FRANKLIN FEDERAL TAX-FREE INCOME FUND
Annual Report
Thank you for investing with Franklin Templeton. We encourage our investors to
maintain a long-term perspective, and to expect that mixed in with the good
years can be some bad years. It's important to remember that all securities
markets move both up and down, as do mutual fund share prices. We appreciate
your past support and look forward to serving your investment needs in the years
ahead.
Charles B. Johnson (right),
Chairman of Franklin Federal
Tax-Free Income Fund and
Thomas J. Kenny (left),
Director of Franklin Municipal
Bond Department.
CONTENTS
Shareholder Letter...................................... 1
Special Feature:
Q&A with Municipal
Bond Department......................................... 3
Manager's Discussion.................................... 8
Performance Summaries
Class I................................................ 11
Class II............................................... 13
Financial Highlights &
Statement of Investments................................ 15
Financial Statements.................................... 40
Notes to
Financial Statements.................................... 43
Independent
Auditors' Report........................................ 45
SHAREHOLDER LETTER
Dear Shareholder:
We are pleased to bring you Franklin Federal Tax-Free Income Fund's annual
report for the period ended April 30, 1998.
During the year under review, the U.S. economy continued on its path of moderate
growth, modest inflation and relatively stable-to-lower interest rates. Economic
growth was solid, as measured by the 1998 first quarter, annualized Gross
Domestic Product (GDP) gain of 4.8%. The Consumer Price Index (CPI), a widely
used measure of inflation, continued to trend downward. The CPI's annualized
increase for March 1998 was a surprisingly low 2.25%, considering the U.S.
economy is in its seventh consecutive year of expansion.
After peaking in the second quarter of 1997, interest rates declined due to
benign inflation and the presumption that the Asian monetary crises would slow
the U.S. economy. The Asian crises also contributed to a flight to quality into
U.S. Treasury bonds and U.S. dollar denominated assets. The 30-year Treasury
yield ended the reporting period at 5.95%, down from 6.95% on April 30, 1997.1
The yield on the Bond Buyer 40 Index, a representative municipal bond index,
declined from 5.89% on April 30, 1997, to 5.39% on April 30, 1998.2 The overall
interest rate decline resulted in a strong year for fixed-income securities in
1997, contributing to an increase in the fund's NAV and share price.
The favorable interest rate environment provided attractive opportunities for
issuers to refinance existing debt or issue new debt. Municipal supply in the
first quarter of 1998 was 70% higher than in the same period of 1997. Looking
forward, the recent economic environment should be beneficial for municipalities
and municipal bonds. Credit rating upgrades substantially outpaced downgrades
from national credit rating agencies during the reporting period.
We encourage you to discuss your financial goals with an investment
representative. He or she can address concerns about volatility and help you
diversify your investments and stay focused on the long term. Mutual funds offer
a level of diversification that is almost impossible for individual investors to
achieve on their own. Municipal bonds continue to be an attractive investment
for diversifying a heavily weighted stock portfolio. As always, we appreciate
your support, welcome your questions and comments, and look forward to serving
your investment needs in the years ahead.
Sincerely,
Charles B. Johnson
Chairman
Franklin Federal Tax-Free Income Fund
Thomas J. Kenny
Director
Franklin Municipal Bond Department
Q
&
A
SPECIAL FEATURE:
Q&A WITH FRANKLIN'S
MUNICIPAL BOND DEPARTMENT
Thomas J. Kenny, Director of Franklin Templeton's Municipal Bond Department, and
portfolio managers Sheila Amoroso and Bernie Schroer discuss the issues that
shaped the recent municipal bond market.
Q: HOW WOULD YOU DESCRIBE THE MUNICIPAL BOND MARKET'S RECENT PERFORMANCE?
TOM KENNY: Long-term interest rates trended lower in 1997, and remained in a
fairly narrow trading range during the early months of 1998. This lower interest
rate environment led to a substantial increase in the supply of municipal bonds
coming to market, both for new projects and refinancing purposes. Demand has not
kept pace with supply, which, in our opinion, has created some excellent buying
opportunities.
Q: RECENTLY, THERE HAS BEEN A LOT OF DISCUSSION ABOUT THE ASIAN MARKET
VOLATILITY. DO YOU THINK THE PROBLEMS THERE WILL HAVE ANY IMPACT ON THE U.S.
BOND MARKET THIS YEAR?
BERNIE SCHROER: The decline in Asia's currency and equity markets may help the
U.S. bond market. In 1997, we experienced a strong U.S. economy, which normally
would have pressured the Federal Reserve (the Fed) to raise interest rates,
causing bond prices to fall. Instead, the Fed left interest rates alone,
probably in part due to the Asian turmoil and the dampening effect it could have
on U.S. economic growth this year.
Q: HAVE THE RECENT TAX LAW CHANGES HAD ANY IMPACT ON THE MUNICIPAL BOND MARKET?
SHEILA AMOROSO: Changes in the tax law did not alter the tax advantages of
municipal bonds. Municipals still distribute income free from regular federal,
and in many cases, state income taxes.*
Q: WHAT ROLE CAN MUNICIPAL BONDS PLAY IN A DIVERSIFIED PORTFOLIO?
SHEILA: After three years of healthy returns due to historic stock market gains,
individuals have seen an increase in the percentage of equities in their
portfolios. As a result, many investors are beginning to re-examine asset
allocation. Municipal bonds generally enjoy low volatility while providing
tax-free income, which can offset some of the risks associated with investing in
a portfolio composed mainly of stocks. The chart on page 6 shows how adding
municipal bonds in different proportions to a stock portfolio has historically
lowered volatility in providing solid after-tax returns. In short, prudent
investors may be able to reduce their risk, and maintain their potential for
competitive return, by including municipal bonds in their portfolios.
*For investors subject to regular federal or state alternative minimum tax, all
or a portion of municipal bond interest and municipal bond fund dividends may be
subject to such tax, depending on the source. Fund distributions of capital
gains and of ordinary income from accrued market discount, if any, are generally
taxable.
"Franklin tax-free income funds can help investors diversify a heavily weighted
stock portfolio, while providing a convenient and effective way to participate
in the municipal bond market."
BERNIE: Municipal bonds remain a strong investment for investors looking for
tax-free income. Franklin tax-free income funds can help investors diversify a
heavily weighted stock portfolio, while providing a convenient and effective way
to participate in the municipal bond market.
Q: LOOKING AHEAD, WHAT DO YOU THINK MIGHT AFFECT THE MUNICIPAL BOND MARKET AND
THE FRANKLIN TAX-FREE INCOME FUNDS?
TOM: Municipal bonds generally share the same trends as U.S. government
securities, such as Treasury bonds. These securities are sensitive to a variety
of factors that affect interest rates in general, including the Federal
Reserve's monetary policy. During most of 1997, the Fed was biased toward
raising interest rates in order to stave off inflationary pressures as the
economy continued its solid growth. However, toward the end of the year and into
1998, the Fed appears to have adopted a more neutral stance for a couple of
reasons. First, although the economy is experiencing moderate growth, inflation
remains subdued. Also, the potential still exists for the Asian crisis to slow
the U.S. economy.
Regardless of changing market conditions, our focus will remain on providing
shareholders with high current income free from regular federal, and depending
on the fund, state income taxes.* Franklin has become the nation's largest
tax-free fund manager**, in part by adhering to a consistent, disciplined
investment philosophy, which historically has proved successful in both strong
and weak bond markets. Of course, past performance is no guarantee of future
results.
*For investors subject to regular federal or state alternative minimum tax, all
or a portion of municipal bond interest and municipal bond fund dividends may be
subject to such tax, depending on the source. Fund distributions of capital
gains and of ordinary income from accrued market discount, if any, are generally
taxable.
**Source: Strategic Insight, 11/97.
MANAGER'S DISCUSSION
YOUR FUND'S OBJECTIVE: 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
When investing in the municipal market, we strive to purchase securities
offering long-term value. Prospects for value in the market are dynamic and can
change daily. In our vigilant search throughout the fund's fiscal year, we found
value in two key areas: insured securities and New York securities.
INSURED SECURITIES
Insured municipal bonds are insured against default by insurance companies. An
insurance company pledges to make all interest and principal payments when due,
if the issuer of the bond defaults on its obligations. Insured bonds usually
trade based on the insurer's credit rating rather than the rating of the
underlying issuer, since the insurance company is ultimately at risk for the
repayment of principal and interest. Some of the major municipal bond insurance
firms include MBIA and AMBAC Indemnity Corporation. Because of their lower risk
and the cost of insurance protection, insured bonds will pay slightly lower
yields. However, insured municipal bonds are generally considered among the
safest investments, as reflected in their high credit quality rating.
As individual state economies enjoyed healthy growth, state and local
governments witnessed an increase in their revenues. Voter resistance toward
higher taxes helped restrain government spending, causing government fiscal
positions and credit ratings to strengthen. As credit qualities rose, municipal
bond insurance became relatively cheap for state and local governments.
Furthermore, increased competition among the municipal insurance companies
contributed to lower insurance costs for issuers. Municipal bond insurance tends
to provide the greatest marketability for issuers, because it attracts the
widest variety of investors. Approximately 60% of the long-term new issues
during the past year have come with insurance, continuing the trend we have
experienced during the past few years.2 The fund's exposure to insured
securities reflected this trend, increasing from 17.5% of long-term assets on
April 30, 1997, to 22.5% at the end of the reporting period.3
The availability of insurance for new issues, as well as secondary securities,
contributed to a narrowing of quality spreads in the municipal market. The
sustained, low interest-rate environment created greater demand for higher
yielding, lower-quality securities. As the supply of these lower-quality
securities declined, the demand drove the prices of these securities higher. As
a result, insured securities offered attractive yields relative to other sectors
of the municipal market.
As illustrated by the chart, 51.2% of the fund's long-term investments were
invested in high-grade bonds at the close of the period. High-grade bonds rated
AAA or AA by Standard & Poor's, or Aaa or Aa by Moody's, two national credit
rating agencies, generally are considered to carry little credit risk.4
Increasing our emphasis on high-quality bonds can help protect the fund against
the risk of issuers defaulting on their interest payments or principal
repayments.
GRAPHIC MATERIAL 1 OMITTED - SEE APPENDIX AT END OF DOCUMENT
1. These dividends are generally subject to state and local income taxes, if
any. For investors subject to federal or state 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.
You will find a complete listing of the fund's portfolio holdings, including
dollar value and number of shares or principal amount, beginning on page 16 of
this report.
2. Source: The Bond Buyer.
3. Fund shares are not insured by any U.S. or other government agency, are
subject to market risks and will fluctuate in value. Insurance relates only to
the payment of principal and interest on the portfolio's insured securities and
the terms of the insurance as outlined in the prospectus. No representation is
made as to any insurer's ability to meet its commitments. 4. This does not
indicate Standard & Poor's or Moody's rating of the fund.
Past performance is not predictive of future results.
NEW YORK SECURITIES
We also found value in New York securities, and at the end of the fund's
reporting period our exposure was 17.2% of total market value, up from 14.61% on
April 30, 1997. New York is generally one of the largest issuers of municipal
bonds, and has been the largest so far in 1998. Due to the large supply of
securities, the sector was priced attractively in the market.
Both New York City and New York state enjoyed improved financial positions. In
August 1997, Standard and Poor's upgraded the state's credit rating from A- to
A. New York City was recently upgraded by Moody's to a3, and is currently rated
A- by Fitch IBCA, and BBB+ by S&P(R).5 These positive factors contributed to New
York securities being one of the best performing sectors in the market
throughout the year under review.
The chart to the left shows that the fund was invested across a broad range of
sectors on April 30, 1998. Also, your fund held investments in all 50 states and
Puerto Rico. The fund had its largest holdings in securities issued in New York,
Illinois and Texas, as illustrated below.
Going forward, we believe municipal bond supply should moderate during the last
half of the year, and demand will remain solid. Most importantly, given the
fund's current taxable-equivalent distribution rate, municipals should provide
an attractive investment for fixed-income investors.
GRAPHIC MATERIAL 2 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 3 OMITTED - SEE APPENDIX AT END OF DOCUMENT
PERFORMANCE SUMMARY
CLASS I
Franklin Federal Tax-Free Income Fund - Class I share price, as measured by net
asset value, increased 35 cents, from $11.90 on April 30, 1997, to $12.25 on
April 30, 1998. During the 12-month reporting period, shareholders received
income distributions totaling 68.8 cents ($0.6880) per share. Distributions will
vary based on the earnings of the fund's portfolio, and past distributions are
not predictive of future trends.
Based on an annualization of April's monthly per-share dividend of 5.6 cents
($0.056) and the maximum offering price of $12.79 on April 30, 1998, your fund's
distribution rate was 5.25%. This tax-free rate is generally higher than the
after-tax return on a comparable taxable investment. For example, an investor in
the maximum federal income tax bracket of 39.6% would need to earn 8.69% from a
taxable investment of similar quality to match the fund's tax-free distribution
rate.
The chart on page 12 compares your fund's Class I shares' performance with that
of the unmanaged Lehman Brothers Municipal Bond Index. The index includes over
40,000 municipal securities from across the country, while your fund consists of
approximately 930 municipal bonds. Of course, such unmanaged market indices have
inherent performance differentials over any fund. They do not pay management
fees to cover salaries of securities analysts or portfolio managers, nor do they
pay commissions to buy and sell bonds. Unlike unmanaged indices, mutual funds
are never 100% invested because they need cash on hand to redeem shares. In
addition, the performance shown for the fund includes the maximum initial sales
charge, all fund expenses and account fees. If operating expenses such as
Franklin Federal Tax-Free Income Fund's had been applied to this index, the
index's performance would have been lower. Please remember that an index is
simply a measure of performance and one cannot invest in it directly.
Your fund's Class I shares' performance exceeded the rate of inflation, as
measured by the Consumer Price Index (CPI), keeping your purchasing power well
ahead of inflation -- a primary goal of any investment.
GRAPHIC MATERIAL 4 OMITTED - SEE APPENDIX AT END OF DOCUMENT
CLASS I
Periods ended 4/30/98
SINCE
INCEPTION
1-YEAR 5-YEAR 10-YEAR (10/17/83)
- - --------------------------------------------------------------------------------
Cumulative Total Return1 8.92% 36.39% 121.20% 256.80%
Average Annual Total Return2 4.28% 5.49% 7.79% 8.80%
Distribution Rate3 5.25%
Taxable Equivalent Distribution Rate4 8.69 %
30-Day Standardized Yield5 4.39%
Taxable Equivalent Yield4 7.27%
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. See Note below.
3. Distribution rate is based on an annualization of April's 5.6 cent per share
monthly dividend and the maximum offering price of $12.79 on April 30, 1998.
4. Taxable equivalent distribution rate and yield assume the 1998 maximum
federal income tax rate of 39.6%.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 1998.
Note: Prior to July 1, 1994, fund shares were offered at a lower initial sales
charge with dividends reinvested at the offering price; thus actual total
returns 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 capital gains
at net asset value. Since markets can go down as well as up, 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 34 cents, from $11.90 on April 30, 1997, to $12.24 on
April 30, 1998. During the 12-month reporting period, shareholders received
income distributions totaling 61.92 cents ($0.6192) per share. Distributions
will vary based on the earnings of the fund's portfolio, and past distributions
are not predictive of future trends.
Based on an annualization of April's monthly per-share dividend of 5.00 cents
($0.0500), plus an annual dividend adjustment of 0.12 cents ($0.0012), and the
maximum offering price of $12.36 on April 30, 1998, your fund's distribution
rate was 4.86%. This tax-free rate is generally higher than the after-tax return
on a comparable taxable investment. For example, an investor in the maximum
federal income tax bracket of 39.6% would need to earn 8.05% from a taxable
investment of similar quality to match the fund's tax-free distribution rate.
The chart on page 14 compares your fund's Class II shares' performance with that
of the unmanaged Lehman Brothers Municipal Bond Index. The index includes over
40,000 municipal securities from across the country, while your fund consists of
approximately 930 municipal bonds. Of course, such unmanaged market indices have
inherent performance differentials over any fund. They do not pay management
fees to cover salaries of securities analysts or portfolio managers, nor do they
pay commissions to buy and sell securities. Unlike unmanaged indices, mutual
funds are never 100% invested because they need cash on hand to redeem shares.
In addition, the performance shown for the fund includes the maximum initial
sales charge, all fund expenses and account fees. If operating expenses such as
Franklin Federal Tax-Free Income Fund's had been applied to this index, the
index's performance would have been lower. Please remember that an index is
simply a measure of performance and one cannot invest in it directly.
Your fund's Class II shares' performance exceeded the rate of inflation, as
measured by the Consumer Price Index (CPI), keeping your purchasing power well
ahead of inflation -- a primary goal of any investment.
GRAPHIC MATERIAL 7 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 8 OMITTED - SEE APPENDIX AT END OF DOCUMENT
GRAPHIC MATERIAL 9 OMITTED - SEE APPENDIX AT END OF DOCUMENT
CLASS II
Periods ended 4/30/98
SINCE
INCEPTION
1-YEAR (5/1/95)
- - -----------------------------------------------------------------------------
Cumulative Total Return1 8.22% 22.68%
Average Annual Total Return2 6.15% 6.69%
Distribution Rate3 4.86%
Taxable Equivalent Distribution Rate4 8.05%
30-Day Standardized Yield5 3.95%
Taxable Equivalent Yield4 6.54%
1. Cumulative total return measures the change in value of an investment over
the periods indicated and does not include sales charges.
2. Average annual total return represents the average annual change in value of
an investment over the periods indicated and includes the 1.0% initial sales
charge and 1.0% contingent deferred sales charge (CDSC), applicable to shares
redeemed within 18 months of investment.
3. Distribution rate is based on an annualization of April's 5.12 cent per share
monthly dividend and the maximum offering price of $12.36 on April 30, 1998.
4. Taxable equivalent distribution rate and yield assume the 1998 maximum
federal income tax rate of 39.6%.
5. Yield, calculated as required by the SEC, is based on the earnings of the
fund's portfolio for the 30 days ended April 30, 1998.
All total return calculations assume reinvestment of dividends and capital gains
at net asset value. Since markets can go down as well as up, investment return
and principal value will fluctuate with market conditions, and you may have a
gain or loss when you sell your shares.
1. Source: Standard & Poor's(R) Micropal (Federal Reserve H15 Report).
2. Source: Standard & Poor's Micropal (Bond Buyer 40). Index is composed of 40
actively traded municipal bonds and does not represent the performance of any
Franklin Templeton fund. Investors cannot invest directly in this unmanaged
index.
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Highlights
<TABLE>
<CAPTION>
Year Ended April 30,
<S> <C> <C> <C> <C> <C>
CLASS I 1998 1997 1996 1995 1994
- - ----------------------------------------------------------------------------------------------------------------------
Per share operating performance
(for a share outstanding throughout the year)
Net asset value, beginning of year................................. $11.90 $11.83 $11.73 $11.81 $12.24
--------------------------------------------
Income from investment operations:
Net investment income............................................. .69 .71 .74 .75 .77
Net realized and unrealized gains (losses)........................ .35 .07 .10 (.05) (.41)
---------------------------------------------
Total from investment operations................................... 1.04 .78 .84 .70 .36
Less distributions from net investment income...................... (.69) (.71) (.74) (.78) (.79)
---------------------------------------------
Net asset value, end of year....................................... $12.25 $11.90 $11.83 $11.73 $11.81
=============================================
Total return*...................................................... 8.92% 6.81% 7.33% 6.21% 2.58%
Ratios/supplemental data
Net assets, end of year (000's).................................... $7,022,961 $6,905,488 $7,012,601 $6,886,941 $6,804,262
Ratios to average net assets:
Expenses.......................................................... .59% .58% .57% .59% .52%
Net investment income............................................. 5.70% 6.00% 6.20% 6.47% 6.27%
Portfolio turnover rate............................................ 14.54% 16.43% 25.10% 19.88% 24.59%
</TABLE>
<TABLE>
<CAPTION>
CLASS II
Per share operating performance
(for a share outstanding throughout the year)
<S> <C> <C> <C>
Net asset value, beginning of year $11.90 $11.82 $11.73**
-------------------------------------
Income from investment operations:
Net investment income .63 .66 .68
Net realized and unrealized gains .33 .06 .09
-------------------------------------
Total from investment operations .96 .72 .77
Less distributions from net investment income (.62) (.64) (.68)
-------------------------------------
Net asset value, end of year $12.24 $11.90 $11.82
=====================================
Total return* 8.22% 6.28% 6.68%
Ratios/supplemental data
Net assets, end of year (000's) $135,195 $71,944 $34,110
Ratios to average net assets:
Expenses 1.17% 1.16% 1.15%
Net investment income 5.12% 5.42% 5.68%
Portfolio turnover rate 14.54% 16.43% 25.10%
</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.
**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 the beginning of period includes this dividend.
See notes to financial statements.
<TABLE>
<CAPTION>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Statement of Investments, April 30, 1998
PRINCIPAL
AMOUNT VALUE
- - ------------------------------------------------------------------------------------------------------------------------
LONG TERM INVESTMENTS 97.4%
BONDS 95.3%
ALABAMA 1.5%
<S> <C> <C>
Alabama HFA, SFMR, Collateralized Home Mortgage, Series D-2, 5.75%, 10/01/23 .............. $ 5,400,000 $ 5,522,094
Alabama Water Pollution Control Authority, Revolving Fund, Series B,
Pre-Refunded, 7.75%, 8/15/12 .............................................................. 6,180,000 6,715,126
Birmingham GO, Street Improvement, Warrants, Pre-Refunded, 8.00%, 7/01/13 ................. 5,000,000 5,131,450
Citronelle IDB, PCR, Stauffer Chemical Project, Guaranteed by Imperial Chemical, Plc., Series
1982, 8.00%, 12/01/12 ..................................................................... 1,000,000 1,088,670
Courtland IDB, PCR, Refunding, Champion International Corp. Project, 6.15%, 6/01/19........ 5,000,000 5,321,250
Courtland IDBR, Refunding, Champion International Corp., Series A, 7.20%, 12/01/13......... 12,000,000 13,308,840
Fairfield IDB, Environmental Improvement Revenue, Refunding, USX
Corp. Projects, 5.45%, 9/01/14 ............................................................ 1,445,000 1,443,324
Jefferson County Sewer Revenue, Warrants, FGIC Insured,
Refunding, Series A, 5.625%, 2/01/22 ...................................................... 4,000,000 4,144,840
Refunding, Series A, 5.375%, 2/01/27 ...................................................... 19,000,000 19,096,900
Series D, 5.75%, 2/01/22 .................................................................. 15,995,000 16,730,130
Series D, 5.75%, 2/01/27 .................................................................. 19,715,000 20,621,101
Montgomery Medical Clinic Board, Health Care Facilities Revenue,
Refunding, Jackson Hospital
and Clinic, AMBAC Insured, 6.00%, 3/01/26 ................................................. 5,385,000 5,699,861
-----------
104,823,586
-----------
Alaska 2.0%
Alaska Industrial Development and Export Authority, Revolving Fund,
Series A, 7.95%, 4/01/10 .................................................................. 1,775,000 1,902,907
Alaska State HFC,
Collateralized Home Mortgage, Series A-1, 6.75%, 12/01/32 ................................. 3,560,000 3,781,290
Refunding, Mortgage, Series A, MBIA Insured, 6.00%, 12/01/15 .............................. 4,565,000 4,804,389
Refunding, Mortgage, Series A, MBIA Insured, 6.10%, 12/01/37 .............................. 34,000,000 35,759,500
Refunding, Series A, MBIA Insured, 5.875%, 12/01/24......................................... 17,875,000 18,583,565
Refunding, Series A, MBIA Insured, 5.875%, 12/01/30......................................... 11,600,000 11,989,528
Series A, Pre-Refunded, 6.60%, 12/01/23 ................................................... 8,000,000 8,788,160
Veterans Mortgage Program, MBIA Insured, 6.75%, 12/01/25.................................... 20,530,000 22,056,611
Anchorage Parking Authority Revenue, Refunding, 5th Avenue Garage Lease Project,
6.50%, 12/01/02 ........................................................................... 3,360,000 3,584,750
6.75%, 12/01/08 ........................................................................... 3,500,000 3,751,195
Valdez Marine Terminal Revenue, Refunding, BP Pipelines, Inc. Project,
Series A, 5.85%, 8/01/25 .................................................................. 25,000,000 25,634,000
Series C, 5.65%, 12/01/28 ................................................................. 500,000 507,040
-------
141,142,935
---------
Arizona .1%
Tempe IDA, Residential Care Facilities Revenue, Volunteers of
America Care Facilities, 9.00%, 6/01/18 ................................................... 5,540,000 5,660,440
---------
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 4,094,840
Desha County Residential Housing Facilities Board, SFMR, Refunding, 7.50%, 4/01/11 ........ 2,130,000 2,267,832
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 3,309,158
Jefferson County PCR, Refunding, Arkansas Power and Light Co. Project, 6.30%, 6/01/18 ..... 1,465,000 1,571,755
Pope County PCR, Refunding, Power and Light Co. Project, 6.30%,
12/01/16................................................................................... 2,600,000 2,760,056
11/01/20................................................................................... 60,000,000 62,634,600
University of Central Arkansas, AMBAC Insured,
Academic Facilities Revenue, Series B, 5.875%, 4/01/16 .................................... 250,000 265,505
Academic Facilities Revenue, Series B, 6.00%, 4/01/21 ..................................... 1,000,000 1,074,890
Athletic Facilities Revenue, Series C, 6.00%, 4/01/21 ..................................... 1,000,000 1,074,890
Athletic Facilities Revenue, Series C, 6.125%, 4/01/26 .................................... 825,000 882,783
Refunding, Housing System Revenue, Series A, 6.00%, 4/01/21 ............................... 1,000,000 1,074,890
---------
81,011,199
---------
Bonds (cont.)
California 6.2%
Alhambra COP, Clubhouse Facility Project, 11.25%
1/01/08 ................................................................................... $ 410,000 $ 420,197
1/01/09 ................................................................................... 455,000 466,279
1/01/10 ................................................................................... 500,000 512,350
Burbank RDA, Refunding, Tax Allocation, Series A, 6.25%, 12/01/24 ......................... 5,325,000 5,640,293
California Health Facilities, Financing Authority Revenue, Refunding, St. Francis Medical Center,
Series H, AMBAC Insured, 6.30%, 10/01/15 ................................................. 2,800,000 3,068,968
California State Educational Facilities Authority Revenue, 6.00%,
National University, Connie Lee Insured, 5/01/09 .......................................... 3,580,000 3,872,701
Pooled College and University Projects, Series B, 12/01/20 ................................ 6,025,000 6,310,465
California State GO,
6.00%, 5/01/18 ............................................................................ 535,000 564,473
5.90%, 4/01/23 ............................................................................ 1,200,000 1,250,256
FGIC Insured, 6.00%, 5/01/20 .............................................................. 850,000 905,412
FGIC Insured, Pre-Refunded, 6.00%, 8/01/19 ................................................ 11,000,000 12,117,930
FGIC Insured, Pre-Refunded, 6.00%, 5/01/20 ................................................ 11,650,000 12,801,486
Pre-Refunded, 6.00%, 5/01/18 .............................................................. 6,465,000 7,086,028
Pre-Refunded, 5.90%, 4/01/23 .............................................................. 10,550,000 11,411,302
Series 1994, 5.90%, 5/01/08 ............................................................... 3,070,000 3,325,271
California State GO, Veterans Bonds,
Series BC, 6.00%, 2/01/10 ................................................................. 1,000,000 1,021,500
Series BD, BE, and BF, 6.55%, 2/01/25 ..................................................... 18,745,000 19,155,516
California State Public Works Board, Lease Revenue, Various University of California Projects,
Series A, Pre-Refunded, 6.375%, 10/01/14 .................................................. 4,000,000 4,485,200
10/01/19 .................................................................................. 2,000,000 2,242,600
California Statewide Communities Development Authority Revenue, COP, Sutter Health Obligation Group,
MBIA Insured, 6.00%, 8/15/25 ............................................................. 14,750,000 15,708,898
Chino USD, COP, Refunding, FSA Insured, 5.90%, 9/01/15 .................................... 8,250,000 8,727,840
Coalinga Public Finance Authority Revenue, Series B, 6.25%, 9/15/07 ....................... 1,020,000 1,039,574
Commerce, Refuse to Energy Authority Revenue, Refunding, Series 1994, 8.75%, 7/01/10 ...... 1,000,000 1,189,120
Foothill/Eastern Transportation Corridor Agency, Toll Road Revenue, Senior Lien,
Series A, 6.50%, 1/01/32................................................................... 59,240,000 63,841,171
Forty-Niner Shops, Inc., Auxiliary Organization, California State Long
Beach Project, 6.875%, 4/01/07.............................................................. 1,090,000 1,164,752
4/01/12 ................................................................................... 1,565,000 1,653,031
Los Angeles County MTA, Sales Tax Revenue, Refunding, Proposition C-2, Series A,
Senior Subordinated Lien, AMBAC Insured, 5.00%, 7/01/23 .................................. 10,000,000 9,571,700
Los Angeles CRDA, Housing Revenue, Refunding, Series A, AMBAC Insured, 6.55%, 1/01/27 ..... 3,180,000 3,432,269
Los Angeles Department of Water and Power, Electric Plant Revenue,
Refunding, 6.40%, 11/01/31 ................................................................ 14,925,000 15,852,290
Refunding, MBIA Insured, 6.00%, 2/01/28 ................................................... 3,000,000 3,149,700
Second Issue, MBIA Insured, 6.40%, 11/01/31 ............................................... 10,500,000 11,243,190
Los Angeles GO, Series A, FGIC Insured, 6.20%, 9/01/14 .................................... 8,100,000 8,709,039
Los Angeles Regional Airport Improvements Corp., Lease Revenue, Refunding,
Facilities Sub-Lease, International Airport, 6.35%, 11/01/25 .............................. 18,500,000 20,096,365
United Airlines, Inc. Project, 6.875%, 11/15/12 ........................................... 8,400,000 9,226,308
Pomona Public Financing Authority Revenue, Series Q, MBIA Insured, 5.90%, 12/01/25 ........ 4,000,000 4,221,200
Sacramento County Airport Systems Revenue, Sub-Series D, MBIA Insured, 6.00%, 7/01/16 ..... 6,480,000 6,958,548
San Bernardino County COP, Medical Center Financing Project, Series A, 5.875%, 8/01/26 .... 33,315,000 34,920,117
San Francisco City and County RDA Revenue, George Moscone Convention Center, Lease
Revenue, 6.75%, 7/01/24 ................................................................... 7,080,000 7,909,351
San Francisco City and County RDA Revenue, Tax Allocation Redevelopment
Project, 6.50%, 8/01/22 ................................................................... 12,680,000 13,752,474
San Francisco City and County Sewer Revenue, Series A, FGIC Insured, 5.90%, 10/01/20 ...... 10,380,000 10,912,390
San Joaquin Hills Transportation Corridor Agency, Toll Road Revenue,
5.00%, 1/01/33 ............................................................................ 5,000,000 4,542,900
Pre-Refunded, 7.00%, 1/01/30 .............................................................. 16,785,000 18,914,681
Pre-Refunded, 6.75%, 1/01/32 .............................................................. 10,000,000 11,164,500
Bonds (cont.)
California (cont.)
University of California Revenues,
Hospital Facilities, U.C. Davis Medical Center, AMBAC Insured, 5.75%, 7/01/24 ............. $25,000,000 $ 26,134,750
Research Facilities, Series B, Pre-Refunded, 6.55%, 9/01/24 ............................... 26,780,000 29,908,172
Windsor RDA Revenue, Tax Allocation, Windsor Project, 7.00%, 9/01/24 ...................... 2,405,000 2,603,797
---------
443,206,354
---------
Colorado 4.1%
Colorado HFA, GO, Series A, 7.50%, 5/01/29 ................................................ 1,595,000 1,680,460
Colorado Post-Secondary Educational Facilities Authority Revenue, Refunding & Improvement,
University of Denver Project, MBIA Insured, 5.375%, 3/01/18 .............................. 6,000,000 6,084,060
Denver City and County Airport Revenue,
Series A, 8.875%, 11/15/12 ................................................................ 12,130,000 13,981,523
Series A, 7.50%, 11/15/23 ................................................................. 13,590,000 15,519,916
Series A, 8.50%, 11/15/23 ................................................................. 72,960,000 80,846,246
Series A, 8.00%, 11/15/25 ................................................................. 21,785,000 23,898,924
Series A, Pre-Refunded, 7.50%, 11/15/12 ................................................... 11,200,000 12,794,992
Series A, Pre-Refunded, 8.875%, 11/15/12 .................................................. 4,515,000 5,245,888
Series A, Pre-Refunded, 7.50%, 11/15/23 ................................................... 2,930,000 3,447,936
Series A, Pre-Refunded, 8.50%, 11/15/23 ................................................... 6,985,000 7,805,877
Series A, Pre-Refunded, 7.25%, 11/15/25 ................................................... 24,525,000 27,822,632
Series A, Pre-Refunded, 8.00%, 11/15/25 ................................................... 2,540,000 2,813,997
Series B, 7.25%, 11/15/23 ................................................................. 2,120,000 2,347,730
Series B, Pre-Refunded, 7.25%, 11/15/23 ................................................... 530,000 597,761
Series D, 7.75%, 11/15/21 ................................................................. 8,950,000 9,970,300
Series D, 7.00%, 11/15/25 ................................................................. 7,835,000 8,380,238
Series D, Pre-Refunded, 7.75%, 11/15/21 ................................................... 2,510,000 2,824,980
Series D, Pre-Refunded, 7.00%, 11/15/25 ................................................... 2,175,000 2,357,874
Denver City and County Special Facilities, Airport Revenue, United Airlines, Inc. Project, Series A,
6.875%, 10/01/32 .......................................................................... 47,980,000 51,969,057
Littleton MFR, Rental Housing, Riverpointe Project I, Series 1985, 8.00%, 12/01/22 ........ 16,105,000 16,525,179
----------
296,915,570
----------
Delaware
Delaware State EDA Revenue, Refunding, Water Development, Wilmington,
Series B, 6.45%, 12/01/07.................................................................. 1,160,000 1,327,504
Delaware State Housing Authority, Refunding, MFMR, Series D, 6.75%, 7/01/06 ............... 2,000,000 2,199,560
---------
3,527,064
---------
District of Columbia .6%
District of Columbia GO, Series E, MBIA Insured, 6.00%, 6/01/13 ........................... 4,000,000 4,256,040
District of Columbia HFA, MFHR, FHA Insured,
Mayfair Mansions Apartments, 8.85%, 2/01/31 ............................................... 6,110,000 6,310,897
Refunding, Series A, 7.10%, 9/01/12 ....................................................... 1,830,000 1,947,578
Refunding, Series A, 7.15%, 3/01/24 ....................................................... 6,575,000 6,968,448
District of Columbia HFA, SFMR, Refunding, Series B, 5.85%, 12/01/18 ...................... 2,830,000 2,904,089
District of Columbia Hospital Revenue, Washington Hospital Center Corp., Series A,
Pre-Refunded, 9.00%, 1/01/08 .............................................................. 3,955,000 4,471,009
District of Columbia Redevelopment Land Agency, Sports Arena, Special Tax
Revenue, 5.625%, 11/01/10 ................................................................. 1,240,000 1,259,456
District of Columbia Revenue,
Association of American Medical Colleges, Pre-Refunded, 7.50%, 2/15/20 .................... 5,685,000 6,098,015
Catholic University of America, 6.45%, 10/01/23 ........................................... 5,265,000 5,726,530
---------
39,942,062
---------
Florida 2.7%
Bay County Resource Recovery Revenue, Refunding, MBIA Insured, 6.50%, 7/01/07,
Series A................................................................................... 2,100,000 2,308,299
Series B................................................................................... 11,020,000 12,113,074
Broward County Resource Recovery Revenue, Broward Waste Energy Co., L.P.,
North Project, Series 1984, 7.95%, 12/01/08................................................ 40,950,000 44,214,534
Callaway/Bay County Waste Water Systems Revenue, Series A, FGIC Insured, 6.00%, 9/01/26 ... 1,000,000 1,089,160
Dunes Community Development District Revenue, Water and Sewer Project,
Pre-Refunded, 8.25%, 10/01/18 ............................................................. 3,800,000 3,942,728
Florida State Board Of Education, Capital Outlay, Public Education, Refunding,
Series 1992, 6.40%, 6/01/19 ............................................................... 22,475,000 24,121,519
Bonds (cont.)
Florida (cont.)
Florida State Department of General Services, Division of Facilities Management Revenue, Florida
Facilities Pool, Pre-Refunded, 8.125%, 9/01/17 ........................................... $ 2,000,000 $ 2,067,360
Florida State Department of Transportation, Right of Way Acquisition
and Bridge, 5.375%, 7/01/26................................................................ 10,000,000 10,017,100
Florida State Department of Transportation, Turnpike Revenue, Series A,
Pre-Refunded, 7.75%, 7/01/09............................................................... 7,125,000 7,571,880
Lakeland Retirement Community, First Mortgage Revenue, Carpenters Home
Estate Project, 9.50%, 9/01/06............................................................. 3,600,000 3,642,228
Manatee County IDR, Manatee Hospital and Health Systems, Inc.,
Pre-Refunded, 9.25%, 3/01/21............................................................... 6,500,000 7,451,730
Manatee County School Board COP, MBIA Insured, Pre-Refunded, 6.125%, 7/01/16 .............. 5,000,000 5,600,450
Santa Rosa County Health Facilities Authority Revenue, Refunding,
Gulf Breeze Hospital, Inc., Pre-Refunded, 8.70%, 10/01/14 ................................. 2,500,000 2,598,900
St. Augustine Water and Sewer Revenue, Refunding, Series A, MBIA Insured, 6.20%,
10/01/00 .................................................................................. 840,000 882,134
10/01/01 .................................................................................. 890,000 947,636
10/01/02 .................................................................................. 940,000 1,013,282
10/01/03 .................................................................................. 1,005,000 1,094,154
10/01/04 .................................................................................. 1,065,000 1,171,564
10/01/05 .................................................................................. 1,130,000 1,250,537
10/01/06 .................................................................................. 1,200,000 1,337,844
10/01/07 .................................................................................. 1,275,000 1,424,213
10/01/08 .................................................................................. 1,355,000 1,502,709
10/01/12 .................................................................................. 6,300,000 6,928,425
Sunrise Utility Systems Revenue, Refunding, AMBAC Insured, 5.20%, 10/01/22 ................ 2,000,000 1,975,380
Tampa Capital Improvement Program Revenue, Series A, 10/01/18,
Custodial Receipts, 5.805%................................................................. 37,250,000 37,490,263
8.25%...................................................................................... 11,010,000 11,177,352
----------
194,934,455
----------
Georgia 2.3%
Burke County Development Authority, PCR, Georgia Power Co., Plant Vogle Project, MBIA Insured,
Series 1984-1, 6.60%, 7/01/24 ............................................................. 105,000,000 109,490,850
Series 1984-7, 6.625%, 10/01/24 ........................................................... 8,025,000 8,409,558
Fulton County Development Authority, Special Facilities Revenue, Refunding,
Delta Air Lines, Inc. Project,
6.85%, 11/01/07 ........................................................................... 3,400,000 3,676,012
6.95%, 11/01/12 ........................................................................... 5,500,000 5,972,835
Gainsville and Hall County Hospital Authority Revenue Anticipation Certificates, Refunding,
Northeast Georgia Healthcare Project, MBIA Insured, 6.00%, 10/01/25 ....................... 7,975,000 8,456,531
Georgia Municipal Electric Authority Power Revenue,
Series B, 6.375%, 1/01/16 ................................................................. 14,000,000 14,897,680
Series EE, 6.40%, 1/01/23 ................................................................. 6,325,000 6,904,054
Georgia State HFA Revenue, Homeownership Opportunity Program, Series C, 6.60%, 12/01/23 ... 3,865,000 4,127,279
Monroe County Development Authority, PCR, Georgia Power Co., AMBAC Insured, 6.25%, 7/01/19 4,300,000 4,468,431
----------
166,403,230
----------
Hawaii 1.1%
Hawaii State Airports System Revenue,
FGIC Insured, 7.00%, 7/01/20 .............................................................. 1,000,000 1,087,300
Second Series, 7.00%, 7/01/07 ............................................................. 12,000,000 12,992,160
Second Series, 6.90%, 7/01/12 ............................................................. 500,000 577,285
Second Series, 7.00%, 7/01/18 ............................................................. 2,830,000 3,046,665
Hawaii State Department of Budget and Finance, Special Purposes Mortgage Revenue,
Hawaii Electric Light Co. Project, 7.20%, 12/01/14 ........................................ 200,000 212,190
Hawaii Electric Light Co. Project, Series A, 7.35%, 1/01/20 ............................... 1,000,000 1,060,000
Hawaii Electric Light Co. Project, Series A, MBIA Insured, 5.65%, 10/01/27 ................ 20,000,000 20,412,200
Kaiser Hospital, 6.25%, 3/01/21 ........................................................... 900,000 945,576
Refunding, Kapiolani Health Care System, 6.00%, 7/01/19 ................................... 2,600,000 2,735,434
Wahiawa General Hospital Project, 7.50%, 7/01/12 .......................................... 1,000,000 1,112,140
Hawaii State Department of Budget and Finance, Special Purposes Revenue,
6.00%, 7/01/11 ............................................................................ 1,000,000 1,073,030
6.20%, 7/01/16 ............................................................................ 2,000,000 2,146,280
6.25%, 7/01/21 ............................................................................ 6,250,000 6,726,375
Bonds (cont.)
Hawaii (cont.)
Hawaii State Department of Budget and Finance, Special Purposes Revenue, (cont.)
Refunding, The Queens Health System, Series A, 5.75%, 7/01/26 ............................. $ 5,800,000 $ 5,961,182
Hawaii State SFMR,
HFC, Series A, 7.00%, 7/01/11 ............................................................. 230,000 246,631
HFC, Series A, 7.10%, 7/01/24 ............................................................. 3,350,000 3,595,187
HFC, Series B, 6.90%, 7/01/16 ............................................................. 360,000 387,126
HFC, Series B, 7.00%, 7/01/31 ............................................................. 11,880,000 12,792,503
Housing and Development Corp., Purchase Revenue, Series A, 5.75%, 7/01/30 ................. 2,500,000 2,545,125
---------
79,654,389
---------
Idaho .1%
Idaho Housing Agency, Refunding, Series D-1, 6.45%, 7/01/19 ............................... 2,195,000 2,354,116
Idaho Housing Agency, SFMR, Senior Bond, Series B-1, FGIC Insured,
7.85%, 7/01/09 ............................................................................ 925,000 960,252
7.90%, 1/01/21 ............................................................................ 1,410,000 1,457,150
Power County PCR, Refunding, FMC Corp. Project, 5.625%, 10/01/14 .......................... 2,200,000 2,243,494
---------
7,015,012
---------
Illinois 6.2%
Bryant PCR, Refunding, Central Illinois Light Co. Project, 6.50%,
Series A, 2/01/18 ......................................................................... 7,200,000 7,721,424
Series C, 1/01/10 ......................................................................... 5,000,000 5,400,450
Chicago Board of Education, Chicago School Reform, MBIA Insured, 6.00%,
12/01/16................................................................................... 9,700,000 10,389,767
12/01/26................................................................................... 7,600,000 8,070,288
Chicago Board of Education, Chicago School Reform, Series A,
AMBAC Insured, 5.25%, 12/01/30............................................................. 8,830,000 8,574,813
Chicago COP, AMBAC Insured, 7.75%, 7/15/11 ................................................ 20,400,000 24,344,340
Chicago Gas Supply Revenue, Refunding, The Peoples Gas Light, Series A, 6.10%, 6/01/25 .... 12,000,000 12,710,280
Chicago-O'Hare International Airport Revenue, Special Facilities,
American Airlines, Inc. Project, 8.20%, 12/01/24 .......................................... 11,720,000 14,040,677
United Airlines, Inc. Project, 8.45%, 5/01/07 ............................................. 4,300,000 4,664,855
United Airlines, Inc. Project, 8.50%, 5/01/18 ............................................. 12,305,000 13,358,185
United Airlines, Inc. Project, Series A, 8.40%, 5/01/18 ................................... 450,000 477,887
United Airlines, Inc. Project, Series C, 8.20%, 5/01/18 ................................... 27,600,000 29,271,456
Chicago SFMR, Collateralized, Series A, 7.25%, 9/01/28 .................................... 4,000,000 4,545,760
Cook County, Orland Park School District No. 135, Refunding, FGIC Insured, 5.90%, 12/01/14 10,000,000 10,503,400
Cook County, Refunding, 11/15/22,
Capital Improvement, FGIC Insured, 5.875%, ................................................ 10,000,000 10,677,600
Series A, MBIA Insured, 5.625%, ........................................................... 20,000,000 20,589,600
Cook County School District No. 140, Tinley Park, Refunding, Series A, AMBAC
Insured, 6.00%, 12/01/15 .................................................................. 8,750,000 9,446,413
Illinois Development Finance Authority, PCR, Commonwealth Edison Co. Project,
Series 1991, 7.25%, 6/01/11 ............................................................... 7,500,000 8,103,525
Refunding, Central Illinois Public Services Co., Series A, 6.375%, 1/01/28 ................ 15,200,000 15,996,632
Refunding, Illinois Power Co. Project, Series A, 7.375%, 7/01/21 .......................... 26,550,000 30,484,445
Illinois HDA, Homeowner Mortgage, Series A-1, 6.85%, 8/01/17............................... 4,245,000 4,655,237
Illinois HDA, MF Program, Lawndale Redevelopment Project, 7.10%, 12/01/34 ................. 20,000,000 21,859,200
Refunding, Series A, 7.10%, 7/01/26 ....................................................... 12,915,000 13,793,607
Series 1, 6.625%, 9/01/12 ................................................................. 12,000,000 12,801,120
Series 1, 6.75%, 9/01/21 .................................................................. 7,550,000 8,027,387
Series C, 7.35%, 7/01/11 .................................................................. 2,265,000 2,384,705
Illinois HDA, RMR, Series B, 7.25%, 8/01/17 ............................................... 7,065,000 7,495,117
Illinois Health Facilities Authority Revenue,
Refunding, Edwards Hospital Project, Pre-Refunded, 7.00%, 2/15/22 ......................... 2,000,000 2,209,220
Refunding, Loyola University Health System, Series A, MBIA Insured, 5.625%, 7/01/18 ....... 9,195,000 9,435,725
Refunding, Northwestern Medical Facility Foundation, MBIA Insured, 5.125%, 11/15/28 ....... 7,500,000 7,139,175
Refunding, Servantcor, Series A, Pre-Refunded, 7.875%, 8/15/19 ............................ 1,000,000 1,067,370
Refunding, Servantcor, Series B, Pre-Refunded, 7.875%, 8/15/19 ............................ 3,000,000 3,202,110
Bonds (cont.)
Illinois (cont.)
Illinois Health Facilities Authority Revenue, (cont.)
Refunding, Westlake Community Hospital, 7.875%, 1/01/13 ................................... $ 6,200,000 $ 6,448,124
South Suburban Hospital, ETM, 7.00%, 2/15/18 .............................................. 4,200,000 5,030,256
South Suburban Hospital, Pre-Refunded, 7.00%, 2/15/18 ..................................... 2,800,000 3,092,908
Victory Health Services, Series A, 5.75%, 8/15/27 ......................................... 8,015,000 8,132,179
Illinois State COP, FSA Insured, 6.875%, 7/01/07 .......................................... 2,600,000 2,866,318
Illinois State Dedicated Tax Revenue, Civic Center, Series A,
AMBAC Insured, 6.00%, 12/15/15............................................................. 2,950,000 3,013,927
Metropolitan Pier and Exposition Authority, Dedicated State Tax Revenue, McCormick Place
Expansion Project, Series A, 6.50%,
6/15/22.................................................................................... 5,000 5,447
6/15/27.................................................................................... 555,000 604,140
FGIC Insured, 6/15/07 ..................................................................... 5,000 5,500
Metropolitan Pier and Exposition Authority, Hospitality Facilities Revenue, McCormick Place
Convention Center,
5.75%, 7/01/06 ............................................................................ 1,645,000 1,704,269
6.25%, 7/01/17 ............................................................................ 9,500,000 10,147,045
7.00%, 7/01/26 ............................................................................ 12,000,000 14,443,080
Onterie Center HFC, Mortgage Revenue, Refunding, Series A, MBIA Insured, 7.05%, 7/01/27 ... 4,350,000 4,654,674
Regional Transportation Authority, Series A, AMBAC Insured, 6.125%, 6/01/22 ............... 3,970,000 4,145,871
Southwestern Illinois Development Authority,
Anderson Hospital Project, Series A, 7.00%, 8/15/22 ....................................... 6,200,000 6,709,516
IDR, Spectrulite Consortium, Inc. Project, 6.20%, 2/01/05 ................................. 1,825,000 1,959,594
IDR, Spectrulite Consortium, Inc. Project, 6.625%, 2/01/10 ................................ 3,050,000 3,285,033
Private Activity Revenue, Glenmark Recovery, 8.50%, 8/01/10 ............................... 2,815,000 3,087,042
Solid Waste Disposal Revenue, LaCede Steel Co., 8.375%, 8/01/08 ........................... 4,985,000 5,498,555
Solid Waste Disposal Revenue, LaCede Steel Co., 8.50%, 8/01/20 ............................ 5,390,000 5,958,214
Upper River Valley Development Authority, Environmental Facilities Revenue, General Electric Co.
Project, 5.45%, 2/01/23 ................................................................... 3,600,000 3,561,084
Will County Exempt Facilities Revenue, Mobil Oil Refining Corp. Project, 6.00%, 2/01/27 ... 7,130,000 7,389,817
-----------
445,184,363
-----------
Indiana 1.1%
Carmel Industrial RDA, County Option, Income Tax Lease, Rent Revenue,
MBIA Insured, 5.25%, 1/01/18............................................................... 1,090,000 1,087,264
Hammond Industrial Sewer and Solid Waste Disposal Revenue, American Maize-Products Co.,
Project A, 8.00%, 12/01/24 ................................................................ 17,000,000 19,790,380
Hammond PCR, Stauffer Chemical Project, Guaranteed by Imperial Chemical, Plc.,
Series 1982, 8.00%, 11/01/12 .............................................................. 2,355,000 2,557,153
Indiana Bond Bank, Special Program, Series A, 8.375%, 2/01/18 ............................. 585,000 601,737
Indiana Health Facility Financing Authority, Hospital Revenue, Hancock Memorial
Hospital Project, Series 1990, Pre-Refunded, 8.30%, 8/15/20 ............................... 3,500,000 3,869,495
Indiana State Educational Facilities Authority Revenue,
Manchester College Project, 6.85%, 10/01/18................................................ 3,240,000 3,419,626
Indiana State Housing Financing Authority, SFMR, Refunding, Series A,
6.75%, 1/01/10 ............................................................................ 2,940,000 3,147,593
6.80%, 1/01/17 ............................................................................ 12,835,000 13,739,996
Indianapolis Local Public Improvement, Series D,
6.75%, 2/01/20 ............................................................................ 13,075,000 14,080,075
Refunding, 6.50%, 2/01/22 ................................................................. 4,625,000 4,632,261
Jasper County EDR, Georgia Pacific Corp. Project, 5.625%, 12/01/27 ........................ 2,500,000 2,487,375
Muncies Edit Building Corp., First Mortgage, Series A, AMBAC Insured, 6.60%, 12/01/17 ..... 2,000,000 2,179,940
Sullivan PCR, Refunding, Indiana-Michigan Power Co. Project, Series C, 5.95%, 5/01/09...... 6,000,000 6,271,500
77,864,395
Iowa .2%
Iowa Financing Authority, SFMR, Series F, 5.70%, 1/01/27 .................................. 10,780,000 11,011,123
----------
Kansas
Kansas State Development Financial Authority Revenue, Sisters of Charity Leavenworth,
MBIA Insured, 5.125%, 12/01/18 ............................................................ 2,000,000 1,971,160
---------
Kentucky 2.1%
Ashland PCR, Refunding, Ashland Oil, Inc. Project, 6.65%, 8/01/09 ......................... 3,900,000 4,204,395
Henderson County Solid Waste Disposal Revenue, MacMillan Bloedel Project, 7.00%, 3/01/25 .. 10,000,000 10,892,300
Jefferson County MFHR, Watterson Park Apartments Project, Series A, 6.35%, 11/15/11 ....... 4,870,000 5,131,422
Bonds (cont.)
Kentucky (cont.)
Kenton County Airport Board Revenue, Special Facilities, Delta Air Lines, Inc.,
7.80%, 12/01/15 ........................................................................... $20,000,000 $ 21,318,600
Project A, 7.50%, 2/01/20 ................................................................. 10,000,000 11,033,300
Project A, 7.125%, 2/01/21 ................................................................ 9,330,000 10,176,044
Project B, 7.25%, 2/01/22 ................................................................. 3,350,000 3,679,975
Kentucky Economic Development Financing Authority, Hospital Systems Revenue,
Refunding & Improvement, Appalachian Regional Facility,
5.80%, 10/01/12 ........................................................................... 1,000,000 1,025,890
5.85%, 10/01/17 ........................................................................... 5,615,000 5,764,921
Kentucky Housing Corp. Revenue,
Series A, 6.70%, 7/01/17 .................................................................. 780,000 829,117
Series B, 6.625%, 7/01/14 ................................................................. 4,910,000 5,194,387
Kentucky State Development Financing Authority, Hospital Revenue,
Claire Medical Center Project, Pre-Refunded, 7.125%, 9/01/21 .............................. 700,000 771,561
Kentucky State Property and Buildings Commission Revenue, Project No. 48,
Pre-Refunded, 8.00%, 8/01/08 .............................................................. 4,500,000 4,633,065
Mount Sterling Lease Revenue, Kentucky League Cities, Series A,
6.10%, 3/01/08 ............................................................................ 20,375,000 21,752,758
6.20%, 3/01/18 ............................................................................ 11,765,000 12,626,433
Pendleton County, Multi-County Lease Revenue, Kentucky Association of Counties
Leasing Trust, Series A, 6.50%, 3/01/19 ................................................... 27,160,000 29,580,771
----------
148,614,939
----------
Louisiana 2.1%
Bastrop PCR, Refunding, International Paper Co. Project, 6.90%, 3/01/07 ................... 2,000,000 2,176,060
Calcasieu Parish IDB, PCR, Refunding, Gulf States Utilities Co. Project, 6.75%, 10/01/12 .. 14,285,000 15,244,523
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 4,855,775
6.50%, 12/01/18 ........................................................................... 5,530,000 6,332,237
6.65%, 12/01/21 ........................................................................... 3,145,000 3,387,354
Calcasieu Parish Public Transportation Authority Mortgage Revenue, Refunding,
Series A, 7.75%, 6/01/12 .................................................................. 3,185,000 3,396,452
Series B, 6.375%, 11/01/02 ................................................................ 305,000 323,559
Series B, 6.875%, 11/01/12 ................................................................ 615,000 658,204
De Soto Parish Environmental Improvement Revenue, International Paper Co.
Project, Series A, 7.70%, 11/01/18......................................................... 2,500,000 2,924,625
East Baton Rouge Mortgage Financing Authority, SFM,
MBS, Series A, 6.80%, 10/01/28 ............................................................ 6,275,000 6,766,835
Series C, 7.00%, 4/01/32 .................................................................. 2,365,000 2,515,083
Series D, 7.10%, 4/01/32 .................................................................. 3,560,000 3,781,468
Lafayette Public Trust Finance Authority, SFMR, Refunding, Series A, 8.50%, 11/15/12 ...... 1,442,598 1,511,454
Louisiana HFA Mortgage Revenue, Refunding,
7.375%, 9/01/13 ........................................................................... 1,315,000 1,375,779
SF, Series B-2, 5.75%, 12/01/28 ........................................................... 2,890,000 2,953,985
Louisiana Office Facility Corp., Capital Facility Bonds, Statewide Lease, 7.75%, 12/01/10 . 3,400,000 3,748,738
Louisiana Public Facilities Authority Revenue, Refunding, MBIA Insured,
Alton Ochsner Medical Foundation Project, Series B, 6.50%, 5/15/22 ........................ 3,500,000 3,769,290
Xavier University of Louisiana Project, 5.25%, 9/01/27 .................................... 3,000,000 2,938,200
New Orleans GO, Refunding, AMBAC Insured,
6.125%, 10/01/16 .......................................................................... 10,275,000 11,027,438
6.20%, 10/01/21 ........................................................................... 8,050,000 8,603,357
Pointe Coupee Parish PCR, Refunding, Gulf States Utilities Co. Project, 6.70%, 3/01/13 .... 2,200,000 2,352,350
Quachita Parish Hospital Service District No. 1 Revenue, Glenwood Regional Medical
Center, Pre-Refunded, 7.50%, 7/01/21 ...................................................... 4,000,000 4,431,000
bTerrebonne Parish Hospital Service District No. 1, Hospital Revenue, Refunding, Terrebonne
General Medical Center Project, 5.375%, 4/01/23 .......................................... 2,500,000 2,457,750
West Feliciana Parish PCR, Gulf Systems Utilities Co. Project,
7.70%, 12/01/14 ........................................................................... 2,000,000 2,236,040
7.00%, 11/01/15 ........................................................................... 3,050,000 3,360,643
8.00%, 12/01/24 ........................................................................... 41,050,000 43,879,577
----------
147,007,776
----------
BONDS (CONT.)
MAINE .9%
Bucksport Solid Waste Disposal Revenue, Champion International Corp.
Project, 6.25%, 5/01/10 ................................................................... $ 5,000,000 $ 5,277,650
Maine Financial Authority, Solid Waste Recycling Facilities Revenue,
Great Northern Paper Co., Bowater Project, 7.75%, 10/01/22 ................................ 29,300,000 32,710,227
Maine State Health and Higher Education Facilities Authority Revenue,
FSA Insured, Series B, 7.00%, 7/01/24 ..................................................... 2,445,000 2,773,461
Maine State Housing Authority, Mortgage Purchase,
Series A-5, 6.20%, 11/15/16 ............................................................... 2,500,000 2,617,100
Series C, 6.55%, 11/15/12 ................................................................. 3,700,000 3,939,501
Series C, 6.65%, 11/15/24 ................................................................. 3,500,000 3,719,415
Series D, 6.45%, 11/15/07 ................................................................. 3,540,000 3,717,142
Series D, 6.70%, 11/15/15 ................................................................. 5,800,000 6,263,942
Rumford PCR, Refunding, Boise Cascade Corp. Project, 6.625%, 7/01/20 ...................... 4,800,000 5,189,424
---------
66,207,862
---------
MARYLAND 2.0%
Gaithersburg Hospital Facilities Improvement Revenue, Shady Grove Hospital,
Refunding & Improvement, FSA Insured, 6.00%, 9/01/21 ...................................... 10,110,000 10,639,562
Series A, Pre-Refunded, 8.25%, 9/01/21 .................................................... 43,225,000 49,276,932
Maryland State Community Development Administration, Department of Housing
and Community Development,
MFHR, Mortgage Insured, Series G, 6.55%, 5/15/19 .......................................... 5,595,000 5,917,384
SF, 7.25%, 4/01/27 ........................................................................ 965,000 1,017,129
Maryland State Health and Higher Educational Facilities Authority Revenue,
Hartford Memorial Hospital and Fallston General Hospital, 8.50%, 7/01/14 ................. 4,900,000 5,003,439
Montgomery County Housing Opportunity Community, SFMR, Refunding,
Series B, 6.625%, 7/01/28 ................................................................. 6,500,000 6,866,535
Takoma Park Hospital Facilities Revenue, Refunding, Washington Adventist
Hospital, Series A, 8.25%, 9/01/21,
Sub-Series 1, Pre-Refunded................................................................. 34,140,000 38,919,941
Sub-Series 2............................................................................... 20,125,000 22,489,486
----------
140,130,408
----------
MASSACHUSETTS 2.6%
Agawam Resource Recovery Revenue, Springfield Resource Recovery Project,
Series 1986, 8.50%, 12/01/08 .............................................................. 10,340,000 10,572,960
Massachusetts Health and Educational Facilities Authority Revenue, Notre Dame
Health Care Center, Series A, 7.875%, 10/01/22 ............................................ 2,310,000 2,482,904
Massachusetts State Consolidated Loan,
Series A, 7.50%, 6/01/04 .................................................................. 7,500,000 8,622,525
Series D, Pre-Refunded, 7.00%, 7/01/07..................................................... 1,325,000 1,452,584
Massachusetts State GO, Refunding, Series B, 6.50%, 8/01/08 ............................... 5,900,000 6,754,733
Massachusetts State Health and Educational Facilities Authority Revenue,
Framingham Union Hospital, Series B, Pre-Refunded, 8.50%, 7/01/20 ......................... 9,020,000 9,979,457
Melrose-Wakefield Hospital, Series B, Refunding, ETM, 6.35%, 7/01/06 ...................... 1,100,000 1,239,953
Sisters Providence Health System, Series A, Pre-Refunded, 6.50%, 11/15/08 ................. 1,000,000 1,115,010
Sisters Providence Health System, Series A, Pre-Refunded, 6.625%, 11/15/22 ................ 12,050,000 13,484,312
Massachusetts State HFA, HDA, Series D, FGIC Insured, 6.875%, 11/15/21 .................... 5,250,000 5,657,085
Massachusetts State HFA, Housing Projects, Refunding, Series A,
6.30%, 10/01/13 ........................................................................... 25,635,000 27,145,158
6.375%, 4/01/21 ........................................................................... 24,750,000 26,240,940
Massachusetts State HFA Revenue, SF, Series 41,
6.30%, 12/01/14 ........................................................................... 6,250,000 6,690,563
6.35%, 6/01/17 ............................................................................ 5,750,000 6,124,670
Massachusetts State HFA Revenue, SFMR, Series G, 8.10%, 12/01/14 .......................... 2,410,000 2,462,273
Massachusetts State Housing Facilities Authority, FGIC Insured,
Series C, 6.90%, 11/15/21 ................................................................. 9,715,000 10,294,791
Series D, 6.80%, 11/15/12 ................................................................. 250,000 271,090
Massachusetts State Industrial Finance Agency, Health Care Facilities Revenue,
Jewish Geriatric Services, Inc., Series B,
5.375%, 5/15/17 ........................................................................... 1,965,000 1,972,251
5.50%, 5/15/27 ............................................................................ 5,000,000 5,527,700
Massachusetts State Industrial Finance Agency Revenue, D. Youville Senior Care,
5.65%, 10/01/17 ........................................................................... 2,295,000 2,327,612
5.70%, 10/01/27 ........................................................................... 7,375,000 7,479,578
Massachusetts State Port Authority Revenue, Special Facilities, Bosfuel Project,
MBIA Insured, 5.75%, 7/01/39 .............................................................. 11,750,000 11,971,840
Bonds (cont.)
Massachusetts (cont.)
Plymouth County COP, Series A, 7.00%,
4/01/12.................................................................................... $10,000,000 $ 11,076,500
4/01/22.................................................................................... 5,000,000 5,049,300
---------
185,995,789
----------
MICHIGAN 1.6%
Battle Creek Tax Increment Finance Authority, Pre-Refunded, 7.40%, 5/01/16 ................ 2,000,000 2,337,920
Belding Area Schools, Refunding, FGIC Insured, 6.10%, 5/01/26 ............................. 3,805,000 4,077,514
Climax-Scotts Community Schools, Pre-Refunded, 6.35%, 5/01/23 ............................. 2,445,000 2,717,593
Detroit GO,
Refunding, Series B, 6.375%, 4/01/06 ...................................................... 7,265,000 7,884,632
Refunding, Series B, 6.25%, 4/01/09 ....................................................... 625,000 668,513
Series A, Pre-Refunded, 6.70%, 4/01/10 .................................................... 4,550,000 5,171,712
Detroit GO, Self-Insurance, Series A, 5.70%, 5/01/02 ...................................... 2,250,000 2,325,983
Detroit Sewage Disposal Revenue, Series A, MBIA Insured, 5.50%, 7/01/20 ................... 29,200,000 29,684,720
Detroit/Wayne County Stadium Authority, FGIC Insured, 5.25%, 2/01/27 ...................... 4,235,000 4,142,423
Kalamazoo EDC Revenue, Refunding, Limited Obligation, Friendship Village,
Series A, 6.25%, 5/15/27 .................................................................. 2,000,000 2,099,120
Michigan State Building Authority Revenue, Series II, 6.25%, 10/01/20 ..................... 15,650,000 16,509,185
Michigan State HDA, Limited Obligation Revenue, Fraser
Woods Project, FSA Insured, 6.625%, 9/15/19 ............................................... 2,500,000 2,677,825
Rental Housing Revenue, Refunding, Series A, 6.60%, 4/01/12 ............................... 5,000,000 5,399,150
Michigan State HDA, SFMR, Series A,
6.45%, 12/01/14 ........................................................................... 2,000,000 2,139,540
6.875%, 6/01/23 ........................................................................... 2,870,000 3,052,676
Michigan State HFA Revenue, Presbyterian Villages Obligation Group,
5.30%, 1/01/99 ............................................................................ 200,000 201,048
5.40%, 1/01/00 ............................................................................ 310,000 313,838
5.70%, 1/01/01 ............................................................................ 310,000 316,005
5.80%, 1/01/02 ............................................................................ 355,000 364,234
5.90%, 1/01/03 ............................................................................ 325,000 336,170
6.00%, 1/01/04 ............................................................................ 390,000 405,857
6.375%, 1/01/15 ........................................................................... 275,000 295,559
6.40%, 1/01/15 ............................................................................ 1,000,000 1,058,180
6.50%, 1/01/25 ............................................................................ 3,500,000 3,702,720
Michigan State HFA Revenue, Refunding, Series A,
Henry Ford Health, 5.25%, 11/15/25 ........................................................ 5,000,000 4,858,150
Hospital Genesys Regional Medical, 5.50%, 10/01/18 ........................................ 4,500,000 4,427,685
Hospital Genesys Regional Medical, 5.50%, 10/01/27 ........................................ 5,000,000 4,866,900
---------
112,034,852
---------
MINNESOTA 2.1%
Cloquet PCR, Refunding, Potlach Corp. Projects, 5.90%, 10/01/26............................ 9,100,000 9,509,591
Dakota County Housing, RDA, Limited Annual Appropriation Tax and Revenue,
Development Housing Facilities Project,
7.25%, 1/01/99 ............................................................................ 600,000 604,644
7.25%, 1/01/00 ............................................................................ 645,000 656,333
7.25%, 1/01/01 ............................................................................ 695,000 712,361
7.50%, 1/01/06 ............................................................................ 3,930,000 4,066,096
8.00%, 1/01/07 ............................................................................ 2,140,000 2,199,342
International Falls PCR, Refunding, Boise Cascade Corp. Project, 5.65%, 12/01/22 .......... 3,500,000 3,532,375
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 26,983,065
Minnesota State HFA, SFM, Series D-1,
6.45%, 7/01/11 ............................................................................ 3,505,000 3,746,495
6.50%, 1/01/17 ............................................................................ 1,380,000 1,467,865
BONDS (CONT.)
MINNESOTA (CONT.)
Minnesota State Higher Educational Facilities Authority Revenue, University
Saint Thomas, Series Four-P,
5.375%, 4/01/18 ........................................................................... $ 525,000 $ 525,567
5.40%, 4/01/23 ............................................................................ 580,000 579,176
Minnetonka MFR, Rental Housing, Ridgepointe Housing Project, Phase II, 8.00%, 5/15/22 ..... 11,230,000 11,506,820
Red Wing Housing, RDA, Jordan Tower II Project, 7.00%, 1/01/19 ............................ 1,500,000 1,592,910
bRochester Health Care Facilities Revenue, Mayo Foundation, Series A, 5.50%, 11/15/27 ...... 29,000,000 28,957,370
Roseville MFR, Rental Housing, Rosepointe No. 1 Project, 8.00%, 10/01/18 .................. 13,785,000 14,144,651
St. Louis Park EDA, Tax Increment Revenue, Refunding, FGIC Insured,
Pre-Refunded, 8.40%, 9/01/09 .............................................................. 6,000,000 6,857,580
St. Paul Port Authority,
Energy Park, Tax Increment Revenue, Refunding, Pre-Refunded, 8.00%, 12/01/07 .............. 3,500,000 3,652,810
IDR, Bandana Square, Series C, 7.70%, 12/01/00 ............................................ 230,000 228,852
IDR, Bandana Square, Series C, 7.70%, 12/01/01 ............................................ 255,000 252,738
IDR, Bandana Square, Series C, 7.70%, 12/01/02 ............................................ 270,000 268,515
IDR, Bandana Square, Series C, 7.70%, 12/01/07 ............................................ 1,690,000 1,499,368
IDR, Bandana Square, Series C, 7.80%, 12/01/12 ............................................ 3,465,000 2,939,914
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/98 ................................ 445,000 445,009
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/99 ................................ 480,000 480,326
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/00 ................................ 515,000 515,613
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/01 ................................ 550,000 550,919
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/02 ................................ 595,000 596,255
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/03 ................................ 640,000 641,613
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/04 ................................ 685,000 686,987
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/05 ................................ 740,000 747,430
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/06 ................................ 795,000 803,117
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/07 ................................ 855,000 863,730
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/08 ................................ 915,000 924,342
IDR, Brown and Bigelow Co., Series 1979-2, 7.50%, 10/01/09 ................................ 670,000 676,841
IDR, Refunding, Common Bond Fund, Series C, Fort Road Medical Center, 7.95%, 9/01/01 ...... 140,000 138,635
IDR, Refunding, Common Bond Fund, Series C, Fort Road Medical Center, 7.95%, 9/01/02 ...... 155,000 153,982
IDR, Refunding, Common Bond Fund, Series C, Fort Road Medical Center, 7.95%, 9/01/10 ...... 1,705,000 1,485,055
IDR, Refunding, Common Bond Fund, Series F, Ideal Security Hardware Corp., 8.00%, 12/01/01 105,000 104,041
IDR, Refunding, Common Bond Fund, Series F, Ideal Security Hardware Corp., 8.00%, 12/01/02 115,000 114,327
IDR, Refunding, Common Bond Fund, Series F, Ideal Security Hardware Corp., 8.00%, 12/01/12 1,790,000 1,546,256
Washington County Housing RDA,
Housing Development Revenue, Orleans Apartments, Project A, 8.25%, 7/01/21 ................ 3,000,000 3,072,840
Housing Development Revenue, Raymie Johnson Apartments, Pre-Refunded, 7.70%, 12/01/19 ..... 5,210,000 5,880,058
Pooled Housing and Redevelopment, 7.20%, 1/01/22 .......................................... 5,885,000 6,294,066
---------
153,210,884
---------
MISSISSIPPI .7%
Claiborne County PCR, Refunding, Systems Energy Resources, Inc.,
7.30%, 5/01/25 ............................................................................ 5,700,000 6,028,491
6.20%, 2/01/26 ............................................................................ 36,500,000 37,427,100
Mississippi Home Corp., SFR, Refunding, Senior Series A, FGIC Insured, 9.25%, 3/01/12 ..... 1,385,000 1,482,809
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 2,453,741
47,392,141
Missouri .3%
Hazelwood IDA, MFHR, Refunding, Lakes Apartments Project, Series A, 6.10%, 9/20/26 ........ 3,000,000 3,116,580
Missouri State Health and Educational Facilities Authority Revenue,
Series B, MBIA Insured, 6.25%, 2/15/12 .................................................... 5,000,000 5,336,300
Sisters of St. Mary's Health Care Project, BIG Insured, Pre-Refunded, 7.75%, 6/01/16 ...... 3,750,000 3,835,688
St. Louis Parking Facilities Revenue, Pre-Refunded, 6.625%, 12/15/21 ...................... 6,000,000 6,662,760
West Plains IDA, Hospital Revenue, Ozarks Medical Center Project, Series A,
Pre-Refunded 8.625%, 9/15/20 .............................................................. 3,550,000 3,945,754
---------
22,897,082
---------
BONDS (CONT.)
MONTANA .8%
Forsyth County PCR,
Puget Sound Power and Light Co. Project, AMBAC Insured, 6.80%, 3/01/22 .................... $10,000,000 $ 10,860,400
Refunding, The Montana Power Co. Colstrip Project, Series A, 6.125%, 5/01/23 .............. 3,250,000 3,389,458
Refunding, The Montana Power Co., Series B, AMBAC Insured, 5.90%, 12/01/23 ................ 4,225,000 4,492,147
Refunding, The Montana Power Co., Series B, MBIA Insured, 5.90%, 12/01/23 ................. 20,385,000 21,673,944
Montana State Health Facilities Authority Revenue, Montana Developmental
Center Project, 6.40%, 6/01/19 ............................................................ 2,000,000 2,156,040
Montana State Health Facilities Authority Revenue, Sisters of Charity Leavenworth,
MBIA Insured, 5.125%, 12/01/18 ............................................................ 5,000,000 4,909,400
Montana State Housing Board, Refunding, SF Program,
Series A, 6.50%, 12/01/22 ................................................................. 2,835,000 2,986,247
Series B-1, 6.25%, 12/01/21 ............................................................... 6,720,000 7,111,306
---------
57,578,942
---------
NEBRASKA .2%
Lancaster County Hospital Authority No. 1, Hospital Revenue, Bryan Memorial Project,
Series B, MBIA Insured, 5.375%, 6/01/22 ................................................... 6,500,000 6,502,535
Nebraska Investment Financial Authority, 7.00%, 11/01/09 .................................. 5,885,000 6,003,230
---------
12,505,765
---------
NEVADA 3.4%
Churchill County Health Care Facilities Revenue, Western Health Network,
Series A, MBIA Insured, 6.25%, 1/01/14..................................................... 2,000,000 2,158,100
Clark County Airport System Improvement Revenue, Pre-Refunded, 8.25%, 7/01/15 ............. 17,500,000 17,962,525
Clark County HFC, MFHR, FHA Insured, 7.75%, 7/01/23 ....................................... 5,075,000 5,261,100
Clark County IDR,
Nevada Power Co. Project, Series A, 5.90% 11/01/32 ........................................ 2,600,000 2,626,442
Refunding, Nevada Power Co. Project, Series B, 5.90%, 10/01/30 ............................ 15,000,000 15,134,700
Refunding, Nevada Power Co. Project, Series C, 7.20%, 10/01/22 ............................ 12,500,000 13,780,875
Southwest Gas Corp., Series A, 7.30%, 9/01/27 ............................................. 18,080,000 19,976,230
Southwest Gas Corp., Series A, 6.50%, 12/01/33 ............................................ 10,000,000 10,776,700
Southwest Gas Corp., Series B, 7.50%, 9/01/32 ............................................. 62,470,000 69,244,247
Humboldt County PCR, Refunding, Sierra Pacific Power Co., Series A,
AMBAC Insured, 6.30%, 7/01/22 ............................................................. 4,500,000 4,802,220
Nevada Housing Division, Multi-Unit Housing Revenue, Issue B, 6.55%, 10/01/25.............. 5,405,000 5,828,644
Nevada Housing Division, Refunding, Issue C-2, 6.75%, 10/01/26............................. 8,190,000 8,779,926
Nevada Housing Division, SF Program,
Issue A, FI/GML, 8.30%, 10/01/19 .......................................................... 2,950,000 3,210,898
Issue A-2, FI/GML, 8.375%, 10/01/19 ....................................................... 2,605,000 2,848,698
Refunding, Program A-1, 6.25%, 10/01/26 ................................................... 3,870,000 4,086,797
Nevada State Colorado River, Series 1994, Pre-Refunded, 6.50%, 7/01/24 .................... 15,915,000 17,729,628
Nevada State Municipal Bond Bank Project No. 40-41-A, ETM, 6.375%, 12/01/17 ............... 10,275,000 11,325,516
Reno RDA, Tax Allocation,
Downtown Redevelopment Project, Series C, Pre-Refunded, 7.75%, 9/01/05 .................... 2,695,000 2,951,375
Downtown Redevelopment Project, Series D, 7.625%, 9/01/16 ................................. 4,255,000 4,617,781
Downtown Redevelopment Project, Series D, Pre-Refunded, 7.625%, 9/01/16.................... 4,035,000 4,474,290
Refunding, Series A, 6.20%, 6/01/18 ....................................................... 3,000,000 3,096,630
Washoe County Gas and Water Facilities Revenue, Refunding, AMBAC Insured, 6.30%, 12/01/14 . 5,000,000 5,378,900
Washoe County Hospital Facility Revenue, Washoe Medical Center, Inc. Project,
Series A, AMBAC Insured, 6.25%, 6/01/13 ................................................... 9,295,000 10,126,345
----------
246,178,567
----------
NEW HAMPSHIRE 1.7%
Nashua Housing Authority, MFR, Refunding, Clocktower Project,
FGIC Insured, 6.25%, 6/20/33 .............................................................. 6,176,000 6,488,876
New Hampshire Higher Education and Health Facilities Authority Revenue,
Kendal at Hanover Project, Pre-Refunded, 8.00%, 10/01/19 .................................. 9,410,000 10,090,155
New Hampshire Catholic Charities, 5.80%, 8/01/22 .......................................... 1,000,000 1,008,110
Rivier College, 5.60%, 1/01/28 ............................................................ 4,590,000 4,437,658
St. Joseph Hospital, 7.50%, 1/01/16 ....................................................... 2,300,000 2,475,490
The Hitchcock Clinic, MBIA Insured, 6.00%, 7/01/27 ........................................ 4,275,000 4,516,837
New Hampshire State HFA,
MFHR, Series 1, 7.10%, 1/01/14 ............................................................ 4,920,000 5,204,081
SF Residential, Series A, 8.50%, 7/01/14 .................................................. 3,515,000 3,627,621
BONDS (CONT.)
NEW HAMPSHIRE (CONT.)
NEW HAMPSHIRE STATE HFA, (CONT.)
SFMR, Series E, 6.75%, 7/01/19 ............................................................ $ 6,360,000 $ 6,886,099
SFMR, Series E, 6.80%, 7/01/25 ............................................................ 4,755,000 5,147,573
New Hampshire State IDA, Pollution Control Public Service Co., 5/01/21,
Project A, 7.65%........................................................................... 6,870,000 7,316,275
Project B, 7.50%........................................................................... 50,690,000 53,992,454
Project C, 7.65%........................................................................... 7,450,000 7,933,952
---------
119,125,181
----------
NEW JERSEY .3%
Mercer County Improvement Authority, Refunding, Solid Waste, 5.75%, 9/15/16 ............... 2,500,000 2,640,850
New Jersey Health Care Facilities, Financing Authority Revenue,
Cathedral Health Service, Pre-Refunded, 7.25%, 2/15/21 .................................... 3,975,000 4,349,207
Community Memorial Hospital Association, Series C, Pre-Refunded, 8.00%, 7/01/14 ........... 900,000 923,733
Refunding, Cathedral Health Services, MBIA Insured, 5.25%, 8/01/21 ........................ 7,865,000 7,812,069
Zurbrugg Memorial Hospital Issue, Series C, 8.50%, 7/01/12 ................................ 4,150,000 4,214,242
---------
19,940,101
----------
NEW MEXICO .9%
Farmington PCR, Refunding, Public Service Co. of New Mexico, Series A,
AMBAC Insured, 6.375%, 12/15/22 ........................................................... 10,435,000 11,256,548
Lordsburg PCR, Refunding, Phelps Dodge Corp. Project, 6.50%, 4/01/13 ...................... 17,000,000 18,455,880
New Mexico State Mortgage Financial Authority, SFM, Refunding, Series A, 6.85%, 7/01/10 ... 13,875,000 14,782,564
University of New Mexico Revenue, Series 1989, Pre-Refunded, 7.90%, 6/01/19 ............... 17,000,000 18,023,400
----------
62,518,392
----------
NEW YORK 16.8%
MTA Revenue,
bCommuter Facilities, Series A, 5.25%, 7/01/28 ............................................ 5,000,000 4,809,450
Commuter Facilities, Series A, FGIC Insured, 6.00%, 7/01/16 ............................... 8,950,000 9,655,260
Commuter Facilities, Series A, FGIC Insured, 6.00%, 7/01/21 ............................... 9,225,000 9,876,008
Commuter Facilities, Series A, FGIC Insured, 6.10%, 7/01/26 ............................... 11,050,000 11,916,541
Commuter Facilities, Series C-1, FGIC Insured, 5.375%, 7/01/27 ............................ 10,000,000 10,011,700
Dedicated Tax Fund, Series A, MBIA Insured, 5.25%, 4/01/26 ................................ 11,125,000 10,948,224
Refunding, Transit Facilities, Series M, 6.00%, 7/01/14 ................................... 18,210,000 18,741,004
Service Contract, Transit Facilities, Series 6, Pre-Refunded, 7.00%, 7/01/09 .............. 3,000,000 3,293,550
Transit Facilities, Refunding, Service Contract, Series 8, 5.375%, 7/01/21 ................ 15,000,000 14,697,150
Transit Facilities, Series A, FSA Insured, 6.00%, 7/01/16 ................................. 3,630,000 3,913,031
Transit Facilities, Series A, FSA Insured, 6.10%, 7/01/21 ................................. 6,260,000 6,750,909
Transit Facilities, Series C-1, 5.625%, 7/01/27 ........................................... 10,800,000 10,901,520
New Rochelle IDA, Civic Facilities Revenue, College of New Rochelle Project,
6.625%, 7/01/12............................................................................ 1,245,000 1,320,447
New York City GO,
Refunding, Series B, 6.20%, 8/15/06 ....................................................... 1,500,000 1,634,340
Refunding, Series B, 6.30%, 8/15/08 ....................................................... 26,875,000 29,066,925
Refunding, Series B, 6.375%, 8/15/10 ...................................................... 21,740,000 23,542,463
Refunding, Series E, 5.75%, 2/15/09........................................................ 8,500,000 8,867,965
Refunding, Series F, 6.00%, 8/01/13 ....................................................... 14,000,000 15,054,760
Refunding, Series F, 5.25%, 8/01/15 ....................................................... 20,580,000 20,121,683
Refunding, Series H, 6.25%, 8/01/15 ....................................................... 13,035,000 13,881,493
Refunding, Series H, 6.125%, 8/01/25 ...................................................... 65,785,000 70,207,726
Refunding, Series H, Sub-Series H-1, 6.125%, 8/01/11 ...................................... 5,000,000 5,358,500
Refunding, Series J, 6.00%, 8/01/21 ....................................................... 28,260,000 29,524,635
Series A, 6.125%, 8/01/06 ................................................................. 14,500,000 15,636,800
Series A, 6.20%, 8/01/07 .................................................................. 21,810,000 23,484,790
Series A, 6.25%, 8/01/08 .................................................................. 4,390,000 4,726,494
Series A, 7.75%, 8/15/13.................................................................... 485,000 537,676
Series A, 7.75%, 8/15/14 .................................................................. 245,000 271,215
Series A, 6.25%, 8/01/16 .................................................................. 3,280,000 3,489,986
Series A, 7.75%, 8/15/17 .................................................................. 105,000 115,999
BONDS (CONT.)
NEW YORK (CONT.)
NEW YORK CITY GO, (CONT.)
Series A, 8.00%, 8/15/20 .................................................................. $ 5,000 $ 5,574
Series A, 8.00%, 8/15/21 .................................................................. 15,000 16,650
Series A, Pre-Refunded, 8.00%, 3/15/12 .................................................... 1,000,000 1,083,030
Series A, Pre-Refunded, 8.00%, 3/15/13 .................................................... 1,850,000 2,003,606
Series A, Pre-Refunded, 7.75%, 8/15/13..................................................... 4,325,000 4,846,768
Series A, Pre-Refunded, 8.00%, 3/15/14 .................................................... 13,400,000 14,512,602
Series A, Pre-Refunded, 8.00%, 3/15/15 .................................................... 1,115,000 1,207,578
Series A, Pre-Refunded, 8.00%, 3/15/16 .................................................... 3,000,000 3,249,090
Series A, Pre-Refunded, 6.25%, 8/01/16 .................................................... 1,720,000 1,863,138
Series A, Pre-Refunded, 8.00%, 3/15/17 .................................................... 11,660,000 12,628,130
Series A, Pre-Refunded, 7.75%, 8/15/17 .................................................... 3,180,000 3,558,452
Series B, 8.00%, 6/01/98................................................................... 15,000 15,043
Series B, 8.25%, 6/01/02 .................................................................. 205,000 229,122
Series B, 7.50%, 2/01/04 .................................................................. 10,000,000 11,060,300
Series B, 8.25%, 6/01/05 .................................................................. 1,000,000 1,202,110
Series B, 7.50%, 10/01/11 ................................................................. 190,000 200,826
Series B, 7.50%, 10/01/12 ................................................................. 630,000 665,627
Series B, 6.75%, 10/01/15 ................................................................. 50,000 54,603
Series B, 6.75%, 10/01/17 ................................................................. 1,300,000 1,411,007
Series B, 7.00%, 2/01/19 .................................................................. 15,000,000 16,352,550
Series B, 6.00%, 8/15/26 .................................................................. 2,000,000 2,082,280
Series B, ETM, 8.00%, 6/01/98.............................................................. 1,420,000 1,424,317
Series B, ETM, 8.00%, 6/01/01 ............................................................. 3,000,000 3,320,670
Series B, Pre-Refunded, 8.25%, 6/01/02 .................................................... 4,295,000 4,841,324
Series B, Pre-Refunded, 7.50%, 10/01/11 ................................................... 6,810,000 7,233,650
Series B, Pre-Refunded, 7.50%, 10/01/12 ................................................... 10,355,000 10,999,185
Series B, Pre-Refunded, 6.75%, 10/01/15 ................................................... 9,250,000 10,225,968
Series B, Sub-Series B-1, Pre-Refunded, 7.00%, 8/15/16..................................... 3,000,000 3,437,460
Series B-1, Pre-Refunded, 7.30%, 8/15/11 .................................................. 8,000,000 9,272,960
Series C, 7.25%, 8/15/24 .................................................................. 3,540,000 3,820,934
Series C, Pre-Refunded, 7.25%, 8/15/24 .................................................... 1,305,000 1,423,494
Series C, Sub-Series C-1, 7.00%, 8/01/17 .................................................. 145,000 159,396
Series C, Sub-Series C-1, 7.00%, 8/01/18 .................................................. 1,705,000 1,874,272
Series C, Sub-Series C-1, Pre-Refunded, 7.00%, 8/01/17 .................................... 1,785,000 1,988,454
Series D, 8.00%, 8/01/99 .................................................................. 1,760,000 1,843,442
Series D, 7.30%, 2/01/01 .................................................................. 2,860,000 3,065,434
Series D, 8.25%, 8/01/13 .................................................................. 145,000 162,758
Series D, 8.25%, 8/01/14 .................................................................. 85,000 95,273
Series D, 7.625%, 2/01/15 ................................................................. 700,000 777,693
Series D, 7.50%, 2/01/16 .................................................................. 255,000 282,407
Series D, 8.00%, 8/01/16 .................................................................. 50,000 55,703
Series D, 7.50%, 2/01/17 .................................................................. 865,000 956,093
Series D, 8.00%, 8/01/17 .................................................................. 100,000 111,374
Series D, 8.00%, 8/01/18 .................................................................. 50,000 55,687
Series D, 8.00%, 8/01/19 .................................................................. 30,000 33,412
Series D, 6.00%, 2/15/25 .................................................................. 31,300,000 32,605,210
Series D, ETM, 8.00%, 8/01/99 ............................................................. 240,000 251,765
Series D, ETM, 7.30%, 2/01/01 ............................................................. 2,140,000 2,304,010
Series D, Group B, 8.25%, 8/01/11.......................................................... 160,000 179,286
Series D, Group B, 8.25%, 8/01/12 ......................................................... 245,000 274,611
Series D, Pre-Refunded, 8.25%, 8/01/12 .................................................... 10,880,000 12,325,190
Series D, Pre-Refunded, 8.25%, 8/01/13 .................................................... 7,605,000 8,615,172
Series D, Pre-Refunded, 8.25%, 8/01/14 .................................................... 4,255,000 4,813,256
Series D, Pre-Refunded, 7.625%, 2/01/15 ................................................... 8,300,000 9,333,848
Series D, Pre-Refunded, 7.50%, 2/01/16 .................................................... 4,745,000 5,315,776
Series D, Pre-Refunded, 7.50%, 2/01/17 .................................................... 11,135,000 12,474,429
BONDS (CONT.)
NEW YORK (CONT.)
NEW YORK CITY GO, (CONT.)
Series E, 6.50%, 12/01/12 ................................................................. $ 135,000 $ 137,248
Series E, 6.00%, 8/01/26 .................................................................. 3,000,000 3,137,460
Series E, Pre-Refunded, 6.50%, 12/01/12 ................................................... 2,475,000 2,516,927
Series F, 8.20%, 11/15/04 ................................................................. 835,000 941,346
Series F, 6.50%, 2/15/07 .................................................................. 4,185,000 4,574,163
Series F, 6.50%, 2/15/08 .................................................................. 1,220,000 1,339,353
Series F, 6.60%, 2/15/10 .................................................................. 10,070,000 11,051,523
Series F, 8.25%, 11/15/15 ................................................................. 160,000 180,747
Series F, 8.25%, 11/15/17 ................................................................. 200,000 226,004
Series F, Pre-Refunded, 8.20%, 11/15/04 ................................................... 4,500,000 5,134,725
Series F, Pre-Refunded, 6.50%, 2/15/07 .................................................... 3,865,000 4,328,491
Series F, Pre-Refunded, 6.50%, 2/15/08 .................................................... 6,320,000 7,077,894
Series F, Pre-Refunded, 6.60%, 2/15/10 .................................................... 5,930,000 6,675,342
Series F, Pre-Refunded, 8.25%, 11/15/15 ................................................... 1,840,000 2,102,513
Series F, Pre-Refunded, 8.25%, 11/15/17 ................................................... 2,300,000 2,628,141
Series G, 6.00%, 10/15/26 ................................................................. 15,335,000 16,018,941
Series H, 7.10%, 2/01/12 .................................................................. 330,000 360,637
Series H, 7.20%, 2/01/14 .................................................................. 1,040,000 1,140,454
Series H, 7.00%, 2/01/16 .................................................................. 340,000 370,780
Series H, Pre-Refunded, 7.10%, 2/01/12 .................................................... 2,670,000 2,949,816
Series H, Pre-Refunded, 7.20%, 2/01/14 .................................................... 8,960,000 9,929,562
Series H, Pre-Refunded, 7.00%, 2/01/16 .................................................... 3,660,000 4,031,087
Series H, Sub-Series H-1, 6.125%, 8/01/09 ................................................. 11,750,000 12,540,305
Series I, 6.25%, 4/15/13 .................................................................. 36,610,000 39,208,578
Series I, 6.25%, 4/15/27 .................................................................. 7,000,000 7,496,860
New York City Health and Hospital Authority Local Government Revenue, Series A,
6.00%, 2/15/07 ............................................................................ 5,010,000 5,273,977
6.30%, 2/15/20 ............................................................................ 18,235,000 19,112,104
New York City IDA, Industrial Development Revenue, Brooklyn Navy Yard Cogeneration Partners,
5.65%, 10/01/28 ........................................................................... 5,000,000 4,999,650
5.75%, 10/01/36 ........................................................................... 5,750,000 5,800,428
New York City Municipal Water Finance Authority, Water and Sewer System Revenue,
Series A, 7.10%, 6/15/12 .................................................................. 2,455,000 2,680,516
Series A, 7.00%, 6/15/15 .................................................................. 4,980,000 5,407,931
Series B, 5.875%, 6/15/26 ................................................................. 6,500,000 6,819,540
Series B, 5.75%, 6/15/29 .................................................................. 15,000,000 15,617,400
Series B, MBIA Insured, 5.75%, 6/15/26 .................................................... 3,000,000 3,160,620
Series B, Pre-Refunded, 7.00%, 6/15/19 .................................................... 2,965,000 3,019,941
New York State Dormitory Authority Lease Revenue, State University Dormitory
Facilities, 5.50%, 7/01/27 ................................................................ 8,915,000 9,016,720
New York State Dormitory Authority Revenue,
City University General Resources, Series 2, MBIA Insured, 6.25%, 7/01/19 ................. 4,000,000 4,240,080
City University System Consolidation, Series 1, 5.375%, 7/01/24 ........................... 23,000,000 22,601,870
City University System Consolidation, Third Issue-1, 5.25%, 7/01/25 ....................... 10,000,000 9,608,000
City University System, Third Generation Resources, Series 2, 6.00%, 7/01/20 .............. 16,860,000 17,601,166
Mental Health Services Facilities, Series A, 6.00%, 8/15/17 ............................... 18,000,000 19,037,880
Mental Health Services Facilities, Series A, 5.75%, 2/15/27 ............................... 5,000,000 5,120,550
Our Lady Nursing Home, FHA Insured, 5.90%, 8/01/20 ........................................ 6,750,000 7,077,375
Refunding, City University System, Third Generation Resources, Series 2, 6.00%, 7/01/26 ... 5,500,000 5,728,690
Refunding, City University System, Third Generation Resources, Series 2,
Pre-Refunded, 6.00%, 7/01/26 .............................................................. 14,150,000 15,678,766
Refunding, State University Educational Facilities, Series B, 7.375%, 5/15/14 ............. 4,240,000 4,556,262
Refunding, State University Educational Facilities, Series B, 7.00%, 5/15/16 .............. 2,000,000 2,129,160
Saint Barnabas Hospital, 5.35%, 8/01/17 ................................................... 5,500,000 5,533,990
Second Hospital, Interfaith Medical Center, Series D, 5.30%, 2/15/19 ...................... 5,000,000 4,852,500
Second Hospital, Interfaith Medical Center, Series D, 5.40%, 2/15/28 ...................... 8,000,000 7,814,000
State University Educational Facilities, Pre-Refunded, 6.00%, 5/15/18 ..................... 5,000,000 5,534,750
BONDS (CONT.)
NEW YORK (CONT.)
New York State Energy Research and Development Authority, Electric Facilities Revenue, Series A,
Long Island Light, 7.15%, 6/01/20 ......................................................... $17,500,000 $ 19,127,500
Long Island Light, 7.15%, 2/01/22 ......................................................... 1,500,000 1,639,500
Refunding, Consolidated Edison Co., Inc., 6.10%, 8/15/20 .................................. 8,500,000 9,084,715
New York State HFA, Refunding, Health Facilities, New York City, Series A, 5.90%, 5/01/05 . 14,070,000 14,877,055
New York State HFA, Refunding, Housing Project Mortgage, Series A, FSA Insured,
6.10%, 11/01/15 ........................................................................... 5,475,000 5,798,189
6.125%, 11/01/20 .......................................................................... 4,230,000 4,471,025
New York State HFA, Service Contract Revenue,
Refunding, Series C, 5.875%, 9/15/14 ...................................................... 4,675,000 4,828,106
Refunding, Series C, 6.125%, 3/15/20 ...................................................... 25,500,000 26,561,565
Refunding, Series C, 5.50%, 9/15/22 ....................................................... 17,505,000 17,503,600
Series A, 6.375%, 9/15/14 ................................................................. 25,000 26,890
Series A, 6.375%, 9/15/16 ................................................................. 3,785,000 4,048,739
Series A, Pre-Refunded, 6.375%, 9/15/14 ................................................... 3,130,000 3,507,697
Series A, Pre-Refunded, 6.50%, 3/15/25 .................................................... 10,000,000 11,384,800
New York State Medical Care Facilities, Financial Agency Revenue,
Hospital and Nursing Home, FSA Mortgage Insured, 6.50%, 2/15/34 ........................... 6,980,000 7,494,635
Hospital Mortgage, Series A, AMBAC Insured, Pre-Refunded, 6.50%, 8/15/29 .................. 7,600,000 8,591,192
Refunding, Hospital and Nursing Home, FSA Mortgage Insured, 6.40%, 8/15/14 ................ 10,800,000 11,824,704
The Hospital for Special Surgery, Series A, 6.375%, 8/15/24 ............................... 12,500,000 13,513,875
bNew York State Tollway Authority, General Revenue, Series D, 5.375%, 1/01/27 .............. 5,000,000 4,981,450
New York State Tollway Authority, Service Contract Revenue, Local Highway and Bridge,
6.25%, 4/01/14 ............................................................................ 11,600,000 12,433,112
5.75%, 4/01/16 ............................................................................ 13,200,000 13,601,148
New York State Urban Development Corp., Correctional Capital Facilities,
Series 5, 6.10%, 1/01/12................................................................... 7,685,000 8,123,122
New York State Urban Development Corp. Revenue, Youth Facilities, 6.00%, 4/01/17 .......... 11,720,000 12,332,604
Warren and Washington Counties IDA Revenue, Refunding, Adirondack Resource
Recovery Project, Series A, 7.90%, 12/15/07 ............................................... 4,490,000 4,669,465
-------------
1,201,107,694
-------------
NORTH CAROLINA 2.6%
Charlotte-Mecklenberg Hospital Authority, Health Care System Revenue,
5.90%, 1/15/16 ............................................................................ 7,010,000 7,428,567
Pre-Refunded, 5.90%, 1/15/16 .............................................................. 2,890,000 3,171,631
Series A, 5.875%, 1/15/26 ................................................................. 5,000,000 5,226,850
North Carolina Eastern Municipal Power Agency, Power System Revenue,
Refunding, Series A, 6.50%, 1/01/17 ....................................................... 25,700,000 27,284,919
Refunding, Series A, 6.50%, 1/01/24 ....................................................... 3,250,000 3,284,320
Refunding, Series B, 6.25%, 1/01/12 ....................................................... 6,875,000 7,119,819
Refunding, Series B, 6.00%, 1/01/22 ....................................................... 1,250,000 1,314,988
Refunding, Series B, 6.25%, 1/01/23 ....................................................... 39,030,000 42,395,557
Refunding, Series B, FGIC Insured, 6.25%, 1/01/23 ......................................... 4,000,000 4,315,440
Refunding, Series B, MBIA Insured, 5.80%, 1/01/16 ......................................... 11,175,000 11,811,081
Refunding, Series B, MBIA Insured, 5.875%, 1/01/21 ........................................ 13,325,000 14,052,545
Series B, 6.00%, 1/01/05 .................................................................. 1,355,000 1,430,799
Series D, 5.875%, 1/01/13 ................................................................. 7,440,000 7,613,873
Series G, 5.75%, 12/01/16 ................................................................. 14,420,000 14,586,407
North Carolina Municipal Power Agency No. 1, Catawba Electric Revenue, Refunding,
5.75%, 1/01/15 ............................................................................ 12,435,000 12,479,144
Series 1982, 6.25%, 1/01/17 ............................................................... 15,620,000 16,495,501
Wake County IPC, Financing Authority Revenue, Carolina Power and Light, 6.90%, 4/01/09 .... 5,000,000 5,323,550
---------
185,334,991
---------
NORTH DAKOTA .4%
Dickinson Health Care Facilities Revenue, BHS Long-Term Care, Inc., 7.625%, 2/15/20 ....... 7,750,000 8,177,258
Ellendale MFHR, Ellendale Manor Apartments Project, 9.75%, 7/01/16 ........................ 310,000 310,831
BONDS (CONT.)
NORTH DAKOTA (CONT.)
Mercer County PCR, Basin Electric Power Corp.,
Second Series, AMBAC Insured, 6.05%, 1/01/19 .............................................. $ 9,130,000 $ 9,835,475
Series E, 7.00%, 1/01/19 .................................................................. 11,540,000 12,050,299
Wahpeton MFHR, Evergreen Apartments Project, 9.75%, 7/01/16 ............................... 757,000 759,104
---------
31,132,967
---------
OHIO 1.6%
Dayton Special Facilities Revenue, Refunding, Emery Air Freight Corp.,
Emery Worldwide Air, Inc., Series E, 6.05%, 10/01/09 ...................................... 4,000,000 4,320,280
Emery Worldwide Air, Inc., Series F, 6.05%, 10/01/09 ...................................... 2,750,000 2,970,193
bSeries A, 5.625%, 2/01/18 ................................................................ 6,000,000 6,120,900
Franklin County Convention Facilities Authority, Tax and Lease Revenue
Anticipation Bonds, MBIA Insured, 5.00%, 12/01/27 ......................................... 7,500,000 7,165,500
Franklin County Nursing Home, First Mortgage Revenue, Volunteers of
America Care Facilities Project, 8.75%, 11/01/18 .......................................... 2,775,000 2,862,218
Montgomery County Health Systems Revenue,
Franciscan Facility, Series B-2, 8.10%, 7/01/01 ........................................... 1,800,000 1,916,010
Franciscan Medical Center-Dayton, 5.50%, 7/01/18 .......................................... 1,995,000 1,973,274
Refunding, Franciscan at Saint Leonard, 5.50%, 7/01/18 .................................... 3,625,000 3,589,874
Series B-2, 8.10%, 7/01/18 ................................................................ 3,705,000 4,416,323
Series B-2, Pre-Refunded, 8.10%, 7/01/18 .................................................. 8,295,000 10,364,520
Montgomery County Hospital Revenue, Refunding, Grandview Hospital and Medical Center,
5.50%, 12/01/10 ........................................................................... 1,300,000 1,322,217
5.60%, 12/01/11 ........................................................................... 1,000,000 1,021,310
5.65%, 12/01/12 ........................................................................... 925,000 947,061
Ohio HFA, Residential Mortgage Revenue,
Series A-1, GNMA Secured, 5.40%, 9/01/29 .................................................. 5,870,000 5,825,623
Series C, 5.75%, 9/01/28 .................................................................. 7,760,000 7,940,886
Ohio State Air Quality Development Authority Revenue,
Refunding, Dayton Power and Light Co. Project, 6.10%, 9/01/30 ............................. 12,000,000 12,807,000
Toledo Edison, Series B, 8.00%, 5/15/19 ................................................... 6,325,000 6,769,142
Ohio State EDR, Good Samaritan Medical Center, Series 1990-3, 7.875%, 12/01/10 ............ 1,550,000 1,644,457
Ohio State Solid Waste Disposal Revenue, USG Corp. Project, 5.65%, 3/01/33 ................ 5,330,000 5,329,467
Ohio State Water Development Authority Revenue, Refunding, Dayton Power,
Series A, 6.40%, 8/15/27................................................................... 3,250,000 3,506,945
Ohio State Water Development Facilities Authority, PCR, Toledo Edison,
Series A, 8.00%, 5/15/19................................................................... 10,000,000 10,702,200
University of Cincinnati COP, University Center Project, MBIA Insured, 5.125%, 6/01/24 .... 10,500,000 10,227,000
-----------
113,742,400
-----------
OKLAHOMA 1.2%
Canadian County HFA, SFMR, Series A,
7.70%, 9/01/05 ............................................................................ 1,390,000 1,452,550
7.80%, 9/01/12 ............................................................................ 2,905,000 3,041,884
Oklahoma State Turnpike System Authority, First Senior Revenue,
7.875%, 1/01/21 ........................................................................... 610,000 636,285
Pre-Refunded, 7.875%, 1/01/21 ............................................................. 19,090,000 19,959,931
Stillwater Medical Center Authority Revenue,
Series A, 6.10%, 5/15/09 .................................................................. 3,440,000 3,600,201
Series B, 6.35%, 5/15/12 .................................................................. 1,235,000 1,310,409
Series B, 6.50%, 5/15/19 .................................................................. 3,390,000 3,635,538
Tulsa County Home Financial Authority, Mortgage Revenue, Series D,
GNMA Insured, 6.95%, 12/01/22 ............................................................. 530,000 561,381
Tulsa County Municipal Airport Revenue, American Airlines, Inc.,
7.35%, 12/01/11 ........................................................................... 4,000,000 4,454,000
6.25%, 6/01/20............................................................................. 18,530,000 19,674,228
7.375%, 12/01/20 .......................................................................... 11,000,000 11,896,940
Tulsa County Parking Authority, Series B,
6.90%, 12/01/07 ........................................................................... 3,000,000 3,298,830
7.00%, 12/01/14 ........................................................................... 5,500,000 5,970,910
Tulsa Housing Assistance Corp. Revenue, First Lien, Refunding, 6.80%, 7/01/11 ............. 2,740,000 2,912,072
BONDS (CONT.)
OKLAHOMA (CONT.)
Tulsa Industrial Authority, Hospital Revenue, St. John Medical Center
Project, Series A, 6.25%, 2/15/14 ......................................................... $ 2,000,000 $ 2,147,720
Valley View Hospital Authority Revenue, Refunding, Valley View
Regional Medical Center, 6.00%, 8/15/14 ................................................... 4,000,000 4,117,040
---------
88,669,919
---------
OREGON .2%
Oregon State Department of Administrative Services COP, Series A,
AMBAC Insured, 5.80%, 5/01/24.............................................................. 5,000,000 5,291,300
Oregon State EDR, Georgia Pacific Corp. Project,
Refunding, Series 183, 5.70%, 12/01/25 .................................................... 3,500,000 3,520,440
Series CLVII, 6.35%, 8/01/25 .............................................................. 5,500,000 5,790,840
---------
14,602,580
----------
PENNSYLVANIA 3.5%
Allegheny County Hospital Development Authority Revenue, Refunding, University
of Pittsburgh Health Center, Series A, MBIA Insured, 5.625%, 4/01/27 ..................... 6,550,000 6,707,855
Allegheny County IDA Revenue, Environmental Improvement, 6.70%, 12/01/20 .................. 5,250,000 5,692,103
Beaver County IDA, PCR, Ohio Edison Co., Beaver Valley Project, Series A, 7.75%, 9/01/24 .. 14,250,000 15,056,123
Cambria County HDA, Hospital Revenue, Conemaugh Valley Memorial Hospital, Refunding, Series B,
6.30%, 7/01/08 ............................................................................ 9,600,000 10,319,904
6.375%, 7/01/18 ........................................................................... 10,740,000 11,399,436
Pre-Refunded, 8.875%, 7/01/18 ............................................................. 3,000,000 3,082,890
Delaware County IDA Revenue, Refunding, Philadelphia Electric,
Series 1991, 7.375%, 4/01/21 .............................................................. 6,500,000 7,052,500
Delaware River Port Authority Revenue, Pennsylvania and New Jersey,
Series 1995, FGIC Insured, 5.50%, 1/01/26 ................................................. 5,000,000 5,127,600
Delaware Valley Regional Finance Authority, Local Government Revenue,
Series B, AMBAC Insured, 5.60%, 7/01/17 ................................................... 5,000,000 5,315,650
Lancaster County Solid Waste Management Authority, Resource Recovery
System Revenue, Series A, Pre-Refunded, 8.50%, 12/15/10 ................................... 22,500,000 23,059,350
Lehigh County IDA, PCR, Refunding, Pennsylvania Power and Light Co. Project,
Series A, MBIA Insured, 6.15%, 8/01/29 .................................................... 4,000,000 4,324,480
Montgomery County Higher Education and Health Authority, Hospital Revenue,
Pre-Refunded, Jeanes Health System Project, 8.75%, 7/01/20 ............................... 5,500,000 6,106,980
Pennsylvania EDA, Financing Authority Revenue, Macmillan, L.P. Project, 7.60%, 12/01/20 ... 5,000,000 5,445,650
Pennsylvania EDA, Financing Resources Recovery Revenue,
Colver Project, Series D, 7.125%, 12/01/15 ................................................ 13,500,000 15,011,190
Pennsylvania State Financial Authority Revenue, Refunding, Municipal
Capital Improvements Program, 6.60%, 11/01/09 ............................................. 33,280,000 36,450,253
Pennsylvania State HFA,
Refunding, Rental Housing, FGIC Insured, 6.40%, 7/01/12 ................................... 10,590,000 11,299,318
SFM, Series 1991, 7.15%, 4/01/15 .......................................................... 3,635,000 3,851,828
Pennsylvania State Higher Educational Facilities Authority, College and University Revenues,
Lycoming College, Pre-Refunded, 8.375%, 10/01/18 ......................................... 2,000,000 2,075,680
Pennsylvania State Pooled Finance Authority, Lease Revenue, Capital Improvement,
Series B, MBIA Insured, 8.00%, 11/01/09 ................................................... 4,445,000 4,656,626
Philadelphia Gas Works Revenue,
Series 13, Pre-Refunded, 7.70%, 6/15/21 ................................................... 2,850,000 3,179,090
Series A, 6.375%, 7/01/26 ................................................................. 3,950,000 4,147,026
Philadelphia GO, Refunding, Series A, 11.50%,
8/01/98 ................................................................................... 1,545,000 1,570,894
8/01/99 ................................................................................... 2,400,000 2,595,000
8/01/00 ................................................................................... 1,000,000 1,140,230
Philadelphia Hospital and Higher Education Facilities Authority Revenue,
Albert Einstein Medical Center, 7.50%, 4/01/99 ............................................ 3,955,000 4,057,790
Mortgage, North Philadelphia Health Systems, Series A, FHA Secured, 5.30%, 1/01/18 ........ 3,330,000 3,281,782
Mortgage, North Philadelphia Health Systems, Series A, FHA Secured, 5.35%, 1/01/23 ........ 5,780,000 5,686,248
Mortgage, North Philadelphia Health Systems, Series A, FHA Secured, 5.375%, 1/01/28 ....... 3,765,000 3,701,635
Philadelphia Hospitals and Higher Education Facilities Authority Revenue,
Temple University Hospital, 5.875%, 11/15/23 .............................................. 5,000,000 5,128,150
Philadelphia Housing RDA Revenue, Sub-Series 2-B, 8.625%, 8/01/26 ......................... 3,690,000 3,741,918
Philadelphia Municipal Authority, Gas Works Lease Revenue, 7.50%, 5/01/01 ................. 1,000,000 1,047,930
Philadelphia School District, Series B, AMBAC Insured, 5.375%, 4/01/19 .................... 7,000,000 7,016,800
Philadelphia Water and Sewer Revenue, Series 10, ETM, 7.35%, 9/01/04 ...................... 10,790,000 12,198,095
South Fork Municipal Authority, Hospital Revenue, Conemaugh Valley Memorial
Hospital Project, Series A, MBIA Insured, 5.75%, 7/01/26 ................................. 5,000,000 5,198,450
Westmoreland County IDA Revenue, Refunding, Citizens General Hospital Project,
Series A, 8.25%, 7/01/13 .................................................................. 3,000,000 3,044,670
---------
248,771,124
---------
BONDS (CONT.)
PUERTO RICO 1.0%
Puerto Rico Commonwealth Highway and Transportation Authority Revenue, Series Y, 7/01/36,
5.00%...................................................................................... $59,000,000 $ 55,377,990
5.50%...................................................................................... 7,000,000 7,235,900
Puerto Rico Commonwealth Urban Renewal and Housing Corp., Refunding, 7.875%, 10/01/04 ..... 3,200,000 3,413,120
Puerto Rico Electric Power Authority Revenue, Refunding, Pre-Refunded,
Series M, 8.00%, 7/01/08................................................................... 2,000,000 2,053,240
Puerto Rico Municipal Finance Agency, Series A, Pre-Refunded, 8.25%, 7/01/08 .............. 5,000,000 5,134,600
---------
73,214,850
---------
RHODE ISLAND 1.4%
Providence Special Obligation Tax Increment, Series A, 7.65%, 6/01/16 ..................... 9,900,000 11,124,729
Rhode Island Clean Water Financial Agency Revenue, Drinking Water Providence,
Series A, AMBAC Insured, 6.70%, 1/01/15 ................................................... 2,200,000 2,446,312
Rhode Island Housing and Mortgage Finance Corp., Homeownership Opportunity,
Series 2, 7.75%, 4/01/22................................................................... 1,895,000 1,981,981
Series 10-A, 6.50%, 10/01/22 .............................................................. 20,200,000 21,427,958
Series 10-A, 6.50%, 4/01/27 ............................................................... 13,085,000 13,859,239
Series 13, 6.70%, 10/01/15 ................................................................ 7,400,000 7,986,376
Series 13, 6.85%, 4/01/27 ................................................................. 3,705,000 4,007,328
Series 15-A, 6.85%, 10/01/24 .............................................................. 15,000,000 16,076,700
Series 16-A, 6.375%, 10/01/26.............................................................. 2,720,000 2,877,787
Series 17-A, 6.25%, 4/01/17 ............................................................... 2,320,000 2,442,728
Rhode Island Port Authority and Economic Development Corp., Refunding,
Shepard Building Project, Series B, AMBAC Insured,
Pre-Refunded, 6.75%, 6/01/25 ............................................................. 3,000,000 3,400,830
Rhode Island State Health and Educational Building Corp. Revenue,
Health Facilities, Tockwotton Home, Pre-Refunded, 7.25%, 4/15/17 .......................... 3,000,000 3,351,150
Roger William Realty, Elmhurst Nursing Home, FHA Insured, 7.50%, 8/01/29 .................. 940,000 978,634
St. Antoine Residence, 6.70%, 11/15/12 .................................................... 2,320,000 2,515,553
St. Antoine Residence, 6.75%, 11/15/18 .................................................... 2,750,000 2,973,163
---------
97,450,468
---------
SOUTH CAROLINA 1.1%
Berkeley County School District COP, Berkeley School Facilities Group, Inc.,
AMBAC Insured, 6.30%, 2/01/16 ............................................................. 1,800,000 1,952,784
Piedmont Municipal Power Agency, South Carolina Electric Revenue, Refunding,
6.55%, 1/01/16 ............................................................................ 18,115,000 18,154,310
6.60%, 1/01/21 ............................................................................ 25,505,000 25,562,131
Series A, 5.75%, 1/01/24 .................................................................. 3,150,000 3,149,685
Series A, AMBAC Insured, 5.75%, 1/01/24 ................................................... 5,050,000 5,051,768
Richland County PCR, Refunding, Union Camp Corp. Project, Series C, 6.55%, 11/01/20 ....... 3,000,000 3,245,550
South Carolina State Housing, Finance and Development Authority, Mortgage
Revenue, Series A-2, AMBAC Insured, 5.80%, 7/01/27 ........................................ 6,405,000 6,669,078
South Carolina State Public Service Authority Revenue, Refunding, Series A,
AMBAC Insured 6.375%, 7/01/21 ............................................................. 12,765,000 13,558,728
Spartanburg County Health Services District, Inc., Hospital Revenue, Series A,
MBIA Insured, 5.50%, 4/15/27 .............................................................. 3,000,000 3,034,320
---------
80,378,354
---------
SOUTH DAKOTA .4%
Lawrence County PCR, Refunding, Black Hills Power and Light Co. Project, 6.70%, 6/01/10 ... 5,000,000 5,425,950
South Dakota State HDA, Homeownership Mortgage,
Series A, 6.30%, 5/01/17 .................................................................. 4,130,000 4,355,828
Series A, 7.15%, 5/01/27 .................................................................. 10,580,000 11,165,920
Series B, 7.10%, 5/01/17 .................................................................. 3,115,000 3,292,088
Series D, 6.65%, 5/01/14 .................................................................. 3,480,000 3,771,102
Series G, 7.125%, 5/01/14 ................................................................. 3,435,000 3,769,844
---------
31,780,732
---------
TENNESSEE .8%
Franklin IDB, MFHR, Refunding, Landings Apartment Project, Series
A, FSA Insured, 6.00%, 10/01/26 ........................................................... 2,000,000 2,091,200
Hamilton County IDB, MFHR, Patten Towers Apartments, Series A,
6.125%, 8/01/05 ........................................................................... 2,515,000 2,619,750
6.30%, 8/01/07 ............................................................................ 1,000,000 1,048,370
BONDS (CONT.)
TENNESSEE (CONT.)
Knox County Health, Educational and Housing Facilities Board, MFHR, GNMA Secured,
East Towne Village Project, 8.20%, 7/01/28 ................................................ $ 4,750,000 $ 4,930,833
Memphis-Shelby County Airport Authority, Special Facilities and Project
Revenue, Federal Express Corp.,
7.875%, 9/01/09 ........................................................................... 14,690,000 16,431,940
6.75%, 9/01/12 ............................................................................ 6,520,000 7,111,234
Metropolitan Government Nashville & Davidson County, Health and Educational
Board Revenue, Multi Modal Health Facility,
Asset Guaranty Insurance Co. Insured, 5.50%, 5/01/23 ..................................... 995,000 1,002,612
Metropolitan Nashville Airport Authority Revenue, Series C, FGIC Insured, 6.60%, 7/01/15 .. 1,940,000 2,091,572
Mount Pleasant IDR, PCR, Stauffer Chemical Co. Project, 8.00%, 12/01/12 ................... 1,990,000 2,164,523
Nashville and Davidson County Revenue, IDB, Refunding & Improvement,
Osco Treatment, Inc., 6.00%, 5/01/03....................................................... 5,000,000 5,209,350
bShelby County Health Educational and Housing Facility Board Hospital Revenue,
MBIA Insured, 5.00%, 4/01/18 .............................................................. 5,000,000 4,810,650
Tennessee HDA, Homeownership Program,
Series 1992, 6.80%, 7/01/17 ............................................................... 2,360,000 2,502,780
Series P, 7.70%, 7/01/16 .................................................................. 4,580,000 4,734,438
Tennessee State Local Development Authority Revenue, Community Provider
Pooled Loan Program, 6.45%, 10/01/14 ...................................................... 2,275,000 2,451,790
---------
59,201,042
---------
TEXAS 6.7%
Austin Combined Utility System Revenue, Series A, Pre-Refunded, 8.00%, 11/15/16 ........... 18,100,000 19,981,857
Austin Utility System Revenue, Refunding, FGIC Insured, 6.25%, 5/15/16 .................... 11,310,000 12,259,361
Bexar County Health Facilities Development Corp. Revenue, FSAInsured,
Incarnate Word Facility, 6.00%, 11/15/15................................................... 4,500,000 4,806,045
Refunding, Incarnate Word Health Services, 6.10%, 11/15/23 ................................ 8,300,000 8,926,484
Bexar County HFC, MFHR, Sunpark Apartments Project, 6.875%, 12/01/12 ...................... 1,725,000 1,800,745
Bexar Metropolitan Water District, Water Works Systems Revenue, Refunding,
MBIA Insured, 5.875%, 5/01/22.............................................................. 5,000,000 5,225,250
Brazos River Authority, Collateralized, PCR, Texas Utilities Electric Co. Project, Series A,
8.25%, 1/01/19 ............................................................................ 15,000,000 15,650,250
bRefunding, AMBAC Insured, 5.55%, 5/01/33 ................................................. 23,965,000 24,027,069
Brazos River Authority Revenue, Refunding, Houston Industries Inc. Project,
Series C, AMBAC Insured, 5.125%, 5/01/19 ................................................. 12,000,000 11,765,520
Dallas-Fort Worth International Airport Facilities, Improvement Corp.
Revenue, American Airlines, Inc.,
8.00%, 11/01/24 ........................................................................... 99,000,000 107,863,470
Refunding, 6.00%, 11/01/14 ................................................................ 29,400,000 31,188,990
El Paso HFC, SFMR, Series A, 8.75%, 10/01/11 .............................................. 4,325,000 4,672,990
Fort Worth Higher Education Financial Corp., Higher Education Revenue,
Texas Christian University Project, 5.00%, 3/15/27 ........................................ 4,000,000 3,761,520
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 3,066,714
Gulf Coast Waste Disposal Authority, Environmental Improvement Revenue,
Refunding, UXS Corp. Projects, 5.50%, 9/01/17 ............................................. 3,250,000 3,242,038
Harris County IDR, Marine Terminal Revenue, Refunding, 6.95%, 2/01/22 ..................... 20,250,000 22,010,130
Harris County Toll Road Revenue, Multiple Mode, Senior Lien, Pre-Refunded, Series D,
8.25%, 8/15/07 ............................................................................ 4,000,000 4,167,480
8.30%, 8/15/17 ............................................................................ 5,000,000 5,210,000
Houston Water and Sewer System Revenue, Refunding,
Junior Lien, Series A, MBIA Insured, Pre-Refunded, 6.20%, 12/01/20 ........................ 22,500,000 24,854,625
Series B, 6.375%, 12/01/14 ................................................................ 21,000,000 22,447,740
Joshua ISD, Refunding, Series B, 6.125%, 2/15/26 .......................................... 20,000 20,201
Lower Neches Valley Authority IDC Revenue, Refunding,
Mobil Oil Refunding Corp., 5.55%, 3/01/33 ................................................. 2,500,000 2,499,775
Lubbock HFC, SFMR, Refunding, MBS Program, Series A, GNMA Secured, 6.125%, 12/01/17 ....... 1,000,000 1,053,380
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 26,479,233
Houston Lighting and Power Co., 6.00%, 7/01/28 ............................................ 19,200,000 20,013,312
Houston Lighting and Power Co., Series A, AMBAC Insured, 6.70%, 3/01/27 ................... 5,500,000 5,934,170
Matagorda County Navigation District No. 1 Revenue, Refunding, Houston
Industries Inc. Project, Series A, MBIA Insured, 5.25%,
11/01/29 ................................................................................. 7,500,000 7,199,100
Mesquite HFC, SFMR, Series 1983, 10.75%, 9/01/14 .......................................... 1,010,000 1,042,704
North Central Health Facilities Development Corp. Revenue, Health Resources
Systems, Series B, MBIA Insured, 5.125%, 2/15/22 .......................................... 5,985,000 5,796,652
Nueces River Authority Environmental Improvement Revenue, Refunding,
Asarco Inc. Project, 5.60%, 1/01/27 ....................................................... 4,000,000 4,006,440
BONDS (CONT.)
TEXAS (CONT.)
Port Corpus Christi Industrial Development Corp. Revenue, Refunding, Valero, 5.40%, 4/01/18,
Series B................................................................................... $ 4,000,000 $ 3,937,480
Series C................................................................................... 6,000,000 5,906,220
Red River Pollution Control Authority, Refunding, West Texas Utilities
Co. Project, MBIA Insured, 6.00%, 6/01/20 ................................................. 5,000,000 5,318,350
Sabine River Authority PCR, Refunding,
Southwestern Electric Power Co., MBIA Insured, 6.10%, 4/01/18 ............................. 4,000,000 4,282,080
Texas Utilities Electric Co. Project, 6.55%, 10/01/22 ..................................... 7,700,000 8,325,086
San Antonio Electric and Gas Revenue, Refunding, 5.50%, 2/01/20 ........................... 10,000,000 10,260,100
San Antonio Water Revenue, Senior Lien, MBIA Insured,
6.50%, 5/15/10 ............................................................................ 2,795,000 3,043,336
Pre-Refunded, 6.50%, 5/15/10 .............................................................. 1,440,000 1,574,640
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 9,454,500
Tarrant County Health Facilities Development Corp., Hospital Revenue,
Ft. Worth Osteopathic Hospital, MBIA Insured, 5.25%, 5/15/28 .............................. 5,010,000 4,877,035
Texas Housing Agency, Residential Development Mortgage Revenue, Series D, 8.35%,
1/01/08 ................................................................................... 1,335,000 1,399,334
7/01/08 ................................................................................... 2,885,000 3,024,028
Texas Water Development Board Revenue, State Revolving Fund, 6.00%, 7/15/13 ............... 2,500,000 2,657,450
Texas Water Resources Finance Authority Revenue, 7.625%, 8/15/08 .......................... 2,365,000 2,456,715
Travis County HFC, SFMR, Refunding, Series A, 6.95%, 10/01/27 ............................. 3,735,000 4,082,019
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 1,763,055
---------
483,334,673
---------
U.S. TERRITORIES .1%
Virgin Islands HFA Mortgage Revenue, Series B, GNMA Secured, Pre-Refunded, 8.10%, 12/01/18 690,000 720,312
bVirgin Islands Public Financing Authority Revenue, Refunding, Subordinated Lien,
Fund Loan Notes, Series D, 5.50%,
10/01/01................................................................................... 1,755,000 1,773,708
10/01/02................................................................................... 1,700,000 1,716,320
10/01/03................................................................................... 1,850,000 1,867,002
---------
6,077,342
---------
UTAH 1.3%
Carbon County, Solid Waste Disposal Revenue, Refunding, Laidlaw, Inc. Project,
Series A, 7.50%, 2/01/10 .................................................................. 5,050,000 5,709,278
Intermountain Power Agency, Power Supply Revenue,
Refunding, Series A, 6.15%, 7/01/14 ....................................................... 25,000,000 27,150,500
Refunding, Series B, 7.75%, 7/01/20 ....................................................... 34,805,000 35,696,704
Second Crossover, Series 86-C, 5.75%, 7/01/20 ............................................. 5,500,000 5,502,145
Salt Lake City College Revenue, Westminster College Project,
5.70%, 10/01/17 ........................................................................... 1,000,000 1,008,530
5.75%, 10/01/27 ........................................................................... 1,000,000 1,010,070
Utah State HFA, Refunding, Series A, 6.50%, 5/01/19 ....................................... 2,945,000 3,078,261
Utah State HFA, SFM,
Refunding, 6.80%, 1/01/12 ................................................................. 1,590,000 1,694,129
Series A, 8.50%, 7/01/19 .................................................................. 355,000 364,177
Series B, 6.55%, 7/01/19 .................................................................. 3,450,000 3,712,338
Series B, 6.55%, 7/01/26 .................................................................. 3,655,000 3,901,676
Series C-1, 6.80%, 7/01/12 ................................................................ 255,000 271,700
Series C-1, 8.375%, 7/01/19 ............................................................... 1,880,000 1,888,742
Series D, 8.60%, 7/01/19 .................................................................. 295,000 295,738
Series E-1, 6.65%, 7/01/20 ................................................................ 2,510,000 2,680,404
Series G-1, 8.10%, 7/01/16 ................................................................ 860,000 882,326
---------
94,846,718
---------
VERMONT .1%
Vermont HFA, SF, Series 5, 7.00%, 11/01/27 ................................................ 9,400,000 10,090,148
BONDS (CONT.)
VIRGINIA .5%
Danville IDA Revenue, Regional Medical Center, FGIC Insured, 6.50%,
10/01/19................................................................................... $ 5,885,000 $ 6,433,305
10/01/24................................................................................... 5,840,000 6,384,113
Henrico County IDA, Public Facilities Lease Revenue, Regional Jail Project, 6.00%, 8/01/15 7,250,000 7,662,598
Richmond Public Utility Revenue, Refunding, Series A, 5.125%, 1/15/28 ..................... 5,510,000 5,302,328
Virginia State HDA, Commonwealth Mortgage,
Series C, Sub-Series C-6, 6.25%, 1/01/15 .................................................. 5,120,000 5,354,547
Series H, Sub-Series H-2, 6.55%, 1/01/17 .................................................. 4,755,000 5,134,687
---------
36,271,578
---------
WASHINGTON 2.5%
Chelan County PUD No. 1, Cheland Hydro Consolidated System Revenue,
Series A, 5.65%, 7/01/32................................................................... 5,000,000 5,040,750
Pierce County EDC, Refunding, Solid Waste-Steilacoom Revenue, 6.60%, 8/01/22 .............. 32,480,000 34,491,811
Port Moses Lake Public Corp., Washington PCR, Union Carbide Corp.,
7.50%, 8/01/04 ............................................................................ 2,100,000 2,100,588
7.875%, 8/01/06 ........................................................................... 1,000,000 1,030,260
SeaTac GO, Series 1994, 6.50%, 12/01/13 ................................................... 2,760,000 3,025,015
Seattle Municipality, Metropolitan Seattle Sewer Revenue,
Refunding, Series V, 6.20%, 1/01/32 ....................................................... 9,680,000 10,080,849
Series W, MBIA Insured, 6.25%, 1/01/21 .................................................... 2,500,000 2,660,350
Seattle Special Obligation, Chinatown International District, 5.90%, 8/01/26 .............. 4,810,000 5,003,410
Snohomish County USD No. 6, 6.50%, 12/01/11 ............................................... 7,000,000 7,995,540
University of Washington Alumni Association, Lease Revenue, Medical
Center Roosevelt II, 6.30%, 8/15/14 ....................................................... 4,000,000 4,369,400
Washington State Public Power Supply System Revenue,
Nuclear Project No. 1, Refunding, Series A,
6.05%, 7/01/12 ............................................................................ 35,355,000 37,540,293
MBIA Insured, 6.25%, 7/01/17 .............................................................. 19,965,000 21,237,769
Washington State Public Power Supply System Revenue, Nuclear Project No. 2, Series A,
6.25%, 7/01/12 ............................................................................ 3,200,000 3,436,512
Refunding, 6.00%, 7/01/09 ................................................................. 18,330,000 19,731,878
Refunding, 6.30%, 7/01/12 ................................................................. 7,700,000 8,598,051
Washington State Public Power Supply System Revenue, Nuclear Project No. 3,
Refunding, Series B, 5.50%, 7/01/18 ....................................................... 10,050,000 10,053,819
----------
176,396,295
----------
WEST VIRGINIA .8%
Braxton County Solid Waste Disposal Revenue, Weyerhaeuser Co. Project,
6.50%, 4/01/25 ............................................................................ 3,500,000 3,790,920
Refunding, 5.40%, 5/01/25 ................................................................. 10,000,000 9,787,200
Putnam County PCR, Refunding, FMC Corp. Project, 5.625%, 10/01/13 ......................... 1,700,000 1,733,609
Taylor County PCR, Union Carbide Corp., 7.625%, 8/01/05 ................................... 2,400,000 2,802,240
West Virginia State Hospital Financing Authority Revenue, Refunding &
Improvement, Logan General Hospital Project, 7.25%, 7/01/20.............................. 7,000,000 6,894,440
West Virginia State Housing Development Fund, Housing Finance, Series D,
7.00%, 5/01/17 ............................................................................ 6,000,000 6,412,800
7.05%, 11/01/24 ........................................................................... 9,000,000 9,635,130
West Virginia State, Series A, FGIC Insured, 5.20%, 11/01/26 .............................. 10,000,000 9,796,100
West Virginia State Water Development Authority Revenue, Loan Program II,
Series A, Pre-Refunded, 8.625%, 11/01/28 .................................................. 5,000,000 5,215,100
---------
56,067,539
---------
WISCONSIN 1.0%
Janesville IDR, Simmons Manufacturing Co., 7.00%, 10/15/17 ................................ 2,200,000 2,323,376
Madison Industrial Gas and Electric Co. Project, Series A, 6.75%, 4/01/27 ................. 4,220,000 4,567,179
Wisconsin Housing and EDA, Homeownership Revenue,
Refunding, Series A, 6.10%, 11/01/10 ...................................................... 9,190,000 9,799,481
Series 1, 6.75%, 9/01/15 .................................................................. 10,230,000 10,944,361
Series 1, 6.75%, 9/01/17 .................................................................. 3,000,000 3,203,700
Series A, 6.90%, 3/01/16 .................................................................. 1,985,000 2,174,925
Series A, 6.45%, 3/01/17 .................................................................. 5,500,000 5,867,565
Series A, 7.10%, 3/01/23 .................................................................. 10,580,000 11,289,389
Series B, 7.05%, 11/01/22 ................................................................. 3,000,000 3,214,140
BONDS (CONT.)
WISCONSIN (CONT.)
Wisconsin State Health and Educational Facilities Authority Revenue, Mercy Health Systems
Corp., AMBAC Insured, 6.125%,
8/15/13 ................................................................................... $ 6,500,000 $ 7,006,805
8/15/17 ................................................................................... 7,500,000 8,033,250
---------
68,424,171
---------
WYOMING .3%
Wyoming CDA, Housing Revenue, Refunding, Series 6, 6.10%, 12/01/28 ........................ 11,540,000 12,088,842
Wyoming CDA, MF Mortgage, Series A,
6.90%, 6/01/12 ............................................................................ 1,425,000 1,490,849
6.95%, 6/01/24 ............................................................................ 3,530,000 3,707,487
Wyoming CDA, SFM,
Series A, 7.25%, 6/01/21 .................................................................. 2,500,000 2,696,724
Series G, 7.375%, 6/01/17 ................................................................. 1,295,000 1,369,902
---------
21,353,804
Total Bonds (Cost $6,377,095,789).......................................................... 6,819,855,407
-------------
ZERO COUPON BONDS 2.1%
Calcasieu Parish, Louisiana, Memorial Hospital Service District Revenue, Lake Charles
Parish Memorial Hospital Project, Series A, 12/01/22 ..................................... 11,040,000 7,261,338
Chicago RMR, Refunding, Series B, MBIA Insured, 10/01/09 .................................. 10,705,000 4,867,884
Coldwater, Michigan, Community Schools, MBIA Insured, Pre-Refunded, 5/01/18 ............... 5,935,000 1,967,214
Colorado Springs Airport Revenue, Series C,
1/01/03 ................................................................................... 1,660,000 1,305,921
1/01/05.................................................................................... 1,610,000 1,127,836
1/01/07.................................................................................... 1,675,000 1,039,353
1/01/08 ................................................................................... 800,000 465,391
1/01/11.................................................................................... 1,450,000 693,811
Cook County, Illinois, Community Consolidated School District No. 54, Schaumburg Township,
Series B, FGIC Insured, Pre-Refunded,
1/01/07 ................................................................................... 3,505,000 2,222,905
1/01/08 ................................................................................... 4,800,000 2,848,655
1/01/09 ................................................................................... 4,380,000 2,430,111
1/01/10 ................................................................................... 5,760,000 2,994,853
Florida State Mid-Bay Bridge Authority Revenue, Series A, Senior Lien, AMBAC Insured,
10/01/23................................................................................... 5,000,000 1,266,100
10/01/24................................................................................... 3,000,000 715,980
Harrison, Michigan, Community Schools, AMBAC Insured, 5/01/20 ............................. 6,000,000 1,621,200
Jefferson County, Kentucky, Capital Projects Corp., Lease Revenue, Refunding, Series A,
8/15/07 ................................................................................... 1,640,000 1,059,013
8/15/08 ................................................................................... 4,505,000 2,719,938
8/15/09.................................................................................... 4,580,000 2,595,393
8/15/10.................................................................................... 4,620,000 2,474,611
8/15/13.................................................................................... 6,825,000 3,138,475
8/15/14 ................................................................................... 6,860,000 2,950,965
8/15/16.................................................................................... 7,005,000 2,682,984
8/15/17.................................................................................... 7,115,000 2,576,056
Metropolitan Pier and Exposition Authority, Illinois, Dedicated State Tax Revenue,
McCormick Place Expansion Project, Series A, FGIC Insured,
6/15/08 ................................................................................... 8,500,000 5,209,990
6/15/09 ................................................................................... 11,000,000 6,389,020
6/15/10 ................................................................................... 8,000,000 4,372,880
6/15/11 ................................................................................... 9,690,000 4,974,942
6/15/12.................................................................................... 250,000 209,924
Pre-Refunded, 6/15/12 ..................................................................... 11,550,000 10,081,994
Miami, Dade County Special Obligation, Series B, Subordinated Lien, MBIA Insured,10/01/34 . 5,500,000 736,120
Owensboro, Kentucky, Electric Light and Power Revenue, Series B, AMBAC Insured, 1/01/08 ... 5,250,000 3,330,284
Zero Coupon Bonds (cont.)
San Joaquin Hills, California, Transportation Corridor Agency, Toll Road Revenue,
Refunding, Series A, 1/15/21 .............................................................. $50,000,000 $ 31,694,500
Senior Lien, Pre-Refunded, 1/01/23 ........................................................ 7,000,000 1,932,000
Shreveport, Louisiana, Water and Sewer Revenue, Series B, FGIC Insured,
12/01/07................................................................................... 490,000 289,912
12/01/08 .................................................................................. 2,530,000 1,396,686
12/01/09 .................................................................................. 4,080,000 2,106,300
12/01/10................................................................................... 5,630,000 2,711,914
Spring, Texas, ISD, Refunding, FGIC Insured, Pre-Refunded, 8/15/08 ........................ 7,000,000 3,507,140
University of Illinois Revenues, AMBAC Insured, 4/01/10 ................................... 14,250,000 7,869,420
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 4,919,860
Nuclear Project No. 3, Series B, 7/01/12 .................................................. 6,400,000 3,039,423
Nuclear Project No. 3, Series B, 7/01/14 .................................................. 15,000,000 6,312,300
-----------
Total Zero Coupon Bonds (Cost $104,239,858)................................................ 154,110,596
-----------
Total Long Term Investments (Cost $6,481,335,647) ......................................... 6,973,966,003
aShort Term Investments .1%
Burke County Development Authority, PCR, Georgia Power Co. Vogtle, Fourth Series,
Daily VRDN and Put, 4.05%, 9/01/25 ........................................................ 2,900,000 2,900,000
New York City Municipal Water Financing Authority, Water and Sewer Systems Revenue,
Series C, FGIC Insured, Daily VRDN and Put, 4.20%, 6/15/23 ............................... 200,000 200,000
Northeastern Hospital and Educational Authority Health Care Revenue, Wyoming Valley Health Care,
Series A, Refunding, AMBAC Insured, Weekly VRDN and Put, 4.10%, 1/01/24 .................. 1,100,000 1,100,000
Uinta County PCR, Refunding, Chevron USA Inc. Proj., Letter of Credit from
Chevron Corp., Daily VRDN and Put, 4.10%, 8/15/20 ......................................... 2,400,000 2,400,000
--------------
Total Short Term Investments (Cost $6,600,000) ............................................ 6,600,000
--------------
Total Investments (Cost $6,487,935,647) 97.5% ............................................. 6,980,566,003
Other Assets, less Liabilities 2.5% ....................................................... 177,589,587
---------------
Net Assets 100.0% ......................................................................... $7,158,155,590
===============
</TABLE>
See glossary of terms on page 39.
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.
FRANKLIN FEDERAL TAX-FREE INCOME FUND Statement of Investments, April 30, 1998
(cont.)
Glossary of Terms
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
EDC - Economic Development Corp.
EDR - Economic Development Revenue
ETM - Escrow to Maturity
FGIC - Financial Guaranty Insurance Co.
FHA - Federal Housing Authority/Agency
FI/GML - Federally Insured or Guaranteed Mortgage Loans
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/Agency
HFA - Housing Finance Authority/Agency
HFC - Housing Finance Corp.
IDA - Industrial Development Authority/Agency
IDB - Industrial Development Board
IDC - Industrial Development Corp.
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
MTA - Metropolitan Transit Authority
PCR - Pollution Control Revenue
PUD - Public Utility District
RDA - Redevelopment Authority/Agency
RMR - Residential Mortgage Revenue
SF - Single Family
SFM - Single Family Mortgage
SFMR - Single Family Mortgage Revenue
SFR - Single Family Revenue
USD - Unified School District
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Financial Statements
<TABLE>
<CAPTION>
Statement of Assets and Liabilities
April 30, 1998
Assets:
<S> <C>
Investments in securities, at value (cost $6,487,935,647) $6,980,566,003
Cash 54,436,058
Receivables:
Investment securities sold 87,160,955
Capital shares sold 5,931,810
Interest 128,792,746
------------
Total assets 7,256,887,572
-------------
Liabilities:
Payables:
Investment securities purchased 81,326,565
Capital shares redeemed 4,225,826
Affiliates 4,405,693
Shareholders 8,447,610
Other liabilities 326,288
--------------
Total liabilities 98,731,982
--------------
Net assets, at value $7,158,155,590
==============
Net assets consist of:
Undistributed net investment income $ 5,570,212
Net unrealized appreciation 492,630,356
Accumulated net realized loss (25,878,831)
Capital shares 6,685,833,853
--------------
Net assets, at value $7,158,155,590
==============
Class I:
Net asset value per share ($7,022,960,760 / 573,422,438 shares outstanding)* $12.25
==============
Maximum offering price per share ($12.25 / 95.75%) $12.79
==============
Class II:
Net asset value per share ($135,194,830 / 11,042,906 shares outstanding)* $12.24
==============
Maximum offering price per share ($12.24 / 99%) $12.36
==============
</TABLE>
*Redemption price is equal to net asset value less any applicable contingent
deferred sales charge.
Statements of Operations (cont.)
for the year ended April 30, 1998
Investment income:
Interest $447,218,775
--------------
Expenses:
Management fees (Note 3) $32,368,130
Distribution fees (Note 3)
Class I 5,098,992
Class II 660,809
Transfer agent fees (Note 3) 2,646,361
Custodian fees 74,874
Reports to shareholders 778,124
Registration and filing fees 201,388
Professional fees 127,345
Directors' fees and expenses 132,568
Other 274,853
-----------
Total expenses 42,363,444
--------------
Net investment income 404,855,331
--------------
Realized and unrealized gains:
Net realized gain from investments 42,732,886
Net unrealized appreciation on investments 156,385,279
--------------
Net realized and unrealized gain 199,118,165
--------------
Net increase in net assets resulting from operations $603,973,496
==============
Statements of Changes in Net Assets
for the years ended April 30, 1998 and 1997
<TABLE>
<CAPTION>
<S> <C> <C>
1998 1997
- - --------------------------------------------------------------------------------------------
Increase (decrease) in net assets:
Operations:
Net investment income $ 404,855,331 $ 422,168,480
Net realized gain (loss) from investments 42,732,886 (3,427,474)
Net unrealized appreciation on investments 156,385,279 44,923,895
---------------------------
Net increase in net assets resulting from operations 603,973,496 463,664,901
Distributions to shareholders from:
Net investment income:
Class I (396,082,048) (418,463,139)
Class II (5,046,130) (2,758,091)
--------------------------------
Total distributions to shareholders (401,128,178) (421,221,230)
Capital share transactions: (Note 2)
Class I (83,120,865) (149,230,534)
Class II 60,999,749 37,508,022
-------------------------------
Total capital share transactions (22,121,116) (111,722,512)
Net increase (decrease) in net assets . 180,724,202 (69,278,841)
Net assets:
Beginning of year 6,977,431,388 7,046,710,229
-------------------------------
End of year $7,158,155,590 $6,977,431,388
===============================
Undistributed net investment income included in net assets
End of year $ 5,570,212 $ 1,843,059
===============================
</TABLE>
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Notes to Financial Statements
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 of its taxable income.
c. Security Transactions, Investment Income, Expenses and Distributions
Security transactions are accounted for on 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 April 30, 1998, there were 10 billion shares of no par value 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>
Year Ended April 30,
------------------------------------------------------------
1998 1997
------------------------------------------------------------
SHARES AMOUNT SHARES AMOUNT
------------------------------------------------------------
Class I Shares:
<S> <C> <C> <C> <C>
Shares sold 114,214,913 $1,390,939,797 82,507,276 $ 981,902,405
Shares issued in reinvestment of distributions 13,093,027 159,083,079 13,756,253 163,131,977
Shares redeemed (134,063,708) (1,633,143,741) (108,778,728) (1,294,264,916)
--------------------------------------------------------------
Net decrease (6,755,768) $ (83,120,865) (12,515,199) $ (149,230,534)
==============================================================
Class II Shares:
Shares sold 5,941,310 $ 72,517,830 3,562,296 $ 42,300,025
Shares issued in reinvestment of distributions 259,109 3,154,246 144,321 1,713,499
Shares redeemed (1,202,566) (14,672,327) (546,174) (6,505,502)
--------------------------------------------------------------
Net increase 4,997,853 $ 60,999,749 3,160,443 $ 37,508,022
==============================================================
</TABLE>
3. 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 shares, and received
contingent deferred sales charges for the year of $977,359 and $23,704,
respectively.
The Fund paid transfer agent fees of $2,646,361, of which $2,428,103 was paid to
Investor Services.
4. INCOME TAXES
At April 30, 1998, the Fund had tax basis capital losses of $25,878,831 which
may be carried over to offset future capital gains. Such losses expire as
follows:
Capital loss carryovers expiring in: 2003....... $22,451,357
2005....... 3,427,474
-------------
$25,878,831
=============
At April 30, 1998, the net unrealized appreciation based on the cost of
investments for income tax purposes of $492,630,356 was as follows:
Unrealized appreciation............. $498,531,208
Unrealized depreciation............. (5,900,852)
-------------
Net unrealized appreciation......... $492,630,356
=============
5. INVESTMENT TRANSACTIONS
Purchases and sales of securities (excluding short-term securities) for the year
ended April 30, 1998 aggregated $1,014,522,038 and $1,095,776,729, respectively.
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
Independent Auditors' Report
To the Shareholders and Board of Directors
Of the Franklin Federal Tax-Free Income Fund
We have audited the accompanying statement of assets and liabilities of the
Franklin Federal Tax-Free Income Fund, including the Fund's statement of
investments as of April 30, 1998, and the related statement of operations for
the year then ended, the statements of changes in net assets for each of the two
years in the period then ended, and the financial highlights for each of the
periods presented. These financial statements and financial highlights are the
responsibility of the Fund's management. Our responsibility is to express an
opinion on these financial statements and financial highlights based on our
audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of securities owned as of April
30, 1998, by correspondence with the custodian and brokers. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements and financial highlights referred to
above present fairly, in all material respects, the financial position of the
Fund as of April 30, 1998, the results of its operations for the year then
ended, the changes in its net assets for each of the two years in the period
then ended, and its financial highlights for each of the periods presented, in
conformity with generally accepted accounting principles.
COOPERS & LYBRAND L.L.P.
San Francisco, California
June 3, 1998
FRANKLIN FEDERAL TAX-FREE INCOME FUND
Tax Information
Under Section 852(b)(5)(A) of the Internal Revenue Code, the Fund hereby
designates 100% of the distributions paid from net investment income as
exempt-interest dividends for the fiscal year ended April 30, 1998.
Franklin Federal Tax-Free Income Fund
Annual Report
April 30, 1998.
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 Franklin
Federal Tax-Free Income Fund based on total long-term investments as of
4/30/98.
AAA 37.3%
AA 13.9%
A 20.0%
BBB 25.8%
Below Investment Grade 3.0%
GRAPHIC MATERIAL (2)
This chart shows the portfolio breakdown by sector based on the percentage of
total long-term investments on 4/30/98 for the Franklin Federal Tax-Free
Income Fund.
Utilities 25.2%
Housing 13.8%
Prerefunded 13.8%
Transportation 12.7%
General Obligation 9.1%
Hospitals 8.1%
Industrial 5.7%
Other Revenue 4.1%
Education 2.8%
Certificates of Participation 2.5%
Health Care 1.5%
Tax Allocation 0.6%
Sales Tax 0.1%
GRAPHIC MATERIAL (3)
This map shows the top three state holdings of the Franklin Federal Tax-Free
Income Fund based on total market value on 4/30/98.
New York 17.2%
Illinois 7.1%
Texas 7.0%
GRAPHIC MATERIAL (4)
This chart shows the dividend distributions for Franklin Federal Tax-Free
Income Fund's Class I from 5/1/97 to 4/30/98.
May 5.8 cents
June 5.8 cents
July 5.8 cents
August 5.8 cents
September 5.8 cents
October 5.8 cents
November 5.8 cents
December 5.8 cents
January 5.6 cents
February 5.6 cents
March 5.6 cents
April 5.6 cents
Total 68.8 cents
GRAPHIC MATERIAL (5)
This chart shows in bar format the comparison between Franklin Federal
Tax-Free Income Fund's Class I distribution rate of 5.25% and the taxable
equivalent rate of 8.69% on 4/30/98.
GRAPHIC MATERIAL (6)
The following line graph compares the performance of the Franklin Federal
Tax-Free Income Fund's Class I shares to that of the Lehman Brothers
Municipal Bond Index, and to the Consumer Price Index based on a $10,000
investment from 5/1/88 to 4/30/98.
Date Franklin Federal Tax-Free Lehman Brothers CPI
Income Fund-Class I Municipal Bond
Index
5/1/88 9,572 10,000 10,000
5/31/88 9,614 -0.29% 9,971 0.34% 10,034
6/30/88 9,805 1.46% 10,117 0.43% 10,077
7/31/88 9,847 0.65% 10,182 0.42% 10,119
8/31/88 9,916 0.09% 10,191 0.42% 10,162
9/30/88 10,148 1.81% 10,376 0.67% 10,230
10/31/88 10,381 1.76% 10,559 0.33% 10,264
11/30/88 10,269 -0.92% 10,461 0.08% 10,272
12/31/88 10,441 1.02% 10,568 0.17% 10,289
1/31/89 10,606 2.07% 10,787 0.50% 10,341
2/28/89 10,537 -1.14% 10,664 0.41% 10,383
3/31/89 10,510 -0.24% 10,638 0.58% 10,444
4/30/89 10,729 2.37% 10,890 0.65% 10,511
5/31/89 10,911 2.08% 11,117 0.57% 10,571
6/30/89 11,036 1.36% 11,268 0.24% 10,597
7/31/89 11,114 1.36% 11,421 0.24% 10,622
8/31/89 11,076 -0.98% 11,310 0.16% 10,639
9/30/89 11,028 -0.30% 11,276 0.32% 10,673
10/31/89 11,127 1.22% 11,413 0.48% 10,724
11/30/89 11,286 1.75% 11,613 0.24% 10,750
12/31/89 11,387 0.82% 11,708 0.16% 10,767
1/31/90 11,308 -0.47% 11,653 1.03% 10,878
2/28/90 11,440 0.89% 11,757 0.47% 10,929
3/31/90 11,410 0.03% 11,760 0.55% 10,990
4/30/90 11,309 -0.72% 11,676 0.16% 11,007
5/31/90 11,588 2.18% 11,930 0.23% 11,032
6/30/90 11,692 0.88% 12,035 0.54% 11,092
7/31/90 11,890 1.48% 12,213 0.38% 11,134
8/31/90 11,671 -1.45% 12,036 0.92% 11,237
9/30/90 11,641 0.06% 12,043 0.84% 11,331
10/31/90 11,769 1.81% 12,261 0.60% 11,399
11/30/90 12,004 2.01% 12,508 0.22% 11,424
12/31/90 12,016 0.44% 12,563 0.00% 11,424
1/31/91 12,211 1.34% 12,731 0.60% 11,493
2/28/91 12,266 0.87% 12,842 0.15% 11,510
3/31/91 12,333 0.04% 12,847 0.15% 11,527
4/30/91 12,554 1.34% 13,019 0.15% 11,544
5/31/91 12,644 0.89% 13,135 0.30% 11,579
6/30/91 12,667 -0.10% 13,122 0.29% 11,613
7/31/91 12,870 1.22% 13,282 0.15% 11,630
8/31/91 12,995 1.32% 13,457 0.29% 11,664
9/30/91 13,190 1.30% 13,632 0.44% 11,715
10/31/91 13,270 0.90% 13,755 0.15% 11,733
11/30/91 13,341 0.28% 13,794 0.29% 11,767
12/31/91 13,606 2.15% 14,090 0.07% 11,775
1/31/92 13,639 0.23% 14,123 0.15% 11,793
2/29/92 13,650 0.03% 14,127 0.36% 11,835
3/31/92 13,708 0.04% 14,132 0.51% 11,895
4/30/92 13,837 0.89% 14,258 0.14% 11,912
5/31/92 14,038 1.18% 14,426 0.14% 11,929
6/30/92 14,240 1.68% 14,669 0.36% 11,972
7/31/92 14,721 3.00% 15,109 0.21% 11,997
8/31/92 14,526 -0.98% 14,961 0.28% 12,030
9/30/92 14,537 0.65% 15,058 0.28% 12,064
10/31/92 14,339 -0.98% 14,910 0.35% 12,106
11/30/92 14,683 1.79% 15,177 0.14% 12,123
12/31/92 14,905 1.02% 15,332 -0.07% 12,115
1/31/93 15,087 1.16% 15,510 0.49% 12,174
2/28/93 15,471 3.62% 16,072 0.35% 12,217
3/31/93 15,403 -1.06% 15,901 0.35% 12,259
4/30/93 15,524 1.01% 16,062 0.28% 12,294
5/31/93 15,621 0.56% 16,152 0.14% 12,311
6/30/93 15,872 1.67% 16,421 0.14% 12,328
7/31/93 15,893 0.13% 16,443 0.00% 12,328
8/31/93 16,160 2.08% 16,785 0.28% 12,363
9/30/93 16,324 1.14% 16,976 0.21% 12,389
10/31/93 16,356 0.19% 17,008 0.41% 12,440
11/30/93 16,284 -0.88% 16,859 0.07% 12,448
12/31/93 16,582 2.11% 17,214 0.00% 12,448
1/31/94 16,721 1.14% 17,411 0.27% 12,482
2/28/94 16,434 -2.59% 16,960 0.34% 12,524
3/31/94 15,931 -4.07% 16,269 0.34% 12,567
4/30/94 15,966 0.85% 16,408 0.14% 12,584
5/31/94 16,082 0.87% 16,551 0.07% 12,593
6/30/94 16,019 -0.61% 16,450 0.34% 12,636
7/31/94 16,246 1.83% 16,751 0.27% 12,670
8/31/94 16,308 0.35% 16,809 0.40% 12,721
9/30/94 16,148 -1.47% 16,562 0.27% 12,755
10/31/94 15,918 -1.78% 16,267 0.07% 12,764
11/30/94 15,645 -1.81% 15,973 0.13% 12,781
12/31/94 15,962 2.20% 16,324 0.00% 12,781
1/31/95 16,367 2.86% 16,791 0.40% 12,832
2/28/95 16,761 2.91% 17,280 0.40% 12,883
3/31/95 16,897 1.15% 17,478 0.33% 12,926
4/30/95 16,957 0.12% 17,499 0.33% 12,968
5/31/95 17,353 3.19% 18,058 0.20% 12,994
6/30/95 17,297 -0.87% 17,901 0.20% 13,020
7/31/95 17,432 0.95% 18,071 0.00% 13,020
8/31/95 17,598 1.27% 18,300 0.26% 13,054
9/30/95 17,690 0.63% 18,415 0.20% 13,080
10/31/95 17,916 1.45% 18,682 0.33% 13,123
11/30/95 18,189 1.66% 18,993 -0.07% 13,114
12/31/95 18,373 0.96% 19,175 -0.07% 13,105
1/31/96 18,451 0.76% 19,321 0.59% 13,182
2/29/96 18,378 -0.68% 19,189 0.32% 13,225
3/31/96 18,213 -1.28% 18,944 0.52% 13,293
4/30/96 18,200 -0.28% 18,891 0.39% 13,345
5/31/96 18,219 -0.04% 18,883 0.19% 13,371
6/30/96 18,408 1.09% 19,089 0.06% 13,379
7/31/96 18,548 0.91% 19,263 0.19% 13,404
8/31/96 18,561 -0.02% 19,259 0.19% 13,429
9/30/96 18,797 1.40% 19,528 0.32% 13,472
10/31/96 18,985 1.13% 19,749 0.32% 13,515
11/30/96 19,270 1.83% 20,110 0.19% 13,541
12/31/96 19,237 -0.42% 20,026 0.00% 13,541
1/31/97 19,284 0.19% 20,064 0.32% 13,585
2/28/97 19,460 0.92% 20,249 0.31% 13,627
3/31/97 19,279 -1.33% 19,979 0.25% 13,661
4/30/97 19,439 0.84% 20,147 0.12% 13,677
5/31/97 19,682 1.51% 20,451 -0.06% 13,669
6/30/97 19,877 1.07% 20,670 0.12% 13,685
7/31/97 20,338 2.77% 21,243 0.12% 13,702
8/31/97 20,218 -0.94% 21,043 0.19% 13,728
9/30/97 20,449 1.19% 21,293 0.25% 13,762
10/31/97 20,580 0.64% 21,430 0.25% 13,796
11/30/97 20,695 0.59% 21,556 -0.06% 13,788
12/31/97 20,963 1.46% 21,871 -0.12% 13,772
1/31/98 21,126 1.03% 22,096 0.19% 13,798
2/28/98 21,154 0.03% 22,103 0.19% 13,824
3/31/98 21,199 0.09% 22,123 0.19% 13,850
4/30/98 21,174 -0.45% 22,023 0.18% 13,875
Total 111.74% 120.23% 38.75%
Return
GRAPHIC MATERIAL (7)
This chart shows in bar format the comparison between Franklin Federal
Tax-Free Income Fund's Class II distribution rate of 4.86% and the taxable
equivalent rate of 8.05% on 4/30/98.
GRAPHIC MATERIAL (8)
This chart shows the dividend distributions for Franklin Federal Tax-Free
Income Fund's Class II from 5/1/97 to 4/30/98.
May 5.21 cents
June 5.21 cents
July 5.27 cents
August 5.27 cents
September 5.27 cents
October 5.19 cents
November 5.19 cents
December 5.19 cents
January 5.00 cents
February 5.00 cents
March 5.00 cents
April 5.12 cents
Total 61.92 cents
GRAPHIC MATERIAL (9)
The following line graph compares the performance of the Franklin Federal
Tax-Free Income Fund's Class II shares to that of the Lehman Brothers
Municipal Bond Index, and to the Consumer Price Index based on a $10,000
investment from 5/1/95 to 4/30/98.
Date Franklin Federal Lehman Brothers CPI
Tax-Free Income Municipal Bond
Fund-Class II Index
5/1/95 9,898 10,000
10,000
5/31/95 10,127 3.19% 10,319 0.20% 10,020
6/30/95 10,090 -0.87% 10,229 0.20% 10,040
7/31/95 10,163 0.95% 10,326 0.00% 10,040
8/31/95 10,254 1.27% 10,458 0.26% 10,066
9/30/95 10,303 0.63% 10,523 0.20% 10,086
10/31/95 10,430 1.45% 10,676 0.33% 10,120
11/30/95 10,574 1.66% 10,853 -0.07% 10,112
12/31/95 10,685 0.96% 10,957 -0.07% 10,105
1/31/96 10,725 0.76% 11,041 0.59% 10,165
2/29/96 10,677 -0.68% 10,966 0.32% 10,198
3/31/96 10,576 -1.28% 10,825 0.52% 10,251
4/30/96 10,557 -0.28% 10,795 0.39% 10,291
5/31/96 10,563 -0.04% 10,791 0.19% 10,310
6/30/96 10,667 1.09% 10,908 0.06% 10,316
7/31/96 10,743 0.91% 11,008 0.19% 10,336
8/31/96 10,745 -0.02% 11,005 0.19% 10,356
9/30/96 10,885 1.40% 11,159 0.32% 10,389
10/31/96 10,989 1.13% 11,286 0.32% 10,422
11/30/96 11,140 1.83% 11,492 0.19% 10,442
12/31/96 11,124 -0.42% 11,444 0.00% 10,442
1/31/97 11,146 0.19% 11,466 0.32% 10,475
2/28/97 11,233 0.92% 11,571 0.31% 10,508
3/31/97 11,134 -1.33% 11,417 0.25% 10,534
4/30/97 11,220 0.84% 11,513 0.12% 10,547
5/31/97 11,355 1.51% 11,687 -0.06% 10,540
6/30/97 11,461 1.07% 11,812 0.12% 10,553
7/31/97 11,722 2.77% 12,139 0.12% 10,565
8/31/97 11,648 -0.94% 12,025 0.19% 10,586
9/30/97 11,766 1.19% 12,168 0.25% 10,612
10/31/97 11,835 0.64% 12,246 0.25% 10,639
11/30/97 11,905 0.59% 12,318 -0.06% 10,632
12/31/97 12,044 1.46% 12,498 -0.12% 10,619
1/31/98 12,142 1.03% 12,627 0.19% 10,640
2/28/98 12,151 0.03% 12,631 0.19% 10,660
3/31/98 12,171 0.09% 12,642 0.19% 10,680
4/30/98 12,143 -0.45% 12,585 0.18% 10,699
Total Return 21.43% 25.85% 6.99%
