<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 X
Pre-Effective Amendment No. (File No. 33-63909)
Post-Effective Amendment No. 3
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940
Amendment No. 4 (File No. 811-07407)
STRATEGIST TAX-FREE INCOME FUND, INC.
IDS Tower 10, Minneapolis, Minnesota 55440-0010
Eileen J. Newhouse - IDS Tower 10,
Minneapolis, Minnesota 55440-0010
(612) 671-2772
Approximate Date of Proposed Public Offering:
It is proposed that this filing will become effective (check appropriate box)
immediately upon filing pursuant to paragraph (b)
X on January 29, 1998 pursuant to paragraph (b)
60 days after filing pursuant to paragraph (a)(i) on (date) pursuant to
paragraph (a)(i) 75 days after filing pursuant to paragraph (a)(ii) on
(date) pursuant to paragraph (a)(ii) of rule 485.
If appropriate, check the following box:
this post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
<PAGE>
Strategist Tax-Free High Yield Fund, a series of the Registrant, is a part of a
master/feeder operating structure. This Post-Effecitve Amendment includes a
signature page for Tax-Free Income Trust, the master fund.
<PAGE>
Cross reference sheet showing the location in the prospectus and Statement of
Additional Information of the information called for by items enumerated in
Parts A and B of Form N-1A.
Negative answers omitted are so indicated.
PART A
Item No. Section in Prospectus
1 Cover page of prospectus
2 (a) Fund expenses
(b) The Fund in brief
(c) The Fund in brief
3 (a) Financial highlights
(b) NA
(c) Performance
(d) Financial highlights
4 (a) The Fund in brief; Investment policies and risks; How the Fund
and Portfolio are organized
(b) Investment policies and risks
(c) Investment policies and risks
5 (a) Board members and officers
(b)(i) Investment manager; About the Advisor
(b)(ii) Investment manager; Administrator and transfer agent
(b)(iii) Investment manager
(c) Portfolio manager
(d) Administrator and transfer agent
(e) Administrator and transfer agent
(f) Investment manager; Administrator and transfer agent; Distributor
(g) About the Advisor
5A(a) *
(b) *
6 (a) Shares; Voting rights
(b) NA
(c) NA
(d) NA
(e) Cover page; Special shareholder services
(f) Dividend and capital gain distributions; Reinvestments
(g) Taxes
(h) Special considerations regarding master/feeder structure
7 (a) Distributor
(b) Valuing Fund shares
(c) NA
(d) How to purchase shares
(e) NA
(f) Distributor
(g) NA
8 (a) How to redeem shares
(b) NA
(c) How to purchase, exchange or redeem shares: Other important
information
(d) How to purchase, exchange or redeem shares: How to redeem shares
9 None
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PART B
Item No. Section in Statement of Additional Information
10 Cover page of SAI
11 Table of Contents
12 NA
13 (a) Additional Investment Policies; all appendices except Dollar-Cost
Averaging
(b) Additional Investment Policies
(c) Additional Investment Policies
(d) Security Transactions
14 (a) Board Members and Officers
(b) Board Members and Officers
(c) Board Members and Officers
15 (a) NA
(b) Principal Holders of Securities, if applicable
(c) Board Members and Officers
16 (a)(i) How the Fund and Portfolio are organized; About the Advisor**
(a)(ii) Agreements: Investment Management Services Agreement, Plan and
Agreement of Distribution / Distribution Agreement
(a)(iii) Agreements: Investment Management Services Agreement
(b) Agreements: Investment Management Services Agreement
(c) NA
(d) Agreements: Administrative Services Agreement
(e) NA
(f) Agreements: Plan and Agreement of Distribution / Distribution
Agreement
(g) NA
(h) Custodian Agreement; Independent Auditors
(i) Agreements: Transfer Agency Agreement; Custodian Agreement
17 (a) Security Transactions
(b) Brokerage Commissions Paid to Brokers Affiliated with the Advisor
(c) Security Transactions
(d) Security Transactions
(e) Security Transactions
18 (a) Shares; Voting rights**
(b) NA
19(a) Investing in the Funds
(b) Valuing Fund Shares; Investing in the Funds
(c) Redeeming Shares
20 Taxes
21 (a) Agreements: Distribution Agreement
(b) NA
(c) NA
22 (a) NA
(b) Performance Information
23 Financial Statements
* Designates information is located in annual report.
** Designates location in prospectus.
<PAGE>
Strategist Tax-Free High Yield Fund
Prospectus
Jan. 29, 1998
This prospectus describes a diversified, no-load mutual fund, Strategist
Tax-Free High Yield Fund, a series of Strategist Tax-Free Income Fund, Inc.,
whose goal is to provide high yield generally exempt from federal income taxes.
The Fund has chosen to participate in a master/feeder structure. It seeks to
achieve its goal by investing all of its assets in a Portfolio of Tax-Free
Income Trust. The Portfolio is managed by American Express Financial Corporation
and has the same goal as the Fund. This arrangement is commonly known as a
master/feeder structure.
This prospectus contains facts that can help you decide if the Fund is the right
investment for you. Read it before you invest and keep it for future reference.
Additional facts about the Fund are in a Statement of Additional Information
(SAI), filed with the Securities and Exchange Commission (SEC) and available for
reference, along with other related materials, on the SEC Internet web site
(http://www.sec.gov). The SAI is incorporated by reference. For a free copy,
contact American Express Financial Direct.
Like all mutual funds, these securities have not been approved or disapproved by
the Securities and Exchange Commission or any state securities commission, nor
has the Securities and Exchange Commission or any state securities commission
passed upon the accuracy or adequacy of this prospectus. Any representation to
the contrary is a criminal offense.
Please note that this Fund:
o is not a bank deposit
o is not federally insured
o is not endorsed by any bank or government agency
o is not guaranteed to achieve its goal
American Express Financial Direct
P.O. Box 59196
Minneapolis, MN
55459-0196
800-AXP-SERV
TTY: 800-710-5260
Web site address: http://www.americanexpress.com/direct
<PAGE>
Table of contents
The Fund in brief
Goal and types of Fund investments and their risks
Structure of the Fund
Manager and distributor
Portfolio manager
Fund expenses
Performance
Financial highlights
Total returns
Yield
Investment policies and risks
Facts about investments and their risks
Valuing Fund shares
How to purchase, exchange or redeem shares
How to purchase shares
How to exchange shares
How to redeem shares
Methods of exchanging or redeeming shares
Systematic purchase plans
Other important information
Special shareholder services
Services
Quick telephone reference
Distributions and taxes
Dividend and capital gain distributions
Reinvestments
Taxes
How to determine the correct TIN
How the Fund and Portfolio are organized
Shares
Voting rights
Shareholder meetings
Special considerations regarding master/feeder structure
Board members and officers
Investment manager
<PAGE>
Administrator and transfer agent
Distributor
About the Advisor
Appendix A: Description of bond ratings
Appendix B: 1998 Federal tax-exempt and taxable equivalent yield calculation
Appendix C: Descriptions of derivative instruments
<PAGE>
The Fund in brief
Strategist Tax-Free High Yield Fund (the Fund) is a diversified mutual fund that
seeks to achieve its goal by investing all of its assets in Tax-Free High Yield
Portfolio (the Portfolio) of Tax-Free High Yield Trust (the Trust) rather than
by directly investing in and managing its own portfolio of securities. The Fund
is a series of Strategist Tax-Free Income Fund, Inc. (the Company).
Goal and types of Fund investments and their risks
The Fund seeks to provide shareholders with a high yield generally exempt from
federal income taxes. It does so by investing all of its assets in the
Portfolio, a diversified mutual fund that usually invests in medium- and
lower-quality bonds and notes issued by or on behalf of state and local
governmental units whose interest generally is exempt from federal income tax.
The Portfolio also may invest in derivative instruments and money market
instruments.
Because investments involve risk, the Fund cannot guarantee achieving its goal.
Some of the Portfolio's investments may be considered speculative and involve
additional investment risks.
Structure of the Fund
The Fund uses what is commonly known as a master/feeder structure. This means
that the Fund (the feeder fund) invests all of its assets in the Portfolio (the
master fund). The Portfolio invests in and manages the securities and has the
same goal and investment policies as the Fund. This structure is described in
more detail in the section captioned "Special considerations regarding
master/feeder structure." Here is an illustration of the structure:
Investors
buy shares in
the Fund
The Fund
invests in
the Portfolio
The Portfolio invests in
securities, such as stocks
or bonds
<PAGE>
Manager and distributor
The Portfolio is managed by American Express Financial Corporation (the
Advisor), a provider of financial services since 1894. The Advisor currently
manages more than $170 billion in assets. These assets are managed by a team of
highly skilled, experienced professionals, backed by one of the nation's largest
investment departments. Our team of professionals includes portfolio managers,
economists and supporting staff, stock and bond analysts including Chartered
Financial Analysts, and investment managers and researchers based in London and
Hong Kong who add a global dimension to our expertise.
Shares of the Fund are sold through American Express Service Corporation (the
Distributor), an affiliated company of the Advisor.
Portfolio manager
Kurt Larson joined the Advisor in 1961 and serves as vice president and senior
portfolio manager. He has managed the assets of Tax-Free High Yield Portfolio
and its predecessor fund since 1979.
Fund expenses
The purpose of the following table and example is to summarize the aggregate
expenses of the Fund and its Portfolio and to assist investors in understanding
the various costs and expenses that investors in the Fund may bear directly or
indirectly. The Company's board believes that, over time, the aggregate per
share expenses of the Fund and its Portfolio should be approximately equal to
(and may be less than) the per share expenses the Fund would have if the Company
retained its own investment advisor and the assets of the Fund were invested
directly in the type of securities held by the Portfolio. For additional
information concerning Fund and Portfolio expenses, see "How the Fund and
Portfolio are organized."
Shareholder transaction expenses(a)
Maximum sales charge on purchases(b)
(as a percentage of offering price)
O%
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Annual Fund and allocated Portfolio operating expenses (as a percentage of
average daily net assets):
- ------------------------------------------------------ ------------------------
Management fee(c) 0.47%
- ------------------------------------------------------ ------------------------
- ------------------------------------------------------ ------------------------
12b-1 fee 0.25%
- ------------------------------------------------------ ------------------------
- ------------------------------------------------------ ------------------------
Other expenses(d) 0.23%
- ------------------------------------------------------ ------------------------
- ------------------------------------------------------ ------------------------
Total (after reimbursement) 0.95%
- ------------------------------------------------------ ------------------------
(a)A wire redemption charge, currently $15, is deducted from the shareholder's
Investment Management Account for wire redemption's made at the request of the
shareholder. (b)There is no sales load; however, the Fund imposes a 0.50%
redemption fee for shares redeemed or exchanged within 180 days of their
purchase date. This fee reimburses the Fund for brokerage fees and other costs
incurred. This fee also helps assure that long-term shareholders are not
unfairly bearing the costs associated with frequent traders. (c)The management
fee is paid by the Trust on behalf of the Portfolio. (d)Other expenses include
an administrative services fee, a transfer agency fee and other nonadvisory
expenses.
The Advisor and the Distributor have agreed to waive certain fees and to absorb
certain other Fund expenses until Dec. 31, 1998. Under this agreement, total
expenses will not exceed 0.95%. Without this agreement, the ratio of expenses to
average daily net assets would have been 2.96%.
Example: Suppose for each year for the next 10 years, Fund expenses are as above
and annual return is 5%. If you sold your shares at the end of the following
years, for each $1,000 invested, you would pay total expenses of:
- ------------------------------------ -----------------------------------
1 year $10
- ------------------------------------ -----------------------------------
- ------------------------------------ -----------------------------------
3 years 30
- ------------------------------------ -----------------------------------
- ------------------------------------ -----------------------------------
5 years 53
- ------------------------------------ -----------------------------------
- ------------------------------------ -----------------------------------
10 years 117
- ------------------------------------ -----------------------------------
The table and example do not represent actual expenses, past or future. Actual
expenses may be higher or lower than those shown. Because the Fund pays annual
distribution (12b-1) fees, long-term shareholders may indirectly pay an
equivalent of more than a 7.25% sales charge, the maximum permitted by the
National Association of Securities Dealers.
<PAGE>
Performance
Financial highlights
Strategist Tax-Free High Yield Fund
5. Financial highlights
The table below shows certain important information for evaluating the Fund's
results.
Fiscal period ended Nov. 30,
Per share income and capital changesa
1997 1996b
Net asset value, beginning of period $4.56 $4.46
Income from investment operations:
Net investment income (loss) .28 .15
Net gains (both realized and unrealized) .08 .10
Total from investment operations .36 .25
Less distributions:
Dividends from net investment income (.28) (.15)
Net asset value, end of period $4.64 $4.56
Ratios/supplemental data
Net assets, end of period (in thousands) $734 $535
Ratio of expenses to average daily net assetsc .95% .95%d
Ratio of net income (loss) to average daily net assets 6.02% 6.22%d
Portfolio turnover rate (excluding short-term 4% 4%
securities)
Total return 8.3% 5.5%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was May 13, 1996.
c The Advisor and Distributor voluntarily limited total operating expenses to
0.95% of average daily net assets. Without this agreement, the ratio of expenses
to average daily net assets would have been 2.96% and 24.16% for the periods
ended 1997 and 1996, respectively.
d Adjusted to an annual basis.
The information in this table has been audited by KPMG Peat Marwick LLP,
independent auditors. The independent auditor's report and additional
information about the performance of the Fund are contained in the Fund's annual
report which, if not included with the prospectus, may be obtained without
charge.
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Total returns
Total return is the sum of all of your returns for a given period, assuming you
reinvest all distributions. It is calculated by taking the total value of shares
you own at the end of the period (including shares acquired by reinvestment),
less the price of shares you purchased at the beginning of the period.
Average annual total return is the annually compounded rate of return over a
given time period (usually two or more years). It is the total return for the
period converted to an equivalent annual figure.
Average annual total returns as of Nov. 30, 1997
<TABLE>
<CAPTION>
- -------------------------------------- ---------------------- ----------------------- ----------------------
<S> <C> <C> <C>
Purchase 1 year 5 years 10 years
made ago ago ago
- -------------------------------------- ---------------------- ----------------------- ----------------------
- -------------------------------------- ---------------------- ----------------------- ----------------------
Tax-Free High Yield Fund +8.26% +6.60% +8.10%
- -------------------------------------- ---------------------- ----------------------- ----------------------
- -------------------------------------- ---------------------- ----------------------- ----------------------
Lehman Brothers Municipal Bond Index +7.18% +6.87% +8.21%
- -------------------------------------- ---------------------- ----------------------- ----------------------
Cumulative total returns as of Nov. 30, 1997
- -------------------------------------- ---------------------- ----------------------- ----------------------
Purchase 1 year 5 years 10 years
made ago ago ago
- -------------------------------------- ---------------------- ----------------------- ----------------------
- -------------------------------------- ---------------------- ----------------------- ----------------------
Tax-Free High Yield Fund +8.26% +37.66% +117.89%
- -------------------------------------- ---------------------- ----------------------- ----------------------
- -------------------------------------- ---------------------- ----------------------- ----------------------
Lehman Brothers Municipal Bond Index +7.18% +39.43% +120.18%
- -------------------------------------- ---------------------- ----------------------- ----------------------
</TABLE>
On May 13, 1996, IDS High Yield Tax-Exempt Fund transferred all of its assets to
the Portfolio. The performance information in the foregoing tables represents
performance of IDS High Yield Tax-Exempt Fund prior to March 20, 1995 and of
Class A shares of IDS High Yield Tax-Exempt Fund from March 20, 1995 through May
13, 1996, adjusted to reflect the absence of sales charges on shares of the Fund
sold through this prospectus.
<PAGE>
The historical performance has not been adjusted for any difference between the
estimated aggregate fees and expenses of the Fund and historical fees and
expenses of IDS High Yield Tax-Exempt Fund.
These examples show total returns from hypothetical investments in the Fund.
These returns are compared to those of a popular index for the same periods.
For purposes of calculation, information about the Fund makes no adjustments for
taxes an investor may have paid on the reinvested income and capital gains, and
covers a period of widely fluctuating securities prices. Returns shown should
not be considered a representation of the Fund's future performance.
Lehman Brothers Municipal Bond Index is an unmanaged index made up of a
representative list of general obligation, revenue, insured and pre-refunded
bonds. The index is frequently used as a general measure of tax-exempt bond
market performance. However, the securities used to create the index may not be
representative of the bonds held in the Portfolio. The index reflects
reinvestment of all distributions and changes in market prices, but excludes
brokerage commissions or other fees.
Yield
Yield is the net investment income earned per share for a specified time period,
divided by the net asset value at the end of the period. This annualized yield
for the 30-day period ended Nov. 30, 1997 was 4.60%. The Fund calculates the
30-day annualized yield by dividing:
o net investment income per share deemed earned during a 30-day period by
o the net asset value per share on the last day of the period
o converting the result to a yearly equivalent figure
The Fund also may calculate a tax equivalent yield by dividing the tax-exempt
portion of its yield by one minus a stated income tax rate. A tax equivalent
yield demonstrates the taxable yield necessary to produce an after-tax yield
equivalent to that of a fund that invests in exempt obligations.
The Fund's yield varies from day to day, mainly because share values and
offering prices (which are calculated daily) vary in response to changes in
interest rates. Net investment income normally changes much less in the short
run. Thus, when interest rates rise and share values fall, yield tends to rise.
When interest rates fall, yield tends to follow. Past yields should not be
considered an indicator of future yields.
<PAGE>
Investment policies and risks
The policies described below apply both to the Fund and the Portfolio.
Under normal market conditions, the Portfolio will invest at least 80% of its
net assets in bonds and notes issued by or on behalf of state and local
governmental units whose interest is exempt from federal income tax in the
opinion of counsel for the issuer, and is not subject to the alternative minimum
tax. This policy cannot be changed without approval of a majority of the
outstanding voting securities. Other investments include derivative instruments,
money market instruments and bonds subject to the alternative minimum tax
computation.
The various types of investments described above that the investment manager
uses to achieve investment performance are explained in more detail in the next
section and in the SAI.
Facts about investments and their risks
Bonds and notes exempt from federal income taxes: The price of bonds generally
falls as interest rates increase, and rises as interest rates decrease. The
price of bonds or notes also fluctuates if the credit rating is upgraded or
downgraded. The price of bonds or notes below investment grade may react more to
the ability of a company to pay interest or principal when due than to changes
in interest rates. They have greater price fluctuations, are more likely to
experience a default, and sometimes are referred to as junk bonds. Reduced
market liquidity for these bonds may occasionally make it more difficult to
value them.
The Portfolio usually invests in medium- and lower-quality notes rated A, BBB or
BB by Standard & Poor's Corporation, Moody's Investors Service, Inc. or Fitch
Investors Services, Inc., or in securities the investment manager believes have
similar qualities even though they are not rated or have been given a lower
rating by a rating agency. The Portfolio invests in higher-quality bonds and
notes when the difference in yield between higher- and lower-quality securities
does not warrant the increase in risk or there is not an adequate supply of
lower-quality securities. Securities that are subsequently downgraded in quality
may continue to be held by the Portfolio and will be sold only when the
investment manager believes it is advantageous to do so.
<PAGE>
<TABLE>
<CAPTION>
Tax-Free High Yield Portfolio
Bond ratings and holdings for the fiscal year ending Dec. 31, 1997
- ---------------------- -------------------- ---------------------------------- --------------------------------------
S&P rating Protection of Percent of net assets
Percent of (or Moody's principal and in unrated securities
net assets equivalent) interest assessed by the Advisor
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
<S> <C> <C> <C>
21.38% AAA Highest quality 3.40
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
5.77 AA High quality --
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
14.72 A Upper medium grade 0.22
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
27.36 BBB Medium grade 2.12
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
5.52 BB Moderately speculative 9.75
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
0.95 B Speculative 3.51
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
-- CCC Highly speculative 0.35
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
-- CC Poor quality 0.03
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
-- C Lowest quality --
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
-- D In default 0.73
- ---------------------- -------------------- ---------------------------------- --------------------------------------
- ---------------------- -------------------- ---------------------------------- --------------------------------------
20.33 Unrated Unrated securities 0.22
- ---------------------- -------------------- ---------------------------------- --------------------------------------
</TABLE>
(See Appendix to this prospectus describing bond ratings for further
information.)
Bonds sold at a deep discount: Some bonds are sold at deep discounts because
they do not pay interest until maturity. They include zero coupon bonds and PIK
(pay-in-kind) bonds. Because such securities do not pay current cash income the
market value of these securities may be subject to greater volatility than other
debt securities. To comply with tax laws, the Portfolio has to recognize a
computed amount of interest income and pay dividends to unitholders even though
no cash has been received. In some instances, the Portfolio may have to sell
securities to have sufficient cash to pay the dividends.
Concentration: The Portfolio may invest more than 25% of its total assets in
industrial revenue bonds, but it does not intend to invest more than 25% of its
total assets in industrial revenue bonds issued for companies in the same
industry or state. As the similarity in issuers increases, the potential for
fluctuation in the net asset value also increases.
Derivative instruments: The investment manager may use derivative instruments in
addition to securities to achieve investment performance. Derivative instruments
include futures, options and forward contracts. Such instruments may be used to
maintain cash reserves while remaining fully invested, to offset anticipated
declines in values of investments, to facilitate trading, to reduce transaction
costs or to pursue higher investment returns. Derivative instruments are
characterized by requiring little or no initial payment and a daily change in
price based on or derived from a security, a currency, a group of securities or
currencies, or an index. A number of strategies or combination of instruments
can be used to achieve the desired investment performance
<PAGE>
characteristics. A small change in the value of the underlying security,
currency or index will cause a sizable gain or loss in the price of the
derivative instrument. Derivative instruments allow the investment manager to
change the investment performance characteristics very quickly and at lower
costs. Risks include losses of premiums, rapid changes in prices, defaults by
other parties, and inability to close such instruments. The Portfolio will use
derivative instruments only to achieve the same investment performance
characteristics it could achieve by directly holding those securities and
currencies permitted under the investment policies. The Portfolio will designate
cash or appropriate liquid assets to cover portfolio obligations. The use of
derivative instruments may produce taxable income. No more than 5% of the
Portfolio's net assets can be used at any one time for good faith deposits on
futures and premiums for options on futures that do not offset existing
investment positions. This does not, however, limit the portion of the
Portfolio's assets at risk to 5%. The Portfolio is not limited as to the
percentage of its assets that may be invested in permissible investments,
including derivatives, except as otherwise explicitly provided in this
prospectus or the SAI. For descriptions of these and other types of derivative
instruments, see the Appendix to this prospectus and the SAI.
Securities and other instruments that are illiquid: A security or other
instrument is illiquid if it cannot be sold quickly in the normal course of
business. Some investments cannot be resold to the U.S. public because of their
terms or government regulations. Securities and instruments, however, can be
sold in private sales, and many may be sold to other institutions and qualified
buyers or on foreign markets. The investment manager will follow guidelines
established by the board and consider relevant factors such as the nature of the
security and the number of likely buyers when determining whether a security is
illiquid. No more than 10% of the Portfolio's net assets will be held in
securities and other instruments that are illiquid.
Money market instruments: Short-term tax-exempt debt securities rated in the top
two grades or the equivalent are used to meet daily cash needs and at various
times to hold assets until better investment opportunities arise. Under
extraordinary conditions where, in the opinion of the investment manager,
appropriate short-term tax-exempt securities are not available, the Portfolio is
authorized to make certain taxable investments as described in the SAI.
The investment policies described above may be changed by the boards.
Lending portfolio securities: The Portfolio may lend its securities to earn
income so long as borrowers provide collateral equal to the market value of the
loans. The risks are that borrowers will not provide collateral when required or
return securities when due. Unless holders of a majority of the outstanding
voting securities approve otherwise, loans may not exceed 30% of the Portfolio's
net assets.
<PAGE>
Valuing Fund shares
The net asset value (NAV) is the value of a single Fund share. It is the total
value of the Fund's investments in the corresponding Portfolio and other assets,
less any liabilities, divided by the number of shares outstanding. The NAV is
the price at which you purchase Fund shares and the price you receive when you
sell your shares. It usually changes from day to day, and is calculated at the
close of business, normally 3 p.m. Central time, each business day (any day the
New York Stock Exchange is open). NAV generally declines as interest rates
increase and rises as interest rates decline.
To establish the net assets, all securities held by a Portfolio are valued as of
the close of each business day. In valuing assets:
o Securities and assets with available market values are valued on that basis
o Securities maturing in 60 days or less are valued at amortized cost
o Assets without readily available market values are valued according to
methods selected in good faith by the board
How to purchase, exchange or redeem shares
How to purchase shares
You may purchase shares of the Fund through an Investment Management Account
(IMA) maintained with the Distributor. There is no fee to open an IMA account.
Payment for shares must be made directly to the Distributor.
Complete an IMA Account Application (available by calling 800-AXP-SERV) and mail
the application to American Express Financial Direct, P.O. Box 59196,
Minneapolis, MN 55459-0196. Corporations and other organizations should contact
the Distributor to determine which additional forms may be necessary to open an
IMA account.
If you already have an IMA account, you may buy shares in the Funds as described
below and need not open a new account.
You may deposit money into your IMA account by check, wire or many other forms
of electronic funds transfer (securities may also be deposited). All deposit
checks should be made payable to the Distributor. If you would like to wire
funds into your existing IMA account, please contact the Distributor at
800-AXP-SERV for instructions.
Minimum Fund investment requirements. Your initial investment in the Fund may be
as low as $2,000 ($1,000 for custodial accounts, Individual Retirement Accounts
and certain other retirement plans). The minimum subsequent investment is $100.
These requirements may be reduced or waived as described in the SAI.
<PAGE>
When and at what price shares will be purchased. You must have money available
in your IMA account in order to purchase Fund shares. If your request and
payment (including money transmitted by wire) are received and accepted by the
Distributor before 2 p.m. Central time, your money will be invested at the net
asset value determined as of the close of business (normally 3 p.m. Central
time) that day. If your request and payment are received after that time, your
request will not be accepted or your payment invested until the next business
day. See "Valuing Fund shares."
Methods of purchasing shares. There are three convenient ways to purchase shares
of the Fund. You may choose the one that works best for you. The Distributor
will send you confirmation of your purchase request.
By phone:
You may use money in your IMA account to make initial and subsequent
purchases. To place your order, call 800-AXP-SERV.
By mail:
Written purchase requests (along with any checks) should be mailed to
American Express Financial Direct, P.O. Box 59196, Minneapolis, MN
55459-0196, and should contain the following information:
o your IMA account number (or an IMA Account Application)
o the name of the Fund and the dollar amount of shares you would like purchased
Your check should be made out to the Distributor. It will be deposited
into your IMA account and used, as necessary, to cover your purchase
request.
By systematic purchase:
Once you have opened an IMA account, you may authorize the Distributor
to automatically purchase shares on your behalf at intervals and in
amounts selected by you. See "Systematic purchase plans."
Other purchase information. The Fund reserves the right, in its sole discretion
and without prior notice to shareholders, to withdraw or suspend all or any part
of the offering made by this prospectus, to reject purchase requests or to
change the minimum investment requirements. All requests to purchase shares of
the Fund are subject to acceptance by the Fund and the Distributor and are not
binding until confirmed or accepted in writing. The Distributor will charge a
$15 service fee against an investor's IMA account if his or her investment check
is returned because of insufficient or uncollected funds or a stop payment
order.
<PAGE>
How to exchange shares
The exchange privilege allows you to exchange your investment in the Fund at no
charge for shares of other funds in the Strategist Fund Group available in your
state. For complete information on any other fund, read that Fund's prospectus
carefully. Any exchange will involve the redemption of Fund shares and the
purchase of shares in another fund on the basis of the net asset value per share
of each fund. An exchange may result in a gain or loss and is a taxable event
for federal income tax purposes. When exchanging into another fund you must meet
that fund's minimum investment requirements. The Fund reserves the right to
modify, terminate or limit the exchange privilege. The current limit is four
exchanges per calendar year. The Distributor and the Fund reserve the right to
reject any exchange, limit the amount or modify or discontinue the exchange
privilege, to prevent abuse or adverse effects on the Fund and its shareholders.
How to redeem shares
The price at which shares will be redeemed. Shares will be redeemed at the net
asset value per share next determined after receipt by the Distributor of proper
redemption instructions, as described below.
The Fund imposes a 0.50% redemption fee for shares redeemed or exchanged within
180 days of their purchase date. This fee reimburses the Fund for brokerage fees
and other costs incurred. This fee also helps assure that long-term shareholders
are not unfairly bearing the costs associated with frequent traders.
Payment of redemption proceeds. Normally, payment for redeemed shares will be
credited directly to your IMA account on the next business day. However, the
Fund may delay payment, but no later than seven days after the Distributor
receives your redemption instructions in proper form. Redemption proceeds will
be held there or mailed to you depending on the account standing instructions
you selected.
If you recently purchased shares by check, your redemption proceeds may be held
in your IMA account until your check clears (which may take up to 10 days from
the purchase date) before a check is mailed to you.
A redemption is a taxable transaction. If your proceeds from your redemption are
more or less than the cost of your shares, you will have a gain or loss, which
can affect your tax liability. Redeeming shares held in an IRA or qualified
retirement account may subject you to certain federal taxes, penalties and
reporting requirements. Consult your tax advisor.
<PAGE>
Methods of exchanging or redeeming shares
By phone:
You may exchange or redeem your shares by calling 800-AXP-SERV. If you
experience difficulties in exchanging or redeeming shares by telephone, you can
mail your exchange or redemption requests as described below.
To properly process your telephone exchange or redemption request we will need
the following information:
o your IMA account number and your name (for exchanges, both funds must be
registered in the same ownership)
o the name of the fund from which you wish to exchange or redeem shares
o the dollar amount or number of shares you want to exchange or redeem
o the name of the fund into which shares are to be exchanged, if applicable
Telephone exchange or redemption requests received before 2 p.m. (Central time)
on any business day, once the caller's identity and account ownership have been
verified by the Distributor, will be processed at the net asset value determined
as of the close of business (normally 3 p.m. Central time) that day.
By mail:
You may also request an exchange or redemption by writing to American Express
Financial Direct, P.O. Box 59196, Minneapolis, MN 55459-0196. Once an exchange
or redemption request is mailed it is irrevocable and cannot be modified or
canceled.
To properly process your mailed exchange or redemption request, we will need a
letter from you that contains the following information:
o your IMA account number
o the name of the fund from which you wish to exchange or redeem shares
o the dollar amount or number of shares you want to exchange or redeem
o the name of the fund into which shares are to be exchanged, if applicable
o a signature of at least one of the IMA account holders in the exact form
specified on the account
Telephone transactions. You may make purchase, redemption and exchange requests
by mail or by calling 800-AXP-SERV. The privilege to initiate transactions by
telephone is automatically available through your IMA account. The Fund will
honor any telephone transaction believed to be authentic and will use reasonable
procedures to confirm that instructions communicated by telephone are genuine.
This includes asking identifying
<PAGE>
questions and tape recording calls. If these procedures are not followed, the
Fund may be liable for losses due to unauthorized or fraudulent instructions.
Telephone privileges may be modified or discontinued at any time.
Systematic purchase plans
The Distributor offers a Systematic Purchase Plan (SPP) that allows you to make
periodic investments in the Funds automatically and conveniently. A SPP can be
used as a dollar cost averaging program and saves you the time and expense
associated with writing checks or wiring funds.
Investment minimums: You can make automatic investments in any amount, from $100
to $50,000.
Investment methods: Automatic investments are made from your IMA account and you
may select from several different investment methods to make automatic
investment(s):
a) Using uninvested cash in your IMA account: If you elect to use this
option to make your automatic investments, uninvested cash in your IMA
account will be used to make the investment and, if necessary, shares
of your Money Market Fund will be redeemed to cover the balance of the
purchase.
b) Using bank authorizations: If you elect to use this option to make your
automatic investments, money is transferred from your bank checking or
savings account into your IMA account and is then used to make
automatic investments.
If you elect to use bank authorizations for your automatic investments, you will
select a transfer date (when the money is transferred into your IMA account). If
you change your bank authorization date, it may also be necessary to change your
automatic investment date to coincide with the new transfer date.
Investment frequency: You can select the frequency of your automatic investments
(example: twice monthly, monthly or quarterly). Quarterly investments are made
on the date selected in the first month of each quarter (January, April, July
and October).
Changing instructions to an already established plan: If you want to change the
fund(s) selected for your SPP you may do so by calling 800-AXP-SERV, or by
sending written instructions clearly outlining the changes to American Express
Financial Direct, P.O. Box 59196, Minneapolis, MN 55459-0196. Written
notification must include the following:
o The funds with SPP that you want to cancel
o The newly selected fund(s) in which you want to begin making
automatic investments and the amount to be invested in each fund
<PAGE>
o The investment frequency and investment dates for your new automatic
investments
Terminating your SPP. If you wish to terminate your SPP, you may call
800-AXP-SERV, or send written instructions to American Express Financial Direct,
P.O. Box 59196, Minneapolis, MN 55459-0196.
Terminating bank authorizations. If you wish to terminate your bank
authorizations, you may do so at any time by notifying American Express
Financial Direct in writing or by calling 800-AXP-SERV. Your bank authorization
will not automatically terminate when you cancel your SPP.
IMPORTANT: If you are canceling your bank authorizations and you wish to cancel
your SPP, you must also provide instructions stating that the Distributor should
cancel your SPP. You may notify the Distributor by sending written instructions
to the address above or telephoning 800-AXP-SERV. Your systematic investments
will continue using IMA account assets if the Distributor does not receive
notification to terminate your systematic investments as well.
To avoid procedural difficulties, the Distributor should receive instructions to
change or terminate your SPP or bank authorizations at least 10 days prior to
your scheduled investment date.
Other important information
Minimum balance and account requirements. The Fund reserves the right to redeem
your shares if, as a result of redemptions, the aggregate value of your holdings
in the Fund drops below $1,000 ($500 in the case of custodial accounts, IRAs and
other retirement plans). You will be notified in writing 30 days before the Fund
takes such action to allow you to increase your holdings to the minimum level.
If you close your IMA account, the Fund will automatically redeem your shares.
Wire transfers to your bank. Funds can be wired from your IMA account to your
bank account. Call the Distributor for additional information on wire transfers.
A $15 service fee will be charged against your IMA account for each wire sent.
No person has been authorized to give any information or to make any
representations not contained in this prospectus in connection with the offering
being made by this prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized by the Fund or
its Distributor. This prospectus does not constitute an offering by the Fund or
by the Distributor in any jurisdiction in which such offering may not be
lawfully made.
<PAGE>
Special shareholder services
Services
To help you track and evaluate the performance of your investments, you will
receive these services:
Quarterly statements listing all of your holdings and transactions during the
previous three months.
Yearly tax statements featuring average-cost-basis reporting of capital gains or
losses if you redeem your shares along with distribution information which
simplifies tax calculations.
Quick telephone reference
American Express Financial Direct Team
Fund performance, objectives and account inquiries, redemptions and exchanges,
dividend payments or reinvestments and automatic payment arrangements
800-AXP-SERV
TTY Service
For the hearing impaired
800-710-5260
Distributions and taxes
As a shareholder you are entitled to your share of the Fund's net income and any
net gains realized on its investments. The Fund distributes dividends and
capital gain distributions to qualify as a regulated investment company and to
avoid paying corporate income and excise taxes. Dividend and capital gain
distributions will have tax consequences that you should know about.
Dividend and capital gain distributions
The Portfolio allocates investment income from dividends and interest and net
realized capital gains or losses, if any, to the Fund. The Fund deducts direct
and allocated expenses from the investment income. The Fund's net investment
income is distributed to you monthly as dividends. Capital gains are realized
when a security is sold for a higher price than was paid for it. Short-term
capital gains are distributed at the end of the calendar year and are included
in net investment income. Long-term capital gains are realized when a security
is held for more than one year. The Fund will offset any net realized capital
gains by any available capital loss carryovers. Net realized long-term capital
gains, if any, are distributed at the end of the calendar year as capital gain
distributions. These long-term capital gains will be subject to differing tax
rates
<PAGE>
depending on the holding period of the underlying investments. Before they are
distributed net long term capital gains are included in the value of each share.
After they are distributed, the value of each share drops by the per-share
amount of the distribution. (If your distributions are reinvested, the total
value of your holdings will not change.)
Reinvestments
Dividends and capital gain distributions are automatically reinvested in
additional shares of the Fund, unless you request the Fund in writing or by
phone to pay distributions to you in cash.
The reinvestment price is the net asset value at close of business on the day
the distribution is paid. (Your quarterly statement will confirm the amount
invested and the number of shares purchased.)
If you choose cash distributions, you will receive only those declared after
your request has been processed.
If the U.S. Postal Service cannot deliver the checks for the cash distributions,
we will reinvest the checks into your account at the then-current net asset
value and make future distributions in the form of additional shares. Prior to
reinvestment no interest will accrue on amounts represented by uncashed
distribution or redemption checks.
Taxes
The Fund has received a Private Letter Ruling from the Internal Revenue Service
stating that, for purposes of the Internal Revenue Code, the Fund will be
regarded as directly holding its allocable share of the income and gain realized
by the Portfolio.
Dividends distributed from interest earned on tax-exempt securities
(exempt-interest dividends) are exempt from federal income taxes but may be
subject to state and local taxes. Dividends distributed from other income earned
and capital gain distributions are not exempt from federal income taxes.
Distributions are taxable in the year the Fund declares them regardless of
whether you take them in cash or reinvest them.
Interest on certain private activity bonds is a preference item for purposes of
the individual and corporate alternative minimum taxes. To the extent the Fund
earns such income, it will flow through to its shareholders and may be taxable
to those shareholders who are subject to the alternative minimum tax.
Because interest on municipal bonds and notes is tax-exempt for federal income
tax purposes, any interest on borrowed money used directly or indirectly to
purchase Fund shares is not deductible on your federal income tax return. You
should consult a tax advisor regarding its deductibility for state and local
income tax purposes.
<PAGE>
Each January, you will receive a tax statement showing the kinds and total
amount of all distributions you received during the previous year. You must
report distributions on your tax returns, even if they are reinvested in
additional shares.
Buying a dividend creates a tax liability. This means buying shares shortly
before a capital gain distribution. You pay the full pre-distribution price for
the shares, then receive a portion of your investment back as a distribution,
which is taxable.
Redemptions and exchanges subject you to a tax on any capital gain. If you sell
shares for more than their cost, the difference is a capital gain. Your gain may
be short term (for shares held for one year or less) or long term (for shares
held for more than one year). Long-term capital gains will be taxed at rates
that vary depending upon the holding period. Long-term capital gains are divided
into two holding periods: 1) shares held more than one year but not more than 18
months and 2) shares held more than 18 months.
Your Taxpayer Identification Number (TIN) is important. As with any financial
account you open, you must list your current and correct Taxpayer Identification
Number (TIN) -- either your Social Security or Employer Identification number.
The TIN must be certified under penalties of perjury on your application when
you open an account.
If you don't provide the TIN, or the TIN you report is incorrect, you could be
subject to backup withholding of 31% of taxable distributions and proceeds from
certain sales and exchanges. You also could be subject to further penalties,
such as:
o a $50 penalty for each failure to supply your correct TIN
o a civil penalty of $500 if you make a false statement that
results in no backup withholding
o criminal penalties for falsifying information
You also could be subject to backup withholding because you failed to report
interest or dividends on your tax return as required.
How to determine the correct TIN
Use the Social Security or
For this type of account: Employer Identification number of:
Individual or joint account The individual or individuals listed
on the account
Custodian account of a minor The minor
(Uniform Gifts/Transfers to
Minors Act)
<PAGE>
A living trust The grantor-trustee (the person who
puts the money into the trust)
An irrevocable trust, pension The legal entity (not the
trust or estate personal representative or trustee,
unless no legal entity is designated
in the account title)
Sole proprietorship The owner
Partnership The partnership
Corporate The corporation
Association, club or The organization
tax-exempt organization
For details on TIN requirements, call 800-AXP-SERV for federal Form W-9,
"Request for Taxpayer Identification Number and Certification."
Important: This information is a brief and selective summary of certain federal
tax rules that apply to the Fund. Tax matters are highly individual and complex,
and you should consult a qualified tax advisor about your personal situation.
How the Fund and Portfolio are organized
Shares
The Fund is owned by its shareholders. All shares issued by the Fund are of the
same class -- capital stock. Par value is 1 cent per share. Both full and
fractional shares can be issued.
Voting rights
As a shareholder, you have voting rights over the Fund's management and
fundamental policies. You are entitled to one vote for each share you own.
Shares of the Funds have cumulative voting rights.
Shareholder meetings
The Company does not hold annual shareholder meetings. However, the board
members may call meetings at their discretion, or on demand by holders of 10% or
more of the Company's outstanding shares, to elect or remove board members.
<PAGE>
Special considerations regarding master/feeder structure
The Fund pursues its goals by investing its assets in a master fund called the
Portfolio. This means that the Fund does not invest directly in securities;
rather the Portfolio invests in and manages its portfolio of securities. The
goals and investment policies of the Portfolio are described under the captions
"Investment policies and risks" and "Facts about investments and their risks."
Additional information on investment policies may be found in the SAI.
Board considerations: The board considered the advantages and disadvantages of
investing the Fund's assets in the Portfolio. The board believes that the
master/feeder structure will be in the best interest of the Fund and its
shareholders since it offers the opportunity for economies of scale. The Fund
may redeem all of its assets from the Portfolio at any time. Should the board
determine that it is in the best interest of the Fund and its shareholders to
terminate its investment in the Portfolio, it would consider hiring an
investment advisor to manage the Fund's assets, or other appropriate options.
The Fund would terminate its investment if the Portfolio changed its goals,
investment policies or restrictions without the same change being approved by
the Fund.
Other feeders: The Portfolio sells securities to other affiliated mutual funds
and may sell securities to non-affiliated investment companies and institutional
accounts (known as feeders). These feeders buy the Portfolio's securities on the
same terms and conditions as the Fund and pay their proportionate share of the
Portfolio's expenses. However, their operating costs and sales charges are
different from those of the Fund. Therefore, the investment returns for other
feeders are different from the returns of the Fund. Information about other
feeders may be obtained by calling a service representative at 800-437-3133.
Each feeder that invests in the Portfolio is different and activities of its
investors may adversely affect all other feeders, including the Fund. For
example, if one feeder decides to terminate its investment in the Portfolio, the
Portfolio may elect to redeem in cash or in kind. If cash is used, the Portfolio
will incur brokerage, taxes and other costs in selling securities to raise the
cash. This may result in less investment diversification if entire investment
positions are sold, and it also may result in less liquidity among the remaining
assets. If in-kind distribution is made, a smaller pool of assets remains that
may affect brokerage rates and investment options. In both cases, expenses may
rise since there are fewer assets to cover the costs of managing those assets.
Shareholder meetings: Whenever the Portfolio proposes to change a fundamental
investment policy or to take any other action requiring approval of its security
holders, the Fund will hold a shareholder meeting. The Fund will vote for or
against the Portfolio's proposals in proportion to the vote it receives for or
against the same proposals from its shareholders.
<PAGE>
Board members and officers
Shareholders of the Company elect a board that oversees the operations of the
Funds and chooses the Company's officers. The Company's officers are responsible
for day-to-day business decisions based on policies set by the board.
Information about the board members and officers of both the Company and the
Trust is found in the SAI under the caption "Board Members and Officers."
Investment manager
The Portfolio pays the Advisor for managing its assets. The Fund pays its
proportionate share of the fee. Under the Investment Management Services
Agreement, the Advisor is paid a fee for these services based on the average
daily net assets of the Portfolio, as follows:
Assets Annual rate at
(billions) each asset level
First $1.0 0.490%
Next 1.0 0.465
Next 1.0 0.440
Next 3.0 0.415
Next 3.0 0.390
Over 9.0 0.360
For the fiscal year ended Nov. 30, 1997, the Advisor received investment
management fees of 0.47% of its average daily net assets. Under the agreement,
the Portfolio also pays taxes, brokerage commissions and nonadvisory expenses.
Administrator and transfer agent
Under an Administrative Services Agreement, the Fund pays the Advisor for
administration and accounting services at an annual rate that decreases as
assets increase. The fee ranges from 0.040% to 0.020%.
Under a separate Transfer Agency Agreement, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC an annual fee of $25 per shareholder account.
Distributor
The Fund sells shares through the Distributor under a Distribution Agreement.
The Distributor is located at P.O. Box 59196, Minneapolis, MN 55459-0196 and is
a wholly-owned subsidiary of Travel Related Services, Inc., a wholly-owned
subsidiary of American Express Company, a financial services company with
headquarters at
<PAGE>
American Express Tower, World Financial Center, New York, NY 10285. Financial
consultants representing the Distributor provide information to investors about
individual investment programs, the Fund and its operations, new account
applications, exchange and redemption requests. The Fund reserves the right to
sell shares through other financial intermediaries or broker/dealers. In that
event, the account terms would also be governed by rules that the intermediary
may establish.
To help defray costs, including costs for marketing, sales administration,
training, overhead, direct marketing programs, advertising and related
functions, the Funds pay the Distributor a distribution fee, also known as a
12b-1 fee. Under a Plan and Agreement of Distribution, the Fund pays a
distribution fee at an annual rate of 0.25% of the Fund's average daily net
assets for distribution-related services.
This fee will not cover all of the costs incurred by the Distributor.
Total expenses paid by the Fund for the fiscal year ended Nov. 30, 1997, were
0.95%.
About the Advisor
The Advisor is located at IDS Tower 10, Minneapolis, MN 55440-0010. It is a
wholly-owned subsidiary of American Express Company. The Portfolios may pay
brokerage commissions to broker-dealer affiliates of the Advisor.
<PAGE>
Appendix A
Description of bond ratings
Bond ratings concern the quality of the issuing state or local governmental
unit. They are not an opinion of the market value of the security. Such ratings
are opinions on whether the principal and interest will be repaid when due. A
security's rating may change, which could affect its price. Ratings by Moody's
Investors Service, Inc. are Aaa, Aa, A, Baa, Ba, B, Caa, Ca and C. Ratings by
Standard & Poor's Corporation are AAA, AA, A, BBB, BB, B, CCC, CC, C and D. The
following is a compilation of the two agencies' rating descriptions. For further
information, see the SAI.
Aaa/AAA - Judged to be of the best quality and carry the smallest degree of
investment risk. Interest and principal are secure.
Aa/AA - Judged to be high-grade although margins of protection for interest and
principal may not be quite as good as Aaa or AAA rated securities.
A - Considered upper-medium grade. Protection for interest and principal is
deemed adequate but may be susceptible to future impairment.
Baa/BBB - Considered medium-grade obligations. Protection for interest and
principal is adequate over the short-term; however, these obligations may have
certain speculative characteristics.
Ba/BB - Considered to have speculative elements. The protection of interest and
principal payments may be very moderate.
B - Lack characteristics of more desirable investments. There may be small
assurance over any long period of time of the payment of interest and principal.
Caa/CCC - Are of poor standing. Such issues may be in default or there may be
risk with respect to principal or interest.
Ca/CC - Represent obligations that are highly speculative. Such issues are often
in default or have other marked shortcomings.
C - Are obligations with a higher degree of speculation. These securities have
major risk exposures to default.
D - Are in payment default. The D rating is used when interest payments or
principal payments are not made on the due date.
Non-rated securities will be considered for investment when they possess a risk
comparable to that of rated securities consistent with the Portfolio's
objectives and
<PAGE>
policies. When assessing the risk involved in each non-rated security, the
Portfolio will consider the financial condition of the issuer or the protection
afforded by the terms of the security.
Definitions of zero-coupon and pay-in-kind securities
A zero-coupon security is a security that is sold at a deep discount from its
face value and makes no periodic interest payments. The buyer of such a security
receives a rate of return by gradual appreciation of the security, which is
redeemed at face value on the maturity date.
A pay-in-kind security is a security in which the issuer has the option to make
interest payments in cash or in additional securities. The securities issued as
interest usually have the same terms, including maturity date, as the
pay-in-kind securities.
<PAGE>
Appendix B
1998 Federal tax-exempt and taxable equivalent yield calculation
These tables will help you determine your federal taxable yield equivalents for
given rates of tax-exempt income.
STEP 1: Calculating your marginal tax rate.
Using your Taxable Income and Adjusted Gross Income figures as guides, you can
locate your Marginal Tax Rate in the table below.
First locate your Taxable Income in a filing status and income range in the
left-hand column. Then, locate your Adjusted Gross Income at the top of the
chart. At the point where your Taxable Income line meets your Adjusted Gross
Income column the percentage indicated is an approximation of your Marginal Tax
Rate. For example: Let's assume you are married filing jointly, your taxable
income is $138,000 and your adjustable gross income is $175,000.
Under Taxable Income married filing jointly status, $138,000 is in the $102,300
- - $155,950 range. Under Adjusted Gross Income, $175,000 in the $124,500 to
$186,800 column. The Taxable Income line and Adjusted Gross Income column meet
at 31.93%. This is the rate you'll use in Step 2.
<TABLE>
<CAPTION>
Taxable income** Adjusted gross income*
$ 0 $124,500 $186,800
to to to Over
<S> <C> <C> <C> <C>
$124,500(1) $186,800(2) $309,300(3) $309,300(2)
Married Filing Jointly
$ 0 - $42,350 15.00%
42,350 - 102,300 28.00 28.84%
102,300 - 155,950 31.00 31.93 33.27%
155,950 - 278,450 36.00 37.08 38.64 37.08%
278,450 + 39.60 42.50*** 40.79
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Taxable income** Adjusted gross income*
$ 0 $124,500
to to Over
<S> <C> <C> <C> <C>
$124,500(1) $247,000(3) $247,000(2)
Single
$ 0 - $25,350 15.00%
26,350 - 61,400 28.00
61,400 - 128,100 31.00 32.60%
128,100 - 278,450 36.00 37.86 37.08%
278,450 + 39.60 40.79
</TABLE>
* Gross income with certain adjustments before taking itemized deductions
and personal exemptions.
** Amount subject to federal income tax after itemized deductions and
personal exemptions.
*** This rate is applicable only in the limited case where your adjusted gross
income is less than $309,300 and your taxable income exceeds $278,450.
(1) No Phase-out -- Assumes no phase-out of itemized deductions or personal
exemptions.
(2) Itemized Deductions Phase-out -- Assumes a single taxpayer has one
personal exemption and joint taxpayers have two personal exemptions.
(3) Itemized Deductions and Personal Exemption Phase-outs -- Assumes a
single taxpayer has one personal exemption, joint taxpayers have two
personal exemptions and itemized deductions continue to phase-out.
If these assumptions do not apply to you, it will be necessary to construct your
own personalized tax equivalency table.
STEP 2: Determining your federal taxable yield equivalents.
Using 31.93%, you may determine that a tax-exempt yield of 4% is equivalent to
earning a taxable 5.88% yield.
<PAGE>
For these Tax-Exempt Rates:
<TABLE>
<CAPTION>
3.00% 3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50%
Marginal Tax Rates Equal the Taxable Rates shown below:
<S> <C> <C> <C> <C> <C> <C> <C> <C>
15.00% 3.53 4.12 4.71 5.29 5.88 6.47 7.06 7.65
28.00% 4.17 4.86 5.56 6.25 6.94 7.64 8.33 9.03
28.84% 4.22 4.92 5.62 6.32 7.03 7.73 8.43 9.13
31.00% 4.35 5.07 5.80 6.52 7.25 7.97 8.70 9.42
31.93% 4.41 5.14 5.88 6.61 7.35 8.08 8.81 9.55
32.60% 4.45 5.19 5.93 6.68 7.42 8.16 8.90 9.64
33.27% 4.50 5.25 5.99 6.74 7.49 8.24 8.99 9.74
37.08% 4.77 5.56 6.36 7.15 7.95 8.74 9.54 10.33
36.00% 4.69 5.47 6.25 7.03 7.81 8.59 9.38 10.16
37.86% 4.83 5.63 6.44 7.24 8.05 8.85 9.66 10.46
38.64% 4.89 5.70 6.52 7.33 8.15 8.96 9.78 10.59
39.79% 4.97 5.79 6.62 7.45 8.28 9.11 9.93 10.76
40.79% 5.07 5.91 6.76 7.60 8.44 9.29 10.13 10.98
42.50% 5.22 6.09 6.96 7.83 8.70 9.57 10.43 11.30
</TABLE>
<PAGE>
Appendix C
Descriptions of derivative instruments
What follows are brief descriptions of derivative instruments the Portfolio may
use. At various times the Portfolio may use some or all of these instruments and
is not limited to these instruments. It may use other similar types of
instruments if they are consistent with the Portfolio's investment goal and
policies. For more information on these instruments, see the SAI.
Options and futures contracts - An option is an agreement to buy or sell an
instrument at a set price during a certain period of time. A futures contract is
an agreement to buy or sell an instrument for a set price on a future date. The
Portfolio may buy and sell options and futures contracts to manage its exposure
to changing interest rates, security prices and currency exchange rates. Options
and futures may be used to hedge the Portfolio's investments against price
fluctuations or to increase market exposure.
Asset-backed and mortgage-backed securities - Asset-backed securities include
interests in pools of assets such as motor vehicle installment sale contracts,
installment loan contracts, leases on various types of real and personal
property, receivables from revolving credit (credit card) agreements or other
categories of receivables. Mortgage-backed securities include collateralized
mortgage obligations and stripped mortgage-backed securities. Interest and
principal payments depend on payment of the underlying loans or mortgages. The
value of these securities may also be affected by changes in interest rates, the
market's perception of the issuers and the creditworthiness of the parties
involved. The non-mortgage related asset-backed securities do not have the
benefit of a security interest in the related collateral. Stripped
mortgage-backed securities include interest only (IO) and principal only (PO)
securities. Cash flows and yields on IOs and POs are extremely sensitive to the
rate of principal payments on the underlying mortgage loans or mortgage-backed
securities.
Indexed securities - The value of indexed securities is linked to currencies,
interest rates, commodities, indexes or other financial indicators. Most indexed
securities are short- to intermediate- term fixed income securities whose values
at maturity or interest rates rise or fall according to the change in one or
more specified underlying instruments. Indexed securities may be more volatile
than the underlying instrument itself.
Inverse floaters - Inverse floaters are created by underwriters using the
interest payment on securities. A portion of the interest received is paid to
holders of instruments based on current interest rates for short-term
securities. The remainder, minus a servicing fee, is paid to holders of inverse
floaters. As interest rates go down, the holders of the inverse floaters receive
more income and an increase in the price for the inverse floaters. As interest
rates go up, the holders of the inverse floaters receive less income and a
decrease in the price for the inverse floaters.
<PAGE>
Structured products - Structured products are over-the-counter financial
instruments created specifically to meet the needs of one or a small number of
investors. The instrument may consist of a warrant, an option or a forward
contract embedded in a note or any of a wide variety of debt, equity and/or
currency combinations. Risks of structured products include the inability to
close such instruments, rapid changes in the market and defaults by other
parties.
<PAGE>
STRATEGIST TAX-FREE INCOME FUND, INC.
STATEMENT OF ADDITIONAL INFORMATION
FOR
STRATEGIST TAX-FREE HIGH YIELD FUND
Jan. 29, 1998
This Statement of Additional Information (SAI) is not a prospectus. It should be
read together with the Fund's prospectus and the financial statements contained
in the Annual Report which may be obtained by calling American Express Financial
Direct, 800-AXP-SERV (TTY: 800-710-5260) or by writing to P.O. Box 59196,
Minneapolis, MN 55459-0196.
This SAI is dated Jan. 29, 1998, and it is to be used with the Funds' prospectus
dated Jan. 29, 1998, and the Annual Report for the fiscal year ended Nov. 30,
1997.
<PAGE>
TABLE OF CONTENTS
Goal and Investment Policies......................................See Prospectus
Additional Investment Policies.............................................p. 3
Security Transactions......................................................p. 7
Brokerage Commissions Paid to Brokers Affiliated with the Advisor..........p. 9
Performance Information....................................................p. 10
Valuing Fund Shares........................................................p. 12
Investing in the Fund......................................................p. 14
Redeeming Shares...........................................................p. 14
Capital Loss Carryover.....................................................p. 15
Taxes......................................................................p. 16
Agreements.................................................................p. 17
Organizational Information.................................................p. 20
Board Members and Officers.................................................p. 20
Compensation for the Fund and Portfolio Board Members......................p. 26
Principal Holders of Securities............................................p. 26
Independent Auditors.......................................................p. 26
Financial Statements..........................................See Annual Report
Prospectus.................................................................p. 27
Appendix A: Description of Short-Term Securities...........................p. 28
Appendix B: Options and Interest Rate Futures Contracts....................p. 30
Appendix C: Dollar-Cost Averaging..........................................p. 36
<PAGE>
ADDITIONAL INVESTMENT POLICIES
Strategist Tax-Free Income Fund, Inc. (the Company) is a mutual fund with one
series of capital stock representing interests in Strategist Tax-Free High Yield
Fund (the Fund). The Fund is a diversified mutual fund with its own goal and
investment policies. The Fund seeks to achieve its goal by investing all of its
assets in a corresponding series portfolio (the Portfolio) of Tax-Free Income
Trust (the Trust), a separate investment company, rather than by directly
investing in and managing its own portfolio of securities.
Fundamental investment policies adopted by the Fund or Portfolio cannot be
changed without the approval of a majority of the outstanding voting securities
of the Fund or Portfolio, respectively, as defined in the Investment Company Act
of 1940 as amended (the 1940 Act). Whenever the Fund is requested to vote on a
change in the investment policies of the corresponding Portfolio, the Company
will hold a meeting of Fund shareholders and will cast the Fund's vote as
instructed by the shareholders.
Notwithstanding any of the Fund's other investment policies, the Fund may invest
its assets in an open-end management investment company having the same
investment objectives, policies and restrictions as the Fund for the purpose of
having those assets managed as part of a combined pool.
Investment Policies applicable to Tax-Free High Yield Portfolio:
These are investment policies in addition to those presented in the prospectus.
The policies below are fundamental policies that apply both to the Fund and its
corresponding Portfolio and may be changed only with shareholder/unitholder
approval. Unless holders of a majority of the outstanding voting securities
agree to make the change, the Portfolio will not:
'Act as an underwriter (sell securities for others). However, under the
securities laws, the Portfolio may be deemed to be an underwriter when it
purchases securities directly from the issuer and later resells them.
'Borrow money or property, except as a temporary measure for extraordinary or
emergency purposes, in an amount not exceeding one-third of the market value of
its total assets (including borrowings) less liabilities (other than borrowings)
immediately after the borrowing. The Portfolio and Fund have not borrowed in the
past and have no present intention to borrow.
'Make cash loans if the total commitment amount exceeds 5% of the Portfolio's
total assets.
<PAGE>
'Invest more than 5% of its total assets in securities of any one company,
government or political subdivision thereof, except the limitation will not
apply to investments in securities issued by the U.S. government, its agencies
or instrumentalities, and except that up to 25% of the Portfolio's total assets
may be invested without regard to this 5% limitation. For purposes of this
policy, the terms of a municipal security determine the issuer.
'Buy or sell real estate, unless acquired as a result of ownership of securities
or other instruments, except this shall not prevent the Portfolio from investing
in securities or other instruments backed by real estate or securities of
companies engaged in the real estate business or real estate investment trusts.
For purposes of this policy, real estate includes real estate limited
partnerships.
'Buy or sell physical commodities unless acquired as a result of ownership of
securities or other instruments, except this shall not prevent the Portfolio
from buying or selling options and futures contracts or from investing in
securities or other instruments backed by, or whose value is derived from,
physical commodities.
'Lend Portfolio securities in excess of 30% of its net assets. The current
policy of the Portfolio's board is to make these loans, either long- or
short-term, to broker-dealers. In making loans, the Portfolio receives the
market price in cash, U.S. government securities, letters of credit or such
other collateral as may be permitted by regulatory agencies and approved by the
board. If the market price of the loaned securities goes up, the Portfolio will
get additional collateral on a daily basis. The risks are that the borrower may
not provide additional collateral when required or return the securities when
due. During the existence of the loan, the Portfolio receives cash payments
equivalent to all interest or other distributions paid on the loaned securities.
A loan will not be made unless American Express Financial Corporation (the
Advisor) believes the opportunity for additional income outweighs the risks.
The policies below are non-fundamental policies that apply both to the Fund and
its corresponding Portfolio and may be changed without shareholder/unitholder
approval. Unless changed by the board, the Portfolio will not:
`Buy on margin or sell short, except the Portfolio may enter into interest rate
futures contracts.
`Pledge or mortgage its assets beyond 15% of total assets. If the Portfolio were
ever to do so, valuation of the pledged or mortgaged assets would be based on
market values. For purposes of this policy, collateral arrangements for margin
deposits on a futures contract are not deemed to be a pledge of assets.
`Invest more than 5% of its total assets in securities whose issuer or guarantor
of principal and interest has been in operation for less than three years.
<PAGE>
`Invest in voting securities, securities of investment companies or exploration
or development programs, such as oil, gas or mineral leases.
`Invest more than 5% of its net assets in warrants.
`Purchase securities of an issuer if the board members and officers of the Fund,
the Portfolio and of the Advisor hold more than a certain percentage of the
issuer's outstanding securities. The holdings of all board members and officers
of the Fund, the Portfolio and of the Advisor who own more than 0.5% of an
issuer's securities are added together, and if in total they own more than 5%,
the Portfolio will not purchase securities of that issuer.
`Invest more than 10% of the Portfolio's net assets in securities and derivative
instruments that are illiquid. For purposes of this policy illiquid securities
include some privately placed securities, public securities and Rule 144A
securities that for one reason or another may no longer have a readily available
market, loans and loan participations, repurchase agreements with maturities
greater than seven days, non-negotiable fixed-time deposits and over-the-counter
options. In determining the liquidity of municipal lease obligations, the
investment manager, under guidelines established by the board, will consider the
essential nature of the leased property, the likelihood that the municipality
will continue appropriating funding for the leased property, and other relevant
factors related to the general credit quality of the municipality and the
marketability of the municipal lease obligation.
In determining the liquidity of Rule 144A securities, which are unregistered
securities offered to qualified institutional buyers, and interest-only and
principal-only fixed mortgage-backed securities (IOs and POs) issued by the U.S.
government or its agencies and instrumentalities, the investment manager, under
guidelines established by the board, will consider any relevant factors
including the frequency of trades, the number of dealers willing to purchase or
sell the security and the nature of marketplace trades.
The Portfolio may make contracts to purchase securities for a fixed price at a
future date beyond normal settlement time (when-issued securities or forward
commitments). Under normal market conditions, the Portfolio does not intend to
commit more than 5% of its total assets to these practices. The Portfolio does
not pay for the securities or receive dividends or interest on them until the
contractual settlement date. The Portfolio will designate cash or liquid
high-grade debt securities at least equal in value to its commitments to
purchase the securities. When issued securities or forward commitments are
subject to market fluctuations and they may affect the Portfolio's total assets
the same as owned securities.
<PAGE>
The Portfolio may invest up to 20% of its net assets in certain taxable
investments for temporary defensive purposes. It may purchase short-term U.S.
and Canadian government securities. It may invest in bank obligations including
negotiable certificates of deposit, non-negotiable fixed time deposits, bankers'
acceptances and letters of credit. The issuing bank or savings and loan
generally must have capital, surplus and undivided profits (as of the date of
its most recently published annual financial statements) in excess of $100
million (or the equivalent in the instance of a foreign branch of a U.S.
bank) at the date of investment.
The Portfolio may purchase short-term corporate notes and obligations rated in
the top two classifications by Moody's Investors Service, Inc. (Moody's) or
Standard & Poor's Corporation (S&P) or the equivalent. It also may use
repurchase agreements with broker-dealers registered under the Securities
Exchange Act of 1934 and with commercial banks. Repurchase agreements involve
investments in debt securities where the seller (broker-dealer or bank) agrees
to repurchase the securities from the Portfolio at cost plus an agreed-to
interest rate within a specified time. A risk of a repurchase agreement is that
if the seller seeks the protection of the bankruptcy laws, the Portfolio's
ability to liquidate the security involved could be impaired, and it might
subsequently incur a loss if the value of the security declines or if the other
party to a repurchase agreement defaults on its obligation.
The Portfolio may invest in commercial paper issued in transactions not
involving a public offering under Section 4(2) of the Securities Act of 1933
(4(2) paper). In determining the liquidity of 4(2) paper, the Advisor, under
guidelines established by the board, will evaluate relevant factors such as the
issuer and the size and nature of its commercial paper programs, the willingness
and ability of the issuer or dealer to repurchase the paper, and the nature of
the clearance and settlement procedures for the paper.
The term "municipal obligation" as used in the prospectus includes debt
obligations issued by or on behalf of states, territories or possessions of the
United States, the District of Columbia and their political subdivisions,
agencies and instrumentalities, the interest on which is generally exempt from
federal income tax. Municipal obligations are classified as principally as
either "general obligations" or "revenue obligations". General obligation bonds
are secured by the municipality's pledge of its credit and taxing power for the
payment of principal and interest. Revenue obligations are generally payable
only from the revenue derived from a particular facility or class of facilities,
or in some cases from the proceeds of a special excise tax or other special
revenue source.
For a description of short-term securities, see Appendix A. For a discussion on
options and interest rate futures contracts, see Appendix B. For a discussion on
dollar-cost averaging, see Appendix C.
<PAGE>
SECURITY TRANSACTIONS
Subject to policies set by the board, the Advisor is authorized to determine,
consistent with the Fund's and Portfolio's investment goal and policies, which
securities will be purchased, held or sold. In determining where the buy and
sell orders are to be placed, the Advisor has been directed to use its best
efforts to obtain the best available price and most favorable execution except
where otherwise authorized by the board.
The Advisor has a strict Code of Ethics that prohibits its affiliated personnel
from engaging in personal investment activities that compete with or attempt to
take advantage of planned portfolio transactions for any fund or trust for which
it acts as investment manager. The Advisor carefully monitors compliance with
its Code of Ethics.
On occasion, it may be desirable to compensate a broker for research services or
for brokerage services by paying a commission that might not otherwise be
charged or a commission in excess of the amount another broker might charge. The
board has adopted a policy authorizing the Advisor to do so to the extent
authorized by law, if the Advisor determines, in good faith, that such
commission is reasonable in relation to the value of the brokerage or research
services provided by a broker or dealer, viewed either in the light of that
transaction or the Advisor's overall responsibilities to the portfolios advised
by the Advisor.
Research provided by brokers supplements the Advisor's own research activities.
Such services include economic data on, and analysis of, U.S. and foreign
economies; information on specific industries; information about specific
companies, including earnings estimates; purchase recommendations for stocks and
bonds; portfolio strategy services; political, economic, business and industry
trend assessments; historical statistical information; market data services
providing information on specific issues and prices; and technical analysis of
various aspects of the securities markets, including technical charts. Research
services may take the form of written reports, computer software or personal
contact by telephone or at seminars or other meetings. The Advisor has obtained,
and in the future may obtain, computer hardware from brokers, including but not
limited to personal computers that will be used exclusively for investment
decision-making purposes, which include the research, portfolio management and
trading functions and other services to the extent permitted under an
interpretation by the SEC.
Normally, the Portfolio's securities are traded on a principal rather than an
agency basis. In other words, the Advisor will trade directly with the issuer or
with a dealer who buys or sells for its own account, rather than acting on
behalf of another client. The Advisor does not pay the dealer commissions.
Instead the dealer's profit, if any, is the difference, or spread, between the
dealer's purchase and sale price for the security.
<PAGE>
When paying a commission that might not otherwise be charged or a commission in
excess of the amount another broker might charge, the Advisor must follow
procedures authorized by the board. To date, three procedures have been
authorized. One procedure permits the Advisor to direct an order to buy or sell
a security traded on a national securities exchange to a specific broker for
research services it has provided. The second procedure permits the Advisor, in
order to obtain research, to direct an order on an agency basis to buy or sell a
security traded in the over-the-counter market to a firm that does not make a
market in that security. The commission paid generally includes compensation for
research services. The third procedure permits the Advisor, in order to obtain
research and brokerage services, to cause the Portfolio to pay a commission in
excess of the amount another broker might have charged. The Advisor has advised
the Trust it is necessary to do business with a number of brokerage firms on a
continuing basis to obtain such services as the handling of large orders, the
willingness of a broker to risk its own money by taking a position in a
security, and the specialized handling of a particular group of securities that
only certain brokers may be able to offer. As a result of this arrangement, some
portfolio transactions may not be effected at the lowest commission, but the
Advisor believes it may obtain better overall execution. The Advisor has
represented that under all three procedures the amount of commission paid will
be reasonable and competitive in relation to the value of the brokerage services
performed or research provided.
All other transactions shall be placed on the basis of obtaining the best
available price and most favorable execution. In so doing, if, in the
professional opinion of the person responsible for selecting the broker or
dealer, several firms can execute the transaction on the same basis,
consideration will be given by such person to those firms offering research
services. Such services may be used by the Advisor in providing advice to all
the trusts in the Preferred Master Trust Group, their corresponding funds and
other accounts advised by the Advisor, even though it is not possible to relate
the benefits to any particular fund, portfolio or account.
Each investment decision made for the Portfolio is made independently from any
decision made for other portfolios, funds or other accounts advised by the
Advisor or any of its subsidiaries. When the Portfolio buys or sells the same
security as another portfolio, fund or account, the Advisor carries out the
purchase or sale in a way the Trust agrees in advance is fair. Although sharing
in large transactions may adversely affect the price or volume purchased or sold
by the Portfolio, the Portfolio hopes to gain an overall advantage in execution.
The Advisor has assured the Trust it will continue to seek ways to reduce
brokerage costs.
On a periodic basis, the Advisor makes a comprehensive review of the
broker-dealers it uses and the overall reasonableness of their commissions. The
review evaluates execution, operational efficiency and research services.
<PAGE>
The Portfolio paid total brokerage commissions of $0 for fiscal year ended Nov.
30, 1997 and $150,492 for the fiscal period from May 13, 1996 to Nov. 30, 1996.
The Portfolio began operations on May 13, 1996. Substantially all firms through
whom transactions were executed provide research services.
No transactions were directed to brokers because of research services they
provided to a Portfolio.
As of the fiscal year ended Nov. 30, 1997, the Portfolio held no securities of
its regular brokers or dealers or of the parents of those brokers or dealers
that derived more than 15% of gross revenue from securities-related activities.
For the fiscal year ended Nov. 30, 1997, and for the fiscal period from May 13,
1996 (commencement of operations) to Nov. 30, 1996, the portfolio turnover rates
were 4% and 4% for Tax-Free High Yield Portfolio.
For periods prior to the commencement of operations of Tax-Free High Yield
Portfolio, turnover rates are based on the turnover rates of the corresponding
IDS fund, which transferred all of its assets to the Portfolio on May 13, 1996.
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH THE ADVISOR
Affiliates of American Express Company (American Express) (of which the Advisor
is a wholly-owned subsidiary) may engage in brokerage and other securities
transactions on behalf of the Portfolio according to procedures adopted by the
board and to the extent consistent with applicable provisions of the federal
securities laws. The Advisor will use an American Express affiliate only if (i)
the Advisor determines that the Portfolio will receive prices and executions at
least as favorable as those offered by qualified independent brokers performing
similar brokerage and other services for the Portfolio and (ii) the affiliate
charges the Portfolio commission rates consistent with those the affiliate
charges comparable unaffiliated customers in similar transactions and if such
use is consistent with terms of the Investment Management Services Agreement.
The Advisor may direct brokerage to compensate an affiliate. The Advisor will
receive research on South Africa from New Africa Advisors, a wholly-owned
subsidiary of Sloan Financial Group. The Advisor owns 100% of IDS Capital
Holdings Inc. which in turn owns 40% of Sloan Financial Group. New Africa
Advisors will send research to the Advisor and in turn the Advisor will direct
trades to a particular broker. The broker will have an agreement to pay New
Africa Advisors. All transactions will be on a best execution basis.
Compensation received will be reasonable for the services rendered.
No brokerage commissions were paid to brokers affiliated with the Advisor for
the two most recent fiscal periods.
<PAGE>
PERFORMANCE INFORMATION
The Fund may quote various performance figures to illustrate past performance.
Average annual total return and current yield quotations used by the Fund are
based on standardized methods of computing performance as required by the SEC.
An explanation of the methods used by the Fund to compute performance follows.
Average annual total return
The Fund may calculate average annual total return for certain periods by
finding the average annual compounded rates of return over the period that would
equate the initial amount invested to the ending redeemable value, according to
the following formula:
P(1+T)n = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the end of
the period (or fractional portion thereof)
Aggregate total return
The Fund may calculate aggregate total return for certain periods representing
the cumulative change in the value of an investment in the Fund over a specified
period of time according to the following formula:
ERV - P
P
where: P = a hypothetical initial payment of $1,000
ERV = ending redeemable value of a hypothetical $1,000
payment, made at the beginning of a period, at the end of
the period (or fractional portion thereof)
Annualized yield
The Fund may calculate an annualized yield by dividing the net investment income
per share deemed earned during a period by the net asset value per share on the
last day of the period and annualizing the results.
<PAGE>
Yield is calculated according to the following formula:
Yield = 2[(a-b + 1)6 - 1]
cd
where: a = dividends and interest earned during the period
b = aggregate expenses accrued for the period (net of reimbursements)
c = the average daily number of shares outstanding during the period
that were entitled to receive dividends
d = the maximum offering price per share on the last day of the
period
The Fund's annualized yield was 4.60% for Tax-Free High Yield Fund.
The Fund's yield, calculated as described above according to the formula
prescribed by the SEC, is a hypothetical return based on market value yield to
maturity for the Portfolio's securities. It is not necessarily indicative of the
amount which was or may be paid to the Fund's shareholders. Actual amounts paid
to the Fund's shareholders are reflected in the distribution yield.
Distribution yield
Distribution yield is calculated according to the following formula:
D divided by POP F equals DY
30 30
where: D = sum of dividends for 30-day period
POP = sum of public offering price for 30-day period
F = annualizing factor
DY = distribution yield
The Fund's distribution yield was 5.63% for Tax-Free High Yield Fund.
Tax-Equivalent Yield
Tax-equivalent yield is calculated by dividing that portion of the yield (as
calculated above) which is tax-exempt by one minus a stated income tax rate and
adding the result to that portion, if any, of the yield that is not tax-exempt.
The following table shows the fund's tax equivalent yield, based on federal but
not state tax rates, for the 30-day period ended Nov. 30, 1997.
<PAGE>
<TABLE>
<CAPTION>
Marginal Income Tax-Equivalent
Tax Bracket Yield Distribution Annualized
- ------------------------------------ ----------------------------------- -----------------------------------
<S> <C> <C>
15.0% 6.62% 5.41%
28.0% 7.82% 6.39%
31.0% 8.16% 6.67%
36.0% 8.80% 7.19%
39.6% 9.32% 7.62%
</TABLE>
In its sales material and other communications, the Fund may quote, compare or
refer to rankings, yields or returns as published by independent statistical
services or publishers and publications such as The Bank Rate Monitor National
Index, Barron's, Business Week, Donoghue's Money Market Fund Report, Financial
Services Week, Financial Times, Financial World, Forbes, Fortune, Global
Investor, Institutional Investor, Investor's Daily, Kiplinger's Personal
Finance, Lipper Analytical Services, Money, Morningstar, Mutual Fund Forecaster,
Newsweek, The New York Times, Personal Investor, Stanger Report, Sylvia Porter's
Personal Finance, USA Today, U.S. News and World Report, The Wall Street Journal
and Wiesenberger Investment Companies Service.
On May 13, 1996, IDS High Yield Tax-Exempt Fund (the IDS Fund), an open-end
investment company managed by the Advisor, transferred all of its assets to
Tax-Free High Yield Portfolio in exchange for units of the Portfolio. Also on
May 13, 1996, the Tax-Free High Yield Fund transferred all of its assets to the
Portfolio in connection with the commencement of its operations.
On March 20, 1995, the IDS Fund converted to a multiple class structure pursuant
to which three classes of shares are offered: Class A, Class B and Class Y.
Class A shares are sold with a 5% sales charge, a 0.175% service fee and no
12b-1 fee. Performance quoted, other than one year, by the Fund, prior to
commencement of operations, is based on the performance of the IDS Fund prior to
March 20, 1995 and to Class A shares of the IDS Fund from March 20, 1995 through
May 13, 1996, adjusted for differences in sales charge. The historical
performance for these periods has not been adjusted for any difference between
the estimated aggregate fees and expenses of the Fund and historical fees and
expenses of the IDS Fund.
VALUING FUND SHARES
The value of an individual share is determined by using the net asset value
before shareholder transactions for the day and dividing that figure by the
number of shares outstanding at the end of the previous day.
On Dec. 1, 1997, the first business day following the end of the fiscal year,
the computations looked like this:
<PAGE>
<TABLE>
<CAPTION>
Net assets Shares
before outstanding at Net asset value
Fund shareholder divided by the end of equals of one share
transactions previous day
- ------------------ ----------------- ----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C>
Tax-Free High $734,326 158,260 $4.64
Yield
</TABLE>
In determining net assets before shareholder transactions, the securities held
by the Fund's corresponding Portfolio are valued as follows as of the close of
business of the New York Stock Exchange (the Exchange):
'Securities, traded on a securities exchange for which a last-quoted sales price
is readily available are valued at the last-quoted sales price on the exchange
where such security is primarily traded.
'Securities traded on a securities exchange for which a last-quoted sales price
is not readily available are valued at the mean of the closing bid and asked
prices, looking first to the bid and asked prices on the exchange where the
security is primarily traded and, if none exist, to the over-the-counter market.
'Securities included in the NASDAQ National Market System are valued at the
last-quoted sales price in this market.
'Securities included in the NASDAQ National Market System for which a
last-quoted sales price is not readily available, and other securities traded
over-the-counter but not included in the NASDAQ National Market System are
valued at the mean of the closing bid and asked prices.
'Futures and options traded on major exchanges are valued at the last-quoted
sales price on their primary exchange.
'Foreign securities traded outside the United States are generally valued as of
the time their trading is complete, which is usually different from the close of
the Exchange. Foreign securities quoted in foreign currencies are translated
into U.S. dollars at the current rate of exchange. Occasionally, events
affecting the value of such securities may occur between such times and the
close of the Exchange that will not be reflected in the computation of the
Fund's net asset value. If events materially affecting the value of such
securities occur during such period, these securities will be valued at their
fair value according to procedures decided upon in good faith by the board.
'Short-term securities maturing more than 60 days from the valuation date are
valued at the readily available market price or approximate market value based
on current interest rates. Short-term securities maturing in 60 days or less
that originally had maturities of more than 60 days at acquisition date are
valued at amortized cost using the market value on the 61st day before maturity.
Short-term securities maturing in 60 days or less at acquisition date are valued
at amortized cost. Amortized cost is an approximation of
<PAGE>
market value determined by systematically increasing the carrying value of a
security if acquired at a discount, or reducing the carrying value if acquired
at a premium, so that the carrying value is equal to maturity value on the
maturity date.
'Securities without a readily available market price and other assets are valued
at fair value as determined in good faith by the board. The board is responsible
for selecting methods it believes provide fair value. When possible, bonds are
valued by a pricing service independent from the Portfolio. If a valuation of a
bond is not available from a pricing service, the bond will be valued by a
dealer knowledgeable about the bond if such a dealer is available.
The Exchange, American Express Service Corporation (the Distributor) and the
Fund will be closed on the following holidays: New Year's Day, Memorial Day,
Independence Day, Labor Day, Thanksgiving Day and Christmas Day.
INVESTING IN THE FUND
The Fund's minimum initial investment requirement is $2,000 ($1,000 for
Custodial Accounts, Individual Retirement Accounts and certain other retirement
plans). Subsequent investments of $100 or more may be made. These minimum
investment requirements may be changed at any time and are not applicable to
certain types of investors.
The Securities Investor Protection Corporation (SIPC) will provide account
protection, in an amount up to $500,000, for securities including Fund shares
(up to $100,000 protection for cash), held in an Investment Management Account
maintained with the Distributor. Of course, SIPC account protection does not
protect shareholders from share price fluctuations.
REDEEMING SHARES
You have a right to redeem your shares at any time. For an explanation of
redemption procedures, please see the prospectus.
During an emergency, the board can suspend the computation of net asset value,
stop accepting payments for purchase of shares or suspend the duty of the Funds
(or a Fund) to redeem shares for more than seven days. Such emergency situations
would occur if:
'The Exchange closes for reasons other than the usual weekend and holiday
closings or trading on the Exchange is restricted, or
'Disposal of the Portfolio's securities is not reasonably practicable or it is
not reasonably practicable for the Fund to determine the fair value of its net
assets, or
<PAGE>
'The SEC, under the provisions of the 1940 Act, declares a period of emergency
to exist.
Should the Fund stop selling shares, the board members may make a deduction from
the value of the assets held by the Fund to cover the cost of future
liquidations of the assets so as to distribute fairly these costs among all
shareholders.
Redemptions by the Fund
The Fund reserves the right to redeem, involuntarily, the shares of any
shareholder whose account has a value of less than a minimum amount but only
where the value of such account has been reduced by voluntary redemption of
shares. Until further notice, it is the policy of the Fund not to exercise this
right with respect to any shareholder whose account has a value of $1,000 or
more ($500 in the case of Custodial accounts, IRAs and other retirement plans).
In any event, before the Fund redeems such shares and sends the proceeds to the
shareholder, it will notify the shareholder that the value of the shares in the
account is less than the minimum amount and allow the shareholder 30 days to
make an additional investment in an amount which will increase the value of the
accounts to at least $1,000.
Redemptions in Kind
The Company has elected to be governed by Rule 18f-1 under the 1940 Act, which
obligates the Fund to redeem shares in cash, with respect to any one shareholder
during any 90-day period, up to the lesser of $250,000 or 1% of the net assets
of that Fund at the beginning of such period. Although redemptions in excess of
this limitation would normally be paid in cash, the Fund reserves the right to
make payments in whole or in part in securities or other assets in case of an
emergency, or if the payment of such redemption in cash would be detrimental to
the existing shareholders of the Fund as determined by the board. In such
circumstances, the securities distributed would be valued as set forth in the
Prospectus. Should the Fund distribute securities, a shareholder may incur
brokerage fees or other transaction costs in converting the securities to cash.
CAPITAL LOSS CARRYOVER
For federal income tax purposes, Tax-Free High Yield Fund had total capital loss
carryovers of $3,937, at Nov. 30, 1997, that if not offset by subsequent capital
gains will expire as set out below:
Fund 2004 2005
- --------------------------- -------------------------- ------------------------
Tax-Free High Yield $1,194 $2,743
It is unlikely that the board will authorize a distribution of any net realized
capital gains until the available capital loss carryover has been offset or has
expired except as required by Internal Revenue Service rules.
<PAGE>
TAXES
All distributions of net investment income during the year will have the same
percentage designated as tax-exempt. This annual percentage is expected to be
substantially the same as the percentage of tax-exempt income actually earned
during any particular distribution period. For the fiscal year ended Nov. 30,
1997, 99.99% of the income distribution was designated as exempt from federal
income taxes.
Capital gain distributions, if any, received by corporate shareholders should be
treated as long-term capital gains regardless of how long they owned their
shares. Capital gain distributions, if any, received by individuals should be
treated as long-term if held for more than one year; however, recent tax laws
have divided long-term capital gains into two holding periods: (1) shares held
more than one year but not more than 18 months and (2) shares held more than 18
months. Short-term capital gains earned by the Fund are paid to shareholders as
part of their ordinary income dividend and are taxable as ordinary income, not
capital gain.
The Fund may purchase tax-exempt securities at a discount from the price at
which they were originally issued, especially during periods of rising interest
rates. For federal income tax purposes, some or all of this market discount will
be included in the Fund's ordinary income and will be taxable income when it is
distributed to you.
If you are a "substantial user" (or related person) of facilities financed by
industrial development bonds, you should consult your tax advisor before
investing. The income from such bonds may not be tax-exempt for you.
Interest on private activity bonds generally issued after August 1986 is a
preference item for purposes of the individual and corporate alternative minimum
taxes. "Private-activity" (non-governmental purpose) municipal bonds include
industrial revenue bonds, student-loan bonds and multi- and single-family
housing bonds. An exception is made for private activity bonds issued for
qualified--501(c)(3)--organizations, including non-profit colleges, universities
and hospitals. These bonds will continue to be tax-exempt and will not be
subject to the alternative minimum tax for individuals. To the extent a fund
earns income subject to the alternative minimum tax, it will flow through to
that fund's shareholders and may subject some shareholders, depending on their
tax status, to the alternative minimum tax. The Fund reports the percentage of
its income earned from these bonds to shareholders with their other tax
information.
State law determines whether interest income on a particular municipal bond is
tax-exempt for state tax purposes. It also determines the tax treatment of those
bonds when earned by a mutual fund and paid to the fund's shareholders. The Fund
will tell you the percentage of interest income from municipal bonds it received
during the year on a state-by-state basis. Your tax advisor should help you
report this income for state tax purposes.
<PAGE>
Under federal tax law, by the end of a calendar year the Fund must declare and
pay dividends representing 98% of ordinary income for that calendar year and 98%
of net capital gains (both long-term and short-term) for the 12-month period
ending Nov. 30 of that calendar year. The Fund is subject to an excise tax equal
to 4% of the excess, if any, of the amount required to be distributed over the
amount actually distributed. The Fund intends to comply with federal tax law and
avoid any excise tax.
This is a brief summary that relates to federal income taxation only.
Shareholders should consult their tax advisor as to the application of federal,
state and local income tax laws to Fund distributions.
AGREEMENTS
Investment Management Services Agreement
The Trust, on behalf of the Portfolio, has an Investment Management Services
Agreement with the Advisor. For managing the assets of the Portfolio, the
Advisor is paid a fee based upon the following schedule.
The Fund pays its proportionate share of the fee.
Assets Annual rate at
(billions) each asset level
First $1.0 0.490%
Next 1.0 0.465
Next 1.0 0.440
Next 3.0 0.415
Next 3.0 0.390
Over 9.0 0.360
On Nov. 30, 1997, the daily rates applied to the Portfolio's net assets on an
annual basis were equal to 0.44% for the Portfolio. The fee is calculated for
each calendar day on the basis of net assets at the close of business two days
prior to the day for which the calculation is made.
The management fee is paid monthly. For the fiscal year ended Nov. 30, 1997, the
total amount paid was $26,174,871 for the Portfolio, for fiscal year 1997, the
total amount paid was $14,890,546, for the fiscal period from May 13, 1996
(commencement of operations) to Nov. 30, 1996. The amount is allocated among the
Fund investing in the Portfolio.
Under the Agreement, the Portfolio also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees; audit and certain legal
fees; fidelity bond premiums; registration fees for units; office expenses;
consultants' fees; compensation of board members, officers and employees;
corporate filing fees; organizational expenses; expenses incurred in connection
with lending portfolio securities; and expenses properly payable by the
Portfolio, approved by the board. For the
<PAGE>
fiscal year ended Nov. 30, 1997, Tax-Free High Yield Portfolio and Tax-Free High
Yield Fund paid nonadvisory expenses of $396,734; for the fiscal period from May
13, 1996 (commencement of operations) to Nov. 30, 1996, Tax-Free High Yield
Portfolio and Tax-Free High Yield Fund paid nonadvisory expenses of $188,679.
Administrative Services Agreement
The Company, on behalf of the Fund, has an Administrative Services Agreement
with the Advisor. Under this agreement, the Fund pays the Advisor for providing
administration and accounting services. The fee is payable from the assets of
the Fund and is calculated as follows:
Assets Annual rate at
(billions) each asset level
First $1 0.040%
Next 1 0.035
Next 1 0.030
Next 3 0.025
Next 3 0.020
Over 9 0.020
On Nov. 30, 1997, the daily rates applied to the Fund's net assets on an annual
basis were equal to 0.03%. The fee is calculated for each calendar day on the
basis of net assets as of the close of business two business days prior to the
day for which the calculation is made. For the fiscal year ended Nov. 30, 1997,
the Fund paid fees of $258.
Under the agreement, the Fund also pays taxes; audit and certain legal fees;
registration fees for shares; office expenses; consultant's fees; compensation
of board members, officers and employees; corporate filing fees; organizational
expenses; and expenses properly payable by the Fund approved by the board.
Transfer Agency Agreement
The Company, on behalf of the Fund, has a Transfer Agency Agreement with
American Express Client Service Corporation (AECSC). This agreement governs the
responsibility for administering and/or performing transfer agent functions, for
acting as service agent in connection with dividend and distribution functions
and for performing shareholder account administration agent functions in
connection with the issuance, exchange and redemption or repurchase of the
Fund's shares. The fee is determined by multiplying the number of shareholder
accounts at the end of the day by a rate of $25 per year and dividing by the
number of days in the year. The fees paid to AECSC may be changed from time to
time upon agreement of the parties without shareholder approval. For the fiscal
year ended Nov. 30, 1997, the Fund paid fees of $227.
<PAGE>
Plan and Agreement of Distribution/Distribution Agreement
To help American Express Service Corporation (the Distributor) defray the costs
of distribution and servicing, the Company and the Distributor have entered into
a Plan and Agreement of Distribution (Plan). These costs cover almost all
aspects of distributing shares of the Fund. Under the Plan, the Distributor is
paid a fee at an annual rate of 0.25% of the Fund's average daily net assets.
The Plan must be approved annually by the board, including a majority of the
disinterested board members, if it is to continue for more than a year. At least
quarterly, the board must review written reports concerning the amounts expended
under the Plan and the purposes for which the expenditures were made. The Plan
and any agreement related to it may be terminated at any time with respect to
the Fund by vote of a majority of board members who are not interested persons
of the Company and have no direct or indirect financial interest in the
operation of the Plan or in any agreement related to the Plan, by vote of a
majority of the outstanding voting securities of the Fund or by the Distributor.
The Plan (or any agreement related to it) will terminate in the event of its
assignment, as that term is defined in the 1940 Act, as amended. The Plan may
not be amended to increase the amount to be spent for distribution without
shareholder approval, and all material amendments to the Plan must be approved
by a majority of the board members, including a majority of the board members
who are not interested persons of the Company and who do not have a financial
interest in the operation of the Plan or any agreement related to it. The
selection and nomination of disinterested board members is the responsibility of
other disinterested board members. No board member who is not an interested
person has any direct or indirect financial interest in the operation of the
Plan or any related agreement. For the fiscal year ended Nov. 30, 1997, the Fund
paid fees of $1,612.
Custodian Agreement
The Trust's securities and cash are held by American Express Trust Company, 1200
Northstar Center West, 625 Marquette Ave., Minneapolis, MN 55402-2307, through a
custodian agreement. The Fund also retains the custodian pursuant to a custodian
agreement. The custodian is permitted to deposit some or all of its securities
in central depository systems as allowed by federal law. For its services, the
Trust pays the custodian a maintenance charge and a charge per transaction in
addition to reimbursing the custodian's out-of-pocket expenses.
The custodian has entered into a sub-custodian arrangement with the Morgan
Stanley Trust Company (Morgan Stanley), One Pierrepont Plaza, Eighth Floor,
Brooklyn, NY 11201-2775. As part of this arrangement, securities purchased
outside the United States are maintained in the custody of various foreign
branches of Morgan Stanley or in such other financial institutions as may be
permitted by law and by the Portfolio's sub-custodian agreement.
<PAGE>
Total fees and expenses
For the fiscal year ended Nov. 30, 1997, the Fund paid total fees and
nonadvisory expenses, net of reimbursements and earnings credits, of $6,130. The
Fund began operations on May 13, 1996. The Advisor and the Distributor have
agreed to waive certain fees and to absorb certain other Fund expenses until
Dec. 31, 1998. Under this agreement, the Fund's total expenses will not exceed
0.95%.
ORGANIZATIONAL INFORMATION
The Fund is a series of Strategist Tax-Free Income Fund, Inc., an open-end
management investment company, as defined in the 1940 Act. The Company was
incorporated on Sept. 1, 1995 in Minnesota. The Company's headquarters are at
IDS Tower 10, Minneapolis, MN 55440-0010.
BOARD MEMBERS AND OFFICERS
Directors of Strategist Fund Group
The following is a list of the Company's board members who are board members of
all 15 funds in the Strategist Fund Group. All shares of the Fund have
cumulative voting rights with respect to the election of board members.
Rodney P. Burwell
Born in 1939
Xerxes Corporation
7901 Xerxes Ave. S.
Minneapolis, MN
Chairman, Xerxes Corporation (fiberglass storage tanks). Director, Children's
Broadcasting Network, Vaughn Communications, Sunbelt Nursery Group Fairview
Corporation.
Jean B. Keffeler
Born in 1945
3424 Zenith Avenue South
Minneapolis, MN
Business and management consultant. Director, National Computer Systems and
American Paging Systems, Inc.
<PAGE>
Thomas R. McBurney
Born in 1938
McBurney Management Advisors
1710 International Centre
900 2nd Ave. S.
Minneapolis, MN
President, McBurney Management Advisors. Director, The Valspar Corporation
(paints), Wenger Corporation, Security American Financial Enterprises, Allina,
Space Center Enterprises and Greenspring Corporation.
James A. Mitchell*
Born in 1941
2900 IDS Tower
Minneapolis, MN
President of all funds in the Strategist Fund Group. Executive vice president
and director of the Advisor. Chairman of the board and chief executive officer
of IDS Life Insurance Company. Director, IDS Life funds.
*Interested person of the Company by reason of being an officer, board member,
employee and/or shareholder of the Advisor or American Express.
In addition to Mr. Mitchell, who is president, the Funds' other officers are:
Eileen J. Newhouse
Born in 1955
IDS Tower 10
Minneapolis, MN
Secretary of all funds in the Strategist Fund Group. Counsel of the Advisor.
Matthew N. Karstetter
Born in 1961
IDS Tower 10
Minneapolis, MN
Treasurer of all funds in the Strategist Fund Group. Vice president of
Investment Accounting for the Advisor since 1996. Prior to joining the Advisor,
he served as vice president of State Street Bank's mutual fund service operation
from 1991 to 1996.
<PAGE>
Compensation for Fund Board Members
Once the assets of the Fund reach $20 million, members of the Fund's board who
are not officers of the Advisor or an affiliate receive an annual fee of $1,000
for Tax-Free High Yield Fund. Once the assets of all funds in the Strategist
Fund Group reach $100 million, members of the board who are not officers of the
Advisor or an affiliate also will receive a fee of $1,000 for attendance at
board meetings. Board members serving more than one fund will receive an
aggregate of $1,000 whether attending one or more meetings held on the same day.
The cost of the fee will be shared by the funds served by the director.
During the fiscal year ended Nov. 30, 1997, the independent members of the board
received no compensation. On Nov. 30, 1997, the Funds' board members and
officers as a group owned less than 1% of the outstanding shares of a Fund.
Trustees of the Preferred Master Trust Group
The following is a list of the Trust's board members. They serve 15 Master Trust
portfolios and 47 IDS and IDS Life funds (except for William H. Dudley who does
not serve the nine IDS Life funds). All units have cumulative voting rights with
respect to the election of board members.
H. Brewster Atwater, Jr.
Born in 1931
4900 IDS Tower
Minneapolis, MN
Former chairman and chief executive officer, General Mills, Inc. Director, Merck
& Co., Inc. and Darden Restaurants, Inc.
Lynne V. Cheney'
Born in 1941
American Enterprise Institute
for Public Policy Research (AEI)
1150 17th St., N.W.
Washington, D.C.
Distinguished Fellow AEI. Former Chair of National Endowment of the Humanities.
Director, The Reader's Digest Association Inc., Lockheed-Martin, Union Pacific
Resources and FPL Group, Inc. (holding company for Florida Power and Light).
<PAGE>
William H. Dudley**
Born in 1932
2900 IDS Tower
Minneapolis, MN
Senior advisor to the chief executive officer of the Advisor.
David R. Hubers+**
Born in 1943
2900 IDS Tower
Minneapolis, MN
President and chief executive officer of the Advisor since August 1993, and
director of the Advisor. Previously, senior vice president, finance and chief
financial officer of the Advisor.
Heinz F. Hutter+'
Born in 1929
P.O. Box 2187
Minneapolis, MN
Former president and chief operating officer, Cargill, Incorporated (commodity
merchants and processors).
Anne P. Jones
Born in 1935
5716 Bent Branch Rd.
Bethesda, MD
Attorney and telecommunications consultant. Former partner, law firm of
Sutherland, Asbill & Brennan. Director, Motorola, Inc. and C-Cor Electronics,
Inc.
William R. Pearce+*
Born in 1927
901 S. Marquette Ave.
Minneapolis, MN
Chairman of the board, Board Services Corporation (provides administrative
services to boards). Director, trustee and officer of registered investment
companies whose boards are served by the company. Former vice chairman of the
board, Cargill, Incorporated (commodity merchants and processors).
<PAGE>
Alan K. Simpson'
Born in 1931
1201 Sunshine Ave.
Cody, WY
Former three-term United States Senator for Wyoming. Former Assistant Republican
Leader, U.S. Senate. Director, PacifiCorp (electric power).
Edson W. Spencer+
Born in 1926
4900 IDS Center
80 S. 8th St.
Minneapolis, MN
President, Spencer Associates Inc. (consulting). Former chairman of the board
and chief executive officer, Honeywell Inc. Director, Boise Cascade Corporation
(forest products). Member of International Advisory Council of NEC (Japan).
John R. Thomas**
Born in 1937
2900 IDS Tower
Minneapolis, MN
Senior vice president of the Advisor.
Wheelock Whitney+
Born in 1926
1900 Foshay Tower
821 Marquette Ave.
Minneapolis, MN
Chairman, Whitney Management Company (manages family assets).
C. Angus Wurtele'
Born in 1934
Valspar Corporation
Suite 1700
Foshay Tower
Minneapolis, MN
Chairman of the board and retired chief executive officer, The Valspar
Corporation (paints). Director, Bemis Corporation (packaging), Donaldson Company
(air cleaners & mufflers) and General Mills, Inc.
(consumer foods).
<PAGE>
+ Member of executive committee.
' Member of joint audit committee.
* Interested person of the Trust by reason of being an officer and employee
of the Trust.
** Interested person of the Trust by reason of being an officer, board member,
employee and/or shareholder of the Advisor or American Express.
The board also has appointed officers who are responsible for day-to-day
business decisions based on policies it has established.
In addition to Mr. Pearce, who is chairman of the board, and Mr. Thomas who is
president, the Trust's other officers are:
Leslie L. Ogg
Born in 1938
901 S. Marquette Ave.
Minneapolis, MN
President, treasurer and corporate secretary of Board Services Corporation. Vice
president, general counsel and secretary for the Trust.
Officers who are also officers and/or employees of the Advisor:
Peter J. Anderson
Born in 1942
IDS Tower 10
Minneapolis, MN
Director and senior vice president-investments of the Advisor. Vice
president-investments for the Trust.
Melinda S. Urion
Born in 1953
IDS Tower 10
Minneapolis, MN
Director, senior vice president and chief financial officer of the Advisor.
Director, executive vice president and controller of IDS Life Insurance Company.
Treasurer for the Trust.
Compensation for Portfolio Board Members
Once the assets of the Portfolio reach $20 million, members of the Portfolio
board who are not officers of a Portfolio or of the Advisor receive an annual
fee of $3,200 for Tax-Free High Yield Portfolio. They also receive attendance
and other fees. These fees include for each day in attendance at meetings of the
board, $50; for meetings of the Contracts and
<PAGE>
Investment Review Committees, $50; meetings of the Audit Committee, $25; for
traveling from out-of-state, $32; and as Chair of the Contracts Committee, $86.
Expenses for attending meetings are reimbursed.
During the fiscal year ended Nov. 30, 1997, the independent members of the board
for Tax-Free High Yield Portfolio, for attending up to 30 meetings, received the
following compensation:
<TABLE>
<CAPTION>
Compensation Table
for Tax-Free High Yield Portfolio
Aggregate Pensions or Estimated annual Total cash
compensation Retirement benefits benefit upon compensation from the
Board Member from the accrued as Portfolio retirement Preferred Master Trust
Portfolio expenses Group
<S> <C> <C> <C> <C>
H. Brewster Atwater, $4,115 $0 $0 $100,900
Jr.
Lynne V. Cheney 4,156 0 0 95,200
Robert F. Froehlke 4,140 0 0 102,700
Heinz F. Hutter 4,165 0 0 103,800
Anne P. Jones 4,337 0 0 104,500
Melvin R. Laird 3,857 0 0 90,500
Alan K. Simpson 3,699 0 0 83,000
(part of year)
Edson W. Spencer 4,601 0 0 129,800
Wheelock Whitney 4,265 0 0 109,900
C. Angus Wurtele 4,215 0 0 106,700
</TABLE>
PRINCIPAL HOLDERS OF SECURITIES
As of Nov. 30, 1997, John L. Warren and Rosana L. Warren held 9.25% of
Strategist Tax-Free Income Fund Shares. Additional information on principal
holders of securities may be obtained by writing to American Express Financial
Direct, P.O. Box 59196, Minneapolis, MN 55459-0196.
INDEPENDENT AUDITORS
The Fund's and corresponding Portfolio's financial statements contained in the
Annual Report to shareholders for the fiscal year ended Nov. 30, 1997 were
audited by independent auditors, KPMG Peat Marwick LLP, 4200 Norwest Center, 90
S. Seventh St., Minneapolis, MN 55402-3900. The independent auditors also
provide other accounting and tax-related services as requested by the Fund.
FINANCIAL STATEMENTS
The Independent Auditor's Report and the Financial Statements, including Notes
to the Financial Statements and the Schedule of Investments in Securities,
contained in the 1997 Annual Report to shareholders, pursuant to Section 30(d)
of the 1940 Act, are hereby incorporated in this SAI by reference. No other
portion of the Annual Report, however, is incorporated by reference.
<PAGE>
PROSPECTUS
The prospectus dated Jan. 29, 1998, is hereby incorporated in this SAI by
reference.
<PAGE>
APPENDIX A
DESCRIPTION OF SHORT-TERM SECURITIES
Short-term Tax-exempt Securities
A portion of the Portfolio's assets are in cash and short-term securities for
day-to-day operating purposes. The investments will usually be in short-term
municipal bonds and notes. These include:
(1) Tax anticipation notes sold to finance working capital needs of
municipalities in anticipation of receiving taxes on a future date.
(2) Bond anticipation notes sold on an interim basis in anticipation of a
municipality issuing a longer term bond in the future.
(3) Revenue anticipation notes issued in anticipation of revenues from sources
other than taxes, such as federal revenues available under the Federal Revenue
Sharing Program.
(4) Tax and revenue anticipation notes issued in anticipation of revenues from
taxes and other sources of revenue, except bond placements.
(5) Construction loan notes insured by the Federal Housing Administration which
remain outstanding until permanent financing by the Federal National Mortgage
Association (FNMA) or the Government National Mortgage Association (GNMA) at the
end of the project construction period.
(6) Tax-exempt commercial paper with a stated maturity of 365 days or less
issued by agencies of state and local governments to finance seasonal working
capital needs or as short-term financing in anticipation of longer-term
financing.
(7) Project notes issued by local housing authorities to finance urban renewal
and public housing projects. These notes are guaranteed by the full faith and
credit of the U.S. government.
(8) Variable rate demand notes, on which the yield is adjusted at periodic
intervals not exceeding 31 days and on which the principal must be repaid in not
less than seven days' notice, are considered short-term regardless of the stated
maturity.
Short-term Taxable Securities and Repurchase Agreements
Depending on market conditions, a portion of the Portfolio's investments may be
in short-term taxable securities. These include:
<PAGE>
(1) Obligations of the U.S. government, its agencies and instrumentalities
resulting principally from lending programs of the U.S. government;
(2) U.S. Treasury bills with maturities up to one year. The difference between
the purchase price and the maturity value or resale price is the interest income
to the Portfolio;
(3) Certificates of deposit or receipts with fixed interest rates issued by
banks in exchange for deposit of funds;
(4) Bankers' acceptances arising from short-term credit arrangements designed to
enable business to obtain funds to finance commercial transactions;
(5) Letters of credit which are short-term notes issued in bearer form with a
bank letter of credit obligating the bank to pay the bearer the amount of the
note;
(6) Commercial paper rated in the two highest grades by Standard & Poor's or
Moody's. Commercial paper is generally defined as unsecured short-term notes
issued in bearer form by large well-known corporations and finance companies.
These ratings reflect a review of management, economic evaluation of the
industry competition, liquidity, long-term debt and ten-year earning trends.
Standard & Poor's rating A-1 indicates that the degree of safety regarding
timely payment is either overwhelming or very strong.
Standard & Poor's ratings A-2 indicates that capacity for timely payment on
issues with this designation is strong.
Moody's rating Prime-1 (P-1) indicates a superior capacity for repayment of
short-term promissory obligations.
Moody's rating Prime-2 (P-2) indicates a strong capacity for repayment of
short-term promissory obligations.
(7) Repurchase agreements involving acquisition of securities by the Portfolio
with a concurrent agreement by the seller, usually a bank or securities dealer,
to reacquire the securities at cost plus interest within a specified time. From
this investment, the Portfolio receives a fixed rate of return that is insulated
from market rate changes while it holds the security.
<PAGE>
APPENDIX B
OPTIONS AND INTEREST RATE FUTURES CONTRACTS
The Portfolio may buy or write options traded on any U.S. or foreign exchange or
in the over-the-counter market. The Portfolio may enter into interest rate
futures contracts traded on any U.S. or foreign exchange. The Portfolio also may
buy or write put and call options on these futures. Options in the
over-the-counter market will be purchased only when the investment manager
believes a liquid secondary market exists for the options and only from dealers
and institutions the investment manager believes present a minimal credit risk.
Some options are exercisable only on a specific date. In that case, or if a
liquid secondary market does not exist, the Portfolio could be required to buy
or sell securities at disadvantageous prices, thereby incurring losses.
OPTIONS. An option is a contract. A person who buys a call option for a security
has the right to buy the security at a set price for the length of the contract.
A person who sells a call option is called a writer. The writer of a call option
agrees to sell the security at the set price when the buyer wants to exercise
the option, no matter what the market price of the security is at that time. A
person who buys a put option has the right to sell a security at a set price for
the length of the contract. A person who writes a put option agrees to buy the
security at the set price if the purchaser wants to exercise the option, no
matter what the market price of the security is at that time. An option is
covered if the writer owns the security (in the case of a call) or sets aside
the cash (in the case of a put) that would be required upon exercise.
The price paid by the buyer for an option is called a premium. In addition, the
buyer generally pays a broker a commission. The writer receives a premium, less
a commission, at the time the option is written. The cash received is retained
by the writer whether or not the option is exercised. A writer of a call option
may have to sell the security for a below-market price if the market price rises
above the exercise price. A writer of a put option may have to pay an
above-market price for the security if its market price decreases below the
exercise price.
Options can be used to produce incremental earnings, protect gains and
facilitate buying and selling securities for investment purposes. The use of
options and futures contracts may benefit the Portfolio and its unitholders by
improving the Portfolio's liquidity and by helping to stabilize the value of its
net assets.
Buying options. Put and call options may be used as a trading technique to
facilitate buying and selling securities for investment reasons. Options are
used as a trading technique to take advantage of any disparity between the price
of the underlying security in the securities market and its price on the options
market. It is anticipated the trading technique will be utilized only to effect
a transaction when the price of the security plus the option price will be as
good or better than the price at which the security could be
<PAGE>
bought or sold directly. When the option is purchased, the Portfolio pays a
premium and a commission. It then pays a second commission on the purchase or
sale of the underlying security when the option is exercised. For record-keeping
and tax purposes, the price obtained on the purchase of the underlying security
will be the combination of the exercise price, the premium and both commissions.
When using options as a trading technique, commissions on the option will be set
as if only the underlying securities were traded.
Put and call options also may be held by the Portfolio for investment purposes.
Options permit the Portfolio to experience the change in the value of a security
with a relatively small initial cash investment. The risk the Portfolio assumes
when it buys an option is the loss of the premium. To be beneficial to the
Portfolio, the price of the underlying security must change within the time set
by the option contract. Furthermore, the change must be sufficient to cover the
premium paid, the commissions paid both in the acquisition of the option and in
a closing transaction or in the exercise of the option and subsequent sale (in
the case of a call) or purchase (in the case of a put) of the underlying
security. Even then the price change in the underlying security does not ensure
a profit since prices in the option market may not reflect such a change.
Writing covered options. The Portfolio will write covered options when it feels
it is appropriate and will follow these guidelines:
'Underlying securities will continue to be bought or sold solely on the basis of
investment considerations consistent with the Portfolio's goal.
'All options written by the Portfolio will be covered. For covered call options
if a decision is made to sell the security, the Portfolio will attempt to
terminate the option contract through a closing purchase transaction.
Net premiums on call options closed or premiums on expired call options are
treated as short-term capital gains.
If a covered call option is exercised, the security is sold by the Portfolio.
The Portfolio will recognize a capital gain or loss based upon the difference
between the proceeds and the security's basis.
Options on many securities are listed on options exchanges. If the Portfolio
writes listed options, it will follow the rules of the options exchange. Options
are valued at the close of the New York Stock Exchange. An option listed on a
national exchange, CBOE or NASDAQ will be valued at the last quoted sales price
or, if such a price is not readily available, at the mean of the last bid and
asked prices.
<PAGE>
FUTURES CONTRACTS. A futures contract is an agreement between two parties to buy
and sell a security for a set price on a future date. They have been established
by boards of trade which have been designated contracts markets by the Commodity
Futures Trading Commission (CFTC). Futures contracts trade on these markets in a
manner similar to the way a stock trades on a stock exchange, and the boards of
trade, through their clearing corporations, guarantee performance of the
contracts. Currently, there are futures contracts based on such debt securities
as long-term U.S. Treasury bonds, Treasury notes, GNMA modified pass-through
mortgage-backed securities, three-month U.S. Treasury bills and bank
certificates of deposit. While futures contracts based on debt securities do
provide for the delivery and acceptance of securities, such deliveries and
acceptances are very seldom made. Generally, the futures contract is terminated
by entering into an offsetting transaction. An offsetting transaction for a
futures contract sale is effected by the Portfolio entering into a futures
contract purchase for the same aggregate amount of the specific type of
financial instrument and same delivery date. If the price in the sale exceeds
the price in the offsetting purchase, the Portfolio immediately is paid the
difference and realizes a gain. If the offsetting purchase price exceeds the
sale price, the Portfolio pays the difference and realizes a loss. Similarly,
closing out a futures contract purchase is effected by the Portfolio entering
into a futures contract sale. If the offsetting sale price exceeds the purchase
price, the Portfolio realizes a gain, and if the offsetting sale price is less
than the purchase price, the Portfolio realizes a loss. At the time a futures
contract is made, a good-faith deposit called initial margin is set up within a
segregated account at the Portfolio's custodian bank. The initial margin deposit
is approximately 1.5% of a contract's face value. Daily thereafter, the futures
contract is valued and the payment of variation margin is required so that each
day the Portfolio would pay out cash in an amount equal to any decline in the
contract's value or receive cash equal to any increase. At the time a futures
contract is closed out, a nominal commission is paid, which is generally lower
than the commission on a comparable transaction in the cash markets.
The purpose of a futures contract, in the case of a portfolio holding long-term
debt securities, is to gain the benefit of changes in interest rates without
actually buying or selling long-term debt securities. For example, if the
Portfolio owned long-term bonds and interest rates were expected to increase, it
might enter into futures contracts to sell securities which would have much the
same effect as selling some of the long-term bonds it owned.
Futures contracts are based on types of debt securities referred to above, which
have historically reacted to an increase or decline in interest rates in a
fashion similar to the debt securities the Portfolio owns. If interest rates did
increase, the value of the debt securities in the portfolio would decline, but
the value of the Portfolio's futures contracts would increase at approximately
the same rate, thereby keeping the net asset value of the Portfolio from
declining as much as it otherwise would have. If, on the other hand, the
Portfolio held cash reserves and interest rates were expected to decline, the
Portfolio might enter into interest rate futures contracts for the purchase of
securities. If short-term
<PAGE>
rates were higher than long-term rates, the ability to continue holding these
cash reserves would have a very beneficial impact on the Portfolio's earnings.
Even if short-term rates were not higher, the Portfolio would still benefit from
the income earned by holding these short-term investments. At the same time, by
entering into futures contracts for the purchase of securities, the Portfolio
could take advantage of the anticipated rise in the value of long-term bonds
without actually buying them until the market had stabilized. At that time, the
futures contracts could be liquidated and the Portfolio's cash reserves could
then be used to buy long-term bonds on the cash market. The Portfolio could
accomplish similar results by selling bonds with long maturities and investing
in bonds with short maturities when interest rates are expected to increase or
by buying bonds with long maturities and selling bonds with short maturities
when interest rates are expected to decline. But by using futures contracts as
an investment tool, given the greater liquidity in the futures market than in
the cash market, it might be possible to accomplish the same result more easily
and more quickly. Successful use of futures contracts depends on the investment
manager's ability to predict the future direction of interest rates. If the
investment manager's prediction is incorrect, the Portfolio would have been
better off had it not entered into futures contracts.
OPTIONS ON FUTURES CONTRACTS. Options give the holder a right to buy or sell
futures contracts in the future. Unlike a futures contract, which requires the
parties to the contract to buy and sell a security on a set date, an option on a
futures contract merely entitles its holder to decide on or before a future date
(within nine months of the date of issue) whether to enter into such a contract.
If the holder decides not to enter into the contract, all that is lost is the
amount (premium) paid for the option. Furthermore, because the value of the
option is fixed at the point of sale, there are no daily payments of cash to
reflect the change in the value of the underlying contract. However, since an
option gives the buyer the right to enter into a contract at a set price for a
fixed period of time, its value does change daily and that change is reflected
in the net asset value of the Portfolio.
RISKS. There are risks in engaging in each of the management tools described
above. The risk the Portfolio assumes when it buys an option is the loss of the
premium paid for the option. Purchasing options also limits the use of monies
that might otherwise be available for long-term investments.
The risk involved in writing options on futures contracts the Portfolio owns, or
on securities held in its portfolio, is that there could be an increase in the
market value of such contracts or securities. If that occurred, the option would
be exercised and the asset sold at a lower price than the cash market price. To
some extent, the risk of not realizing a gain could be reduced by entering into
a closing transaction. The Portfolio could enter into a closing transaction by
purchasing an option with the same terms as the one it had previously sold. The
cost to close the option and terminate the Portfolio's obligation, however,
might be more or less than the premium received when it originally wrote the
<PAGE>
option. Furthermore, the Portfolio might not be able to close the option because
of insufficient activity in the options market.
A risk in employing futures contracts to protect against the price volatility of
portfolio securities is that the prices of securities subject to futures
contracts may not correlate perfectly with the behavior of the cash prices of
the securities. The correlation may be distorted because the futures market is
dominated by short-term traders seeking to profit from the difference between a
contract or security price and their cost of borrowed funds. Such distortions
are generally minor and would diminish as the contract approached maturity.
Another risk is that the Portfolio's investment manager could be incorrect in
anticipating as to the direction or extent of various interest rate movements or
the time span within which the movements take place. For example, if the
Portfolio sold futures contracts for the sale of securities in anticipation of
an increase in interest rates, and interest rates declined instead, the
Portfolio would lose money on the sale.
TAX TREATMENT. As permitted under federal income tax laws, the Portfolio intends
to identify futures contracts as mixed straddles and not mark them to market,
that is, not treat them as having been sold at the end of the year at market
value. Such an election may result in the Portfolio being required to defer
recognizing losses incurred by entering into futures contracts and losses on
underlying securities identified as being hedged against.
Federal income-tax treatment of gains or losses from transactions in options on
futures contracts and indexes will depend on whether such option is a section
1256 contract. If the option is a non-equity option, the Portfolio will either
make a 1256(d) election and treat the option as a mixed straddle or mark to
market the option at fiscal year end and treat the gain/loss as 40% short-term
and 60% long-term. Certain provisions of the Internal Revenue Code may also
limit the Portfolio's ability to engage in futures contracts and related options
transactions. For example, at the close of each quarter of the Portfolio's
taxable year, at least 50% of the value of its assets must consist of cash,
government securities and other securities, subject to certain diversification
requirements.
The IRS has ruled publicly that an exchange-traded call option is a security for
purposes of the 50%-of-assets test and that its issuer is the issuer of the
underlying security, not the writer of the option, for purposes of the
diversification requirements.
Accounting for futures contracts will be according to generally accepted
accounting principles. Initial margin deposits will be recognized as assets due
from a broker (the Portfolio's agent in acquiring the futures position). During
the period the futures contract is open, changes in value of the contract will
be recognized as unrealized gains or losses by marking to market on a daily
basis to reflect the market value of the contract at the end
<PAGE>
of each day's trading. Variation margin payments will be made or received
depending upon whether gains or losses are incurred. All contracts and options
will be valued at the last-quoted sales price on their primary exchange.
<PAGE>
APPENDIX C
DOLLAR-COST AVERAGING
A technique that works well for many investors is one that eliminates random buy
and sell decisions. One such system is dollar-cost averaging. Dollar-cost
averaging involves building a portfolio through the investment of fixed amounts
of money on a regular basis regardless of the price or market condition. This
may enable an investor to smooth out the effects of the volatility of the
financial markets. By using this strategy, more shares will be purchased when
the price is low and less when the price is high. As the accompanying chart
illustrates, dollar-cost averaging tends to keep the average price paid for the
shares lower than the average market price of shares purchased, although there
is no guarantee.
While this technique does not ensure a profit and does not protect against a
loss if the market declines, it is an effective way for many shareholders who
can continue investing on a regular basis through changing market conditions,
including times when the price of their shares falls or the market declines, to
accumulate shares in a fund to meet long-term goals.
Dollar-cost averaging
- -------------------------- ------------------------------ ----------------------
Regular Investment Market Price of a Share Shares Acquired
- -------------------------- ------------------------------ ----------------------
$100 $6.00 16.7
100 4.00 25.0
100 4.00 25.0
100 6.00 16.7
100 5.00 20.0
$500 $25.00 103.4
Average market price of a share over 5 periods: $5.00 ($25.00 divided by 5).
The average price you paid for each share: $4.84 ($500 divided by 103.4).
<PAGE>
Independent auditors' report
The board and shareholders
Strategist Tax-Free Income Fund, Inc.:
We have audited the accompanying statement of assets and liabilities of
Strategist Tax-Free High Yield Fund (a series of Strategist Tax-Free Income
Fund, Inc.) as of November 30, 1997, and the related statement of operations for
the year then ended and the statements of changes in net assets and the
financial highlights for the year ended November 30, 1997 and the period from
May 13, 1996 (commencement of operations) to November 30, 1996. These financial
statements and the financial highlights are the responsibility of fund
management. Our responsibility is to express an opinion on these financial
statements and the 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 audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. 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 referred to above present fairly, in
all material respects, the financial position of Strategist Tax-Free High Yield
Fund at November 30, 1997, and the results of its operations, the changes in its
net assets and the financial highlights for the periods stated in the first
paragraph above, in conformity with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 2, 1998
<PAGE>
Financial statements
Statement of assets and liabilities
Strategist Tax-Free High Yield Fund
Nov. 30, 1997
Assets
Investment in Tax-Free High Yield Portfolio (Note 1) $775,649
Expense reimbursement receivable from AEFC 105
Organizational costs (Note 1) 1,797
-----
Total assets 777,551
=======
Liabilities
Dividends payable to shareholders 368
Accrued distribution fee 10
Accrued transfer agency fee 2
Accrued administrative services fees 2
Other accrued expenses 42,792
------
Total liabilities 43,174
------
Net assets applicable to outstanding capital stock $734,377
========
Represented by
Capital stock-- $.01 par value (Note 1) $ 1,583
Additional paid-in capital 701,487
Undistributed net investment income 624
Accumulated net realized gain (loss) (Note 4) (7,107)
Unrealized appreciation (depreciation) on investments 37,790
------
Total-- representing net assets applicable to
outstanding capital stock $734,377
========
Shares outstanding 158,260
-------
Net asset value per share of outstanding capital stock $ 4.64
--------
See accompanying notes to financial statements.
<PAGE>
Statement of operations
Strategist Tax-Free High Yield Fund
Year ended Nov. 30, 1997
Investment income
Income:
Interest $44,970
-------
Expenses (Note 2):
Expenses allocated from Tax-Free High Yield Portfolio 3,082
Distribution fee 1,612
Transfer agency fee 227
Administrative services fee and expenses 258
Postage 2,489
Registration fees 6,234
Reports to shareholders 1,568
Audit fees 3,200
Other 414
---
Total expenses 19,084
Less expenses reimbursed by AEFC (12,954)
-------
Total net expenses 6,130
-----
Investment income (loss)-- net 38,840
------
Realized and unrealized gain (loss)-- net
Net realized gain (loss) on:
Security transactions (2,306)
Financial futures contracts (3,505)
------
Net realized gain (loss) on investments (5,811)
Net change in unrealized appreciation (depreciation) on investments 19,642
------
Net gain (loss) on investments 13,831
------
Net increase (decrease) in net assets resulting from operations $52,671
-------
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist Tax-Free High Yield Fund
Year ended For the period
Nov. 30, 1997 from May 13, 1996*
to Nov. 30, 1996
Operations and distributions
<S> <C> <C>
Investment income (loss) -- net $ 38,840 $ 13,647
Net realized gain (loss) on investments (5,811) (1,260)
Net change in unrealized appreciation (depreciation)
on investments 19,642 18,148
------ ------
Net increase (decrease) in net assets resulting
from operations 52,671 30,535
------ ------
Distributions to shareholders from:
Net investment income (39,320) (13,647)
------- -------
Capital share transactions (Note 3)
Proceeds from sales 188,471 405,000
Reinvestment of distributions at net asset value 39,737 12,824
Payments for redemptions (41,894) --
------- --------
Increase (decrease) in net assets from
capital share transactions 186,314 417,824
------- -------
Total increase (decrease) in net assets 199,665 434,712
Net assets at beginning of period (Note 1) 534,712 100,000
------- -------
Net assets at end of period $734,377 $534,712
======== ========
Undistributed net investment income $ 624 $ 553
-------- --------
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Strategist Tax-Free High Yield Fund
1. Summary of significant accounting policies
The Fund is a series of Strategist Tax-Free Income Fund, Inc. and is registered
under the Investment Company Act of 1940 (as amended) as a diversified, open-end
management investment company. The Fund has 3 billion authorized shares of
capital stock. On April 15, 1996, American Express Financial Corporation (AEFC)
invested $100,000 in the Fund which represented 22,422 shares. Operations did
not formally commence until May 13, 1996.
Investment in Tax-Free High Yield Portfolio
The Fund invests all of its net investable assets in the Tax-Free High Yield
Portfolio (the Portfolio), a series of Tax-Free Income Trust, an open-end
investment company that has the same objectives as the Fund. The Portfolio
invests primarily in medium- and lower-quality bonds and notes issued by or on
behalf of state and local governmental units whose interest generally is exempt
from federal income tax. The Portfolio also may invest in derivative instruments
and money market instruments.
The Fund records daily its share of the Portfolio's income, expenses and
realized and unrealized gains and losses. The financial statements of the
Portfolio are included elsewhere in this report and should be read in
conjunction with the Fund's financial statements.
The Fund records its investment in the Portfolio at value that is equal to the
Fund's proportionate ownership interest in the net assets of the Portfolio. The
percentage of the Portfolio owned by the Fund at Nov. 30, 1997 was 0.01%.
Valuation of securities held by the Portfolio is discussed in Note 1 of the
Portfolio's "Notes to financial statements," which are included elsewhere in
this report.
Organizational costs
The Fund incurred organizational expenses in connection with the start-up and
initial registration of the Fund. These costs will be amortized over 60 months
on a straight-line basis beginning with the commencement of operations. If any
or all of the shares held by AEFC representing initial capital of the Fund are
redeemed during the amortization period, the redemption proceeds will be reduced
by the pro rata portion of the unamortized organizational cost balance.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Federal taxes
Since the Fund's policy is to comply with all sections of the Internal Revenue
Code applicable to regulated investment companies and to distribute all of its
taxable income to the shareholders, no provision for income or excise taxes is
required.
Net investment income (loss) and net realized gains (losses) allocated from the
Portfolio may differ for financial statement and tax purposes primarily because
of the deferral of losses on certain futures contracts and losses deferred due
to "wash sale" transactions. The character of distributions made during the year
from net investment income or net realized gains may differ from their ultimate
characterization for federal income tax purposes. Also, due to the timing of
dividend distributions, the fiscal year in which amounts are distributed may
differ from the year that the income or realized gains (losses) were recorded by
the Fund.
On the statement of assets and liabilities, as a result of permanent book-to-tax
differences, undistributed net investment income has been increased by $551 and
accumulated net realized loss has been increased by $34 resulting in a net
reclassification adjustment to decrease paid-in capital by $517.
Dividends to shareholders
Dividends from net investment income, declared daily and payable monthly, are
reinvested in additional shares of the Fund at net asset value or payable in
cash. Capital gains, when available, are distributed along with the last income
dividend of the calendar year.
Other
At Nov. 30, 1997, AEFC owned 98,951 shares of the Fund. At Nov. 30, 1997,
American Express Company (the parent company of AEFC) owned 24,635 shares of the
Fund.
2. Expenses and sales charges
In addition to the expenses allocated from the Portfolio, the Fund accrues its
own expenses as follows:
The Fund entered into agreements with AEFC for providing administrative services
and serving as transfer agent. Under its Administrative Services Agreement, the
Fund pays AEFC a fee for administration and accounting services at a percentage
of the Fund's average daily net assets in reducing percentages from 0.04% to
0.02% annually.
Under a separate Transfer Agency Agreement, AEFC maintains shareholder accounts
and records. The Fund pays AEFC an annual fee per shareholder account of $25.
Under a Plan and Agreement of Distribution, the Fund pays American Express
Service Corporation (the Distributor) a distribution fee at an annual rate of
0.25% of the Fund's average daily net assets for distribution related services.
A redemption fee of 0.5% is applied and retained by the Fund, if shares are
redeemed or exchanged within 180 days of purchase.
AEFC and the Distributor have agreed to waive certain fees and to absorb other
of the Fund's expenses until Dec. 31, 1998. Under this agreement, the Fund's
total expenses will not exceed 0.95% of the Fund's average daily net assets.
3. Capital share transactions Transactions in shares of capital stock for the
periods indicated are as follows:
Year ended Nov. 30, 1997
Sold 41,520
Issued for reinvested distributions 8,740
Redemptions (9,305)
Net increase (decrease) 40,955
Period ended Nov. 30, 1996*
Sold 92,032
Issued for reinvested distributions 2,851
Net increase (decrease) 94,883
*Inception date was May 13, 1996.
4. Capital loss carryover
For federal income tax purposes, Tax-Free High Yield Fund had a capital loss
carryover at Nov. 30, 1997 of $3,937 that if not offset by subsequent capital
gains, will expire in 2004 through 2005. It is unlikely the board will authorize
a distribution of any net realized capital gains for a fund until its available
capital loss carryover has been offset or expires.
5. Financial highlights
The table below shows certain important information for evaluating the Fund's
results.
Fiscal period ended Nov. 30,
Per share income and capital changesa
1997 1996b
Net asset value, beginning of period $4.56 $4.46
Income from investment operations:
Net investment income (loss) .28 .15
Net gains (both realized and unrealized) .08 .10
Total from investment operations .36 .25
Less distributions:
Dividends from net investment income (.28) (.15)
Net asset value, end of period $4.64 $4.56
Ratios/supplemental data
Net assets, end of period (in thousands) $734 $535
Ratio of expenses to average daily net assetsc .95% .95%d
Ratio of net income (loss) to average daily net assets 6.02% 6.22%d
Portfolio turnover rate
(excluding short-term securities) 4% 4%
Total return 8.3% 5.5%
a For a share outstanding throughout the period. Rounded to the nearest cent.
b Inception date was May 13, 1996.
c The Advisor and Distributor voluntarily limited total operating expenses to
0.95% of average daily net assets. Without this agreement, the ratio of expenses
to average daily net assets would have been 2.96% and 24.16% for the periods
ended 1997 and 1996, respectively.
d Adjusted to an annual basis.
<PAGE>
Federal income tax information
Strategist Tax-Free High Yield Fund
The Fund is required by the Internal Revenue Code of 1986 to tell its
shareholders about the tax treatment of the dividends it pays during its fiscal
year. The dividends listed below were reported to you on Form 1099-DIV,
Dividends and Distributions.
Strategist Tax-Free Income Fund, Inc.
Fiscal period ended Nov. 30, 1997
Exempt-interest dividends -- taxable status explained below.
Payable date Per share
Dec. 26, 1996 $0.02829
Jan. 29, 1997 0.02944
Feb. 26, 1997 0.02344
March 26, 1997 0.02087
April 28, 1997 0.02593
May 28, 1997 0.02207
June 26, 1997 0.02158
July 25, 1997 0.02170
Aug. 27, 1997 0.02382
Sept. 25, 1997 0.02144
Oct. 28, 1997 0.02366
Nov. 25, 1997 0.02006
Total $0.28230
Taxable dividend -- income distribution.
Payable date Per share
Dec. 26, 1996 $0.00002
Total distributions $0.28232
Federal taxation
Exempt-interest dividends are exempt from federal income taxes and should not be
included in shareholders' gross income.
Other taxation
Exempt-interest dividends may be subject to state and local taxes. Each
shareholder should consult a tax advisor about reporting this income for state
and local tax purposes.
Source of income by state
Percentages of income from municipal securities earned by the Fund from various
states during the year ended Nov. 30, 1997 are listed below.
Alabama 0.715%
Alaska 0.337
Arizona 0.935
Arkansas 0.067
California 7.728
Colorado 6.849
Florida 4.217
Georgia 2.305
Hawaii 0.359
Illinois 8.665
Indiana 2.351
Iowa 0.812
Kentucky 1.380
Louisiana 3.516
Maine 0.185
Maryland 0.632
Massachusetts 2.589
Michigan 3.762
Minnesota 3.883
Mississippi 0.923
Missouri 0.695
Montana 0.008
Nebraska 0.023
Nevada 0.689
New Hampshire 2.688
New Jersey 0.242
New Mexico 2.057
New York 8.664
North Carolina 3.729
North Dakota 0.435
Ohio 3.096
Oklahoma 1.396
Oregon 0.682
Pennsylvania 4.403
Puerto Rico 0.745
South Carolina 0.913
South Dakota 0.519
Tennessee 0.512
Texas 7.677
Utah 1.932
Virginia 0.619
Washington 3.386
Washington, DC 0.598
West Virginia 1.118
Wisconsin 0.655
Wyoming 0.309
<PAGE>
Independent auditors' report
The board of trustees and unitholders
Tax-Free Income Trust:
We have audited the accompanying statement of assets and liabilities, including
the schedule of investments in securities, of Tax-Free High Yield Portfolio (a
series of Tax-Free Income Trust) as of November 30, 1997, the related statement
of operations for the year then ended and the statements of changes in net
assets for the year ended November 30, 1997 and for the period from May 13, 1996
(commencement of operations) to November 30, 1996. These financial statements
are the responsibility of portfolio management. Our responsibility is to express
an opinion on these financial statements 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 are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. Investment securities
held in custody are confirmed to us by the custodian. As to securities purchased
and sold but not received or delivered, we request confirmations from brokers,
and where replies are not received, we carry out other appropriate auditing
procedures. 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 referred to above present fairly, in
all material respects, the financial position of Tax-Free High Yield Portfolio
at November 30, 1997, and the results of its operations and the changes in its
net assets for the periods stated in the first paragraph above, in conformity
with generally accepted accounting principles.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 2, 1998
<PAGE>
Financial statements
Statement of assets and liabilities
Tax-Free High Yield Portfolio
Nov. 30, 1997
Assets
Investments in securities, at value (Note 1)
(identified cost $5,300,390,986) $5,863,084,228
Accrued interest receivable 111,433,801
Receivable for investment securities sold 21,275,695
----------
Total assets 5,995,793,724
=============
Liabilities
Disbursements in excess of cash on demand deposit 1,536,388
Payable for investment securities purchased 5,627,528
Accrued investment management services fee 144,396
Other accrued expenses 85,917
------
Total liabilities 7,394,229
---------
Net assets $5,988,399,495
==============
See accompanying notes to financial statements.
<PAGE>
Statement of operations
Tax-Free High Yield Portfolio
Year ended Nov. 30, 1997
Investment income
Income:
Interest $388,169,902
------------
Expenses (Note 2):
Investment management services fee 26,174,871
Compensation of board members 41,397
Custodian fees 259,025
Audit fees 35,000
Other 88,467
------
Total expenses 26,598,760
Earnings credits on cash balances (Note 2) (28,106)
-------
Total net expenses 26,570,654
----------
Investment income (loss) -- net 361,599,248
-----------
Realized and unrealized gain (loss) -- net
Net realized gain (loss) on:
Security transactions (Note 3) (640,186)
Financial futures contracts (33,565,567)
-----------
Net realized gain (loss) on investments (34,205,753)
Net change in unrealized appreciation (depreciation)
on investments 137,325,053
-----------
Net gain (loss) on investments 103,119,300
-----------
Net increase (decrease) in net assets resulting
from operations $464,718,548
------------
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Tax-Free High Yield Portfolio
Year ended For the period
Nov. 30, 1997 from May 13, 1996*
to Nov. 30, 1996
Operations
<S> <C> <C>
Investment income (loss) -- net $ 361,599,248 $ 214,101,176
Net realized gain (loss) on investments (34,205,753) 2,001,114
Net change in unrealized appreciation (depreciation)
on investments 137,325,053 142,421,758
----------- -----------
Net increase (decrease) in net assets resulting
from operations 464,718,548 358,524,048
Net contributions (withdrawals) from partners (640,111,208) 5,805,168,107
------------ -------------
Total increase (decrease) in net assets (175,392,660) 6,163,692,155
Net assets at beginning of period (Note 1) 6,163,792,155 100,000
------------- -------
Net assets at end of period $5,988,399,495 $6,163,792,155
============== ==============
*Commencement of operations.
See accompanying notes to financial statements.
</TABLE>
<PAGE>
Notes to financial statements
Tax-Free High Yield Portfolio
1. Summary of significant accounting policies
Tax-Free High Yield Portfolio (the Portfolio) is a series of Tax-Free Income
Trust (the Trust) and is registered under the Investment Company Act of 1940 (as
amended) as a diversified, open-end management investment company. Tax-Free High
Yield Portfolio invests primarily in medium- and lower-quality bonds and notes
issued by or on behalf of state and local governmental units whose interest
generally is exempt from federal income tax. The Declaration of Trust permits
the Trustees to issue non-transferable interests in the Portfolio. On April 15,
1996, American Express Financial Corporation (AEFC) contributed $100,000 to the
Portfolio. Operations did not formally commence until May 13, 1996, at which
time, an existing fund transferred its assets to the Portfolio in return for an
ownership percentage of the Portfolio.
Significant accounting polices followed by the Portfolio are summarized below:
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of increase and decrease in net assets from operations
during the period. Actual results could differ from those estimates.
Valuation of securities
All securities are valued at the close of each business day. Securities traded
on national securities exchanges or included in national market systems are
valued at the last quoted sales price. Debt securities are generally traded in
the over-the-counter market and are valued at a price deemed best to reflect
fair value as quoted by dealers who make markets in these securities or by an
independent pricing service. Securities for which market quotations are not
readily available are valued at fair value according to methods selected in good
faith by the board. Short-term securities maturing in more than 60 days from the
valuation date are valued at the market price or approximate market value based
on current interest rates; those maturing in 60 days or less are valued at
amortized cost.
Option transactions
In order to produce incremental earnings, protect gains and facilitate buying
and selling of securities for investment purposes, the Portfolio may buy and
sell put and call options and write covered call options on portfolio securities
and may write cash-secured put options. The risk in writing a call option is
that the Portfolio gives up the opportunity of profit if the market price of the
security increases. The risk in writing a put option is that the Portfolio may
incur a loss if the market price of the security decreases and the option is
exercised. The risk in buying an option is that the Portfolio pays a premium
whether or not the option is exercised. The Portfolio also has the additional
risk of not being able to enter into a closing transaction if a liquid secondary
market does not exist. The Portfolio may write over-the-counter options where
the completion of the obligation is dependent upon the credit standing of the
other party.
Option contracts are valued daily at the closing prices on their primary
exchanges and unrealized appreciation or depreciation is recorded. The Portfolio
will realize a gain or loss upon expiration or closing of the option
transaction. When options on debt securities or futures are exercised, the
Portfolio will realize a gain or loss. When other options are exercised, the
proceeds on sales for a written call option, the purchase cost for a written put
option or the cost of a security for a purchased put or call option is adjusted
by the amount of premium received or paid.
Futures transactions
In order to gain exposure to or protect itself from changes in the market, the
Portfolio may buy and sell financial futures contracts. Risks of entering into
futures contracts and related options include the possibility that there may be
an illiquid market and that a change in the value of the contract or option may
not correlate with changes in the value of the underlying securities.
Upon entering into a futures contract, the Portfolio is required to deposit
either cash or securities in an amount (initial margin) equal to a certain
percentage of the contract value. Subsequent payments (variation margin) are
made or received by the Portfolio each day. The variation margin payments are
equal to the daily changes in the contract value and are recorded as unrealized
gains and losses. The Portfolio recognizes a realized gain or loss when the
contract is closed or expires.
Illiquid securities
At Nov. 30, 1997, investments in securities included issues that are illiquid.
The Portfolio currently limits investments in illiquid securities to 10% of the
net assets, at market value, at the time of purchase. The aggregate value of
such securities at Nov. 30, 1997 was $1,506,740 representing 0.03% of net
assets. Pursuant to guidelines adopted by the board, certain unregistered
securities are determined to be liquid and are not included within the 10%
limitation specified above.
Federal taxes
For federal income tax purposes the Portfolio qualifies as a partnership and
each investor in the Portfolio is treated as the owner of its proportionate
share of the net assets, income, expenses and realized and unrealized gains and
losses of the Portfolio. Accordingly, as a "pass-through" entity, the Portfolio
does not pay any income dividends or capital gain distributions.
Other
Security transactions are accounted for on the date securities are purchased or
sold. Interest income, including level-yield amortization of premium and
discount, is accrued daily.
2. Fees and expenses
The Trust, on behalf of the Portfolio, has entered into an Investment Management
Services Agreement with AEFC for managing its portfolio. Under this agreement,
AEFC determines which securities will be purchased, held or sold. The management
fee is a percentage of the Portfolio's average daily net assets in reducing
percentages from 0.49% to 0.36% annually.
Under the agreement, the Trust also pays taxes, brokerage commissions and
nonadvisory expenses, which include custodian fees, audit and certain legal
fees, fidelity bond premiums, registration fees for units, office expenses,
consultants' fees, compensation of trustees, corporate filing fees and any other
expenses properly payable by the Trust or Portfolio and approved by the board.
During the year ended Nov.30, 1997, the Portfolio's custodian fees were reduced
by $28,106 as a result of earnings credits from overnight cash balances.
Pursuant to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the units of the Trust.
3. Securities transactions
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $225,875,994 and $632,283,656, respectively, for the
year ended Nov. 30, 1997. For the same year, the portfolio turnover rate was 4%.
Realized gains and losses are determined on an identified cost basis.
4. Interest rate futures contracts
At Nov. 30, 1997, investments in securities included securities valued at
$31,605,000 that were pledged as collateral to cover initial margin deposits on
1,500 sale contracts. The market value of the open sale contracts at Nov. 30,
1997 was $183,421,875 with a net unrealized loss of $5,624,031. See Summary of
significant accounting policies.
<PAGE>
Investments in securities
Tax-Free High Yield Portfolio
Nov. 30, 1997
(Percentages represent value of investments compared to net assets)
Municipal bonds (95.5%)
Name of issuer and Coupon Maturity Principal Value(a)
title of issue (b,c,j) rate year amount
Alabama (0.5%)
Baldwin County Eastern Shore Health Care Authority
Hospital Revenue Bonds Thomas
Hospital Series 1991 8.50% 2016 $4,765,000 $ 5,455,163
Camden Industrial Development Board Solid Waste Disposal
Revenue Bonds MacMillan Bloedel
Series 1991A A.M.T. 7.75 2019 8,500,000 9,273,585
Marengo County Limited Obligation Capital Outlay
Warrants Series 1988 8.50 2018 3,000,000 3,183,000
Mobile Industrial Development Board Solid Waste
Refunding Revenue Bonds Mobile
Energy Services 6.95 2020 11,250,000 12,335,062
Total 30,246,810
Alaska (0.2%)
North Slope Borough General Obligation Bonds
Series 1984B Zero Coupon
(CGIC Insured) 7.05 2004 7,000,000(f) 5,150,880
North Slope Borough General Obligation Bonds
Series 1984B Zero Coupon
(CGIC Insured) 7.15 2005 7,000,000(f) 4,880,260
Total 10,031,140
Arizona (1.0%)
Chandler Industrial Development Authority
Beverly Enterprises
Series 1994 7.625 2008 2,750,000 2,876,225
Maricopa County Hospital System Revenue Bonds
Samaritan Health Services
Series 1981 12.00 2008 255,000 401,837
Maricopa County Industrial Development Authority
Multi-family Housing Revenue Bonds
Series B 7.375 2026 2,320,000 2,385,842
Maricopa County Industrial Development Authority
Senior Living Facilities Revenue Bonds
Series 1997A 7.875 2027 15,000,000 15,623,550
Maricopa County Pollution Control Refunding
Revenue Bonds Palo Verde
Public Service 6.375 2023 3,500,000 3,658,760
Navajo Industrial Development Authority Revenue Bonds
Stone Container Corporation
Series 1997 A.M.T. 7.20 2027 3,000,000 3,300,690
Phoenix Civic Improvement Waste Water System
Lease Refunding
Revenue Bonds 5.00 2018 5,000,000 4,831,350
Phoenix Industrial Development Authority
Refunding Revenue Bonds Christian
Care Apartments 6.50 2026 9,525,000 10,085,165
Pima County Industrial Development Authority
Multi-family Housing Revenue Bonds
Las Villas De Kino Apartments
Series 1997 A.M.T. 6.90 2029 7,000,000 7,054,880
Pima County Industrial Development Authority
Revenue Bonds LaPosada Park Centre
Series 1996A 7.00 2027 5,750,000 5,971,662
Scottsdale Industrial Development Authority
Beverly Enterprises
Series 1994 7.625 2008 3,035,000 3,174,306
Total 59,364,267
Arkansas (0.1%)
Pope County Solid Waste Disposal Revenue Bonds
Arkansas Power & Light
Series 1991 A.M.T. 8.00 2021 3,250,000 3,578,023
California (8.3%)
ABAG Financial Authority for Nonprofit Corporations
International Schools Certificate of Participation
Series 1996 7.375 2026 8,000,000 8,195,120
Community Development Authority Health Facilities
Unihealth America Certificate of Participation
Series 1993 Inverse Floater
(AMBAC Insured) 7.47 2011 22,400,000(d) 25,452,000
East Bay Municipal Utility District Water Revenue Bonds
Series 1993 Inverse Floater
(MBIA Insured) 6.22 2008 15,500,000(d) 16,313,750
Foothill Eastern Transportation Corridor Agency
Toll Road Revenue Bonds
Series 1995A 5.00 2035 41,070,000 37,652,155
Fresno Health Facility Refunding Revenue Bonds
Holy Cross Health System
(MBIA Insured) 5.625 2013 3,000,000 3,106,470
Irwindale Redevelopment Agency Subordinate Lein
Tax Allocation Bonds 7.05 2026 5,750,000 6,321,838
Lake Elsinore Public Financing Authority
Local Agency Revenue Bonds
Series 1997F 7.10 2020 12,000,000 12,802,440
Los Angeles County Certificate
of Participation 6.71 2015 20,000,000 21,132,000
Los Angeles International Airport Regional Airports
Improvement Corporation Refunding Revenue Bonds
Delta Airlines 6.35 2025 13,000,000 14,023,490
Los Angeles International Airport Regional Airports
Improvement Corporation Refunding Revenue Bonds
United Airlines
Series 1984 8.80 2021 11,650,000 13,158,325
Los Angeles Water & Power Electric Plant
Refunding Revenue Bonds
Series 1992 6.375 2020 10,000,000 10,744,800
Millbrae Residential Facility Revenue Bonds
Magnolia of Millbrae Series
1997A A.M.T. 7.375 2027 2,500,000 2,512,100
Modesto Santa Clara Redding Public Power Bonds
San Juan Series C
(AMBAC Insured) 5.50 2021 4,500,000 4,500,000
Northern California Power Agency Geothermal 3
Revenue Bonds 5.00 2009 49,635,000 49,417,102
Novato Community Facility District 1 Vintage Oaks
Public Improvement Special Tax
Refunding Bonds 7.25 2021 5,000,000 5,426,600
Oceanside Certificate of Participation Refunding Bonds
Oceanside Civic Center
(MBIA Insured) 5.25 2019 7,000,000 6,883,800
Orange County Special Tax Community Facilities Bonds
Aliso Veijo District 88-1
Series 1992A 7.35 2018 6,000,000 6,901,560
Pleasanton Joint Powers Financing Authority Reassessment
Revenue Bonds
Series 1993A 6.15 2012 4,640,000 4,927,216
Regional Airports Improvement Facilities Sublease
Revenue Bonds Continental Airlines Los Angeles
International Airport
Series 1988 A.M.T. 9.00 2008-17 12,100,000 12,628,261
Sacramento Cogeneration Authority Revenue Bonds
Proctor & Gamble
Series 1995 6.50 2014-21 11,800,000 12,753,178
Sacramento Municipal Utility District Electric
Refunding Revenue Bonds Series 1993D
Inverse Floater
(FSA Insured) 6.47 2005 15,800,000(d) 17,241,750
Sacramento Municipal Utility District Electric
Refunding Revenue Bonds Series 1993D
Inverse Floater
(FSA Insured) 6.67 2006 16,400,000(d) 17,896,500
Sacramento Municipal Utility District Electric
Refunding Revenue Bonds Series 1993D
Inverse Floater
(MBIA Insured) 7.12 2015 15,000,000(d) 15,600,000
Sacramento Power Authority Cogeneration Revenue Bonds
Campbell Soup
Series 1995 6.00 2022 25,000,000 26,032,750
San Joaquin Hills Orange County Transportation
Corridor Agency Senior Lien Toll Road
Revenue Bonds 6.75 2032 14,785,000 16,605,181
San Joaquin Hills Transportation Corridor Agency
Capital Appreciation Toll Road Refunding Revenue Bonds
Zero Coupon Series 1997A
(MBIA Insured) 5.63 2024-25 54,375,000(f) 12,773,681
San Joaquin Hills Transportation Corridor Agency
Capital Appreciation Toll Road Refunding Revenue Bonds
Zero Coupon Series 1997A
(MBIA Insured) 5.65 2026-27 36,670,000(f) 7,979,860
San Joaquin Hills Transportation Corridor Agency
Capital Appreciation Toll Road Refunding Revenue Bonds
Zero Coupon Series 1997A
(MBIA Insured) 5.67 2028 7,000,000(f) 1,379,840
San Joaquin Hills Transportation Corridor Agency
Senior Lien Toll Road Revenue Bonds Zero Coupon
Escrowed to Maturity 5.35 2017 34,860,000(f) 12,817,325
San Jose Redevelopment Agency Merged Area Tax
Allocation Bonds Series 1993 Inverse Floater
(MBIA Insured) 6.61 2014 33,600,000(d) 34,062,000
San Marcos Public Facility Authority
Refunding Revenue Bonds
Civic Center Public Improvement
Series A 6.20 2022 12,300,000 12,608,853
Sierra Unified School District Fresno County
Certificate of Participation Capital Financing
Refunding Bonds
Series 1993 6.125 2018 6,470,000 6,652,713
Southern California Public Power Authority
Power Revenue Bonds Palo Verde
Series 1993 Inverse Floater
(FGIC Insured) 6.62 2017 20,000,000(d) 20,625,000
South Tahoe Joint Power Financing Authority
Refunding Revenue Bonds South Tahoe Area 1
Series 1995B 6.00 2028 9,900,000 10,188,090
Ukiah Unified School District Mendocino County
Certificate of Participation
Series 1993 6.00 2010 5,000,000 5,190,400
University of California Refunding Revenue Bonds
Multiple Purpose Project
(AMBAC Insured) 5.25 2016 6,000,000 6,003,300
Total 498,509,448
Colorado (6.6%)
Arapahoe County Capital Improvement Trust Fund
E-470 Highway
Revenue Bonds 7.00 2026 22,000,000 26,064,500
Arapahoe County Industrial Development Revenue Bonds
Dillion Real
Estate-Kroger 8.00 2009 4,000,000 4,566,360
Aurora Centretech Metropolitan District
Arapahoe County
Series 1987B 6.00 2023 5,699,785 4,907,743
Bowles Metropolitan District General Obligation Bonds
Series 1995 7.75 2015 16,000,000 16,896,640
Briargate Public Building Authority
Landowner Assessment Lien Bonds
Series 1985A 10.25 2000 4,333,690(e) 3,683,636
Castle Rock Ranch Public Facility Improvement
Revenue Bonds
Series 1996 6.25 2017 10,000,000 11,229,300
Colorado Health Facility Authority Hospital Improvement
Refunding Revenue Bonds
Parkview Episcopal Medical Center
Series 1995 6.125 2025 7,000,000 7,246,050
Colorado Health Facility Authority Revenue Bonds
Liberty Heights Zero Coupon
Escrowed to Maturity 7.50 2022 81,465,000(f) 21,511,648
Colorado Springs Hospital Revenue Bonds
Memorial Hospital
Series 1990 7.875 2010 5,000,000 5,524,800
Colorado Springs Stetson Hills Public Building Authority
Landowner Assessment Lien Bonds
Series 1988A 9.75 2008 2,869,110(e) 86,073
Colorado Springs Utilities System
Refunding Revenue Bonds
Series 1991C 6.50 2015 24,895,000 27,101,195
Colorado Springs Utilities System
Refunding Revenue Bonds
Series 1991C 6.75 2021 30,000,000 33,121,747
Colorado Springs Utilities System
Pre-Refunded Revenue Bonds
Series 1991C 6.50 2015 1,505,000 1,655,109
Denver City & County Airport Systems Revenue Bonds
Series 1991A A.M.T. 8.75 2023 10,000,000 11,619,200
Denver City & County Airport Systems Revenue Bonds
Series 1991D A.M.T. 7.75 2021 8,650,000 9,707,636
Denver City & County Airport Systems Revenue Bonds
Series 1992A 7.25 2025 20,975,000 24,002,741
Denver City & County Airport Systems Revenue Bonds
Series 1992B A.M.T. 7.25 2023 20,500,000 22,835,360
Denver City & County Airport Systems Revenue Bonds
Series 1994A 7.50 2012 5,000,000 5,777,050
Denver City & County Airport Systems Revenue Bonds
Series 1994A A.M.T. 7.50 2023 19,340,000 22,316,233
Denver City & County GVR Metropolitan District
General Obligation Refunding Bonds
Series 1991 8.00 2006 1,385,000 1,729,103
Denver City & County GVR Metropolitan District
General Obligation Refunding Bonds
Series 1995B 11.00 2006 730,000 711,750
Denver Special Facility Airport Revenue Bonds
United Air Lines
Series A A.M.T. 6.875 2032 25,400,000 27,674,316
Denver Urban Renewal Authority Tax Increment
Revenue Bonds Downtown Denver Redevelopment
Adams Mark Hotel
Series 1989 A.M.T. 8.00 2015-17 20,000,000 22,336,000
Denver Urban Renewal Authority Tax Increment
Revenue Bonds South Broadway Montgomery Ward
Urban Renewal
Series 1992 8.50 2016 14,015,000 15,518,810
Denver West Metropolitan District
General Obligation Bonds
Series 1996 6.50 2016 2,560,000 2,690,637
Denver West Metropolitan District General Obligation
Refunding Improvement Bonds
Series 1995 7.00 2014 4,230,000 4,609,431
Hotchkiss Industrial Development Revenue Bonds
Dillion Real
Estate-Kroger 8.00 2009 1,500,000 1,712,385
Housing Finance Authority Single Family Program
Senior Bonds Series 1991B
(FGIC Insured) 7.25 2011 2,580,000 2,723,654
Housing Finance Authority Single Family Program
Senior Bonds Series 1991B
(FGIC Insured) 7.30 2018 2,340,000 2,459,714
Lowry Economic Redevelopment Authority
Revenue Bonds
Series 1996 7.50 2010 19,000,000 19,659,490
Saddle Rock Metropolitan District Limited Tax
General Obligation Bonds
Series 1997 7.63 2016 5,590,000 5,841,662
Superior Metropolitan District 2 Limited Tax
General Obligation Refunding Bonds
MDC Holdings
Series 1994B 7.50 1998 1,900,000 1,944,612
Superior Metropolitan District 2 Limited Tax
General Obligation Refunding Bonds
MDC Holdings
Series 1994B 8.25 2013 2,580,000 2,872,056
Superior Metropolitan District 2 Limited Tax
General Obligation Refunding Bonds
MDC Holdings
Series 1994B 8.50 2013 12,000,000 13,417,320
Thornton Industrial Development Revenue Bonds
Dillion Real
Estate-Kroger 8.00 2009 4,500,000(h) 4,500,000
Westminster Industrial Development Revenue Bonds
Dillion Real
Estate-Kroger 8.00 2009 3,500,000 3,995,565
Total 394,249,526
District of Columbia (0.7%)
General Obligation Refunding Bonds Series 1994A
(MBIA Insured) 6.00 2010 27,875,000 29,727,851
General Obligation Refunding Bonds Series 1994A
(MBIA Insured) 6.10 2011 7,580,000 8,109,766
Housing Finance Agency Multi-family Mortgage
Revenue Bonds Temple Courts Section 8
Series 1985
(FHA Insured) 12.00 2022 1,315,000 1,574,384
Total 39,412,001
Florida (4.1%)
Arbor Greene Community Development District
Special Assessment Revenue Bonds
Series 1996 7.60 2018 5,000,000 5,364,500
Broward County Airport System Revenue Bonds
Series 1989B A.M.T. 7.625 2013 15,000,000 15,761,700
Charlotte County Development Authority 1st Mortgage
Refunding Revenue Bonds
Royal Palm Retirement Centre
Series 1991 9.50 2014 4,050,000 4,362,012
Crossings at Fleming Island Community Development
District Special Assessment Bonds
Series 1995 8.25 2016 10,200,000 11,188,074
Crossings at Fleming Island Community Development
District Utility Revenue Bonds
Series 1994 7.375 2019 13,535,000 14,243,557
Department of Transportation Turnpike Revenue Bonds
Series 1991A
(AMBAC Insured) 6.25 2020 20,000,000 21,202,200
Gateway Centre Development District Pinellas County
Special Assessment Revenue Bonds
Series 1988 9.125 2009 1,350,000 1,395,832
Grand Haven Community Development District
Special Assessment Bonds Flagler County
Series 1997A 6.30 2002 5,600,000 5,722,864
Grand Haven Community Development District
Special Assessment Revenue Bonds
Series 1997B 6.90 2019 1,000,000 1,024,350
Hillsborough County Utility Refunding Revenue Bonds
Series 1991A 7.00 2014 24,000,000 26,146,680
Hillsborough County Utility Refunding Revenue Bonds
Series 1991A
(MBIA Insured) 6.50 2016 24,760,000 26,838,602
Jacksonville Electric Authority St. John's River Power
Park System Revenue Bonds
Series 1989 6.00 2015 10,300,000 10,547,406
Jacksonville Health Facilities Authority Hospital
Refunding Revenue Bonds Riverside Hospital
Series 1989 7.625 2013 1,600,000 1,729,232
Lakewood Ranch Community Development District 1
Special Assessment Bonds
Series 1994 8.25 2014 5,190,000 5,636,548
Lee County Industrial Development Authority
Industrial Development Revenue Bonds Gulf Utility
Series 1988A A.M.T. 9.625 2018 5,545,000 5,933,760
Lee County Industrial Development Authority
Industrial Development Revenue Bonds Gulf Utility
Series 1988B A.M.T. 9.50 2020 3,915,000 4,415,533
Miami Health Facility Authorization Revenue Bonds
Inverse Floater
(AMBAC Insured) 6.57 2015 3,500,000(d) 3,473,750
North Springs Improvement Special Assessment
District Revenue Bonds Heron Bay
Series 1997 7.00 2019 3,000,000 3,036,510
North Springs Improvement Special Assessment
District Revenue Bonds Parkland Isles
Series 1997B 6.25 2005 3,000,000 3,015,000
Palm Beach County Health Facilities Authority Hospital
Revenue Bonds Good Samaritan Health
Series 1993 6.30 2022 3,750,000 3,982,800
Polk County Industrial Development Authority 1st Mortgage
Refunding Revenue Bonds
Spring Haven II 8.75 2014 6,115,000 6,672,015
Port Everglades Port Authority Revenue Bonds
Junior Lien 5.00 2016 18,635,000 18,299,943
Riverwood Community Development District
Charlotte County Special Assessment
Revenue Bonds Zero Coupon
Series 1992A-B 8.50 2012 5,850,000(f) 6,301,503
Sumter County Industrial Development Authority
Industrial Development Reveue Bonds
Little Sumter Utility Company
Series 1997 A.M.T. 7.25 2027 4,200,000 4,232,424
Sumter County Village Community Development
District 1 Capital Improvement Revenue Bonds
Series 1992 8.40 2012 1,360,000 1,458,872
Sunrise Utility System Refunding & Improvement
Revenue Bonds 10.75 2018 5,000,000 5,868,100
Village Center Community Development District 2
Lake County Recreational Revenue Bonds
Anticipation Notes
Series 1996 6.50 2000 6,155,000 6,189,530
Village Center Community District Recreational
Revenue Bonds
Series 1996B 8.25 2017 2,885,000 3,116,002
Village Community Development District 2
Special Assessment District Revenue Bonds
Series 1996 7.625 2017 5,875,000 6,237,017
Volusia County Industrial Development Authority
1st Mortgage Refunding Revenue Bonds
Series 1996 7.625 2026 10,925,000 11,490,697
Total 244,887,013
Georgia (2.0%)
Atlanta Special Purpose Facility Revenue Bonds
Delta Air Lines
Series 1989B A.M.T. 6.25 2019 8,685,000 8,800,597
Atlanta Special Purpose Facility Revenue Bonds
Delta Air Lines
Series 1989B A.M.T. 7.90 2018 13,500,000 14,513,310
Colquitt County Development Authority Revenue Bonds
Zero Coupon Escrowed
to Maturity 6.87 2021 46,350,000(f) 12,657,722
Effingham County Pollution Control Revenue Bonds
Fort Howard
Series 1988 7.90 2005 19,850,000 21,368,128
Fulco Hospital Authority Revenue Anticipation Certificate
Georgia Baptist Health Care Systems
Series 1992A 6.375 2022 20,300,000 22,360,450
Municipal Electric Authority Power Refunding Bonds
Series 1989R 6.00 2014 9,130,000 9,190,623
Municipal Electric Authority Power Revenue Bonds
Series L 5.00 2020 1,150,000 1,086,761
Rockdale County Development Authority Solid Waste
Disposal Revenue Bonds Visy Paper
Series 1993 A.M.T. 7.50 2026 10,000,000 10,794,600
Savannah Georgia Economic Development Authority
Revenue Bonds Zero Coupon Escrowed
to Maturity 6.87 2021 64,220,000(f) 17,537,840
Total 118,310,031
Hawaii (0.4%)
City & County of Honolulu Refunding & Improvement
General Obligation Bonds Series 1993B
Inverse Floater 6.48 2006 10,000,000(d) 10,912,500
City & County of Honolulu Refunding & Improvement
General Obligation Bonds Series 1993B
Inverse Floater 6.78 2008 10,000,000(d) 11,062,500
Total 21,975,000
Illinois (7.6%)
Bradley Kankakee County Tax Increment
Refunding Revenue Bonds
Series 1993 8.40 2012 5,800,000 6,558,060
Broadview Cook County Senior Lien Tax Increment
Revenue Bonds
Series 1993 8.25 2013 11,705,000 13,239,526
Chicago General Obligation Refunding Bonds
Series 1995A
(AMBAC Insured) 5.50 2018 20,000,000 20,539,800
Chicago General Obligation Bonds Series 1991
(AMBAC Insured) 6.00 2016 6,170,000 6,463,877
Chicago General Obligation Bonds Series 1994A
(AMBAC Insured) 5.875 2022 17,850,000 18,452,437
Chicago O'Hare International Airport General Airport
Revenue Bonds
Series 1990A A.M.T. 6.00 2018 29,000,000 29,523,160
Chicago O'Hare International Airport General Airport
Revenue Bonds
Series 1990A A.M.T. 7.50 2016 21,000,000 22,590,750
Chicago O'Hare International Airport General Airport
Refunding Revenue Bonds
Series 1993A 5.00 2016 14,450,000 13,900,033
Chicago O'Hare International Airport
Special Revenue Facility Bonds Delta Airlines
Series 1992 6.45 2018 10,000,000 10,541,000
Chicago O'Hare International Airport
Special Revenue Facility Bonds United Airlines
Series C 8.20 2018 22,780,000 24,498,979
Chicago O'Hare International Airport Terminal
Special Revenue
Bonds A.M.T. 7.50 2017 32,250,000 34,525,238
Chicago O'Hare International Airport Terminal
Special Revenue Bonds
(FGIC Insured) A.M.T. 7.875 2025 17,750,000 19,474,767
Chicago Ridge Special Service Area 1 Unlimited
Ad Valorem Tax Bonds
Series 1990 9.00 2008 2,700,000 2,946,321
Chicago Wastewater Transmission Revenue Bonds
Series 1994
(MBIA Insured) 6.375 2024 22,500,000 24,505,650
Cook County Bedford Park Senior Lien Tax Increment
Revenue Bonds Mark IV
Series 1992 9.75 2012 1,740,000 2,130,334
Cook County Bedford Park Senior Lien Tax Increment
Revenue Bonds 7.00 2006 1,175,000 1,247,392
Cook County Bedford Park Senior Lien Tax Increment
Revenue Bonds 7.375 2012 1,700,000 1,798,413
Development Finance Authority Lifecare Revenue Bonds
Presbyterian Homes
Series 1996B 6.40 2031 6,700,000 7,257,708
Development Finance Authority Pollution Control
Refunding Revenue Bonds Central Illinois
Public Service
Series 1993B-2 5.90 2028 2,500,000 2,582,525
Development Finance Authority Pollution Control
Refunding Revenue Bonds Commonwealth Edison
Series 1994 5.70 2009 2,000,000 2,134,120
Development Finance Authority Pollution Control
Refunding Revenue Bonds Commonwealth Edison
Series 1994 5.85 2014 4,500,000 4,788,990
Development Finance Authority Pollution Control
Refunding Revenue Bonds Illinois Power
Series 1991A 7.375 2021 19,250,000 22,183,508
Development Finance Authority Retirement Housing
Revenue Bonds Zero Coupon
Escrowed to Maturity 7.75 2020 68,000,000(f) 19,841,720
DuPage County Tax Increment Revenue Bonds
Series 1997 7.875 2017 4,690,000 5,085,461
Educational Facilities Authority Refunding Revenue Bonds
Loyola University of Chicago Series 1993
Inverse Floater
(FGIC Insured) 7.22 2012 11,000,000(d) 11,893,750
Educational Facilities Authority Refunding Revenue Bonds
Lewis University
Series 1996 6.125 2026 8,780,000 9,070,706
Granite City Madison County Hospital
Refunding Revenue Bonds St. Elizabeth Medical Center
Series 1989A 8.125 2008 3,315,000 3,487,712
Health Facilities Authority Refunding Revenue Bonds
Edwards Hospital
Series 1993A 6.00 2019 6,350,000 6,493,827
Health Facilities Authority Refunding Revenue Bonds
Morris Hospital 6.125 2023 3,005,000 3,092,025
Health Facilities Authority Refunding Revenue Bonds
Masonic Medical Center
Series 1993 5.50 2019 2,000,000 1,979,780
Health Facilities Authority Refunding Revenue Bonds
University of Chicago Series 1993 Inverse Floater
(MBIA Insured) 7.37 2014 10,000,000(d) 10,700,000
Health Facilities Authority Revenue Bonds
Sarah Bush Lincoln Health Center
Series 1996B 5.75 2022 2,915,000 2,926,660
Health Facility Authority Revenue Bonds
Delnore Community Hospital
Series 1989 8.00 2019 7,000,000 7,523,110
Health Facility Authority Revenue Bonds
Sarah Bush Lincoln Health Center
Series 1992 7.25 2012-22 4,000,000 4,533,720
Health Facility Authority Revenue Bonds
South Suburban Hospital
Series 1992 7.00 2009-18 9,000,000 10,409,610
Hodgkins General Obligation Tax Increment Bonds
Series 1991 9.50 2009 12,200,000 14,785,674
Hodgkins General Tax Increment Bonds
Series 1995A 7.625 2013 9,000,000 9,865,710
Lakemoor Special Tax Revenue Bonds
Series 1997 7.80 2027 9,000,000 9,487,890
Lansing Tax Increment Refunding Revenue Bonds
Landings Redevelopment Area Limited Sales
Tax Pledge Series 19927.00 2008 10,000,000 11,129,600
Marion General Obligation Hospital Alternate
Revenue Source Bonds
Series 1991 7.50 2016 3,800,000 4,304,412
Metropolitan Pier & Exposition Authority
Dedicated State Tax Refunding Revenue Bonds
McCormick Place Zero Coupon
(FGIC Insured) 6.37 2019 6,000,000(f) 1,891,440
Metropolitan Pier & Exposition Authority
Dedicated State Tax Refunding Revenue Bonds
McCormick Place Zero Coupon
(MBIA Insured) 6.61 2017 11,210,000(f) 3,948,610
Metropolitan Pier & Exposition Authority
Sales Tax & Miscellaneous Tax Revenue
Capital Appreciation Refunding Bonds
Zero Coupon Series 1996A
(MBIA Insured) 6.05 2022 16,225,000(f) 4,261,009
Regional Transportation Authority General
Obligation Bonds Counties of Cook, Dupage, Kane, Lake
McHenry & Will Series 1992A
(AMBAC Insured) 6.125 2022 7,200,000 7,502,688
Tinley Park Cook & Will Counties Limited Sales Tax
Revenue Bonds
Series 1988 10.25 1999 895,000(e) 340,100
Tinley Park Cook & Will Counties Unlimited Ad Valorem
Tax Bonds of
Special Service 10.65 1997-07 1,275,000 1,134,750
Total 457,572,552
Indiana (2.0%)
Brazil 1st Mortgage Revenue Bonds Hoosier Care II
Series 1990 10.375 2020 4,165,000 4,507,113
Carmel Retirement Rental Housing Refunding
Revenue Bonds Beverly Enterprises
Series 1992 8.75 2008 6,785,000 7,702,536
Development Finance Authority Environmental
Improvement Refunding Revenue Bonds USX Corporation
Series 1996 6.25 2030 2,000,000 2,109,840
East Chicago Elementary School Building Lake County
1st Mortgage Refunding Bonds
Series 1996 6.25 2016 8,000,000 8,691,440
Hanover 1st Mortgage Revenue Bonds Hoosier Care II
Series 1990 10.375 2020 6,815,000 7,374,784
Health Facility Authority Hospital Revenue Bonds
Community Hospital of Anderson
Series 1993 6.00 2023 10,000,000 10,195,700
Health Facility Authority Hospital Revenue Bonds
Union Hospital Series 1993
(MBIA Insured) 5.125 2018 10,000,000 9,634,200
Health Facility Finance Authority Hospital Revenue Bonds
Hancock Memorial
Series 1996 6.125 2017 2,295,000 2,377,941
Kokomo Hospital Authority Hospital Refunding
Revenue Bonds St. Joseph's Hospital
Series 1988A 8.75 2013 5,000,000 5,264,950
La Porte County Hospital Authority Hospital Refunding
Revenue Bonds La Porte Hospital
Series 1993 6.00 2023 2,990,000 3,056,647
La Porte County Hospital Authority Hospital Refunding
Revenue Bonds La Porte Hospital
Series 1993 6.25 2012 5,070,000 5,273,003
Lawrenceburg Pollution Control Refunding Revenue Bonds
Methodist Hospital
Series 1989 6.50 2008-13 19,670,000 21,666,789
Municipal Power Agency Power Supply System
Refunding
Revenue Bonds 5.75 2018 6,470,000 6,472,717
Rockport Pollution Control Refunding Revenue Bonds
Indiana Michigan Electric
Series B 7.60 2016 5,500,000 6,001,600
St. Joseph County Hospital Facility Revenue Bonds
Memorial Hospital of
South Bend 9.40 2010 1,930,000 2,499,755
Vincennes Economic Development
Revenue Bonds Southwest Indiana
Regional Youth Village Facility
Series 1993 8.50 2024 16,575,000 17,705,581
Total 120,534,596
Iowa (0.7%)
Iowa City Refunding Revenue Bonds Mercy Hospital
Series 1986 6.00 2012 6,300,000 6,324,633
Keokuk Hospital Facilities Refunding Revenue Bonds
Keokuk Area Hospital
Series 1991 7.625 2021 5,350,000 5,805,820
Muscatine Electric Refunding Revenue Bonds
Series 1986 5.00 2007-08 7,350,000 7,349,786
Muscatine Electric Refunding Revenue Bonds
Series 1986 6.00 2005-06 22,175,000 22,202,053
Total 41,682,292
Kentucky (1.3%)
Development Finance Authority Hospital Facility
Revenue Bonds St. Luke Hospital
Series 1989B 6.00 2019 22,695,000 23,073,326
Development Finance Authority Medical Center
Refunding Revenue Improvement Bonds
Ashland Hospital
Series 1987 9.75 2011 4,000,000 4,117,784
Economic Development Finance Authority Hospital
Refunding Revenue & Improvement Bonds
Appalachian Regional Hospital
Series 1997 5.875 2022 2,000,000 2,014,660
Louisville Airport Lease Revenue Bonds
Series 1989A A.M.T. 7.875 2019 4,000,000 4,282,200
Louisville & Jefferson County Riverport Authority
Mortgage Revenue Bonds
Series 1986 A.M.T. 7.875 2016 7,185,000 7,391,425
McCracken County Revenue Bonds
Lourdes Hospital 6.00 2012 8,300,000 8,320,916
Muhlenberg County Hospital Refunding Revenue Bonds
Muhlenberg Community Hospital
Series 1988 9.50 2010 3,920,000 4,138,854
Muhlenberg County Hospital Refunding Revenue Bonds
Muhlenberg Community Hospital
Series 1996 6.75 2010 9,565,000 9,937,461
Turnpike Authority Economic Road Development
Refunding Revenue Bonds Series 1993 Inverse Floater
(AMBAC Insured) 7.189 2012 15,000,000(d) 15,993,750
Total 79,270,376
Louisiana (3.2%)
Calcasieu Parish Industrial Development Pollution Control
Refunding Revenue Bonds Gulf State Utilities
Series 1992 6.75 2012 10,500,000 11,243,715
Energy & Power Authority Refunding Revenue Bonds
Rodemacher Unit 2 Series 1991
(FGIC Insured) 6.00 2013 28,000,000 28,678,720
Hodge Village Combined Utility System Revenue Bonds
Stone Container
Series 1990 A.M.T. 9.00 2010 23,000,000 25,051,370
New Orleans Audubon Park Commission Aquarium
Revenue Bonds
Series 1992A 8.00 2012 7,100,000 8,220,167
Public Facilities Authority Revenue Bonds
Glen Retirement Systems
Series 1995 6.50 2015 1,000,000 1,061,160
Public Facilities Authority Revenue Bonds
Glen Retirement Systems
Series 1995 6.70 2025 1,500,000 1,608,465
Public Facilities Authority Revenue Bonds
Windsor Multi-family Housing Foundation
Series 1996A 6.25 2026 9,570,000 8,265,035
St. Charles Parish Pollution Control Revenue Bonds
Louisiana Power & Light
Series 1984 8.25 2014 28,600,000 30,841,954
St. Charles Parish Pollution Control Revenue Bonds
Louisiana Power & Light
Series 1991 A.M.T. 7.50 2021 20,700,000 22,738,122
St. Charles Parish Pollution Control Revenue Bonds
Louisiana Power & Light
2nd Series 1984 8.00 2014 29,155,000 31,756,209
Southern Louisiana Port Commission Terminal
Refunding Revenue Bonds Gatx Terminal
Series 1993 7.00 2023 13,180,000 14,321,124
West Feliciana Parish Demand Pollution Control
Revenue Bonds Gulf State Utilities
Series 1985B 9.00 2015 6,000,000 6,717,480
Total 190,503,521
Maine (0.1%)
Finance Authority Multi-family Housing Revenue
Obligation Securities Huntington Common
Series 1997A 7.50 2027 5,000,000 4,993,200
Health & Higher Educational Facilities Authority
Revenue Bonds St. Mary's Hospital
Series 1989 8.625 2022 3,500,000 3,802,540
Total 8,795,740
Maryland (0.7%)
Frederick County Economic Refunding Revenue Bonds
Alumax Series 1992 7.25 2017 9,880,000 10,648,368
Harford County Industrial Development Revenue Bonds
Dorsey 8.00 2005 500,000 502,460
Prince George's County Hospital Revenue Bonds
Dimensions Health
Series 1992 7.00 2022 7,000,000 7,888,440
Prince George's County Hospital Revenue Bonds
Dimensions Health
Series 1992 7.25 2017 11,400,000 12,964,422
State Transportation Authority Facility Revenue Bonds
Zero Coupon Series 1992 Capital Appreciation
(FGIC Insured) 6.33 2010-11 9,700,000(f) 4,999,532
State Transportation Authority Facility Revenue Bonds
Zero Coupon Series 1992
(FGIC Insured) 6.35 2012 5,000,000(f) 2,391,100
Total 39,394,322
Massachusetts (2.6%)
Bay Transportation Authority Refunding Revenue Bonds
Series 1994A
(MBIA Insured) 6.00 2012 8,000,000 8,471,280
Greater Lawrence Sanitary District North Andover
General Obligation
Bonds 8.50 2005 3,255,000 3,371,757
Health & Educational Facilities Authority Revenue Bonds
Berkshire Health Systems
Series C 5.90 2011 2,000,000 2,032,720
Health & Educational Facilities Authority Revenue Bonds
Berkshire Health Systems
Series C 6.00 2020 4,000,000 4,078,440
Health & Educational Facilities Authority Revenue Bonds
Beverly Hospital Inverse Floater
(MBIA Insured) 7.37 2020 8,000,000(d) 8,360,000
Health & Educational Facilities Authority Revenue Bonds
Charlton Memorial Hospital
Series B 7.25 2013 6,455,000 7,088,558
Industrial Finance Agency Pollution Control Refunding
Revenue Bonds Eastern Edison
Series 1993 5.875 2008 4,250,000 4,336,318
Industrial Finance Agency Resource Recovery
Revenue Bonds SEMASS
Series 1991A 9.00 2015 18,885,000 21,285,472
Industrial Finance Agency Resource Recovery
Revenue Bonds SEMASS
Series 1991B A.M.T. 9.25 2015 24,900,000 28,064,541
Municipal Wholesale Electric Power Supply System
Revenue Bonds
Series 1992B 6.75 2017 10,130,000 11,320,275
Municipal Wholesale Electric Power Supply System
Revenue Bonds Series 1993A Inverse Floater
(AMBAC Insured) 7.02 2018 6,500,000(d) 6,418,750
State Health & Educational Facilities Authority
Revenue Bonds Holyoke Hospital
Series 1994B 6.50 2015 500,000 522,700
State Industrial Finance Agency Assisted Living
Facility Revenue Bonds Newton Group Properties LLC
Series 1997 A.M.T. 8.00 2027 4,300,000 4,338,485
Water Resources Authority General
Refunding Revenue Bonds
Series 1992B 5.50 2015 22,175,000 22,351,513
Water Resources Authority General Revenue Bonds
Series 1992A 6.50 2019 3,500,000 4,086,460
Water Resources Authority General Revenue Bonds
Series 1993B-95B
(MBIA Insured) 5.00 2022-25 19,000,000 18,121,930
Total 154,249,199
Michigan (3.9%)
Crawford County Economic Development Corporation
Environmental Improvement Revenue Bonds
Weyerhaeuser
Series 1991A 7.125 2007 10,800,000 12,466,656
Detroit Unlimited Tax General Obligation Bonds
Series 1993 6.35 2014 5,930,000 6,289,299
Detroit Unlimited Tax General Obligation Bonds
Series 1995A 6.80 2015 1,375,000 1,580,672
Lincoln Consolidated School District Unlimited Tax
General Obligation Refunding Bonds
(FGIC Insured) 5.85 2018 6,455,000 6,751,414
Midland County Economic Development Corporation
Pollution Control Limited Obligation
Refunding Revenue Bonds Midland Cogeneration
Series 1990B A.M.T. 9.50 2009 35,200,000 38,926,624
Midland County Economic Development Corporation
Pollution Control Limited Obligation
Refunding Revenue Bonds Midland Cogeneration
Series 1990C 8.50 2009 18,900,000 20,482,308
Monroe County Pollution Control
Revenue Bonds Detroit Edison
A.M.T. 7.75 2019 40,250,000(h) 43,639,855
State Hospital Finance Authority Hospital
Refunding Revenue Bonds Detroit Medical Center
Series 1993A 6.50 2018 10,000,000 10,784,700
State Hospital Finance Authority Hospital
Refunding Revenue Bonds
Sinai Hospital Greater Detroit
Series 1995 6.625 2016 2,750,000 3,017,355
State Hospital Finance Authority Hospital
Refunding Revenue Bonds
Sinai Hospital Greater Detroit
Series 1995 6.70 2026 3,000,000 3,295,890
State Hospital Finance Authority Hospital
Revenue Bonds Central Michigan
Community Hospital 6.25 2016 2,095,000 2,169,896
State Hospital Finance Authority Hospital
Revenue Bonds McLaren Obligated Group
Series 1991A 7.50 2021 7,500,000 8,467,950
State Job Development Authority Pollution Control
Revenue Bonds
Chrysler 5.70 1999 4,350,000 4,469,538
Strategic Fund Environmental Improvement Limited
Obligation Refunding Revenue Bonds
Crown Paper Company
Series 1997B 6.25 2012 1,100,000 1,113,981
Strategic Fund Limited Obligation Refunding
Revenue Bonds Detroit Edison
Series 1995AA
(MBIA Insured) 6.40 2025 12,000,000 13,223,760
Strategic Fund Limited Obligation Refunding
Revenue Bonds Ford Motor
Series 1991A 7.10 2006 16,400,000 19,249,008
Strategic Fund Limited Obligation Refunding
Revenue Bonds Great Lakes Pulp & Fibre
Series 1994 A.M.T. 10.25 2016 35,000,000(e) 19,425,000
Troy City Downtown Development Authority
Revenue Bonds Oakland County
Series 1995A 6.375 2018 1,000,000 1,092,890
Van Buren County Downtown Development Authority
Tax Increment Revenue Bonds
Series 1994 8.40 2016 3,990,000 4,573,657
Wayne County Special Airport Facilities Refunding
Revenue Bonds Northwest Airlines
Series 1995 6.75 2015 11,295,000 12,348,146
Total 233,368,599
Minnesota (3.9%)
Becker Solid Waste Disposal Facility Revenue Bonds
Liberty Paper
Series 1994B A.M.T. 9.00 2015 18,000,000 19,136,160
Bloomington Community Development
Refunding Revenue Note
24th Avenue Motel 8.50 2005 1,499,244(k) 1,506,740
Bloomington Health Care Facility Revenue Bonds
Friendship Village of Bloomington
Series 1992 8.50 2002 3,680,000 3,985,035
Brainerd Economic Development Authority Health Care
Facility Revenue Bonds Benedictine Health System
St. Joseph Medical Center
Series 1990 8.375 2020 4,670,000 5,172,165
Duluth Economic Development Authority Health Care
Facility Revenue Bonds Benedictine Health System
St. Mary's Medical Center
Series 1990 8.375 2020 8,300,000 9,192,499
Duluth Housing & Redevelopment Authority
1st Mortgage Revenue Bonds
Lakeshore
Lutheran Home 8.00 2000 110,000 110,211
Duluth Housing & Redevelopment Authority
1st Mortgage Revenue Bonds
Lakeshore
Lutheran Home 8.25 2009 750,000 751,590
Fergus Falls Health Care Facilities Revenue Bonds
Series 1995 6.50 2025 1,530,000 1,634,407
International Falls Solid Waste Disposal
Revenue Bonds Boise Cascade
Series 1990 A.M.T. 7.75 2015 10,000,000 10,517,800
Mahtomedi Multi-family Housing Revenue Bonds
Briarcliff
Series 1996 A.M.T. 7.35 2036 2,000,000 2,067,980
Maplewood Elder Care Facility Revenue Bonds
Care Institute
Series 1994 7.75 2024 8,000,000 8,491,120
Maplewood Multi-family Housing Refunding
Revenue Bonds Carefree Cottages
Series 1995 A.M.T. 7.20 2032 5,000,000 5,088,450
Mille Lacs Capital Improvement Authority Infrastructure
Revenue Bonds
Series 1992A 9.25 2012 4,455,000 5,565,097
Minneapolis Housing & Healthcare Facility
Revenue Bonds Augustana Chapel View Homes
Series 1997 6.75 2027 2,640,000 2,681,395
Richfield Multi-family Housing
Refunding Revenue Bonds
Village Shores Apartments
Series 1996 7.625 2031 4,985,000 5,122,935
Robbinsdale Multi-family Housing Revenue Bonds
Copperfield Hill
Series A 7.35 2031 3,500,000 3,547,355
St. Louis Park Health Care Facilities Revenue Bonds
Healthsystem Minnesota Obligated Group
Series 1993 Inverse Floater
(AMBAC Insured) 4.925 2005 10,200,000(d) 10,047,000
St. Louis Park Health Care Facilities Revenue Bonds
Healthsystem Minnesota Obligated Group
Series 1993 Inverse Floater
(AMBAC Insured) 5.925 2013 18,000,000(d) 17,865,000
St. Louis Park Health Care Park Nicollet
Medical Center Facility Revenue Bonds
Series 1990A 9.25 2020 6,000,000 6,718,440
St. Louis Park Multi-family Housing Refunding
Revenue Bonds Park Boulevard Towers
Series 1996A 7.00 2031 11,585,000 11,918,185
St. Paul Housing & Redevelopment Authority
Health Care Facility Revenue Bonds
Lyngblomsten Care Center
Series 1993A 7.125 2017 4,535,000 4,768,552
St. Paul Housing & Redevelopment Authority
Health Care Facility Revenue Bonds Lyngblomsten
Multi-family Rental Housing
Series 1993B 7.00 2024 2,780,000 2,807,300
St. Paul Port Authority Redevelopment Multi-family
Refunding Revenue Bonds Burlington Apartments
Series A
(GNMA Insured) 5.75 2031 14,355,000 14,533,863
St. Paul Port Authority Redevelopment Multi-family
Subordinate Refunding Revenue Bonds
Burlington Apartments
Series A 8.625 2031 3,770,000 3,811,545
Southern Minnesota Municipal Power Agency
Power Supply System Refunding Revenue Bonds
Series 1992 5.75 2018 32,210,000 32,656,753
Southern Minnesota Municipal Power Agency
Power Supply System Revenue Bonds
Zero Coupon Series 1994A
(MBIA Insured) 6.72 2021 13,500,000(f) 3,926,610
Southern Minnesota Municipal Power Agency
Power Supply System Revenue Bonds
Zero Coupon Series 1994A
(MBIA Insured) 6.73 2022 17,500,000(f) 4,824,925
Southern Minnesota Municipal Power Agency
Power Supply System Revenue Bonds
Zero Coupon Series 1994A
(MBIA Insured) 6.74 2023 27,500,000(f) 7,187,400
Southern Minnesota Municipal Power Agency
Power Supply System Revenue Bonds
Zero Coupon Series 1994A
(MBIA Insured) 6.75 2024-27 87,410,000(f) 20,079,756
Vadnais Heights Multi-family Housing Refunding
Revenue Bonds Cottages of Vadnais Heights
Series 1995 A.M.T. 7.00 2031 1,995,000 2,029,075
Washington County Housing & Redevelopment Authority
Woodbury Multi-family Housing Refunding
Revenue Bonds
Series 1996 6.95 2023 4,940,000 5,035,046
Total 232,780,389
Mississippi (0.7%)
Claiborne County Pollution Control Refunding
Revenue Bonds System Energy Resources
Series 1995 7.30 2025 4,000,000 4,232,960
Claiborne County Pollution Control Revenue Bonds
Middle South Energy 9.50 2013 1,500,000 1,616,460
Claiborne County Pollution Control Revenue Bonds
Middle South Energy
Series C 9.875 2014 15,375,000 16,624,988
Harrison County Waste Water Management District
Refunding Bonds
Series 1986 5.00 2015 4,250,000 4,225,477
Jackson Industrial Development Revenue
Bonds Dorsey 8.00 2005 422,000 425,929
Lowndes County Solid Waste Disposal Pollution Control
Revenue Bonds Weyerhaeuser
Series 1989 A.M.T. 7.875 2005 12,250,000 13,305,215
Lowndes County Solid Waste Disposal Pollution Control
Refunding Revenue Bonds Weyerhaeuser
Series 1989 7.99 2022 4,000,000(i) 4,808,680
Total 45,239,709
Missouri (0.7%)
Regional Convention & Sports Complex Authority Bonds
St. Louis Sponsor
Series 1991B 7.00 2021 5,810,000 6,568,495
State Environment & Improvement Energy Resources
Authority Pollution Control Revenue
Bonds Chrysler 5.70 1999 9,250,000 9,418,535
Sikeston Electric System Refunding Revenue Bonds
Series 1992
(MBIA Insured) 5.80 2002 4,165,000 4,427,312
St. Louis Industrial Development Authority
Refunding Revenue Bonds Kiel Center
Multipurposes Arena
Series 1992 A.M.T. 7.875 2024 15,400,000 16,815,414
St. Louis Regional Convention & Sports Complex Authority
Pre-Refunded Revenue Bonds
Series 1991C 7.90 2021 2,575,000 3,027,144
St. Louis Regional Convention & Sports Complex Authority
Revenue Bonds
Series 1991C 7.90 2021 125,000 139,589
Total 40,396,489
Nebraska (--%)
Omaha Public Power District Electric System
Revenue Bonds
Series 1986A 6.00 2015 1,370,000 1,461,297
Nevada (0.7%)
Clark County Collateralized Pollution Control
Revenue Bonds Nevada Power
A.M.T. 7.80 2009 11,850,000 12,584,345
Clark County Industrial Development Revenue Bonds
Nevada Power Series 1990
A.M.T. 7.80 2020 5,000,000 5,383,800
Las Vegas Redevelopment Agency Tax Increment
Subordinate Lien Revenue Bonds
Series 1994A 6.00 2010 2,000,000 2,068,780
Las Vegas Redevelopment Agency Tax Increment
Subordinate Lien Revenue Bonds
Series 1994A 6.10 2014 2,750,000 2,851,200
Las Vegas Special Improvement District 707
Local Improvement Bonds
Summerlin Area
Series 1996 7.10 2016 6,000,000 6,235,200
Washoe County Hospital Revenue Bonds
Washoe Medical Center
Series 1989A 7.60 2019 2,750,000 2,939,448
Washoe County Hospital Revenue Bonds
Washoe Medical Center
Series 1993A 6.00 2015 7,250,000 7,520,062
Total 39,582,835
New Hampshire (2.4%)
Business Financial Authority Pollution Control
Refunding Revenue Bonds United Illuminating
Series 1993A 5.875 2033 13,200,000 13,262,964
Business Financial Authority Pollution Control &
Solid Waste Disposal Refunding Revenue Bonds
Crown Paper Company
Series 1996 7.75 2022 4,255,000 4,691,180
Industrial Development Authority Pollution Control
Revenue Bonds State Public Service
Series 1991B 7.50 2021 51,485,000 54,084,993
Industrial Development Authority Pollution Control
Revenue Bonds State Public Service
Series 1991C A.M.T. 7.65 2021 25,000,000 26,551,000
Industrial Development Authority Pollution Control
Revenue Bonds United Illuminating
Series 1989A A.M.T. 8.00 2014 8,000,000 8,562,480
State Higher Education & Health Facility Authority
Hospital Revenue Bonds Hitchcock Clinic
Series 1994
(MBIA Insured) 6.00 2024 13,000,000 13,657,410
State Turnpike System Refunding Revenue Bonds
Series 1992 5.75 2020 20,615,000 20,930,203
Total 141,740,230
New Jersey (0.2%)
Health Care Facility Finance Authority Revenue Bonds
St. Peter Medical Center Series 1994F
(MBIA Insured) 5.00 2016 10,000,000 9,693,500
Health Care Facility Finance Authority Revenue Bonds
Zurbrugg Memorial Hospital
Series C 8.50 2012 3,500,000 3,577,525
Total 13,271,025
New Mexico (1.8%)
Albuquerque Health Care System Revenue Bonds
Lovelace Medical
Fund 10.25 2011 55,000 55,811
Bernalillo County Multi-family Housing Revenue Bonds
Series 1997D 7.70 2027 9,985,000 10,195,384
Cibola County Correctional Facility
Certificate of Participation
Series 1993 8.50 2015 16,710,000 18,414,420
Farmington Pollution Control Refunding Revenue Bonds
Series 1996A-B 6.30 2016 10,000,000 10,561,000
Farmington Pollution Control Refunding Revenue Bonds
State Public Service San Juan
Series 1994A 6.40 2023 30,650,000 32,185,259
Farmington Pollution Control Refunding Revenue Bonds
Series 1997A 6.95 2020 4,000,000 4,431,080
Farmington Power Refunding Revenue Bonds
Generating Division 9.875 2013 5,000,000 6,675,900
Las Vegas Hospital Facility Refunding Revenue Bonds
Northeastern Regional Hospital
Series 1987 9.625 2013 5,525,000 5,667,103
Lordsberg Pollution Control Refunding Revenue Bonds
Phelps Dodge 6.50 2013 20,000,000 21,671,200
Total 109,857,157
New York (8.3%)
Battery Park City Authority Refunding Revenue Bonds
Series 1993A 5.50 2010 9,940,000 10,235,317
Dormitory Authority New York State University Education
Facility Pre-Refunded Revenue Bonds
Series 1990A 7.70 2012 10,000,000 11,028,700
Dormitory Authority New York State University Education
Facility Revenue Bonds
Series 1993A 5.50 2013 24,530,000 25,357,642
Dormitory Authority New York City University System
Consolidated 2nd General Resource Revenue Bonds
Series 1990C 5.00 2017 20,820,000 19,651,582
Dormitory Authority New York City University System
Consolidated 2nd General Resource Revenue Bonds
Series 1990C 6.00 2016 39,465,000 40,257,457
Dormitory Authority New York City University System
Consolidated 2nd General Resource Revenue Bonds
Series 1990D 7.00 2009 5,000,000 5,799,550
Dormitory Authority New York City University System
Consolidated 2nd General Resource Revenue Bonds
Series 1994A 5.75 2018 5,500,000 5,786,385
Dormitory Authority New York Court Facility Lease
Revenue Bonds
Series 1993A 5.375 2016 11,000,000 10,879,220
Metropolitan Transportation Transit Facilities
Service Contract
Series 3 6.00 2019 6,395,000 6,687,379
New York City General Obligation Bonds
Series 1992B 7.40 2000 30,000,000 31,896,000
New York City General Obligation Bonds
Series 1994B 7.00 2016 16,500,000 18,660,510
New York City General Obligation Bonds
Series 1996F-G 5.75 2017-20 27,825,000 28,316,394
New York City Industrial Development Agency
Special Facility Revenue Bonds American Airlines
Series 1990 A.M.T. 8.00 2020 16,130,000 16,961,502
New York City Municipal Water Financial Authority
Water & Sewer System Revenue Bonds Series 1994B
Inverse Floater
(MBIA Insured) 6.27 2009 15,500,000(d) 15,906,875
New York City Municipal Water Financial Authority
Water & Sewer System Revenue Bonds
Series A 6.25 2021 55,500,000 58,573,590
New York City Municipal Water Financial Authority
Water & Sewer System Revenue Bonds
Series B 5.00 2017 6,255,000 6,102,440
Port Authority Special Obligation Revenue Bonds
KIAC A.M.T. 6.75 2019 3,500,000 3,816,960
Port Authority Special Project Bonds La Guardia
Airport Passenger Terminal Continental and
Eastern Airlines
A.M.T. 9.00 2006 2,645,000 2,985,888
Port Authority Special Project Bonds La Guardia
Airport Passenger Terminal Continental and
Eastern Airlines
Series 2 A.M.T. 9.00 2010 8,800,000 9,934,144
Port Authority Special Project Bonds La Guardia
Airport Passenger Terminal Continental and
Eastern Airlines
Series 2 A.M.T. 9.125 2015 17,500,000 19,814,200
State Energy Research & Development Authority Electric
Facility Revenue Bonds Consolidated Edison
A.M.T. 7.125 2022 10,750,000 10,981,555
State Energy Research & Development Authority Electric
Facility Revenue Bonds Consolidated Edison
A.M.T. 7.375 2024 23,000,000 23,606,970
State Energy Research & Development Authority Electric
Facility Revenue Bonds Consolidated Edison
A.M.T. 7.50 2021 9,000,000 9,113,400
State Energy Research & Development Authority Electric
Facility Revenue Bonds Consolidated Edison
Series 1990A
A.M.T. 7.50 2025 30,975,000 32,660,350
State Housing Finance Agency Service Contract Obligation
Revenue Bonds
Series 1995A 6.50 2025 12,475,000 13,728,862
State Housing Finance Agency State University
Construction Refunding Bonds
Series 1986A 6.50 2013 3,500,000 3,972,430
State Local Government Assistance Corporation
Series 1991A 6.50 2020 11,000,000 11,832,260
State Medical Facilities Finance Agency Mental
Health Services Improvement Refunding Revenue Bonds
Series 1993D 5.25 2023 15,000,000 14,425,950
State Medical Facilities Finance Agency Mental
Health Services Improvement Refunding Revenue Bonds
Series 1993F 5.25 2019 5,790,000 5,581,502
State Urban Development Correctional Facility
Refunding Revenue Bonds
Series A 5.50 2016 2,750,000 2,755,170
State Urban Development Correctional Facility
Revenue Bonds
Series 1993A 5.25 2021 12,110,000 11,578,977
State Urban Development Correctional Facility
Revenue Bonds
Series 6 5.375 2025 9,000,000 8,731,080
Total 497,620,241
North Carolina (4.1%)
Eastern Municipal Power Agency Power Supply System
Refunding Revenue Bonds
Series 1993B 6.25 2012 24,655,000 25,963,687
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds
Series 1986A 4.00 2018 8,675,000 7,396,132
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds
Series 1986A 5.00 2017 6,500,000 6,374,035
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds
Series 1988A 6.00 2026 3,125,000 3,355,801
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds
Series 1989A 5.50 2011 37,800,000 37,861,236
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds
Series 1989A 6.50 2024 16,750,000 16,996,728
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds
Series 1989A 7.50 2010 29,160,000 35,236,810
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds
Series 1991A 5.75 2019 55,000,000 55,155,100
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds
Series 1994B 7.25 2007 5,000,000 5,737,500
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds
Series B 6.125 2009 10,000,000 10,547,200
Eastern Municipal Power Agency Power System
Revenue Bonds
Series 1993D 5.875 2013 2,300,000 2,355,361
Municipal Power Agency 1 Catawba Electric
Revenue Bonds
Series 1988 7.00 2016 5,140,000 5,256,986
Municipal Power Agency 1 Catawba Electric
Revenue Bonds Series 1993
Inverse Floater
(MBIA Insured) 6.82 2012 7,400,000(d) 7,686,750
Municipal Power Agency 1 Catawba Electric
Revenue Bonds
Series 1993 Inverse Floater
(MBIA Insured) 7.02 2020 15,000,000(d) 15,243,750
Offiss Incorporation Recreational Facilities
Gross Revenue Bonds Smoky Mountain Golf Course
Zero Coupon
Series 1994-96 8.38 2019 8,295,000(e,g) 8,094,759
Total 243,261,835
North Dakota (0.4%)
Fargo Hospital Refunding Revenue & Improvement Bonds
Dakota Hospital
Series 1992 6.875 2012 3,000,000 3,370,410
Fargo Hospital Refunding Revenue & Improvement Bonds
Dakota Hospital
Series 1992 7.00 2022 4,250,000 4,798,208
General Obligation Bonds Real Estate
Series 1986A 6.00 2013 8,585,000 8,681,581
Ward County Health Care Facilities
Refunding Revenue Bonds
Series 1996B 6.25 2021 4,000,000 4,148,760
Ward County Health Care Facilities Refunding
Revenue Bonds Trinity Group
Series 1996A 6.25 2026 6,110,000 6,337,231
Total 27,336,190
Ohio (3.0%)
Air Quality Development Authority Pollution Control
Refunding Revenue Bonds Cleveland Electric Company
Series 1997B 6.00 2020 10,000,000 10,230,900
Air Quality Development Authority Pollution Control
Refunding Revenue Bonds Ohio Edison
Series A 5.95 2029 13,300,000 13,607,496
Air Quality Development Authority Pollution Control
Revenue Bonds Ohio Edison
Series 1989A 7.625 2023 6,750,000 7,126,717
Bellefontaine Hospital Facilities Refunding Revenue Bonds
Mary Rutan Health Association
Series 1993 6.00 2013 5,330,000 5,421,356
Butler County Hospital Facilities
Refunding Revenue & Improvement Bonds
Fort Hamilton-Hughes Memorial Center
Series 1991 7.50 2010 9,800,000 10,643,192
Carroll Water & Sewer District Unlimited Tax
General Obligation
Bonds 6.25 2010 8,360,000 8,357,743
Cleveland Parking Facilities Improvement
Revenue Bonds
Series 1992 8.10 2022 15,000,000 17,630,850
Coshocton County Solid Waste Disposal Refunding
Revenue Bonds Stone Container
Series 1992 7.875 2013 17,500,000 19,549,600
Cuyahoga County Health Care Facilities Lifecare Refunding
Revenue Bonds Judson Retirement Community
Series 1996A 7.25 2013-18 6,210,000 6,584,338
Erie County Hospital Improvement Refunding
Revenue Bonds Firelands Community Hospital
Series 1992 6.75 2015 6,540,000 7,088,052
Lorain County Independent Living & Hospital Facilities
Mortgage Refunding Revenue Bonds
Elyria United Methodist
Series 1996C 6.875 2022 3,100,000 3,297,966
Marion County Health Care Facilities
Refunding & Improvement Revenue Bonds
United Church Homes
Series 1993 6.30 2015 1,800,000 1,877,670
Marion County Health Care Facilities
Refunding & Improvement Revenue Bonds
United Church Homes
Series 1993 6.375 2010 2,000,000 2,097,140
Montgomery County Health Facilities Refunding
Revenue Bonds Friendship Village of Dayton
Series 1990A 9.25 2016 9,025,000 10,117,386
Water Development Authority Collateralized Pollution
Control Refunding Revenue Bonds Cleveland Electric
Series 1995 7.70 2025 13,000,000 14,874,860
Water Development Authority Collateralized Pollution
Control Revenue Bonds Cleveland Electric
Series 1989 A.M.T. 8.00 2023 10,000,000 11,377,200
Water Development Authority Collateralized Pollution
Control Revenue Bonds Toledo Edison
Series 1989 A.M.T. 8.00 2023 8,500,000 8,978,040
Water Development Authority Pollution Control
Revenue Bonds Ohio Edison
A.M.T. 8.10 2023 10,000,000 10,666,700
Water Development Authority Pollution Control
Refunding Revenue Bonds Toledo Edison
Series 1994A A.M.T. 8.00 2023 10,000,000 10,382,300
Total 179,909,506
Oklahoma (1.0%)
Grand River Dam Authority Refunding Revenue Bonds
Series 1987 5.00 2012 10,105,000 10,053,464
Hinton Economic Development Authority
Certificate of Participation
Series 1994 8.75 2015 11,675,000 12,544,554
Hinton Economic Development Authority
Certificate of Participation Dominion Leasing
Series 1990A 9.75 2015 19,090,000 21,261,678
Jackson County Hospital Authority
Refunding Revenue Bonds
Jackson County Memorial Hospital
Series 1994 7.30 2015 6,580,000 7,040,995
Midwest City Memorial Hospital Authority Hospital
Revenue Bonds
Series 1992 7.375 2022 7,815,000 8,856,818
Stillwater Medical Center Authority
Hospital Revenue Bonds
Series 1997B 6.50 2019 1,750,000 1,866,603
Total 61,624,112
Oregon (0.6%)
State Health Housing Educational &
Cultural Facilities Authority Revenue Bonds
Oregon Baptist Retirement Homes-Weidler
Retirement Center
Series 1995 8.00 2026 7,720,000 7,992,670
Western Generation Agency Revenue Bonds
Wauna Cogeneration
Series 1994A 7.125 2021 19,200,000 20,682,432
Western Generation Agency Revenue Bonds
Wauna Cogeneration
Series 1994B A.M.T. 7.40 2016 9,000,000 9,828,270
Total 38,503,372
Pennsylvania (4.1%)
Allegheny County Industrial Development Authority
Environment Improvement Revenue Bonds
USX Corporation
Series 1994A 6.70 2020 6,000,000 6,480,600
Beaver County Industrial Development Authority
Collateralized Pollution Control Refunding
Revenue Bonds Cleveland Electric Illuminating
Series 1995 7.625 2025 7,500,000 8,523,675
Beaver County Industrial Development Authority
Collateralized Pollution Control Refunding
Revenue Bonds Cleveland Electric Illuminating
Series 1995A 7.75 2025 21,150,000 24,253,339
Beaver County Industrial Development Authority
Collateralized Pollution Control Refunding
Revenue Bonds Toledo Edison
Series 1995A 7.75 2020 14,000,000 16,109,520
Beaver County Industrial Development Authority
Pollution Control Revenue Bonds
Toledo Edison-Beaver Valley
Series 1995 7.625 2020 11,700,000 13,296,933
Beaver County Industrial Development Authority
Pollution Control Revenue Bonds
Ohio Edison 7.75 2024 34,650,000 36,578,966
Butler County Industrial Development Authority
Health Care Refunding Revenue Bonds
Pittsburgh Lifetime Care Community Sherwood Oaks
Series 1993 5.75 2011-16 5,000,000 5,111,860
Convention Center Authority Refunding Revenue Bonds
Philadelphia
Series 1994A 6.75 2019 5,300,000 5,818,340
Delaware County Authority 1st Mortgage Revenue Bonds
Riddle Village
Series 1996 7.00 2026 10,000,000 10,362,400
Delaware County Authority 1st Mortgage Revenue Bonds
Whitehorse Village Continuing Care
Series 1989 9.70 2009-19 11,000,000 12,228,150
Delaware County Industrial Development Authority
Pollution Control Refunding Revenue Bonds
Philadelphia Electric
Series A 7.375 2021 900,000 981,603
Harrisburg Dauphin County General Obligation Bonds
Zero Coupon Series 1997F
(AMBAC Insured) 5.50 2020 3,000,000(f) 875,040
Harrisburg Dauphin County General Obligation Bonds
Zero Coupon Series 1997F
(AMBAC Insured) 5.52 2021-22 2,000,000(f) 535,430
Montgomery County Higher Education & Health Authority
Retirement Community Revenue Bonds G.D.L. Farms
Series A 9.50 2020 3,000,000 3,365,820
Philadelphia Gas Works Revenue Bonds
Series 13 7.70 2021 4,150,000 4,691,160
Philadelphia Hospital & Higher Education Facility
Authority Hospital Revenue Bonds
Albert Einstein
Medical Center 7.625 2011 15,545,000 16,415,986
Philadelphia Municipal Authority Lease
Refunding Revenue Bonds
Series 1993D 6.25 2013 2,500,000 2,615,375
Philadelphia Municipal Authority Lease
Refunding Revenue Bonds
Series 1993D 6.30 2017 1,550,000 1,621,393
Philadelphia Water & Sewer Revenue Bonds
16th Series 7.00 2018 14,000,000 15,306,060
Philadelphia Water & Sewer Revenue Bonds
16th Series 7.50 2010 13,200,000 14,880,096
Philadelphia Water & Wastewater Revenue Bonds
Series 1993
(CGIC Insured) 5.50 2015 11,000,000 11,155,540
State Department of General Services Certificate of
Participation Series 1994A
(AMBAC Insured) 5.00 2015 25,000,000 24,231,000
Wilkins Industrial Development Authority Revenue Bonds
Retirement Community Longwood at Oakmont
Series 1991A 10.00 2021 8,495,000 10,078,298
Total 245,516,584
Puerto Rico (0.8%)
Electric Power Agency Revenue Bonds
Series N-O 6.00 2010 45,305,000 46,154,016
South Carolina (0.9%)
Cherokee County Spring City Knitting
Cluett Peabody 7.40 2009 5,200,000 5,772,312
Piedmont Municipal Power Agency Electric
Refunding Revenue Bonds
Series 1986B 5.75 2024 7,550,000 7,549,925
Public Service Authority Electric System Expansion
Revenue Bonds Santee Cooper
Series 1991D 6.625 2031 14,975,000 16,657,441
Public Service Authority Electric System Revenue Bonds
Santee Cooper
Series 1991B 6.00 2031 8,000,000 8,456,000
Public Service Authority Electric System Revenue Bonds
Santee Cooper Series 1993A Inverse Floater
(MBIA Insured) 6.50 2013 17,700,000(d) 18,275,250
Total 56,710,928
South Dakota (0.5%)
Heartland Consumers Power District Electric System
Refunding Revenue Bonds
Series 1986 6.00 2010 10,205,000 11,042,014
Souix Falls Multi-family Housing Revenue Bonds
Series 1996A 7.50 2034 12,200,000 12,754,124
State Lease Revenue Trust Certificates Series 1993
(CGIC Insured) 6.70 2017 7,260,000 8,576,964
Total 32,373,102
Tennessee (0.4%)
Nashville & Davidson County Health & Education Facility
1st Mortgage Revenue Bonds
Blakeford at
Green Hills CCRC 9.25 2024 12,230,000 14,425,040
Knox County Health Education & Housing Facility Hospital
Revenue Bonds Baptist Health System East Tennessee
Series 1989 8.60 2016 10,000,000 10,779,600
Total 25,204,640
Texas (6.6%)
Alliance Airport Authority Special Facility Revenue Bonds
American Airlines Series 1990
A.M.T. 7.50 2029 37,400,000 40,724,860
Austin Combined Utility Systems Refunding
Revenue Bonds
Series 1985 10.75 2010-15 12,000,000 13,833,480
Austin Combined Utility Systems Refunding
Revenue Bonds
Series 1986 5.00 2013 20,000,000 19,400,600
Board of Regents of the University System General
Refunding Revenue Bonds
Series 1986 6.50 2007 2,565,000 2,683,067
Brazos River Authority Collateralized Pollution Control
Revenue Bonds Texas Utility Electric
Series 1989A A.M.T. 8.25 2019 14,000,000 14,799,400
Brazos River Authority Collateralized Pollution Control
Revenue Bonds Texas Utility Electric
Series 1990A A.M.T. 8.125 2020 13,205,000 14,344,988
Brazos River Authority Collateralized Pollution Control
Revenue Bonds Texas Utility Electric
Series 1991A A.M.T. 7.875 2021 24,450,000 27,002,091
Brazos River Authority Collateralized
Refunding Revenue Bonds Houston Lighting & Power
Series 1989A 7.625 2019 26,300,000 28,060,259
Brownsville Utility System Priority Revenue Bonds
Series 1990
(AMBAC Insured) 6.50 2017 10,015,000 10,814,197
Castlewood Municipal Utility District Water &
Sewer Systems Unlimited Tax & Refunding Revenue Bonds
Series 1997 6.75 2014 2,890,000 2,895,607
Colony Municipal Utility District 1 Denton County
Series 1980 9.25 2007 1,000,000 1,355,490
Dallas & Fort Worth International Airport Special Facility
Revenue Bonds American Airlines
Series 1990 A.M.T. 7.50 2025 26,200,000 28,481,234
Dallas & Fort Worth International Airport Special Facility
Revenue Bonds Delta Air Lines
Series 1991 A.M.T. 7.125 2026 13,500,000 14,465,520
Denison Hospital Authority Hospital Revenue Bonds
Texoma Medical Center
Series 1994 7.10 2024 3,950,000 4,308,621
Harris County Health Facilities Hospital Revenue Bonds
Memorial Hospital
Series 1992 7.125 2015 16,000,000 18,233,440
Harris County Industrial Development Marine Terminal
Refunding Revenue Bonds GATX Terminal
Series 1992 6.95 2022 15,000,000 16,278,150
Hidalgo County Health Services Corporation
Hospital Revenue Bonds Mission Hospital
Series 1996 6.875 2026 7,880,000 8,469,818
Interstate Municipal Utility District
Unlimited Tax Bonds Harris County
Series 1996 6.75 2021 3,020,000 3,246,681
Karnes County Public Facility Lease
Revenue Bonds 9.20 2015 15,990,000 16,996,890
Kings Manor Municipal Utility District
Waterworks & Sewer Systems Combination
Unlimited Tax & Revenue Bonds
Series 1995 6.875 2018 2,470,000 2,561,909
Matagorda County Navigation District 1
Collateral Pollution Control Revenue Bonds
Central Power & Light Series 1986A
(AMBAC Insured)
A.M.T. 7.50 2020 6,500,000 7,001,995
Midland County Hospital District Revenue Bonds
Series 1992 7.50 2016 3,025,000 3,430,894
Municipal Power Agency Refunding Revenue Bonds
(MBIA Insured) 5.25 2009 8,000,000 8,363,920
Municipal Power Agency Revenue
Bonds 5.50 2013 7,410,000 7,410,222
Plano Collin & Denton County General Obligation Bonds
Limited Tax
Series 1986 6.00 2006 1,600,000 1,607,984
Rio Grande City Consolidated Independent School District
Public Facilities Lease Revenue Bonds
Series 1995 6.75 2010 4,000,000 4,298,400
Sabine River Authority Collateralized Pollution Control
Revenue Bonds Texas Utilities Electric
Series 1990A A.M.T. 8.125 2020 30,500,000 33,133,065
San Antonio Electric & Gas System
Refunding Revenue Bonds
Series 1989B 5.00 2016 11,000,000 10,629,630
San Antonio Electric & Gas System
Revenue Bonds
Series 1987 5.00 2014 8,680,000 8,481,749
West Side Calhoun County Navigation District
Solid Waste Disposal Revenue Bonds
Union Carbide Chemical & Plastics Series 1991
A.M.T. 8.20 2021 17,550,000 19,553,859
Total 392,868,020
Utah (1.9%)
Association Municipal Power System Hunter Series A
(AMBAC Insured) 5.50 2012 4,000,000 4,000,920
Carbon County Solid Waste Disposal
Refunding Revenue Bonds Sunnyside
Cogeneration Associates Series 1991
A.M.T. 9.25 2018 25,350,000(e) 13,942,500
Housing Finance Agency Single Family Mortgage
Senior Bonds Series 1991C
(FGIC Insured) 7.30 2011 860,000 910,198
Housing Finance Agency Single Family Mortgage
Senior Bonds Series 1991C
(FGIC Insured) 7.35 2016 685,000 724,367
Hurricane Health Facilities Development Revenue Bonds
Mission Health Services
Series 1990 10.50 2020 7,635,000 8,475,842
Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series F
(AMBAC Insured) 5.00 2013 5,000,000 4,925,300
Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series 1993B
Inverse Floater 7.14 2011 7,600,000(d) 8,037,000
Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series 1996C
(MBIA Insured) 5.70 2017 46,000,000 47,579,640
Intermountain Power Agency Power Supply
Revenue Bonds Series 1987A
(MBIA Insured) 5.00 2012 8,000,000 7,942,400
Intermountain Power Agency Power Supply
Revenue Bonds
Series 1989A-B 6.00 2023 13,665,000 13,821,793
Tooele County Pollution Control Revenue Bonds
Laidlaw Environmental Services Incorporated
Series 1997A A.M.T. 7.55 2027 4,000,000 4,389,600
Total 114,749,560
Virginia (0.6%)
Fairfax County Redevelopment & Housing Authority
Multi-family Housing Revenue Bonds
Burkeshire Commons
Series 1996 7.60 2036 13,245,000 14,172,680
Hopewell City Industrial Development Authority
Pollution Control Refunding Revenue Bonds
Stone Container
Series 1992 8.25 2010 3,170,000 3,574,460
Housing Development Authority Commonwealth
Mortgage Bonds
Series 1992A 7.15 2033 15,000,000 15,798,000
Total 33,545,140
Washington (3.6%)
King County Housing Authority Pooled Housing
Refunding Revenue Bonds
Series 1995A 7.20 2026 4,000,000 4,113,520
Longview Industrial Development Corporation Solid Waste
Revenue Bonds Weyerhauser Series 1991
A.M.T. 7.45 2013 20,000,000 21,788,000
Public Power Supply System Nuclear Project 1
Refunding Revenue Bonds
Series A 6.50 2015 21,000,000 23,186,100
Public Power Supply System Nuclear Project 1 Refunding
Revenue Bonds Bonneville Power Administration
Series 1993A Inverse Floater
(FSA Insured) 7.32 2011 25,000,000(d) 28,375,000
Public Power Supply System Nuclear Project 1
Revenue Bonds
Series 1989 6.00 2017 28,070,000 28,891,328
Public Power Supply System Nuclear Project 1
Revenue Bonds
Series 1990A 6.00 2017 38,875,000 39,683,989
Public Power Supply System Nuclear Project 2
Revenue Bonds
Series 1994A 5.375 2011 10,000,000 10,043,900
Public Power Supply System Nuclear Project 3
Revenue Bonds
Series 1989B 5.50 2017-18 27,550,000 27,342,242
Snohomish County Public Utility District 1
Generation System Revenue Bonds
Series 1986A 5.00 2020 17,750,000 17,423,223
State General Obligation
Refunding Revenue Bonds
Zero Coupon
Series 1997A 5.95 2019 16,260,000(f) 5,017,836
State Housing Finance Commission
Refunding Revenue Bonds Horizon House
Series 1995A (Asset
Guaranty Insured) 6.00 2017 3,700,000 3,853,217
State Housing Finance Commission
Refunding Revenue Bonds Horizon House
Series 1995A (Asset
Guaranty Insured) 6.125 2027 3,850,000 4,007,003
Total 213,725,358
West Virginia (1.5%)
Kanawha County Pollution Control
Revenue Bonds Union Carbide
Series 1984 7.35 2004 3,000,000 3,453,660
Marion County Solid Waste Disposal Facility
Revenue Bonds American Power Paper Recycling
Series 1993 A.M.T. 7.75 2011 20,000,000(e) 9,500,000
Marion County Solid Waste Disposal Facility
Revenue Bonds American Power Paper Recycling
Series 1994 A.M.T. 8.25 2011 10,000,000(e) 4,750,000
Marion County Solid Waste Disposal Facility
Revenue Bonds American Power Paper Recycling
Series 1995 A.M.T. 9.00 2011 5,000,000(e) 2,375,000
Marion County Solid Waste Disposal Facility
Revenue Bonds American Power Paper Recycling
Series 1995B A.M.T. 9.25 2011 5,000,000(e) 2,375,000
Mason County Pollution Control Refunding
Revenue Bonds Appalachian Power
Series 1992J 6.60 2022 25,000,000 26,735,750
Pea Ridge Public Service District Sewer
Refunding Revenue Bonds
Series 1990 9.25 2020 2,575,000 2,713,329
Putnam County Pollution Control Revenue Bonds
Appalachian Power
Series C 6.60 2019 10,600,000 11,282,322
School Building Authority Capital Improvement
Revenue Bonds
Series 1991A 6.00 2021 20,785,000 21,473,191
South Charleston Pollution Control Refunding
Revenue Bonds Union Carbide
Series 1985 7.625 2005 3,000,000 3,492,390
Total 88,150,642
Wisconsin (0.6%)
Health & Education Facilities Authority
Revenue Bonds
St. Clare Hospital 7.00 2022 12,115,000 13,062,393
Health Facilities Authority Refunding Revenue Bonds
Villa Clement
Series 1986 8.75 2012 4,365,000 4,376,000
Madison Industrial Development
Refunding Revenue Bonds Madison Gas & Electric
Series 1992B 6.70 2027 19,300,000 20,949,957
Total 38,388,350
Wyoming (0.2%)
Green River & Rock Springs Sweetwater County
Joint Powers Water Board Revenue Bonds
Series 1988A 8.50 2007 2,500,000 2,581,925
Natrona County Hospital Revenue Bonds
Wyoming
Medical Center 8.125 2010 6,500,000 7,043,270
State Farm Loan Board Capital Facilities
Revenue Bonds
Series 1994 6.10 2024 5,000,000 5,253,850
Total 14,879,045
Total municipal bonds
(Cost: $5,158,090,986) $5,720,784,228
Short-term securities (2.4%)
Issuer (c,i,j) Effective Amount Value (a)
yield payable at
maturity
Municipal notes
Allegheny County Industrial Development Authority
Revenue Bonds Longwood at Oakmont Series D
07-01-27 3.85% $ 2,500,000 $ 2,500,000
Burke County Development Authority Pollution
Control Revenue Bonds Georgia Power Vogtle
3rd Series
09-01-25 3.80 2,000,000 2,000,000
Burke County Development Authority Pollution
Control Revenue Bonds Georgia Power Vogtle
4th Series
07-01-24 3.85 1,800,000 1,800,000
Burke County Development Authority Pollution
Control Revenue Bonds Georgia Power Vogtle
5th Series V.R.
07-01-24 4.00 19,000,000 19,000,000
Columbia Industrial Development Pollution
Control Revenue Bonds Alabama Power
Series C V.R.
10-01-22 4.00 9,600,000 9,600,000
Duluth Health Facilities Revenue Bonds
Miller-Dwan Medical Center V.R.
06-01-19 3.85 5,200,000 5,200,000
Forsyth Pollution Control Revenue Bonds
Portland General Electric Series A
06-01-13 3.85 3,500,000 3,500,000
Harris County Health Facilities Development
Hospital Revenue V.R. Methodist Hospital
12-01-25 3.85 7,900,000 7,900,000
Jackson County Pollution Control Revenue Bonds
Chevron Series 1992
06-01-23 3.85 200,000 200,000
Jackson County Port Facility Chevron V.R.
06-01-23 3.90 15,500,000 15,500,000
Louisiana State Offshore Term Authority
Deepwater Port Revenue Bonds Loop V.R.
09-01-08 3.85 4,000,000 4,000,000
Monroe County Development Authority
Georgia Power 2nd Series
07-01-25 4.00 4,100,000 4,100,000
New York City General Obligation Bonds
Fiscal 1995 Series B
06-15-23 3.85 2,500,000 2,500,000
New York City Municipal Water Finance Authority
Series G V.R. (FGIC Insured)
06-15-25 4.00 25,800,000 25,800,000
New York City Municipal Water Finance Authority
Series 1994C
06-15-23 3.85 4,500,000 4,500,000
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds
06-15-22 3.85 9,600,000 9,600,000
06-15-23 3.85 2,100,000 2,100,000
Putnam County Development Authority Pollution
Control Revenue Georgia Power Company
09-01-29 3.85 8,400,000 8,400,000
Valdez Marine Term Revenue Bonds
Exxon Pipeline Series A V.R.
12-01-33 3.85 5,000,000 5,000,000
Washington State Public Power Supply System
07-01-17 3.85 6,100,000 6,100,000
Washington State Public Power Supply System
07-01-17 3.90 3,000,000 3,000,000
Total short-term securities
(Cost: $142,300,000) $ 142,300,000
Total investments in securities
(Cost: $5,300,390,986)(l) $5,863,084,228
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) Investments in bonds, by rating category as a percentage of total bonds, are
as follows:
(Unaudited)
Rating 11-30-97 11-30-96
AAA 30% 25%
AA 5 6
A 15 16
BBB 28 33
BB and below 22 20
Non-rated -- --
Total 100% 100%
(c) The following abbreviations are used in portfolio descriptions to identify
the insurer of the issue: AMBAC -- American Municipal Bond Association
Corporation CGIC -- Capital Guaranty Insurance Company FGIC -- Financial
Guarantee Insurance Corporation FHA -- Federal Housing Authority FSA --
Financial Security Assurance GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(d) Inverse floaters represent securities that pay interest at a rate that
increases (decreases) in the same magnitude as, or in a multiple of, a decline
(increase) in market short-term rates. Interest rate disclosed is the rate in
effect on Nov. 30, 1997. Inverse floaters in the aggregate represent 5.8% of the
Portfolio's net assets as of Nov. 30, 1997.
(e) Non-income producing. Items identified are in default as to payment of
interest and/or principal.
(f) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(g) For those zero coupon bonds that become coupon paying at a future date, the
interest rate disclosed represents the annualized effective yield from the date
of acquisition to interest reset date disclosed.
(h) Pledged as initial deposit on the following open interest rate futures
contracts (see Note 4 to the financial statements):
Type of security Notional amount
Sales contracts
Municipal Bonds Dec. 1997 $150,000,000
(i) Interest rate varies to reflect current market conditions; rate shown is the
effective rate on Nov. 30, 1997.
(j) The Portfolio is entitled to receive principal amount from issuer or
corporate guarantor, if indicated in parentheses, after a day or a week's
notice. The maturity date disclosed represents the final maturity. The following
abbreviations are used in the portfolio descriptions:
V.R. -- Variable Rate
V.R.D.N. -- Variable Rate Demand Note
A.M.T. -- Alternative Minimum Tax -- As of Nov. 30, 1997, the value of
securities subject to alternative minimum tax represented 18.4% of
net assets.
(k) Identifies issues considered to be illiquid as to their marketability (see
Note 1 to the financial statements). Information concerning such security
holdings at Nov. 30, 1997, is as follows:
Security Acquisition Purchase
date cost
Bloomington Community Development
Refunding Revenue Note 24th Avenue Motel 03-31-88 $1,721,000
(l) At Nov. 30, 1997, the cost of securities for federal income tax purposes was
$5,300,394,205 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $614,690,695
Unrealized depreciation (52,000,672)
-----------
Net unrealized appreciation $562,690,023
<PAGE>
PART C. OTHER INFORMATION
Item 24. Financial Statements and Exhibits
(a) FINANCIAL STATEMENTS:
Financial Statements filed as part of this Post-Effective Amendment:
Strategist Tax-Free High Yield Fund:
Independent auditors' report dated January 2, 1998
Statement of assets and liabilities, Nov. 30, 1997
Statement of operations, year ended Nov. 30, 1997
Statements of changes in net assets for the year ended Nov. 30, 1997
and for the period from May 13, 1996 (commencement of operations) to
Nov. 30, 1996
Notes to financial statements
Tax-Free High Yield Portfolio:
Independent auditors' report dated January 2, 1998
Statement of assets and liabilities, Nov. 30, 1997
Statement of operations, year ended Nov. 30, 1997
Statements of changes in net assets, for the year ended Nov. 30, 1997
and for the period from May 13, 1996 (commencement of operations) to
Nov. 30, 1996
Notes to financial statements
Investments in securities, Nov. 30, 1997
Notes to investments in securities
(b) EXHIBITS:
1(a) Articles of Incorporation, dated May 24, 1995, filed electronically on or
about September 1, 1995, as Exhibit 1 to Registration Statement No.
33-63909, are incorporated herein by reference.
1(b) Articles of Amendment dated April 4, 1996, filed electronically on or
about April 17, 1996 as Exhibit 1(b) to Registrant's Pre-Effective
Amendment No. 1 are incorporated herein by reference.
2. Copy of By-laws filed electronically on or about April 17, 1996 as Exhibit
2 to Registrant's Pre-Effective Amendment No. 1 are incorporated herein by
reference.
3. Not Applicable.
4. Not Applicable.
5. Not Applicable.
6. Copy of Distribution Agreement between Strategist Tax-Free Income Fund,
Inc. on behalf of its underlying series fund and American Express Service
Corporation dated May 13, 1996 filed electronically as Exhibit 6 to
Registrant's Post-Effective Amendment No. 2 to Registration Statement No.
33-63909, is incorporated herein by reference.
7. Not Applicable.
<PAGE>
8(a) Copy of Custodian Agreement between Strategist Tax-Free Income Fund, Inc.
on behalf of its underlying series fund and American Express Trust Company
dated May 13, 1996 filed electronically as Exhibit 8(a) to Registrant's
Post-Effective Amendment No. 2 to Registration Statement No. 33-63909, is
incorporated herein by reference.
8(b) Copy of Addendum to the Custodian Agreement between Strategist Tax-Free
Income Fund, Inc. and American Express Trust Company executed on May 13,
1996, filed electronically as Exhibit 8(b) to Registrant's Post-Effective
Amendment No. 2 to Registration Statement No. 33-63909, is incorporated
herein by reference.
9(a) Copy of Transfer Agency Agreement between Strategist Tax-Free Income Fund,
Inc. on behalf of its underlying series fund and American Express Financial
Corporation dated May 13, 1996 filed electronically as Exhibit 9(a) to
Registrant's Post-Effective Amendment No. 2 to Registration Statement No.
33-63909, is incorporated herein by reference.
9(b) Copy of Administrative Services Agreement between Strategist Tax-Free
Income Fund, Inc. on behalf of its underlying series fund and American
Express Financial Corporation dated May 13, 1996 filed electronically as
Exhibit 9(b) to Registrant's Post-Effective Amendment No. 2 to Registration
Statement No. 33-63909, is incorporated herein by reference.
9(c) Copy of Agreement and Declaration of Unitholders between Strategist
Tax-Free Income Fund, Inc. and IDS High Yield Tax-Exempt Fund dated May 13,
1996, filed electronically as Exhibit 9(c) to Registrant's Post-Effective
Amendment No. 2 to Registration Statement No. 33-63909, is incorporated
herein by reference.
10. An opinion and consent of counsel as to the legality of securities being
registered, is filed electronically herewith.
11. Independent Auditors Consent, is filed electronically herewith.
12. Not Applicable.
13. Copy of Share Purchase Agreement between Strategist Tax-Free Income Fund,
Inc. and American Express Financial Corporation dated April 16, 1996 filed
electronically as Exhibit 13 to Registrant's Post-Effective Amendment No. 2
to Registration Statement No. 33-63909, is incorporated herein by
reference.
14. Not Applicable.
15. Copy of Plan and Agreement of Distribution between Strategist Tax-Free
Income Fund, Inc. on behalf of its underlying series fund and American
Express Service Corporation dated May 13, 1996 filed electronically as
Exhibit 15 to Registrant's Post-Effective Amendment No. 2 to Registration
Statement No. 33-63909, is incorporated herein by reference.
<PAGE>
16. Schedule for computation of each performance quotation filed electronically
on or about April 17, 1996 as Exhibit 16 to Registrant's Pre-Effective
Amendment No. 1 is incorporated herein by reference.
17. Financial Data Schedules are filed electronically herewith.
18. Not Applicable.
19(a). Director's Power of Attorney to sign Amendments to this Registration
Statement, dated November 20, 1997, is filed electronically herewith as
Exhibit 19(a).
19(b). Officers' Power of Attorney to sign Amendments to this Registration
Statement, dated November 21, 1997, is filed electronically herewith as
Exhibit 19(b).
19(c). Trustees Power of Attorney to sign amendments to this Registration
Statement dated January 7, 1998, is filed electronically herewith as
Exhibit 19(c).
19(d). Officers' Power of Attorney to sign Amendments to this Registration
Statement dated April 11, 1996, filed electronically on or about April
17, 1996 as Exhibit 19(b) to Registrant's Pre-Effective Amendment No. 1
is incorporated herein by reference.
Item 25. Persons Controlled by or Under Common Control with Registrant
None.
Item 26. Number of Holders of Securities
(1) (2)
Number of Record
Title of Class Holders as of
January 13, 1998
Common Stock 18
$.01 par value
Item 27. Indemnification
Reference is hereby made to Article IV of Registrant's Articles of Incorporation
filed electronically on or about Nov. 1, 1995 as Exhibit 1 to Registrant's
initial registration statement and Article X of Registrant's By-laws filed
electronically on or about April 17, 1996 as Exhibit 2 to Registrant's
Pre-Effective Amendment No. 1.
<PAGE>
PAGE 1
American Express Financial Corporation is the investment advisor of
the Portfolios of the Trust.
<PAGE>
Item 29(c). Not applicable.
Item 30. Location of Accounts and Records
American Express Financial Corporation
IDS Tower 10
Minneapolis, MN 55440
Item 31. Management Services
Not Applicable.
Item 32. Undertakings
(a) Not Applicable.
(b) Not Applicable.
(c) The Registrant undertakes to furnish each person
to whom a prospectus is delivered with a copy of
the Registrant's latest annual report to
shareholders, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, the Registrant, Strategist Tax-Free Income Fund, Inc.,
certifies that it meets the requirements for the effectiveness of this Amendment
to its Registration Statement pursuant to Rule 485(b) under the Securities Act
of 1933 and has duly caused this Amendment to its Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized, in the City
of Minneapolis and State of Minnesota on the 26th day of January, 1998.
STRATEGIST TAX-FREE INCOME FUND, INC.
By /s/ James A. Mitchell*
James A. Mitchell
President
By___________________________________
Matthew N. Karstetter
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
its Registration Statement has been signed below by the following persons in the
capacities indicated on the 26th day of January, 1998.
Signature Title
By /s/ Rodney P. Burwell** Director
Rodney P. Burwell
By /s/ Jean B. Keffeler** Director
Jean B. Keffeler
By /s/ Brian Kleinberg** Director
Brian Kleinberg
By /s/ Thomas R. McBurney** Director
Thomas R. McBurney
By /s/ James A. Mitchell** Director
James A. Mitchell
<PAGE>
* Signed pursuant to Officers' Power of Attorney dated November 21, 1997, filed
electronically herewith as Exhibit 19(b), by:
_________________________________
Eileen J. Newhouse
** Signed pursuant to Directors Power of Attorney dated November 20, 1997, filed
electronically herewith as Exhibit 19(a), by:
_________________________________
Eileen J. Newhouse
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933 and the Investment
Company Act of 1940, TAX-FREE INCOME TRUST consents to the filing of this
Amendment to the Registration Statement signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Minneapolis and State of Minnesota on
the 26th day of January, 1998.
TAX-FREE INCOME TRUST
By /s/ William R. Pearce**
William R. Pearce
Chairman of the board
By___________________________________
Matthew N. Karstetter
Treasurer
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below by the following persons in the
capacities indicated on the 26th day of January, 1998.
Signatures Capacity
/s/ William R. Pearce* Trustee
William R. Pearce
/s/ H. Brewster Atwater, Jr.* Trustee
H. Brewster Atwater, Jr.
/s/ Lynne V. Cheney* Trustee
Lynne V. Cheney
/s/ William H. Dudley* Trustee
William H. Dudley
/s/ David R. Hubers* Trustee
David R. Hubers
<PAGE>
Signatures Capacity
/s/ Heinz F. Hutter* Trustee
Heinz F. Hutter
/s/ Anne P. Jones* Trustee
Anne P. Jones
/s/ Alan K. Simpson* Trustee
Alan K. Simpson
/s/ Edson W. Spencer* Trustee
Edson W. Spencer
/s/ John R. Thomas* Trustee
John R. Thomas
/s/ Wheelock Whitney* Trustee
Wheelock Whitney
/s/ C. Angus Wurtele* Trustee
C. Angus Wurtele
* Signed pursuant to Trustees Power of Attorney dated January 7, 1998, filed
electronically herewith as Exhibit 19(c), by:
____________________________________
Leslie L. Ogg
** Signed pursuant to Officers' Power of Attorney dated April 11, 1996, filed on
or about April 17, 1996 as Exhibit 19(b) to Registrant's Pre-Effective Amendment
No. 1 by:
____________________________________
Leslie L. Ogg
<PAGE>
CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 3 TO REGISTRATION STATEMENT NO.
33-63909
This Amendment to its Registration Statement comprises the following papers and
documents:
The facing sheet.
Cross reference sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements
Part C.
Other Information.
The signatures.
<PAGE>
Strategist Tax-Free Income Fund, Inc.
File No. 33-63909/811-07407
EXHIBIT INDEX
Exhibit 10: Opinion and consent of counsel.
Exhibit 11: Independent Auditors' Consent.
Exhibit 17: Financial Data Schedules.
Exhibit 19(a): Director's Power of Attorney dated November 20, 1997.
Exhibit 19(b): Officers' Power of Attorney dated November 21, 1997.
Exhibit 19(c): Trustees Power of Attorney dated January 7, 1998.
<PAGE>
Exhibit 10
January 26, 1998
Strategist Tax-Free Income Fund, Inc.
IDS Tower 10
Minneapolis, Minnesota 55440-0010
Gentlemen:
I have examined the Articles of Incorporation and the By-Laws of the Company and
all necessary certificates, permits, minute books, documents and records of the
Company, and the applicable statutes of the State of Minnesota, and it is my
opinion:
(a) That the Company is a corporation duly organized and existing under the
laws of the State of Minnesota with an authorized capital stock of
20,000,000,000 shares, all of $.01 par value, and that such shares may
be issued as full or fractional shares;
(b) That all such authorized shares are, under the laws of the State of
Minnesota, redeemable as provided in the Articles of Incorporation of
the Company and upon redemption shall have the status of authorized
shares and unissued shares;
(c) That the Company registered on November 2, 1995, an indefinite number
of shares pursuant to Rule 24f-2; and
(d) That shares which were sold at not less than their par value and in
accordance with applicable federal and state securities laws were
legally issued, fully paid an nonassessable.
I hereby consent that the foregoing opinion may be used in connection with this
Post-Effective Amendment.
Very truly yours,
Eileen J. Newhouse
Secretary
EJN/NL/rdh
<PAGE>
Independent auditors' consent
The board and shareholders
Strategist Tax-Free Income Fund, Inc.:
Strategist Tax-Free High Yield Fund
The board of trustees and unitholders Tax-Free Income Trust:
Tax-Free High Yield Portfolio
We consent to the use of our reports included or incorporated herein by
reference and to the references to our Firm under the headings "Financial
highlights" in Part A and "INDEPENDENT AUDITORS" in Part B of the Registration
Statement.
KPMG Peat Marwick LLP
Minneapolis, Minnesota
January 27, 1998
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 1
<NAME> STRATEGIST TAX-FREE INCOME FUND, INC.
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 0
<INVESTMENTS-AT-VALUE> 0
<RECEIVABLES> 105
<ASSETS-OTHER> 777446
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 777551
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 43174
<TOTAL-LIABILITIES> 43174
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 703587
<SHARES-COMMON-STOCK> 158260
<SHARES-COMMON-PRIOR> 117305
<ACCUMULATED-NII-CURRENT> 73
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 7073
<ACCUM-APPREC-OR-DEPREC> 37790
<NET-ASSETS> 734377
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 44970
<OTHER-INCOME> 0
<EXPENSES-NET> 6130
<NET-INVESTMENT-INCOME> 38840
<REALIZED-GAINS-CURRENT> (5811)
<APPREC-INCREASE-CURRENT> 19642
<NET-CHANGE-FROM-OPS> 52671
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 39320
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 41520
<NUMBER-OF-SHARES-REDEEMED> 9305
<SHARES-REINVESTED> 8740
<NET-CHANGE-IN-ASSETS> 199665
<ACCUMULATED-NII-PRIOR> 553
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 1262
<GROSS-ADVISORY-FEES> 3082
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 19084
<AVERAGE-NET-ASSETS> 646879
<PER-SHARE-NAV-BEGIN> 4.56
<PER-SHARE-NII> 0.28
<PER-SHARE-GAIN-APPREC> 0.08
<PER-SHARE-DIVIDEND> 0.28
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 4.64
<EXPENSE-RATIO> 0.95
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 6
<SERIES>
<NUMBER> 2
<NAME> TAX-FREE HIGH YIELD PORTFOLIO
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> NOV-30-1997
<PERIOD-END> NOV-30-1997
<INVESTMENTS-AT-COST> 5300390986
<INVESTMENTS-AT-VALUE> 5863084228
<RECEIVABLES> 132709496
<ASSETS-OTHER> 0
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 5995793724
<PAYABLE-FOR-SECURITIES> 5627528
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1766701
<TOTAL-LIABILITIES> 7394229
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 0
<SHARES-COMMON-STOCK> 0
<SHARES-COMMON-PRIOR> 0
<ACCUMULATED-NII-CURRENT> 0
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 0
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 0
<NET-ASSETS> 5988399495
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 388169902
<OTHER-INCOME> 0
<EXPENSES-NET> 26570654
<NET-INVESTMENT-INCOME> 361599248
<REALIZED-GAINS-CURRENT> (34205753)
<APPREC-INCREASE-CURRENT> 137325053
<NET-CHANGE-FROM-OPS> 464718548
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 0
<NUMBER-OF-SHARES-REDEEMED> 0
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (175392660)
<ACCUMULATED-NII-PRIOR> 0
<ACCUMULATED-GAINS-PRIOR> 0
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 26174871
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 26598760
<AVERAGE-NET-ASSETS> 5965506219
<PER-SHARE-NAV-BEGIN> 0
<PER-SHARE-NII> 0
<PER-SHARE-GAIN-APPREC> 0
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 0
<EXPENSE-RATIO> 0
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<PAGE>
DIRECTORS POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as directors of the below listed open-end management
investment companies that previously have filed registration statements and
amendments thereto pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940 with the Securities and Exchange
Commission:
1933 Act 1940 Act
Reg. Number Reg. Number
Strategist Growth Fund, Inc. 33-63905 811-7401
Strategist Growth and Income Fund, Inc. 33-63907 811-7403
Strategist Income Fund, Inc. 33-60323 811-7305
Strategist Tax-Free Fund, Inc. 33-63909 811-7407
Strategist World Fund, Inc. 33-63951 811-7405
hereby constitutes and appoints James A. Mitchell, Eileen J. Newhouse, Colin M.
Lancaster, or Sherilyn K. Beck as her or his attorney-in-fact and agent, to sign
for her or him in her or his name, place and stead any and all further
amendments to said registration statements filed pursuant to said Acts and any
rules and regulations thereunder, and to file such amendments with all exhibits
thereto and other documents in connection therewith with the Securities and
Exchange Commission, granting to either of them the full power and authority to
do and perform each and every act required and necessary to be done in
connection therewith.
Dated this 20th day of November, 1997.
/s/ Rodney P. Burwell /s/ Thomas R. McBurney
Rodney P. Burwell Thomas R. McBurney
/s/ Jean B Keffeler /s/ James A. Mitchell
Jean B. Keffeler James A. Mitchell
/s/ Brian Kleinberg
Brian Kleinberg
<PAGE>
OFFICERS POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as officers of the below listed open-end management
investment companies that previously have filed registration statements and
amendments thereto pursuant to the requirements of the Securities Act of 1933
and the Investment Company Act of 1940 with the Securities and Exchange
Commission:
1933 Act 1940 Act
Reg. Number Reg. Number
Strategist Growth Fund, Inc. 33-63905 811-7401
Strategist Growth and Income Fund, Inc. 33-63907 811-7403
Strategist Income Fund, Inc. 33-60323 811-7305
Strategist Tax-Free Fund, Inc. 33-63909 811-7407
Strategist World Fund, Inc. 33-63951 811-7405
hereby constitutes and appoints James A. Mitchell, Eileen J. Newhouse, Colin M.
Lancaster, or Sherilyn K. Beck as his attorney-in-fact and agent, to sign for
him in his name, place and stead any and all further amendments to said
registration statements filed pursuant to said Acts and any rules and
regulations thereunder, and to file such amendments with all exhibits thereto
and other documents in connection therewith with the Securities and Exchange
Commission, granting to either of them the full power and authority to do and
perform each and every act required and necessary to be done in connection
therewith.
Dated this 21st day of November, 1997.
/s/ James A. Mitchell
James A. Mitchell
/s/ Matthew N. Karstetter
Matthew N. Karstetter
<PAGE>
TRUSTEES POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as trustees of the below listed open-end,
diversified investment companies that previously have filed registration
statements and amendments thereto pursuant to the requirements of the Investment
Company Act of 1940 with the Securities and Exchange Commission:
1940 Act
Reg. Number
Growth Trust 811-07395
Growth and Income Trust 811-07393
Income Trust 811-07307
Tax-Free Income Trust 811-07397
World Trust 811-07399
hereby constitutes and appoints William R. Pearce and Leslie L. Ogg or either
one of them, as her or his attorney-in-fact and agent, to sign for her or him in
her or his name, place and stead any and all further amendments to said
registration statements filed pursuant to said Act and any rules and regulations
thereunder, and to file such amendments with all exhibits thereto and other
documents in connection therewith with the Securities and Exchange Commission,
granting to either of them the full power and authority to do and perform each
and every act required and necessary to be done in connection therewith.
Dated the 7th day of January, 1998.
/s/ H. Brewster Atwater, Jr. /s/ William R. Pearce
H. Brewster Atwater, Jr. William R. Pearce
/s/ Lynne V. Cheney /s/ Alan K. Simpson
Lynne V. Cheney Alan K. Simpson
/s/ William H. Dudley /s/ Edson W. Spencer
William H. Dudley Edson W. Spencer
/s/ David R. Hubers /s/ John R. Thomas
David R. Hubers John R. Thomas
/s/ Heinz F. Hutter /s/ Wheelock Whitney
Heinz F. Hutter Wheelock Whitney
/s/ Anne P. Jones /s/ C. Angus Wurtele
Anne P. Jones C. Angus Wurtele
