding, Union Camp Corp. Project, Series C, 6.55%, 11/01/20 3,000,000 3,244,410
South Carolina State Housing, Finance and Development Authority, Mortgage Revenue,
Series A-2, AMBAC Insured, 5.80%, 7/01/27 6,405,000 6,605,541
South Carolina State Public Service Authority Revenue, Refunding,
Series A, AMBAC Insured, 6.375%, 7/01/21 12,765,000 13,567,153
Series B, Pre-Refunded, 6.00%, 7/01/31 10,000,000 10,603,400
Spartanburg County Health Services District, Inc.,
Hospital Revenue, Series A, MBIA Insured, 5.50%, 4/15/27 3,000,000 3,012,510
---------
126,759,651
---------
SOUTH DAKOTA .4%
Lawrence County PCR, Refunding, Black Hills Power and Light Co. Project, 6.70%, 6/01/10 5,000,000 5,429,550
South Dakota State HDA, Homeownership Mortgage,
Series A, 6.30%, 5/01/17 4,130,000 4,331,214
Series A, 7.15%, 5/01/27 10,580,000 11,184,753
Series B, 7.10%, 5/01/17 3,115,000 3,298,318
Series D, 6.65%, 5/01/14 3,480,000 3,764,664
Series G, 7.125%, 5/01/14 3,435,000 3,766,684
---------
31,775,183
---------
TENNESSEE .8%
Franklin IDB, MFHR, Refunding, Landings Apartment Project, Series A,
FSA Insured, 6.00%, 10/01/26 2,000,000 2,072,760
Gatlinburg COP, Gatlinburg Convention Center, Inc., Pre-Refunded, 9.25%, 12/01/12 6,690,000 6,916,189
Hamilton County IDB, MFHR, Patten Towers Apartments, Series A,
6.125%, 8/01/05 $ 2,515,000 $ 2,607,904
6.30%, 8/01/07 1,000,000 1,041,980
Knox County Health, Educational and Housing Facilities Board, MFHR,
GNMA Secured, East Towne Village Project, 8.20%, 7/01/28 4,770,000 4,976,636
Memphis-Shelby County Airport Authority, Special Facilities
and Project Revenue, Federal Express Corp., 7.875%, 9/01/09 14,690,000 16,528,160
6.75%, 9/01/12 6,520,000 7,114,494
Metropolitan Nashville Airport Authority Revenue, Series C, FGIC Insured, 6.60%, 7/01/15 1,940,000 2,105,986
Mount Pleasant IDR, PCR, Stauffer Chemical Co. Project, 8.00%, 12/01/12 1,990,000 2,193,239
Nashville and Davidson County Revenue, IDB, Refunding & Improvement,
Osco Treatment, Inc., 6.00%, 5/01/03 5,000,000 5,184,000
Tennessee HDA, Homeownership Program,
Series 1992, 6.80%, 7/01/17 2,360,000 2,501,930
Series P, 7.70%, 7/01/16 4,580,000 4,744,651
Tennessee State Local Development Authority Revenue,
Community Provider Pooled Loan Program, 6.45%, 10/01/14 2,275,000 2,433,681
---------
60,421,610
---------
TEXAS 6.7%
Austin Combined Utility System Revenue, Series A, Pre-Refunded, 8.00%, 11/15/16 18,100,000 20,332,997
Austin Utility System Revenue, Refunding, FGIC Insured, 6.25%, 5/15/16 11,310,000 12,207,675
Bexar County Health Facilities Development Corp. Revenue,
Incarnate Word Facility, FSA Insured, 6.00%, 11/15/15 4,500,000 4,749,660
Refunding, Incarnate Word Health Services, FSA Insured, 6.10%, 11/15/23 8,300,000 8,758,326
Bexar County HFC, MFHR, Sunpark Apartments Project, 6.875%, 12/01/12 1,735,000 1,810,420
Bexar Metropolitan Water District, Water Works Systems Revenue,
Refunding, MBIA Insured, 5.875%, 5/01/22 5,000,000 5,208,400
Brazos River Authority, Collateralized, PCR, Texas Utilities Electric Co. Project, Series A,
9.25%, 3/01/18 17,550,000 18,178,290
8.25%, 1/01/19 15,000,000 15,887,100
Dallas-Fort Worth International Airport Facilities, Improvement Corp. Revenue,
American Airlines, Inc., 8.00%, 11/01/24 99,000,000 109,587,060
Refunding, 6.00%, 11/01/14 29,400,000 30,909,984
El Paso HFC, SFMR, Series A, 8.75%, 10/01/11 4,715,000 5,128,034
Grand Prairie Health Facilities Development Corp., Hospital Revenue,
Refunding, Dallas/Ft. Worth Medical Center
Project, AMBAC Insured, 6.875%, 11/01/10 2,700,000 3,064,608
Grand Prairie HFC, SFMR, 10.75%, 9/01/14 980,000 1,010,302
Harris County IDR, Marine Terminal Revenue, Refunding, 6.95%, 2/01/22 20,250,000 22,059,743
Harris County Toll Road Revenue, Multiple Mode, Senior Lien, Pre-Refunded,
Series C, 8.125%, 8/15/17 3,500,000 3,645,355
Series D, 8.25%, 8/15/07 4,000,000 4,251,280
Series D, 8.30%, 8/15/17 5,000,000 5,316,000
Houston Water and Sewer System Revenue, Refunding,
Junior Lien, Series A, MBIA Insured, Pre-Refunded, 6.20%, 12/01/20 22,500,000 25,064,100
Series B, 6.375%, 12/01/14 21,000,000 22,391,040
Joshua ISD, Refunding, Series B, 6.125%, 2/15/26 20,000 20,328
Lubbock HFC, SFMR, Refunding, MBS Program, Series A, GNMA Secured, 6.125%, 12/01/17 1,000,000 1,043,780
Matagorda County Navigation District No. 1, PCR, Collateralized, Refunding,
Central Power and Light Co. Project, MBIA Insured, 6.10%, 7/01/28 $25,300,000 $ 26,271,014
Houston Lighting and Power Co., 6.00%, 7/01/28 19,200,000 20,022,912
Houston Lighting and Power Co., Series A, AMBAC Insured, 6.70%, 3/01/27 5,500,000 5,990,380
Houston Lighting and Power Co., Series B, 7.70%, 2/01/19 40,975,000 42,107,139
Mesquite HFC, SFMR, Series 1983, 10.75%, 9/01/14 1,070,000 1,104,615
Red River Pollution Control Authority, Refunding, West Texas Utilities Co. Project,
MBIA Insured, 6.00%, 6/01/20 5,000,000 5,271,950
Sabine River Authority PCR, Refunding,
Southwestern Electric Power Co., MBIA Insured, 6.10%, 4/01/18 4,000,000 4,246,600
Texas Utilities Electric Co. Project, 6.55%, 10/01/22 7,700,000 8,319,927
San Antonio Electric and Gas Revenue, Refunding, 5.50%, 2/01/20 10,000,000 10,141,400
San Antonio Water Revenue, Refunding, MBIA Insured, 6.50%, 5/15/10 5,000,000 5,450,600
Tarrant County Health Facilities Development Corp., Health Services Revenue,
Texas Health Resources System,
Series A, MBIA Insured, 5.00%, 2/15/26 10,000,000 9,381,300
Texas Housing Agency, Residential Development Mortgage Revenue, Series D,
8.35%, 1/01/08 1,440,000 1,494,230
8.35%, 7/01/08 2,975,000 3,087,039
Texas Housing Agency, SFMR, Series B, 8.20%, 3/01/16 2,295,000 2,347,739
Texas Water Development Board Revenue, State Revolving Fund, 6.00%, 7/15/13 2,500,000 2,627,475
Texas Water Resources Finance Authority Revenue, 7.625%, 8/15/08 2,370,000 2,456,221
Travis County HFC, SFMR, Refunding, Series A, 6.95%, 10/01/27 3,735,000 4,075,296
Tyler Health Facilities Development Corp., Hospital Revenue, Refunding,
East Texas Medical Center Project, Series A,
MBIA Insured, 5.50%, 11/01/17 1,735,000 1,750,147
---------
476,770,466
---------
U.S. TERRITORIES
Virgin Islands HFA Mortgage Revenue, Series B, GNMA Secured,
Pre-Refunded, 8.10%, 12/01/18 690,000 733,725
-------
UTAH 1.6%
Carbon County, Solid Waste Disposal Revenue, Refunding, Laidlaw, Inc. Project,
Series A, 7.50%, 2/01/10 5,050,000 5,694,582
Intermountain Power Agency, Power Supply Revenue,
Refunding, Series A, 6.15%, 7/01/14 25,000,000 26,732,000
Refunding, Series B, 7.75%, 7/01/20 34,805,000 36,318,669
Second Crossover, Series 86-C, 5.75%, 7/01/20 5,500,000 5,501,595
Salt Lake City College Revenue, Westminster College Project,
5.70%, 10/01/17 1,000,000 1,005,580
5.75%, 10/01/27 1,000,000 1,008,070
Utah State HFA, Refunding, Series A, 6.50%, 5/01/19 2,945,000 3,069,662
Utah State HFA, SFM,
Refunding, 6.80%, 1/01/12 1,870,000 1,992,747
Series A, 8.50%, 7/01/19 485,000 527,656
Series B, 6.55%, 7/01/19 3,905,000 4,191,783
Series B, 6.55%, 7/01/26 3,980,000 4,230,541
Series C-1, 6.80%, 7/01/12 320,000 341,005
Series C-1, 8.375%, 7/01/19 2,440,000 2,659,258
Series D, 8.60%, 7/01/19 450,000 502,524
Series E-1, 6.65%, 7/01/20 2,830,000 3,009,394
Series G-1, 8.10%, 7/01/16 1,050,000 1,150,464
Utah State School District Finance, Cooperative Revenue, Financing Pool, Series 1988,
8.375%, 2/15/10 $ 1,435,000 $ 1,476,859
Mandatory Redemption 2/15/98, 8.375%, 2/15/10 1,040,000 1,051,898
Mandatory Redemption 2/15/99, 8.375%, 2/15/10 1,190,000 1,228,151
Mandatory Redemption 2/15/00, 8.375%, 2/15/10 1,195,000 1,232,846
Mandatory Redemption 2/15/01, 8.375%, 2/15/10 1,245,000 1,283,458
Mandatory Redemption 2/15/02, 8.375%, 2/15/10 1,340,000 1,380,347
Mandatory Redemption 2/15/03, 8.375%, 2/15/10 1,420,000 1,461,649
Mandatory Redemption 2/15/04, 8.375%, 2/15/10 1,730,000 1,779,392
Mandatory Redemption 2/15/05, 8.375%, 2/15/10 2,450,000 2,518,061
Mandatory Redemption 2/15/06, 8.375%, 2/15/10 1,030,000 1,058,212
Mandatory Redemption 2/15/07, 8.375%, 2/15/10 1,065,000 1,094,170
Mandatory Redemption 2/15/08, 8.375%, 2/15/10 1,160,000 1,191,772
Mandatory Redemption 2/15/09, 8.375%, 2/15/10 1,210,000 1,243,142
---------
115,935,487
---------
VERMONT .1%
Vermont HFA, SF, Series 5, 7.00%, 11/01/27 9,400,000 10,052,360
----------
VIRGINIA .4%
Danville IDA Revenue, Regional Medical Center, FGIC Insured,
6.50%, 10/01/19 5,885,000 6,397,113
6.50%, 10/01/24 5,840,000 6,344,634
Henrico County IDA, Public Facilities Lease Revenue, Regional Jail Project, 6.00%, 08/01/15 7,250,000 7,600,828
Virginia State HDA, Commonwealth Mortgage,
Series C, Sub-Series C-6, 6.25%, 1/01/15 5,120,000 5,342,157
Series H, Sub-Series H-2, 6.55%, 1/01/17 4,755,000 5,119,899
---------
30,804,631
---------
WASHINGTON 4.1%
Chelan County PUD No. 1, Cheland Hydro Consolidated System Revenue,
Pre-Refunded, 9.30%, 7/01/62 5,000,000 5,141,400
Series A, 5.65%, 7/01/32 5,000,000 5,012,250
Pierce County EDC, Refunding, Solid Waste-Steilacoom Revenue, 6.60%, 8/01/22 32,480,000 34,390,798
Port Moses Lake Public Corp., Washington PCR, Union Carbide Corp.,
7.50%, 8/01/04 2,100,000 2,114,553
7.875%, 8/01/06 1,000,000 1,029,370
SeaTac GO, Series 1994, 6.50%, 12/01/13 2,760,000 3,016,790
Seattle Municipality, Metropolitan Seattle Sewer Revenue,
Refunding, Series V, 6.20%, 1/01/32 9,680,000 10,028,867
Series W, MBIA Insured, 6.25%, 1/01/21 2,500,000 2,651,900
Seattle Special Obligation, Chinatown International District, 5.90%, 8/01/26 4,810,000 4,988,884
Snohomish County USD No. 6, 6.50%, 12/01/11 7,000,000 7,944,930
University of Washington Alumni Association, Lease Revenue,
Medical Center Roosevelt II, 6.30%, 8/15/14 4,000,000 4,352,920
Washington State Housing Finance Commission, MFMR,
Refunding, Series A, 7.90%, 7/01/30 4,795,000 4,945,227
Washington State Public Power Supply System Revenue,
Nuclear Project No. 1, Refunding, Series A,
6.00%, 7/01/09 18,330,000 19,668,090
6.00%, 7/01/12 22,400,000 23,025,184
Washington State Public Power Supply System Revenue, Nuclear Project No. 1,
Refunding, Series A, (cont.)
6.05%, 7/01/12 $35,355,000 $ 36,777,332
6.25%, 7/01/12 16,150,000 17,045,841
6.25%, 7/01/17 23,205,000 24,385,902
Pre-Refunded, 6.50%, 7/01/15 34,070,000 37,682,101
Pre-Refunded, 6.00%, 7/01/17 21,250,000 21,888,350
Washington State Public Power Supply System Revenue, Nuclear Project No. 2,
Refunding, Series A, 6.30%, 7/01/12 7,700,000 8,594,201
Washington State Public Power Supply System Revenue,
Nuclear Project No. 3, Refunding, Series A,
BIG Insured, 6.00%, 7/01/18 3,500,000 3,533,075
Pre-Refunded, 6.50%, 7/01/18 13,350,000 14,585,009
----------
292,802,974
---------
WEST VIRGINIA .5%
Braxton County Solid Waste Disposal Revenue, Weyerhaeuser Co. Project, 6.50%, 4/01/25 3,500,000 3,772,685
New Martinsville Building Commission Revenue, City of New Martinsville Project,
Series A, Pre-Refunded, 8.50%, 11/01/03 2,165,000 2,240,970
Putnam County PCR, Refunding, FMC Corp. Project, 5.625%, 10/01/13 1,700,000 1,712,359
Taylor County PCR, Union Carbide Corp., 7.625%, 8/01/05 2,400,000 2,794,896
West Virginia State Hospital Financing Authority Revenue,
Refunding & Improvement, Logan General Hospital
Project, 7.25%, 7/01/20 7,000,000 7,310,030
West Virginia State Housing Development Fund, Housing Finance, Series D,
7.00%, 5/01/17 6,000,000 6,417,960
7.05%, 11/01/24 9,000,000 9,644,580
West Virginia State Water Development Authority Revenue, Loan Program II,
Series A, Pre-Refunded, 8.625%, 11/01/28 5,000,000 5,325,750
---------
39,219,230
---------
WISCONSIN 1.0%
Janesville IDR, Simmons Manufacturing Co., 7.00%, 10/15/17 2,200,000 2,306,942
Madison Industrial Gas and Electric Co. Project, Series A, 6.75%, 4/01/27 4,220,000 4,555,490
Wisconsin Housing and EDA, Homeownership Revenue,
Refunding, Series A, 6.10%, 11/01/10 9,190,000 9,746,363
Series 1, 6.75%, 9/01/15 10,230,000 10,950,499
Series 1, 6.75%, 9/01/17 3,000,000 3,204,870
Series A, 6.90%, 3/01/16 1,985,000 2,170,578
Series A, 6.45%, 3/01/17 5,500,000 5,844,630
Series A, 7.10%, 3/01/23 10,580,000 11,300,921
Series B, 7.05%, 11/01/22 3,000,000 3,218,220
Wisconsin State Health and Educational Facilities Authority Revenue,
Mercy Health Systems Corp., AMBAC Insured,
6.125%, 8/15/13 6,500,000 6,945,380
6.125%, 8/15/17 7,500,000 7,966,650
---------
68,210,543
---------
WYOMING .3%
Wyoming CDA, Housing Revenue, Refunding, Series 6, 6.10%, 12/01/28 $11,540,000 $ 11,981,751
Wyoming CDA, MF Mortgage, Series A,
6.90%, 6/01/12 1,460,000 1,523,174
6.95%, 6/01/24 3,530,000 3,697,992
Wyoming CDA, SFM,
Series A, 7.25%, 6/01/21 2,500,000 2,702,024
Series G, 7.375%, 6/01/17 1,605,000 1,706,226
---------
21,611,167
---------
TOTAL BONDS (COST $6,352,145,389) 6,851,964,820
-------------
ZERO COUPON BONDS 2.0%
Calcasieu Parish, Louisiana, Memorial Hospital Service District Revenue,
Lake Charles Parish Memorial Hospital
Hospital Project, Series A, 12/01/22 11,040,000 7,007,971
Chicago RMR, Refunding, Series B, MBIA Insured, 10/01/09 12,410,000 5,451,588
Coldwater, Michigan, Community Schools, MBIA Insured, Pre-Refunded, 5/01/18 5,935,000 1,909,407
Colorado Springs Airport Revenue, Series C,
1/01/03 1,660,000 1,270,148
1/01/05 1,610,000 1,095,024
1/01/07 1,675,000 1,009,287
1/01/08 800,000 451,623
1/01/11 1,450,000 665,346
Cook County, Illinois, Community Consolidated School District No. 54,
Schaumburg Township, Series B,
FGIC Insured, Pre-Refunded,
1/01/07 3,505,000 2,178,952
1/01/08 4,800,000 2,792,351
1/01/09 4,380,000 2,382,062
1/01/10 5,760,000 2,935,583
Harrison, Michigan, Community Schools, AMBAC Insured, 5/01/20 6,000,000 1,548,360
Jefferson County, Kentucky, Capital Projects Corp., Lease Revenue, Refunding, Series A,
8/15/07 1,640,000 1,022,555
8/15/08 4,505,000 2,617,991
8/15/09 4,580,000 2,501,962
8/15/10 4,620,000 2,382,625
8/15/13 6,825,000 3,012,964
8/15/14 6,860,000 2,801,281
8/15/16 7,005,000 2,528,874
8/15/17 7,115,000 2,432,973
Metropolitan Pier and Exposition Authority, Illinois, Dedicated State Tax Revenue,
McCormick Place Expansion Project, Series A, FGIC Insured,
6/15/08 8,500,000 5,074,924
6/15/09 11,000,000 6,185,520
6/15/10 8,000,000 4,228,560
6/15/11 9,690,000 4,805,173
6/15/12 250,000 202,952
Pre-Refunded, 6/15/12 11,550,000 9,837,134
Owensboro, Kentucky, Electric Light and Power Revenue, Series B, AMBAC Insured, 1/01/08 5,250,000 3,220,612
San Joaquin Hills, California, Transportation Corridor Agency, Toll Road Revenue,
Refunding, Series A, 1/15/21 $50,000,000 $ 30,069,000
Senior Lien, Pre-Refunded, 1/01/23 7,000,000 1,823,220
Shreveport, Louisiana, Water and Sewer Revenue, Series B, FGIC Insured,
12/01/07 490,000 285,228
12/01/08 2,530,000 1,374,118
12/01/09 4,080,000 2,062,521
12/01/10 5,630,000 2,655,557
Spring, Texas, ISD, Refunding, FGIC Insured, Pre-Refunded, 8/15/08 7,000,000 3,425,590
University of Illinois Revenues, AMBAC Insured, 4/01/10 14,250,000 7,565,040
Washington State Public Power Supply System Revenue, Nuclear Project No. 3, Refunding, Series B,
Nuclear Project No. 2, Series A, 7/01/13 11,000,000 4,619,010
Nuclear Project No. 3, Series B, 7/01/12 6,400,000 2,860,864
Nuclear Project No. 3, Series B, 7/01/14 15,000,000 5,920,500
---------
TOTAL ZERO COUPON BONDS (COST $128,127,587) 146,214,450
-----------
TOTAL LONG TERM INVESTMENTS (COST $6,480,272,976) 6,998,179,270
---------
aSHORT TERM INVESTMENTS .8%
Arkansas State Development Financing Authority, Higher Education,
Capital Assets, Series A, FGIC Insured,
Daily VRDN and Put, 3.60%, 3/01/15 300,000 300,000
Connecticut State Development Authority, PCR, Refunding,
Connecticut Light & Power Co. Project, Series A,
Weekly VRDN and Put, 3.60%, 9/01/28 100,000 100,000
Howard County, Maryland, MFHR, Avalon Meadows Project, FNMA Secured,
Weekly VRDN and Put, 3.55%, 6/15/26 100,000 100,000
Jackson County, Mississippi, PCR, Refunding, Chevron U.S.A., Inc. Project,
Daily VRDN and Put, 4.00%, 12/01/16 10,800,000 10,800,000
4.00%, 6/01/23 7,500,000 7,500,000
Kansas City, Missouri, IDA, Hospital Revenue, Resh Health Services System,
MBIA Insured, Daily VRDN and Put,
4.00%, 10/15/14 4,600,000 4,600,000
Massachusetts State Health and Educational Facilities Authority Revenue,
Capital Assets Program, Series D,
MBIA Insured, Daily VRDN and Put, 3.85%, 1/01/35 2,100,000 2,100,000
New York City Municipal Water Financing Authority, Water and Sewer Systems Revenue,
Series G, FGIC Insured, Daily VRDN and Put, 4.00%, 6/15/24 6,350,000 6,350,000
Port Authority of New York and New Jersey, Special Versatile Structure Obligation,
Series P, Daily VRDN and Put, 4.00%, 5/01/19 8,700,000 8,700,000
Princeton, Indiana, PCR, Refunding, PSI Energy, Inc. Project,
Daily VRDN and Put, 4.00%, 4/01/22 5,000,000 5,000,000
Tennessee State GO, Series A, Weekly VRDN and Put, 3.60%, 7/02/11 100,000 100,000
Uinta County, Wyoming, PCR, Refunding, Chevron U.S.A., Inc. Project,
Daily VRDN and Put, 4.00%, 8/15/20 6,800,000 6,800,000
University of Arkansas Revenues, Medical Sciences Campus,
Weekly VRDN and Put, 3.70%, 12/01/19 100,000 100,000
Washington State Health Care Facilities Authority Revenue, Sisters of Providence,
Series B, Daily VRDN and Put, 4.00%, 10/01/05 3,800,000 3,800,000
---------
TOTAL SHORT TERM INVESTMENTS (COST $56,350,000) 56,350,000
----------
TOTAL INVESTMENTS (COST $6,536,622,976) 98.6% 7,054,529,270
OTHER ASSETS, LESS LIABILITIES 1.4% 98,143,545
----------
NET ASSETS 100.0% $7,152,672,815
==============
PORTFOLIO ABBREVIATIONS :
AMBAC - American Municipal Bond Assurance Corp.
BIG - Bond Investors Guaranty Insurance Co.
(Acquired by MBIA in 1989 and no longer does business under this name.)
CDA - Community Development Authority/Agency
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
(Some of the securities shown as FSA Insured were originally insured by Capital Guaranty Insurance
Co. (CGIC) which was acquired by FSA in 1995 and no longer does business under this name.)
GNMA - Government National Mortgage Association
GO - General Obligation
HDA - Housing Development Authority
HFA - Housing Finance Agency
HFC - Housing Finance Corp.
IDA - Industrial Development Authority/Agency
IDB - Industrial Development Board
IDBR - Industrial Development Board Revenue
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
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
</TABLE>
aVariable 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 at
specified dates.
bSufficient collateral has been segregated for securities traded on a
when-issued or delayed delivery basis.
See notes to financial statements.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
October 31, 1997 (unaudited)
<S> <C>
Assets:
Investments in securities, at value (cost $6,536,622,976) $7,054,529,270
Cash 128,008
Receivables:
Investment securities sold 26,620,193
Capital shares sold 3,313,523
Interest 134,833,445
-----------
Total assets 7,219,424,439
-----------
Liabilities:
Payables:
Investment securities purchased 53,917,971
Capital shares redeemed 2,481,887
Affiliates 4,351,428
Shareholders 5,671,784
Other liabilities 328,554
-----------
Total liabilities 66,751,624
-----------
Net assets, at value $7,152,672,815
==============
Net assets consist of:
Undistributed net investment income $ 3,399,043
Net unrealized appreciation 517,906,294
Accumulated net realized loss (56,699,252)
Capital shares 6,688,066,730
-------------
Net assets, at value $7,152,672,815
==============
CLASS I:
Net asset value per share ($7,050,478,792 / 576,246,542 shares outstanding)* $12.24
==============
Maximum offering price per share ($12.24 / 95.75%) $12.78
==============
CLASS II:
Net asset value per share ($102,194,023 / 8,355,777 shares outstanding)* $12.23
==============
Maximum offering price per share ($12.23 / 99%) $12.35
==============
*Redemption price is equal to net asset value less any applicable sales charge.
STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1997 (UNAUDITED)
Investment income:
Interest $225,678,561
Expenses:
Management fees (Note 5) $16,079,652
Distribution fees (Note 5)
Class I 2,484,690
Class II 283,834
Transfer agent fees (Note 5) 1,309,486
Custodian fees 34,565
Reports to shareholders 661,809
Registration and filing fees 78,165
Professional fees 66,367
Directors' fees and expenses 71,422
Other 153,301
-------
Total expenses 21,223,291
----------
Net investment income 204,455,270
---------------
Realized and unrealized gains:
Net realized gain from investments 11,912,465
Net unrealized appreciation on investments 181,661,217
---------------
Net realized and unrealized gain 193,573,682
---------------
Net increase in net assets resulting from operations $398,028,952
==============
</TABLE>
STATEMENTS OF CHANGES IN NET ASSETS
FOR THE SIX MONTHS ENDED OCTOBER 31, 1997 (UNAUDITED)
AND THE YEAR ENDED APRIL 30, 1997
<TABLE>
<CAPTION>
SIX MONTHS YEAR ENDED
ENDED 10/31/97 4/30/97
<S> <C> <C>
Increase (decrease) in net assets:
Operations:
Net investment income $ 204,455,270 $ 422,168,480
Net realized gain (loss) from investments 11,912,465 (3,427,474)
Net unrealized appreciation on investments 181,661,217 44,923,895
------------------------------
Net increase in net assets resulting from operations 398,028,952 463,664,901
Distributions to shareholders from:
Net investment income:
Class I (200,704,920) (418,463,139)
Class II (2,194,366) (2,758,091)
------------------------------
Total distributions to shareholders (202,899,286) (421,221,230)
Capital share transactions (Note 2):
Class I (47,838,007) (149,230,534)
Class II 27,949,768 37,508,022
-----------------------------
Total capital share transactions (19,888,239) (111,722,512)
Net increase (decrease) in net assets 175,241,427 (69,278,841)
Net assets:
Beginning of period 6,977,431,388 7,046,710,229
--------------------------------
End of period $7,152,672,815 $6,977,431,388
=================================
Ending undistributed net investment income included in net assets $ 3,399,043 $ 1,843,059
==============================
</TABLE>
See notes to financial statements.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES
Franklin Federal Tax-Free Income Fund (the Fund) is registered under the
Investment Company Act of 1940 as a diversified, open-end investment company.
The Fund seeks to provide tax-free income.
The following summarizes the Fund's significant accounting policies.
A. SECURITY VALUATION
Tax-free bonds generally trade in the over-the-counter market and are valued
within the range of the latest quoted bid and asked prices. 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. Securities for
which market quotations are not readily available are valued at fair value as
determined by management in accordance with procedures established by the Board
of Directors.
B. INCOME TAXES
No provision has been made for income taxes because the Fund's policy is to
qualify as a regulated investment company under the Internal Revenue Code and
distribute all its taxable income.
C. SECURITY TRANSACTIONS, INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS
Security transactions are accounted for on the trade date. Realized gains and
losses on security transactions are determined on a specific identification
basis. Interest income and estimated expenses are accrued daily. Bond discount
and premium are amortized on an income tax basis. Distributions to shareholders
are recorded on the ex-dividend date.
Realized and unrealized gains and 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.
D. 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.
2. CAPITAL STOCK
The Fund offers two classes of shares: Class I and Class II. The shares have the
same rights except for their initial sales load, distribution fees, voting
rights on matters affecting a single class and the exchange privilege of each
class.
At October 31, 1997, there were 10 billion shares of no par value capital stock
authorized, of which 3 billion each were designated as Class I and Class II.
Transactions in the Fund's shares were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED YEAR ENDED
OCTOBER 31, 1997 APRIL 30, 1997
------------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------------
<S> <C> <C> <C> <C>
CLASS I SHARES:
Shares sold 62,303,748 $753,030,625 82,507,276 $ 981,902,405
Shares issued in reinvestment of distributions 6,657,943 80,174,252 13,756,253 163,131,977
Shares redeemed (72,893,355) (881,042,884) (108,778,728) (1,294,264,916)
------------------------------------------------------------------
Net decrease (3,931,664) $ (47,838,007) (12,515,199) $ (149,230,534)
=================================================================
CLASS II SHARES:
Shares sold 2,698,660 $ 32,638,378 3,562,296 $ 42,300,025
Shares issued in reinvestment of distributions 113,475 1,367,615 144,321 1,713,499
Shares redeemed (501,411) (6,056,225) (546,174) (6,505,502)
---------------------------------------------------------------
Net increase 2,310,724 $ 27,949,768 3,160,443 $ 37,508,022
===============================================================
</TABLE>
3. TAX INFORMATION
At April 30, 1997, the Fund had tax basis capital losses of $68,611,717 which
may be carried over to offset future capital gains. Such losses expire as
follows:
Capital loss carryovers expiring in:
2000 $2,238,745
2002 10,591,976
2003 52,353,522
2005 3,427,474
---------
$68,611,717
=========
The cost of securities for income tax purposes is the same as shown in the
investment portfolio.
At October 31, 1997, the net unrealized appreciation based on the cost of
investments for income tax purposes of $6,536,622,976 was as follows:
Unrealized appreciation $519,227,201
Unrealized depreciation (1,320,907)
-----------
Net unrealized appreciation $517,906,294
============
4. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the
period ended October 31, 1997 aggregated $445,624,718 and $454,546,764,
respectively.
5. TRANSACTIONS WITH AFFILIATES
Certain officers and directors of the Fund are also officers or directors of
Franklin/Templeton Distributors, Inc. (Distributors), Franklin Advisers, Inc.
(Advisers), Franklin/Templeton Investor Services, Inc. (Investor Services), and
Franklin Templeton Services, Inc. (FT Services), the Fund's principal
underwriter, investment manager, transfer agent, and administrative manager,
respectively.
The Fund pays an investment management fee to Advisers based on the average net
assets of the Fund 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.
Under an agreement with Advisers, FT Services provides administrative services
to the Fund. The fee is paid by Advisers based on average daily net assets, and
is not an additional expense of the Fund.
The Fund reimburses Distributors up to 0.10% and 0.65% per year of the average
daily net assets of Class I and Class II, respectively, for costs incurred in
marketing the Fund's shares.
Distributors paid net commissions on sales of the Fund's shares, and received
contingent deferred sales charges for the period of $303,993 and $19,705,
respectively.
The Fund paid transfer agent fees of $1,309,486, of which $1,221,675 was paid to
Investor Services.
6. CREDIT RISK
The Fund 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.
FRANKLIN FEDERAL TAX-FREE INCOME FUND SEMI-ANNUAL REPORT OCTOBER 31, 1997
APPENDIX
DESCRIPTION OF GRAPHIC MATERIAL OMITTED FROM EDGAR FILING (PURSUANT TO ITEM
304(a) OF REGULATION S-T)
GRAPHIC MATERIAL (1)
This chart shows in pie format the credit quality breakdown of the fund's
portfolio on 10/31/97, based on total long-term investments.
AAA 33.5%
AA 14.8%
A 22.7%
BBB 26.1%
Below Investment Grade 2.9%
GRAPHIC MATERIAL (2)
This map chart shows the fund's top two state holdings on 10/31/97 as a percent
of total market value: New York, 15.79%; California, 7.42%.
GRAPHIC MATERIAL (3)
This chart shows in bar format the comparison between the fund's Class I shares
distribution rate of 5.45% and the taxable equivalent rate of 9.02%.
GRAPHIC MATERIAL (4)
This chart shows in bar format the comparison between the fund's Class II shares
distribution rate of 5.04% and the taxable equivalent rate of 8.34%.
