SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 [ ]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 6 (File No. 33-63909) [X]
--------
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 [ ]
Amendment No. 7 (File No. 811-07407) [X]
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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 Jan. 28, 2000 pursuant to paragraph (b)
[ ] 60 days after filing pursuant to paragraph (a)(1)
[ ] on [date] pursuant to paragraph (a)(1)
[ ] 75 days after filing pursuant to paragraph (a)(2)
[ ] on (date) pursuant to paragraph (a)(2) 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.
Tax-Free Income Trust also has executed this Amendment to the Registration
Statement.
<PAGE>
Strategist Tax-Free Income Fund, Inc.
Prospectus
Jan. 28, 2000
Strategist Tax-Free High Yield Fund seeks to provide shareholders with a high
yield generally exempt from federal income taxes.
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
Like all mutual funds, the Securities and Exchange Commission has not approved
or disapproved these securities or passed upon the adequacy of this prospectus.
Any representation to the contrary is a criminal offense.
<PAGE>
Table of Contents
TAKE A CLOSER LOOK AT:
The Fund 2
Goal 2
Investment Strategy 2
Risks 4
Past Performance 5
Fees and Expenses 7
Management 8
Buying and Selling Shares 8
Valuing Fund Shares 8
Purchasing Shares 9
Exchanging/Selling Shares 13
Distributions and Taxes 15
Personalized Shareholder Information 16
Master/Feeder Structure 17
Business Structure 18
Financial Highlights 20
Appendix 21
<PAGE>
The Fund
Strategist Tax-Free High Yield Fund (the Fund) is closed to new accounts.
Existing shareholders of the Fund may continue to purchase additional shares.
See "Purchasing Shares." The Fund may resume sales to new investors at some
future date, but it has no present intention to do so.
GOAL
The Fund seeks to provide shareholders with a high yield generally exempt from
federal income taxes. Because any investment involves risk, achieving this goal
cannot be guaranteed. The Fund seeks to achieve its goal by investing all of its
assets in a master portfolio rather than by directly investing in and managing
its own portfolio of securities.The master portfolio has the same goal and
investment policies as the Fund.
INVESTMENT STRATEGY
The Fund's assets primarily are invested in medium and lower quality bonds (junk
bonds) and other debt obligations. Under normal market conditions, the Fund will
invest at least 80% of its net assets in bonds and in other debt obligations
issued by or on behalf of state or local governmental units whose interest is
exempt from federal income tax and is not subject to the alternative minimum
tax. However, the Fund may invest up to 20% of its net assets in debt
obligations the interest from which is subject to the alternative minimum tax.
The selection of municipal obligations that are tax-exempt is the primary
decision in building the investment portfolio.
In pursuit of the Fund's goal, American Express Financial Corporation (AEFC),
the Fund's investment manager, chooses investments by:
o Considering opportunities and risks in municipal obligations given current
and expected interest rates.
o Identifying municipal obligations that:
-- are medium or lower quality,
-- have similar qualities, in AEFC's opinion, even though they are not
rated or have been given a lower rating by a rating agency,
-- have long-term maturities with higher yields,
-- have characteristics (coupon, call, maturity, etc.) that fit our
investment strategy at the time of purchase.
o Identifying investments that contribute to the portfolio diversification of
the Fund, including both the number of issuers and the types of securities
held in the portfolio.
In evaluating whether to sell a security, AEFC considers, among other factors,
whether:
-- the security is overvalued relative to alternative investments,
-- the issuer's credit rating declines or AEFC expects a decline (the
Fund may continue to own securities that are down-graded until AEFC
believes it is advantageous to sell),
-- political, economic, or other events could affect the issuer's
performance,
-- AEFC expects the issuer to call the security,
-- AEFC identifies a more attractive opportunity, and
-- the issuer or the security continues to meet the other standards
described above.
Although not a primary investment strategy, the Fund also may invest in other
instruments, such as money market securities and other short-term tax-exempt
securities, derivatives (such as: futures, options and forward contracts) and
other instruments.
During weak or declining markets, the Fund may invest more of its assets in
money market securities or certain taxable investments. Although the Fund
primarily will invest in these securities to avoid losses, this type of
investing also could prevent the Fund from achieving its investment objective.
During these times, AEFC may make frequent securities trades that could result
in increased fees, expenses, and taxes.
<PAGE>
For more information on strategies and holdings, see the Fund's Statement of
Additional Information (SAI) and the annual/semiannual reports.
RISKS
Please remember that with any mutual fund investment you may lose money.
Principal risks associated with an investment in the Fund include:
Market Risk
Interest Rate Risk
Credit Risk
Legal/Legislative Risk
Call/Prepayment Risk
Market Risk
The market may drop and you may lose money. Market risk may affect a single
issuer, sector of the economy, industry, or the market as a whole. The market
value of all securities may move up and down, sometimes rapidly and
unpredictably.
Interest Rate Risk
The risk of losses attributable to changes in interest rates. This term is
generally associated with bond prices (when interest rates rise, bond prices
fall). In general, the longer the maturity of a bond, the higher its yield and
the greater its sensitivity to changes in interest rates.
Credit Risk
The risk that the issuer of a security, or the counterparty to a contract, will
default or otherwise become unable to honor a financial obligation (such as
payments due on a bond or note). The price of junk bonds may react more to the
ability of the issuing company to pay interest and principal when due than to
changes in interest rates. Junk bonds have greater price fluctuations and are
more likely to experience a default than investment grade bonds.
Legal/Legislative Risk
Congress and other governmental units have the power to change existing laws
affecting securities. A change in law might affect an investment adversely.
Call/Prepayment Risk
The risk that a bond or other security might be called (or otherwise converted,
prepaid, or redeemed) before maturity. This type of risk is closely related to
reinvestment risk, which is the risk that an investor will not be able to
reinvest income or principal at the same rate it currently is earning.
<PAGE>
PAST PERFORMANCE
The following bar chart and table show the risks and variability of investing in
the Fund by showing:
o how the Fund's performance varied for each full calendar year shown on the
chart below, and
o how the Fund's average annual total returns compare to a recognized index.
How the Fund performed in the past does not indicate how the Fund will perform
in the future.
Strategist Tax-Free High Yield Fund Performance (based on calendar years)
- --------------------------------------------------------------------------------
+5.10% +12.02% +8.70% +9.73% -5.07% +17.39% +2.47% +9.78% +5.59% -3.43%
- --------------------------------------------------------------------------------
1990 1991 1992 1993 1994 1995 1996* 1997 1998 1999
During the period shown in the bar chart, the highest return for a calendar
quarter was +3.61% (quarter ending June, 1997) and the lowest return for a
calendar quarter was -1.29% (Quarter ending June, 1999).
The Fund's year to date return as of Dec. 31, 1999 was -3.43%.
* On May 13, 1996, AXP High Yield Tax-Exempt Fund (the predecessor fund)
transferred all of its assets to the Portfolio. The performance information in
this and the following table represents performance of the predecessor fund
prior to March 20, 1995 and of Class A shares of the predecessor fund from March
20, 1995 through May 13, 1996, adjusted to reflect the absence of sales charges
on shares of the Fund. The historical performance has not been adjusted for any
difference between the fees and expenses of the Fund and historical fees and
expenses of the predecessor fund.
<PAGE>
Average Annual Total Returns (as of Dec. 31, 1999)
1 year 5 years 10 years
Strategist Tax-Free High Yield Fund -3.43% +6.13% +6.03%
Lehman Brothers Municipal Bond Index -2.06% +6.91% +6.89%
Lipper General Municipal Debt Index -4.07% +6.14% +6.29%
This table shows total returns from a hypothetical investment in the Fund. These
returns are compared to the indexes shown for the same periods. For purposes of
this calculation, information about the Fund assumes no adjustments for taxes an
investor may have paid on the reinvested income and capital gains.
Lehman Brothers Municipal Bond Index, an unmanaged index, is 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. The index reflects reinvestment of all distributions and
changes in market prices, but excludes brokerage commissions or other fees.
However, the securities used to create the index may not be representative of
the bonds held by the Fund.
The Lipper General Municipal Debt Index, an unmanaged index published by Lipper
Analytical Services, Inc., includes 30 funds that are generally similar to the
Fund, although some funds in the index may have somewhat different investment
policies or objectives.
<PAGE>
FEES AND EXPENSES
Fund investors pay various expenses. The table below describes the fees and
expenses that you may pay if you buy and hold shares of the Fund.
Shareholder Fees(a) (fees paid directly from your investment)
Maximum sales charge (load)
imposed on purchases(b)
(as a percentage of offering price) 0%
Annual Fund operating expenses(c) (expenses that are deducted from Fund assets)
(as a percentage of average daily net assets):
Management fees(d) 0.45%
Distribution (12b-1) fees 0.25%
Other expenses(e) 0.25%
Total(f) 0.95%
(a) A wire transfer charge, currently $15, is deducted from your brokerage
account for wire transfers made at your request.
(b) There are no sales loads; however, the Fund reserves the right upon 60 days'
advance written notice to shareholders to impose a redemption fee of up to 1% on
shares redeemed within one year of purchase.
(c) Both in this table and the following example, Fund operating expenses
include expenses charged by both the Fund and the Portfolio.
(d) The management fee is paid by the Trust on behalf of the Portfolio.
(e) Other expenses include an administrative services fee, a transfer agency fee
and other nonadvisory expenses.
(f) The Advisor and the Distributor have agreed to waive certain fees and to
absorb certain other Fund expenses until Nov. 30, 2000. Under this agreement,
total expenses will not exceed 0.95%. For the most recent fiscal year actual
total expenses with fee waivers and expense reimbursement were 3.25%.
<PAGE>
Example
This example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
Assume you invest $10,000 and the Fund earns a 5% annual return. The operating
expenses remain the same each year. If you sell your shares at the end of the
years shown, your costs would be:
1 year 3 years 5 years 10 years
$97 $303 $526 $1,171
This example does not represent actual expenses, past or future. Actual expenses
may be higher or lower than those shown.
MANAGEMENT
The Fund's assets are invested in Tax-Free High Yield Portfolio (the Portfolio),
which is managed by AEFC. Kurt Larson, vice president and senior portfolio
manager, joined AEFC in 1961. He has managed the assets of the Portfolio and its
predecessor fund since 1979.
Buying and Selling Shares
VALUING FUND SHARES
The public offering price for a single Fund share is the net asset value (NAV).
The NAV is the value of a single Fund share. The NAV usually changes daily, and
is calculated at the close of business of the New York Stock Exchange, normally
3 p.m. Central Time (CT), each business day (any day the New York Stock Exchange
is open).
The Fund's investments are valued based on market quotations, or where market
quotations are not readily available, based on methods selected in good faith by
the board. If the Fund's investment policies permit it to invest in securities
that are listed on foreign stock exchanges that trade on weekends or other days
when the Fund does not price its shares, the value of the Fund's underlying
investments may change on days when you could not buy or sell shares of the
Fund. Please see the SAI for further information.
<PAGE>
PURCHASING SHARES
The Fund is closed to new accounts. Purchases are limited to existing accounts
only. The discussion below regarding brokerage accounts and the purchase of
shares of the Fund is qualified by this limitation.
You may purchase additional shares of the Fund in which you are invested through
a brokerage account maintained with American Express Financial Advisors Inc.
(the Distributor). Payment for shares must be made directly to the Distributor.
Important: When you open an account, you must provide your correct Taxpayer
Identification Number (TIN), which is either your Social Security or Employer
Identification number.
If you do not provide the correct TIN, 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 for a false statement that results in no
backup withholding, and
o criminal penalties for falsifying information.
You also could be subject to backup withholding for failure to report interest
or dividends on your tax return. For details on TIN requirements, call
800-297-7378 to obtain a copy of federal Form W-9, "Request for Taxpayer
Identification Number and Certification."
Deposits into your brokerage account
You may deposit money into your brokerage account by check, wire or many other
forms of electronic funds transfer (securities also may be deposited). All
deposit checks should be made payable to American Express Financial Advisors
Inc. If you would like to wire funds into your existing brokerage account or add
to your account by electronic transfer, please contact the Distributor at
800-297-7378 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.
When and at what price shares will be purchased
You must have money available in your brokerage 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. CT, your order will
be priced at the next calculated NAV. See "Valuing Fund Shares."
<PAGE>
Methods of purchasing shares
You may purchase shares of the Fund in three ways.
1 By telephone:
You may use money in your brokerage account to make purchases. To place your
order, call 800-297-7378.
2 By mail:
Mail written purchase requests (along with any checks) to American Express
Financial Direct, P.O. Box 59196, Minneapolis, MN 55459-0196. These requests
should include:
o your brokerage account number (or a brokerage account application),
and
o the name of the Fund and the dollar amount of shares you would like
purchased.
Your check should be made payable to American Express Financial Advisors Inc. It
will be deposited into your brokerage account and used to cover your purchase
request.
3 By systematic purchase:
Once you have opened a brokerage account, you may authorize the Distributor to
automatically purchase shares on your behalf at intervals and in amounts
selected by you as described below.
Systematic Purchase Plan
The Distributor offers a Systematic Purchase Plan (SPP) that allows you to make
periodic investments in the Fund automatically and conveniently. Participating
in the SPP will save you the time and expense associated with writing checks or
wiring money.
Investment minimums
You can make automatic investments in any amount, from $100 to $50,000.
<PAGE>
Investment methods
There are two ways to make automatic investments in your brokerage account:
(1) Using uninvested cash in your brokerage account: If you elect this option,
uninvested cash in your brokerage account will be used to make the
investment and, if necessary, shares of your Money Market Fund will be sold
to cover the balance of the purchase.
(2) Using bank authorizations: If you elect this option, money is transferred
from your bank checking or savings account into your brokerage account for
automatic investments.
You will need to select a transfer date (when the money is transferred into your
brokerage 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 call
800-297-7378, or send written instructions clearly outlining the changes to
American Express Financial Direct, P.O. Box 59196, Minneapolis, MN 55459-0196.
These instructions must include:
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 (for which you have an existing account) and the amount to be
invested in each fund, and
o The investment frequency and investment dates for your new automatic
investments.
<PAGE>
Terminating your SPP
If you wish to terminate your SPP, you may call 800-297-7378, 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
800-297-7378. Your bank authorization will not automatically terminate when you
cancel your SPP.
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
American Express Financial Direct, P.O. Box 59196, Minneapolis, MN 55459-0196 or
telephoning 800-297-7378. Your systematic investments will continue using
brokerage account assets if the Distributor does not receive notification to
terminate your systematic investments as well.
To avoid procedural difficulties, the Distributor must receive instructions to
change or terminate your SPP or bank authorizations at least 10 days prior to
your scheduled investment date.
Minimum balance and account requirements
The Fund reserves the right to sell your shares if, as a result of sales, 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 brokerage
account, the Fund will automatically sell your shares and mail the proceeds to
you.
Wire transfers to your bank
Money can be wired from your brokerage account to your bank account. Call the
Distributor at 800-297-7378 for additional information on wire transfers. A $15
service fee will be charged against your brokerage account for each wire sent.
<PAGE>
EXCHANGING/SELLING SHARES
Exchanging Shares
You can exchange your shares of the Fund for shares of other funds in the
Strategist Fund Group in which you have an existing account at any time. For
complete information on the other funds, including fees and expenses, read that
fund's prospectus carefully. Your exchange will be priced at the next NAV
calculated after it is accepted by that fund. When exchanging into another fund
you must meet that fund's minimum investment requirements. You may make up to
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. For example, if exchanges are
too numerous or too large, they may disrupt a Fund's investment strategies or
increase its costs.
Selling Shares
You may sell your shares at any time. Your sale price will be the next NAV
calculated after receipt by the Distributor of proper sale instructions, as
described below.
There are no sales loads; however, the Fund imposes a 0.50% fee for shares sold
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.
Normally, payment for shares sold will be credited directly to your brokerage
account on the next business day. However, the Fund may delay payment, but no
later than seven days after the Distributor receives your selling instructions
in proper form. Sale proceeds will be held in your brokerage account or mailed
to you according to your account instructions.
If you recently purchased shares by check, your sale proceeds may be held in
your brokerage account until your check clears (which may take up to 10 days
from the purchase date) before a check is mailed to you.
The Fund reserves the right to redeem in kind.
<PAGE>
Two ways to request an exchange or sale of shares
1 By telephone:
You may exchange or sell your shares by calling 800-297-7378. Alternatively, you
can mail your exchange or sale requests as described below.
To properly process your telephone exchange or sale request we will need the
following information:
o your brokerage 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 sell shares,
o the dollar amount or number of shares you want to exchange or sell, and
o the name of the fund into which shares are to be exchanged, if applicable.
Telephone exchange or sale requests received before 2 p.m. CT on any business
day, once the caller's identity and account ownership have been verified by the
Distributor, will be processed at the next calculated NAV. See "Valuing Fund
Shares."
2 By mail:
You also may request an exchange or sale by writing to American Express
Financial Direct, P.O. Box 59196, Minneapolis, MN 55459-0196. Once an exchange
or sale request is mailed it is irrevocable and cannot be modified or canceled.
To properly process your mailed exchange or sale request, we will need a letter
from you that contains the following information:
o your brokerage account number,
o the name of the fund from which you wish to exchange or sell shares,
o the dollar amount or number of shares you want to exchange or sell,
o the name of the fund into which shares are to be exchanged, if applicable,
and
o a signature of at least one of the brokerage account holders in the exact
form specified on the account.
<PAGE>
Telephone Transactions
The privilege to initiate transactions by telephone is automatically available
through your brokerage 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. The Fund may modify or
discontinue telephone privileges at any time.
Distributions and Taxes
As a shareholder you are entitled to your share of the Fund's net income and net
gains. The Fund distributes dividends and capital gains to qualify as a
regulated investment company and to avoid paying corporate income and excise
taxes.
DIVIDENDS AND CAPITAL GAIN DISTRIBUTIONS
The Fund's net investment income is distributed to you as dividends. Capital
gains are realized when a security is sold for a higher price than was paid for
it. Each realized capital gain or loss is long-term or short-term depending on
the length of time the Fund held the security. Realized capital gains or losses
offset each other. The Fund offsets any net realized capital gains by any
available capital loss carryovers. Net short-term capital gains are included in
net investment income. Net realized long-term capital gains, if any, are
distributed by the end of the calendar year as capital gain distributions.
REINVESTMENTS
Dividends and capital gain distributions are automatically reinvested in
additional shares of the Fund unless you request distributions in cash. We
reinvest the distributions for you at the next calculated NAV after the
distribution is paid. If you choose cash distributions, you will receive cash
only for distributions declared after your request has been processed.
TAXES
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 capital gain
distributions and other income earned 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.
<PAGE>
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 money you borrow that is 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.
If you buy shares shortly before the record date of a distribution you may pay
taxes on money earned by the Fund before you were a shareholder. You will pay
the full pre-distribution price for the shares, then receive a portion of your
investment back as a distribution, which may be taxable.
For tax purposes, an exchange is considered a sale and purchase and may result
in a gain or loss. A sale is a taxable transaction. If you sell shares for less
than their cost, the difference is a capital loss. 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).
Important: This information is a brief and selective summary of some of the tax
rules that apply to the Fund. Because tax matters are highly individual and
complex, you should consult a qualified tax advisor.
Personalized Shareholder Information
To help you track and evaluate the performance of your investments, you will
receive these individualized reports:
QUARTERLY STATEMENTS
List all of your holdings and transactions during the previous three months.
YEARLY TAX STATEMENTS
Feature average-cost-basis reporting of capital gains or losses if you sell your
shares along with distribution information to simplify tax calculations.
<PAGE>
Master/Feeder Structure
The Fund uses a master/feeder structure. This means that the Fund (a feeder
fund) invests all of its assets in a Portfolio (the master fund). Other feeder
funds also invest in the Portfolio. The master/feeder structure offers the
potential for reduced costs because it spreads fixed costs of portfolio
management over a larger pool of assets. The Fund may withdraw its assets from
the corresponding Portfolio at any time if the Fund's board determines that it
is best. In that event, the board would consider what action should be taken,
including whether to hire an investment advisor to manage the Fund's assets
directly or to invest all of the Fund's assets in another pooled investment
entity. Here is an illustration of the structure:
Investors buy shares in the Fund
The Fund buys units in the Portfolio
The Portfolio invests in securities, such as stocks or bonds
Other feeders may include mutual funds and institutional accounts. 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
American Express Financial Direct at 800-437-3133.
Business Structure
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
--------------------
Shareholders
--------------------
- ----------------------- --------------------- -------------------- --------------------
Transfer Agent: Administrative Distributor:
American Express Services Agent: American Express
Client Service American Express Financial Advisors
Corporation Financial Inc.
Corporation The Fund ->
Maintains shareholder - Markets and
accounts and records Provides The Fund distributes
for the Fund; administrative and invests its shares; receives
receives a fee based accounting services assets in distribution fee.
on the number of for the Fund; the
accounts it services. receives a fee Portfolio.
based on average The Fund
daily net assets. and/or
- ----------------------- --------------------- the -------------------- --------------------
Portfolio
have
--------------------- contracts -------------------- --------------------
Investment Manager: with Custodian:
American Express certain American Express
Financial service Trust Company
Corporation providers
Provides
Manages the safekeeping of
Portfolio's The Portfolio -> assets; receives a
investments and - fee that varies
receives a fee based on the
based on average number of
daily net assets*. securities held.
--------------------- -------------------- --------------------
</TABLE>
* The Portfolio pays AEFC a fee for managing its assets. The Fund pays its
proportionate share of the fee. Under the Investment Management Services
Agreement, the fee for the most recent fiscal year was 0.45% of average
daily net assets. Under the Agreement, the Portfolio also pays taxes,
brokerage commissions and nonadvisory expenses.Shareholders
<PAGE>
ABOUT AMERICAN EXPRESS FINANCIAL CORPORATION
American Express Financial Corporation (AEFC), the Fund's investment manager,
has been a provider of financial services since 1894, and as of the most recent
fiscal year end manages more than $244 billion in assets.
AEFC, located at IDS Tower 10, Minneapolis, MN 55440-0010, is a wholly-owned
subsidiary of American Express Company, a financial services company with
headquarters at American Express Tower, World Financial Center, New York, NY
10285.
YEAR 2000
The Fund could be adversely affected if the computer systems used by AEFC and
the Fund's other service providers do not properly process and calculate
date-related information from and after Jan. 1, 2000. While Year 2000-related
computer problems could have a negative effect on the Fund, AEFC is working to
avoid such problems and to obtain assurances from service providers that they
are taking similar steps.
The companies, governments or international markets in which the Fund invests
also may be adversely affected by Year 2000 issues. To the extent a portfolio
holding is adversely affected by a Year 2000 processing issue, the Fund's return
could be adversely affected.
<PAGE>
Financial Highlights
Fiscal period ended Nov. 30,
<TABLE>
<CAPTION>
Per share income and capital changes(a)
<S> <C> <C> <C> <C>
1999 1998 1997 1996(b)
Net asset value, beginning of period $4.68 $4.64 $4.56 $4.46
Income from investment operations:
Net investment income (loss) .25 .26 .28 .15
Net gains (losses) (both realized and unrealized) (.34) .04 .08 .10
Total from investment operations (.09) .30 .36 .25
Less distributions:
Dividends from net investment income (.25) (.26) (.28) (.15)
Tax return of capital (.10) -- -- --
Total distributions (.35) (.26) (.28) (.15)
Net asset value, end of period $4.24 4.68 $4.64 $4.56
Ratios/supplemental data
Net assets, end of period (in thousands) $796 $863 $734 $535
Ratio of expenses
to average daily net assets(c) .95% .94 .95% .95%(d)
Ratio of net investment income
(loss) to average daily net assets 5.61% 5.54% 6.02% 6.22%(d)
Portfolio turnover rate
(excluding short-term securities) 16% 14% 4% 4%
Total return (2.25%) 6.65% 8.26% 5.60%
</TABLE>
(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 3.25%, 1.76%, 2.96%
and 24.16% for the periods ended 1999, 1998, 1997 and 1996, respectively.
(d) Adjusted to an annual basis.
The information in this table has been audited by KPMG LLP, independent
auditors. The independent auditors' report and additional information about the
performance of the Fund is contained in the Fund's annual report which, if not
included with this prospectus, may be obtained without charge.
<PAGE>
Appendix
2000 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 federal
Marginal Tax Rate. For example: Let's assume you are married filing jointly,
your taxable income is $138,000 and your adjusted gross income is $175,000.
Under Taxable Income married filing jointly status, $138,000 is in the
$105,950-$161,450 range. Under Adjusted Gross Income, $175,000 is in the
$128,950 to $193,400 column. The Taxable Income line and Adjusted Gross Income
column meet at 31.93%. This is the rate you'll use in Step 2.
<PAGE>
Adjusted gross income*
Taxable income** $0 $128,950 $193,400
to to to Over
$128,950(1) $193,400(2) $315,900(3) $315,900(2)
Married Filing Jointly
$ 0 - $ 43,850 15.00%
43,850 - 105,950 28.00 28.84%
105,950 - 161,450 31.00 31.93 33.32%
161,450 - 288,350 36.00 37.08 38.69 37.08%
288,350 + 39.60 42.56*** 40.79
Adjusted gross income*
Taxable income** $0 $128.950
to to Over
$128,950(1) $251,450(3) $251,450(2)
Single
$ 0 - $ 26,250 15.00%
26,250 - 63,550 28.00
63,550 - 132,600 31.00 32.62%
132,600 - 288,350 36.00 37.89 37.08%
288,350 + 39.60 40.79
* Gross income with certain adjustments before taking itemized deductions and
personal exemptions.
** Amount subject to federal income tax after itemized deductions (or standard
deduction) and personal exemptions.
*** This rate is applicable only in the limited case where your adjusted gross
income is less than $315,900 and your taxable income exceeds $288,350.
(1) No Phase-out -- Assumes no phase-out of itemized deductions or personal
exemptions.
(2) Itemized Deductions Phase-out -- Assumes a phase-out of itemized deductions
and no current phase-out of personal exemptions.
(3) Itemized Deductions and Personal Exemption Phase-outs -- Assumes a single
taxpayer has one personal exemption, joint taxpayers have two personal
exemptions, personal exemptions phase-out 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.
<PAGE>
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.
For these Tax-Exempt Rates:
3.50% 4.00% 4.50% 5.00% 5.50% 6.00% 6.50% 7.00%
Marginal Tax Rates Equal the Taxable Rates shown below:
15.00% 4.12 4.71 5.29 5.88 6.47 7.06 7.65 8.24
28.00% 4.86 5.56 6.25 6.94 7.64 8.33 9.03 9.72
28.84% 4.92 5.62 6.32 7.03 7.73 8.43 9.13 9.84
31.00% 5.07 5.80 6.52 7.25 7.97 8.70 9.42 10.14
31.93% 5.14 5.88 6.61 7.35 8.08 8.81 9.55 10.28
32.62% 5.19 5.94 6.68 7.42 8.16 8.90 9.65 10.39
33.32% 5.25 6.00 6.75 7.50 8.25 9.00 9.75 10.50
36.00% 5.47 6.25 7.03 7.81 8.59 9.38 10.16 10.94
37.08% 5.56 6.36 7.15 7.95 8.74 9.54 10.33 11.13
37.89% 5.64 6.44 7.25 8.05 8.86 9.66 10.47 11.27
38.69% 5.71 6.52 7.34 8.16 8.97 9.79 10.60 11.42
39.60% 5.79 6.62 7.45 8.28 9.11 9.93 10.76 11.59
40.79% 5.91 6.76 7.60 8.44 9.29 10.13 10.98 11.82
42.56% 6.09 6.96 7.83 8.70 9.58 10.45 11.32 12.19
The Fund, along with the other funds in the Strategist Fund Group, is
distributed by American Express Financial Advisors Inc.
Additional information about the Fund and its investments is available in the
Fund's Statement of Additional Information (SAI), annual and semiannual reports
to shareholders. In the Fund's annual report, you will find a discussion of
market conditions and investment strategies that significantly affected the Fund
during the last fiscal year. The SAI is incorporated by reference in this
prospectus. For a free copy of the SAI, annual or semiannual report, or to make
inquiries about the Fund contact American Express Financial Direct.
American Express Financial Direct P.O. Box 59196, Minneapolis, MN 55459-0196
800-297-7378 TTY: 800-710-5620 Web site address:
http://www.americanexpress.com/direct
You may review and copy information about the Fund, including its SAI, at the
Securities and Exchange Commission's (Commission) Public Reference Room in
Washington, D.C. (for information about the public reference room call
1-800-SEC-0330). Reports and other information about the Fund are available on
the Commission's Internet site at http://www.sec.gov. Copies of this information
may be obtained by writing and paying a duplicating fee to the Public Reference
Section of the Commission, Washington, D.C. 20549-6009.
Investment Company Act File #811-7407
S-6126 F (1/00)
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
FOR
STRATEGIST TAX-FREE INCOME FUND, INC.
STRATEGIST TAX-FREE HIGH YIELD FUND
(singularly and collectively with the corresponding portfolio of Tax-Free Income
Trust (the Trust) and the Trust, where the context requires, referred to as the
"Fund")
Jan. 28, 2000
This Statement of Additional Information (SAI) is not a prospectus. It should be
read together with the prospectus and the financial statements contained in the
most recent Annual Report to shareholders (Annual Report) that 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.
The Independent Auditors' Report and the Financial Statements, including Notes
to the Financial Statements and the Schedule of Investments in Securities,
contained in the Annual Report are incorporated in this SAI by reference. No
other portion of the Annual Report, however, is incorporated by reference. The
prospectus for the Fund, dated the same date as this SAI, also is incorporated
in this SAI by reference.
<PAGE>
TABLE OF CONTENTS
Mutual Fund Checklist........................................................p.3
Fundamental Investment Policies..............................................p.5
Investment Strategies and Types of Investments...............................p.6
Information Regarding Risks and Investment Strategies........................p.8
Security Transactions.......................................................p.28
Brokerage Commissions Paid to Brokers Affiliated with the Adviser...........p.29
Performance Information.....................................................p.30
Valuing Fund Shares.........................................................p.32
Selling Shares..............................................................p.33
Capital Loss Carryover......................................................p.34
Taxes.......................................................................p.34
Agreements..................................................................p.35
Organizational Information..................................................p.38
Board Members and Officers..................................................p.39
Compensation for Board Members..............................................p.43
Principal Holders of Securities.............................................p.44
Independent Auditors........................................................p.44
Appendix: Description of Ratings...........................................p.45
<PAGE>
MUTUAL FUND CHECKLIST
- --------------------------------------------------------------------------------
|X| Mutual funds are NOT guaranteed or insured by any bank or
government agency. You can lose money.
|X| Mutual funds ALWAYS carry investment risks. Some types carry more
risk than others.
|X| A higher rate of return typically involves a higher risk of loss.
|X| Past performance is not a reliable indicator of future
performance.
|X| ALL mutual funds have costs that lower investment return.
|X| Shop around. Compare a mutual fund with others of the same type
before you buy.
OTHER IDEAS FOR SUCCESSFUL MUTUAL FUND INVESTING:
Develop a Financial Plan
Have a plan - even a simple plan can help you take control of your financial
future.
Dollar-Cost Averaging
An investment 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 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 through changing market conditions to accumulate shares to meet
long-term goals.
<PAGE>
Dollar-cost averaging:
- --------------------------------------------------------------------------------
Regular Market Price Shares
Investment of a Share 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)
Diversify
Diversify your portfolio. By investing in different asset classes and different
economic environments you help protect against poor performance in one type of
investment while including investments most likely to help you achieve your
important goals.
Understand Your Investment
Know what you are buying. Make sure you understand the potential risks, rewards,
costs, and expenses associated with each of your investments.
<PAGE>
FUNDAMENTAL INVESTMENT POLICIES
- --------------------------------------------------------------------------------
The Fund pursues its investment objective by investing all of its assets in a
portfolio of the Trust, a separate investment company, rather than by directly
investing in and managing its own portfolio of securities. The Portfolio has the
same investment objectives, policies, and restrictions as the Fund.
Fundamental investment policies adopted by the Fund cannot be changed without
the approval of a majority of the outstanding voting securities of the Fund as
defined in the Investment Company Act of 1940, as amended (the 1940 Act).
Notwithstanding any of the Fund's other investment policies, the Fund may invest
its assets in an open-end management investment company having substantially the
same investment objectives, policies, and restrictions as the Fund for the
purpose of having those assets managed as part of a combined pool.
The policies below are fundamental policies that apply to the Fund and may be
changed only with shareholder approval. Unless holders of a majority of the
outstanding voting securities agree to make the change, the Fund will not:
o Under normal market conditions, invest less than 80% of its net assets in
bonds and notes issued by or on behalf of state and local governmental
units whose interest, in the opinion of counsel for the issuer, is exempt
from federal income tax and is not subject to the alternative minimum tax.
o Act as an underwriter (sell securities for others). However, under the
securities laws, the Fund may be deemed to be an underwriter when it
securities laws, the Fund may be deemed to be an underwriter when it
purchases securities directly from the issuer and later resells them.
o 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.
o Make cash loans if the total commitment amount exceeds 5% of the Fund's
total assets.
o 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 Fund'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.
o Buy or sell real estate, unless acquired as a result of ownership of
securities or other instruments, except this shall not prevent the Fund
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.
o Buy or sell physical commodities unless acquired as a result of ownership
of securities or other instruments, except this shall not prevent the Fund
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.
o Lend Fund securities in excess of 30% of its net assets.
Except for the fundamental investment policies listed above, the other
investment policies described in the prospectus and in this SAI are not
fundamental and may be changed by the board at any time.
<PAGE>
INVESTMENT STRATEGIES AND TYPES OF INVESTMENTS
- --------------------------------------------------------------------------------
This table shows various investment strategies and investments that many funds
are allowed to engage in and purchase. It is intended to show the breadth of
investments that the investment manager may make on behalf of the Fund. For a
description of principal risks, please see the prospectus. Notwithstanding the
Fund's ability to utilize these strategies and techniques, the investment
manager is not obligated to use them at any particular time. For example, even
though the investment manager is authorized to adopt temporary defensive
positions and is authorized to hedge against certain types of risk, these
practices are left to the investment manager's sole discretion.
- --------------------------------------------------------------------------------
Investment strategies & types of investments: Allowable for
the Fund?
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Agency and Government Securities yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Borrowing yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Cash/Money Market Instruments yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Collateralized Bond Obligations yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Commercial Paper yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Common Stock no
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Convertible Securities yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Corporate Bonds yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Debt Obligations yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Depositary Receipts no
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Derivative Instruments yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Foreign Currency Transactions yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Foreign Securities yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
High-Yield (High-Risk) Securities (Junk Bonds) yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Illiquid and Restricted Securities yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Indexed Securities yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Inverse Floaters yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Investment Companies no
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Lending of Portfolio Securities yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Loan Participations yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mortgage- and Asset-Backed Securities yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Mortgage Dollar Rolls yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Municipal Obligations yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Preferred Stock no
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Real Estate Investment Trusts yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Repurchase Agreements yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Reverse Repurchase Agreements yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Short Sales no
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Sovereign Debt yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Structured Products yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Variable- or Floating-Rate Securities yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Warrants yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
When-Issued Securities yes
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Zero-Coupon, Step-Coupon, and Pay-in-Kind Securities yes
- --------------------------------------------------------------------------------
<PAGE>
The following are guidelines that may be changed by the board at any time:
o The Fund 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.
o No more than 5% of the Fund'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.
o No more than 10% of the Fund's net assets will be held in securities and
other instruments that are illiquid.
o 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 Fund may invest up
to 20% of its net assets in certain taxable investments for temporary
defensive purposes.
o The Fund will not buy on margin or sell short, except the Fund may use
derivative instruments.
<PAGE>
INFORMATION REGARDING RISKS AND INVESTMENT STRATEGIES
- --------------------------------------------------------------------------------
RISKS
The following is a summary of common risk characteristics. Following this
summary is a description of certain investments and investment strategies and
the risks most commonly associated with them (including certain risks not
described below and, in some cases, a more comprehensive discussion of how the
risks apply to a particular investment or investment strategy). Please remember
that a mutual fund's risk profile is largely defined by the fund's primary
securities and investment strategies. However, most mutual funds are allowed to
use certain other strategies and investments that may have different risk
characteristics. Accordingly, one or more of the following types of risk will be
associated with the Fund at any time (for a description of principal risks,
please see the prospectus):
Call/Prepayment Risk
The risk that a bond or other security might be called (or otherwise converted,
prepaid, or redeemed) before maturity. This type of risk is closely related to
"reinvestment risk."
Correlation Risk
The risk that a given transaction may fail to achieve its objectives due to an
imperfect relationship between markets. Certain investments may react more
negatively than others in response to changing market conditions.
Credit Risk
The risk that the issuer of a security, or the counterparty to a contract, will
default or otherwise become unable to honor a financial obligation (such as
payments due on a bond or a note). The price of junk bonds may react more to the
ability of the issuing company to pay interest and principal when due than to
changes in interest rates. Junk bonds have greater price fluctuations and are
more likely to experience a default than investment grade bonds.
Event Risk
Occasionally, the value of a security may be seriously and unexpectedly changed
by a natural or industrial accident or occurrence.
Foreign/Emerging Markets Risk
The following are all components of foreign/emerging markets risk:
Country risk includes the political, economic, and other conditions of
a country. These conditions include lack of publicly available information, less
government oversight (including lack of accounting, auditing, and financial
reporting standards), the possibility of government-imposed restrictions, and
even the nationalization of assets.
Currency risk results from the constantly changing exchange rate
between local currency and the U.S. dollar. Whenever the Fund holds securities
valued in a foreign currency or holds the currency, changes in the exchange rate
add or subtract from the value of the investment.
<PAGE>
Custody risk refers to the process of clearing and settling trades. It
also covers holding securities with local agents and depositories. Low trading
volumes and volatile prices in less developed markets make trades harder to
complete and settle. Local agents are held only to the standard of care of the
local market. Governments or trade groups may compel local agents to hold
securities in designated depositories that are not subject to independent
evaluation. The less developed a country's securities market is, the greater the
likelihood of problems occurring.
Emerging markets risk includes the dramatic pace of change (economic,
social, and political) in emerging market countries as well as the other
considerations listed above. These markets are in early stages of development
and are extremely volatile. They can be marked by extreme inflation, devaluation
of currencies, dependence on trade partners, and hostile relations with
neighboring countries.
Inflation Risk
Also known as purchasing power risk, inflation risk measures the effects of
continually rising prices on investments. If an investment's yield is lower than
the rate of inflation, your money will have less purchasing power as time goes
on.
Interest Rate Risk
The risk of losses attributable to changes in interest rates. This term is
generally associated with bond prices (when interest rates rise, bond prices
fall). In general, the longer the maturity of a bond, the higher its yield and
the greater its sensitivity to changes in interest rates.
Issuer Risk
The risk that an issuer, or the value of its stocks or bonds, will perform
poorly. Poor performance may be caused by poor management decisions, competitive
pressures, breakthroughs in technology, reliance on suppliers, labor problems or
shortages, corporate restructurings, fraudulent disclosures, or other factors.
Legal/Legislative Risk
Congress and other governmental units have the power to change existing laws
affecting securities. A change in law might affect an investment adversely.
Leverage Risk
Some derivative investments (such as options, futures, or options on futures)
require little or no initial payment and base their price on a security, a
currency, or an index. A small change in the value of the underlying security,
currency, or index may cause a sizable gain or loss in the price of the
instrument.
Liquidity Risk
Securities may be difficult or impossible to sell at the time that the Fund
would like. The Fund may have to lower the selling price, sell other
investments, or forego an investment opportunity.
Management Risk
The risk that a strategy or selection method utilized by the investment manager
may fail to produce the intended result. When all other factors have been
accounted for and the investment manager chooses an investment, there is always
the possibility that the choice will be a poor one.
<PAGE>
Market Risk
The market may drop and you may lose money. Market risk may affect a single
issuer, sector of the economy, industry, or the market as a whole. The market
value of all securities may move up and down, sometimes rapidly and
unpredictably.
Reinvestment Risk
The risk that an investor will not be able to reinvest income or principal at
the same rate it currently is earning.
Sector/Concentration Risk
Investments that are concentrated in a particular issuer, geographic region, or
industry will be more susceptible to changes in price (the more you diversify,
the more you spread risk).
Small Company Risk
Investments in small and medium companies often involve greater risks than
investments in larger, more established companies because small and medium
companies may lack the management experience, financial resources, product
diversification, and competitive strengths of larger companies. In addition, in
many instances the securities of small and medium companies are traded only
over-the-counter or on regional securities exchanges and the frequency and
volume of their trading is substantially less than is typical of larger
companies.
<PAGE>
INVESTMENT STRATEGIES
The following information supplements the discussion of the Fund's investment
objectives, policies, and strategies that are described in the prospectus and in
this SAI. The following describes many strategies that many mutual funds use and
types of securities that they purchase. Please refer to the section entitled
Investment Strategies and Types of Investments to see which are applicable to
the Fund.
Agency and Government Securities
The U.S. government and its agencies issue many different types of securities.
U.S. Treasury bonds, notes, and bills and securities including mortgage pass
through certificates of the Government National Mortgage Association (GNMA) are
guaranteed by the U.S. government. Other U.S. government securities are issued
or guaranteed by federal agencies or government-sponsored enterprises but are
not guaranteed by the U.S. government. This may increase the credit risk
associated with these investments.
Government-sponsored entities issuing securities include privately owned,
publicly chartered entities created to reduce borrowing costs for certain
sectors of the economy, such as farmers, homeowners, and students. They include
the Federal Farm Credit Bank System, Farm Credit Financial Assistance
Corporation, Federal Home Loan Bank, FHLMC, FNMA, Student Loan Marketing
Association (SLMA), and Resolution Trust Corporation (RTC). Government-sponsored
entities may issue discount notes (with maturities ranging from overnight to 360
days) and bonds. Agency and government securities are subject to the same
concerns as other debt obligations. (See also Debt Obligations and Mortgage- and
Asset-Backed Securities.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with agency and government securities include:
Call/Prepayment Risk, Inflation Risk, Interest Rate Risk, Management Risk, and
Reinvestment Risk.
Borrowing
The Fund may borrow money from banks for temporary or emergency purposes and
make other investments or engage in other transactions permissible under the
1940 Act that may be considered a borrowing (such as derivative instruments).
Borrowings are subject to costs (in addition to any interest that may be paid)
and typically reduce the Fund's total return. Except as qualified above,
however, the Fund will not buy securities on margin.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with borrowing include: Inflation Risk and Management
Risk.
Cash/Money Market Instruments
The Fund may maintain a portion of its assets in cash and cash-equivalent
investments. Cash-equivalent investments include short-term U.S. and Canadian
government securities and negotiable certificates of deposit, non-negotiable
fixed-time deposits, bankers' acceptances, and letters of credit of banks or
savings and loan associations having 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 Fund also may purchase short-term
notes and obligations of U.S. and foreign banks and corporations and may use
repurchase agreements with broker-dealers registered under the Securities
Exchange Act of 1934 and with commercial banks. (See also Commercial Paper, Debt
Obligations, Repurchase Agreements, and Variable- or Floating-Rate Securities.)
These types of instruments generally offer low rates of return and subject the
Fund to certain costs and expenses.
See the appendix for a discussion of securities ratings.
<PAGE>
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with cash/money market instruments include: Credit
Risk, Inflation Risk, and Management Risk.
Collateralized Bond Obligations
Collateralized bond obligations (CBOs) are investment grade bonds backed by a
pool of junk bonds. CBOs are similar in concept to collateralized mortgage
obligations (CMOs), but differ in that CBOs represent different degrees of
credit quality rather than different maturities. (See also Mortgage- and
Asset-Backed Securities.) Underwriters of CBOs package a large and diversified
pool of high-risk, high-yield junk bonds, which is then separated into "tiers."
Typically, the first tier represents the higher quality collateral and pays the
lowest interest rate; the second tier is backed by riskier bonds and pays a
higher rate; the third tier represents the lowest credit quality and instead of
receiving a fixed interest rate receives the residual interest payments--money
that is left over after the higher tiers have been paid. CBOs, like CMOs, are
substantially overcollateralized and this, plus the diversification of the pool
backing them, earns them investment-grade bond ratings. Holders of third-tier
CBOs stand to earn high yields or less money depending on the rate of defaults
in the collateral pool. (See also High-Yield (High-Risk) Securities.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with CBOs include: Call/Prepayment Risk, Credit Risk,
Interest Rate Risk, and Management Risk.
Commercial Paper
Commercial paper is a short-term debt obligation with a maturity ranging from 2
to 270 days issued by banks, corporations, and other borrowers. It is sold to
investors with temporary idle cash as a way to increase returns on a short-term
basis. These instruments are generally unsecured, which increases the credit
risk associated with this type of investment. (See also Debt Obligations and
Illiquid and Restricted Securities.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with commercial paper include: Credit Risk, Liquidity
Risk, and Management Risk.
Common Stock
Common stock represents units of ownership in a corporation. Owners typically
are entitled to vote on the selection of directors and other important matters
as well as to receive dividends on their holdings. In the event that a
corporation is liquidated, the claims of secured and unsecured creditors and
owners of bonds and preferred stock take precedence over the claims of those who
own common stock.
The price of common stock is generally determined by corporate earnings, type of
products or services offered, projected growth rates, experience of management,
liquidity, and general market conditions for the markets on which the stock
trades.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with common stock include: Issuer Risk, Management
Risk, Market Risk, and Small Company Risk.
<PAGE>
Convertible Securities
Convertible securities are bonds, debentures, notes, preferred stocks, or other
securities that may be converted into common stock of the same or a different
issuer within a particular period of time at a specified price. Some convertible
securities, such as preferred equity-redemption cumulative stock (PERCs), have
mandatory conversion features. Others are voluntary. A convertible security
entitles the holder to receive interest normally paid or accrued on debt or the
dividend paid on preferred stock until the convertible security matures or is
redeemed, converted, or exchanged. Convertible securities have unique investment
characteristics in that they generally (i) have higher yields than common stocks
but lower yields than comparable non-convertible securities, (ii) are less
subject to fluctuation in value than the underlying stock since they have fixed
income characteristics, and (iii) provide the potential for capital appreciation
if the market price of the underlying common stock increases.
The value of a convertible security is a function of its "investment value"
(determined by its yield in comparison with the yields of other securities of
comparable maturity and quality that do not have a conversion privilege) and its
"conversion value" (the security's worth, at market value, if converted into the
underlying common stock). The investment value of a convertible security is
influenced by changes in interest rates, with investment value declining as
interest rates increase and increasing as interest rates decline. The credit
standing of the issuer and other factors also may have an effect on the
convertible security's investment value. The conversion value of a convertible
security is determined by the market price of the underlying common stock. If
the conversion value is low relative to the investment value, the price of the
convertible security is governed principally by its investment value. Generally,
the conversion value decreases as the convertible security approaches maturity.
To the extent the market price of the underlying common stock approaches or
exceeds the conversion price, the price of the convertible security will be
increasingly influenced by its conversion value. A convertible security
generally will sell at a premium over its conversion value by the extent to
which investors place value on the right to acquire the underlying common stock
while holding a fixed income security.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with convertible securities include: Call/Prepayment
Risk, Interest Rate Risk, Issuer Risk, Management Risk, Market Risk, and
Reinvestment Risk.
Corporate Bonds
Corporate bonds are debt obligations issued by private corporations, as distinct
from bonds issued by a government agency or a municipality. Corporate bonds
typically have four distinguishing features: (1) they are taxable; (2) they have
a par value of $1,000; (3) they have a term maturity, which means they come due
all at once; and (4) many are traded on major exchanges. Corporate bonds are
subject to the same concerns as other debt obligations. (See also Debt
Obligations and High-Yield (High-Risk) Securities.)
Corporate bonds may be either secured or unsecured. Unsecured corporate bonds
are generally referred to as "debentures." See the appendix for a discussion of
securities ratings.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with corporate bonds include: Call/Prepayment Risk,
Credit Risk, Interest Rate Risk, Issuer Risk, Management Risk, and Reinvestment
Risk.
Debt Obligations
Many different types of debt obligations exist (for example, bills, bonds, or
notes). Issuers of debt obligations have a contractual obligation to pay
interest at a specified rate on specified dates and to repay principal on a
specified maturity date. Certain debt obligations (usually intermediate- and
long-term bonds) have provisions that allow the issuer to redeem or "call" a
bond before its maturity. Issuers are most likely to call these securities
during periods of falling interest rates. When this happens, an investor may
have to replace these securities with lower yielding securities, which could
result in a lower return.
<PAGE>
The market value of debt obligations is affected primarily by changes in
prevailing interest rates and the issuers perceived ability to repay the debt.
The market value of a debt obligation generally reacts inversely to interest
rate changes. When prevailing interest rates decline, the price usually rises,
and when prevailing interest rates rise, the price usually declines.
In general, the longer the maturity of a debt obligation, the higher its yield
and the greater the sensitivity to changes in interest rates. Conversely, the
shorter the maturity, the lower the yield but the greater the price stability.
As noted, the values of debt obligations also may be affected by changes in the
credit rating or financial condition of their issuers. Generally, the lower the
quality rating of a security, the higher the degree of risk as to the payment of
interest and return of principal. To compensate investors for taking on such
increased risk, those issuers deemed to be less creditworthy generally must
offer their investors higher interest rates than do issuers with better credit
ratings. (See also Agency and Government Securities, Corporate Bonds, and
High-Yield (High-Risk) Securities.)
All ratings limitations are applied at the time of purchase. Subsequent to
purchase, a debt security may cease to be rated or its rating may be reduced
below the minimum required for purchase by the Fund. Neither event will require
the sale of such a security, but it will be a factor in considering whether to
continue to hold the security. To the extent that ratings change as a result of
changes in a rating organization or their rating systems, the Fund will attempt
to use comparable ratings as standards for selecting investments.
See the appendix for a discussion of securities ratings.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with debt obligations include: Call/Prepayment Risk,
Credit Risk, Interest Rate Risk, Issuer Risk, Management Risk, and Reinvestment
Risk.
Depositary Receipts
Some foreign securities are traded in the form of American Depositary Receipts
(ADRs). ADRs are receipts typically issued by a U.S. bank or trust company
evidencing ownership of the underlying securities of foreign issuers. European
Depositary Receipts (EDRs) and Global Depositary Receipts (GDRs) are receipts
typically issued by foreign banks or trust companies, evidencing ownership of
underlying securities issued by either a foreign or U.S. issuer. Generally,
depositary receipts in registered form are designed for use in the U.S. and
depositary receipts in bearer form are designed for use in securities markets
outside the U.S. Depositary receipts may not necessarily be denominated in the
same currency as the underlying securities into which they may be converted.
Depositary receipts involve the risks of other investments in foreign
securities. In addition, ADR holders may not have all the legal rights of
shareholders and may experience difficulty in receiving shareholder
communications. (See also Common Stock and Foreign Securities.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with depositary receipts include: Foreign/Emerging
Markets Risk, Issuer Risk, Management Risk, and Market Risk.
<PAGE>
Derivative Instruments
Derivative instruments are commonly defined to include securities or contracts
whose values depend, in whole or in part, on (or "derive" from) the value of one
or more other assets, such as securities, currencies, or commodities.
A derivative instrument generally consists of, is based upon, or exhibits
characteristics similar to options or 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. Their
value changes daily based on a security, a currency, a group of securities or
currencies, or an index. A small change in the value of the underlying security,
currency, or index can cause a sizable percentage gain or loss in the price of
the derivative instrument.
Options and forward contracts are considered to be the basic "building blocks"
of derivatives. For example, forward-based derivatives include forward
contracts, swap contracts, and exchange-traded futures. Forward-based
derivatives are sometimes referred to generically as "futures contracts."
Option-based derivatives include privately negotiated, over-the-counter (OTC)
options (including caps, floors, collars, and options on futures) and
exchange-traded options on futures. Diverse types of derivatives may be created
by combining options or futures in different ways, and by applying these
structures to a wide range of underlying assets.
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 for the length of the contract 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 during the length of the contract, 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 or securities of equivalent value (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 to
the premium, the buyer generally pays a broker a commission. The writer receives
a premium, less another commission, at the time the option is written. The
premium received by the writer is retained 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.
When an option is purchased, the buyer 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 sale of the underlying security is the combination of the exercise price,
the premium, and both commissions.
One of the risks an investor assumes when it buys an option is the loss of the
premium. To be beneficial to the investor, 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 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.
Options on many securities are listed on options exchanges. If the Fund 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
ask prices.
<PAGE>
Options on certain securities are not actively traded on any exchange, but may
be entered into directly with a dealer. These options may be more difficult to
close. If an investor is unable to effect a closing purchase transaction, it
will not be able to sell the underlying security until the call written by the
investor expires or is exercised.
Futures Contracts. A futures contract is a sales contract between a
buyer (holding the "long" position) and a seller (holding the "short" position)
for an asset with delivery deferred until a future date. The buyer agrees to pay
a fixed price at the agreed future date and the seller agrees to deliver the
asset. The seller hopes that the market price on the delivery date is less than
the agreed upon price, while the buyer hopes for the contrary. Many futures
contracts trade in a manner similar to the way a stock trades on a stock
exchange and the commodity exchanges.
Generally, a futures contract is terminated by entering into an offsetting
transaction. An offsetting transaction is effected by an investor taking an
opposite position. At the time a futures contract is made, a good faith deposit
called initial margin is set up. Daily thereafter, the futures contract is
valued and the payment of variation margin is required so that each day a buyer
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 market.
Futures contracts may be based on various securities, securities indices (such
as the S&P 500 Index), foreign currencies and other financial instruments and
indices.
Options on Futures Contracts. Options on futures contracts 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 (some futures are settled in cash), 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 a contract. If the
holder decides not to enter into the contract, all that is lost is the amount
(premium) paid for the option. Further, 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.
One of the risks in buying an option on a futures contract is the loss of the
premium paid for the option. The risk involved in writing options on futures
contracts an investor owns, or on securities held in its portfolio, is that
there could be an increase in the market value of these 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. An investor could
enter into a closing transaction by purchasing an option with the same terms as
the one previously sold. The cost to close the option and terminate the
investor's obligation, however, might still result in a loss. Further, the
investor might not be able to close the option because of insufficient activity
in the options market. Purchasing options also limits the use of monies that
might otherwise be available for long-term investments.
Options on Stock Indexes. Options on stock indexes are securities
traded on national securities exchanges. An option on a stock index is similar
to an option on a futures contract except all settlements are in cash. A fund
exercising a put, for example, would receive the difference between the exercise
price and the current index level.
Tax Treatment. As permitted under federal income tax laws and to the
extent the Fund is allowed to invest in futures contacts, the Fund 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 Fund being required to defer recognizing
losses incurred on futures contracts and on underlying securities identified as
hedged positions and require recognition of unrealized gain.
<PAGE>
Federal income tax treatment of gains or losses from transactions in options on
futures contracts and indexes will depend on whether the option is a section
1256 contract. If the option is a non-equity option, the Fund 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.
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 Fund'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 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.
Other Risks of Derivatives.
The primary risk of derivatives is the same as the risk of the underlying asset,
namely that the value of the underlying asset may go up or down. Adverse
movements in the value of an underlying asset can expose an investor to losses.
Derivative instruments may include elements of leverage and, accordingly, the
fluctuation of the value of the derivative instrument in relation to the
underlying asset may be magnified. The successful use of derivative instruments
depends upon a variety of factors, particularly the investment manager's ability
to predict movements of the securities, currencies, and commodity markets, which
requires different skills than predicting changes in the prices of individual
securities. There can be no assurance that any particular strategy will succeed.
Another risk is the risk that a loss may be sustained as a result of the failure
of a counterparty to comply with the terms of a derivative instrument. The
counterparty risk for exchange-traded derivative instruments is generally less
than for privately-negotiated or OTC derivative instruments, since generally a
clearing agency, which is the issuer or counterparty to each exchange-traded
instrument, provides a guarantee of performance. For privately-negotiated
instruments, there is no similar clearing agency guarantee. In all transactions,
an investor will bear the risk that the counterparty will default, and this
could result in a loss of the expected benefit of the derivative transaction and
possibly other losses.
When a derivative transaction is used to completely hedge another position,
changes in the market value of the combined position (the derivative instrument
plus the position being hedged) result from an imperfect correlation between the
price movements of the two instruments. With a perfect hedge, the value of the
combined position remains unchanged for any change in the price of the
underlying asset. With an imperfect hedge, the values of the derivative
instrument and its hedge are not perfectly correlated. For example, if the value
of a derivative instrument used in a short hedge (such as writing a call option,
buying a put option, or selling a futures contract) increased by less than the
decline in value of the hedged investment, the hedge would not be perfectly
correlated. Such a lack of correlation might occur due to factors unrelated to
the value of the investments being hedged, such as speculative or other
pressures on the markets in which these instruments are traded.
Derivatives also are subject to the risk that they cannot be sold, closed out,
or replaced quickly at or very close to their fundamental value. Generally,
exchange contracts are very liquid because the exchange clearinghouse is the
counterparty of every contract. OTC transactions are less liquid than
exchange-traded derivatives since they often can only be closed out with the
other party to the transaction.
<PAGE>
Another risk is caused by the legal unenforcibility of a party's obligations
under the derivative. A counterparty that has lost money in a derivative
transaction may try to avoid payment by exploiting various legal uncertainties
about certain derivative products.
(See also Foreign Currency Transactions.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with derivative instruments include: Leverage Risk,
Liquidity Risk, and Management Risk.
Foreign Currency Transactions
Since investments in foreign countries usually involve currencies of foreign
countries, the value of the Fund's assets as measured in U.S. dollars may be
affected favorably or unfavorably by changes in currency exchange rates and
exchange control regulations. Also, the Fund may incur costs in connection with
conversions between various currencies. Currency exchange rates may fluctuate
significantly over short periods of time causing the Fund's NAV to fluctuate.
Currency exchange rates are generally determined by the forces of supply and
demand in the foreign exchange markets, actual or anticipated changes in
interest rates, and other complex factors. Currency exchange rates also can be
affected by the intervention of U.S. or foreign governments or central banks, or
the failure to intervene, or by currency controls or political developments.
(See also Derivative Instruments and Foreign Securities.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with foreign currency transactions include: Correlation
Risk, Interest Rate Risk, Leverage Risk, Liquidity Risk, and Management Risk.
Foreign Securities
Foreign securities, foreign currencies, and securities issued by U.S. entities
with substantial foreign operations involve special risks, including those set
forth below, which are not typically associated with investing in U.S.
securities. Foreign companies are not generally subject to uniform accounting,
auditing, and financial reporting standards comparable to those applicable to
domestic companies. Additionally, many foreign stock markets, while growing in
volume of trading activity, have substantially less volume than the New York
Stock Exchange, and securities of some foreign companies are less liquid and
more volatile than securities of domestic companies. Similarly, volume and
liquidity in most foreign bond markets are less than the volume and liquidity in
the U.S. and, at times, volatility of price can be greater than in the U.S.
Further, foreign markets have different clearance, settlement, registration, and
communication procedures and in certain markets there have been times when
settlements have been unable to keep pace with the volume of securities
transactions making it difficult to conduct such transactions. Delays in such
procedures could result in temporary periods when assets are uninvested and no
return is earned on them. The inability of an investor to make intended security
purchases due to such problems could cause the investor to miss attractive
investment opportunities. Payment for securities without delivery may be
required in certain foreign markets and, when participating in new issues, some
foreign countries require payment to be made in advance of issuance (at the time
of issuance, the market value of the security may be more or less than the
purchase price). Some foreign markets also have compulsory depositories (i.e.,
an investor does not have a choice as to where the securities are held). Fixed
commissions on some foreign stock exchanges are generally higher than negotiated
commissions on U.S. exchanges. Further, an investor may encounter difficulties
or be unable to pursue legal remedies and obtain judgments in foreign courts.
There is generally less government supervision and regulation of business and
industry practices, stock exchanges, brokers, and listed companies than in the
U.S. It may be more difficult for an investor's agents to keep currently
informed about corporate actions such as stock dividends or other matters that
may affect the prices of portfolio securities. Communications between the U.S.
and foreign countries may be less reliable than within the U.S., thus increasing
the risk of delays or loss of certificates
<PAGE>
for portfolio securities. In addition, with respect to certain foreign
countries, there is the possibility of nationalization, expropriation, the
imposition of additional withholding or confiscatory taxes, political, social,
or economic instability, diplomatic developments that could affect investments
in those countries, or other unforeseen actions by regulatory bodies (such as
changes to settlement or custody procedures).
The risks of foreign investing may be magnified for investments in emerging
markets, which may have relatively unstable governments, economies based on only
a few industries, and securities markets that trade a small number of
securities.
The introduction of a single currency, the euro, on January 1, 1999 for
participating European nations in the Economic and Monetary Union ("EU")
presents unique uncertainties, including whether the payment and operational
systems of banks and other financial institutions will be ready by the scheduled
launch date; the creation of suitable clearing and settlement payment systems
for the new currency; the legal treatment of certain outstanding financial
contracts after January 1, 1999 that refer to existing currencies rather than
the euro; the establishment and maintenance of exchange rates; the fluctuation
of the euro relative to non-euro currencies during the transition period from
January 1, 1999 to December 31, 2000 and beyond; whether the interest rate, tax
or labor regimes of European countries participating in the euro will converge
over time; and whether the conversion of the currencies of other EU countries
such as the United Kingdom, Denmark, and Greece into the euro and the admission
of other non-EU countries such as Poland, Latvia, and Lithuania as members of
the EU may have an impact on the euro.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with foreign securities include: Foreign/Emerging
Markets Risk, Issuer Risk, and Management Risk.
High-Yield (High-Risk) Securities (Junk Bonds)
High yield (high-risk) securities are sometimes referred to as "junk bonds."
They are non-investment grade (lower quality) securities that have speculative
characteristics. Lower quality securities, while generally offering higher
yields than investment grade securities with similar maturities, involve greater
risks, including the possibility of default or bankruptcy. They are regarded as
predominantly speculative with respect to the issuer's capacity to pay interest
and repay principal. The special risk considerations in connection with
investments in these securities are discussed below.
See the appendix for a discussion of securities ratings. (See also Debt
Obligations.)
The lower-quality and comparable unrated security market is relatively new and
its growth has paralleled a long economic expansion. As a result, it is not
clear how this market may withstand a prolonged recession or economic downturn.
Such conditions could severely disrupt the market for and adversely affect the
value of such securities.
All interest-bearing securities typically experience appreciation when interest
rates decline and depreciation when interest rates rise. The market values of
lower-quality and comparable unrated securities tend to reflect individual
corporate developments to a greater extent than do higher rated securities,
which react primarily to fluctuations in the general level of interest rates.
Lower-quality and comparable unrated securities also tend to be more sensitive
to economic conditions than are higher-rated securities. As a result, they
generally involve more credit risks than securities in the higher-rated
categories. During an economic downturn or a sustained period of rising interest
rates, highly leveraged issuers of lower-quality securities may experience
financial stress and may not have sufficient revenues to meet their payment
obligations. The issuer's ability to service its debt obligations also may be
adversely affected by specific corporate developments, the issuer's inability to
meet specific projected business forecast, or the unavailability of additional
financing. The risk of loss due to default by an issuer of these securities is
significantly greater than issuers of higher-rated securities because such
securities are generally unsecured and are often subordinated to other
creditors. Further, if the issuer of a lower quality security defaulted, an
investor might incur additional expenses to seek recovery.
<PAGE>
Credit ratings issued by credit rating agencies are designed to evaluate the
safety of principal and interest payments of rated securities. They do not,
however, evaluate the market value risk of lower-quality securities and,
therefore, may not fully reflect the true risks of an investment. In addition,
credit rating agencies may or may not make timely changes in a rating to reflect
changes in the economy or in the condition of the issuer that affect the market
value of the securities. Consequently, credit ratings are used only as a
preliminary indicator of investment quality.
An investor may have difficulty disposing of certain lower-quality and
comparable unrated securities because there may be a thin trading market for
such securities. Because not all dealers maintain markets in all lower quality
and comparable unrated securities, there is no established retail secondary
market for many of these securities. To the extent a secondary trading market
does exist, it is generally not as liquid as the secondary market for
higher-rated securities. The lack of a liquid secondary market may have an
adverse impact on the market price of the security. The lack of a liquid
secondary market for certain securities also may make it more difficult for an
investor to obtain accurate market quotations. Market quotations are generally
available on many lower-quality and comparable unrated issues only from a
limited number of dealers and may not necessarily represent firm bids of such
dealers or prices for actual sales.
Legislation may be adopted from time to time designed to limit the use of
certain lower quality and comparable unrated securities by certain issuers.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with high-yield (high-risk) securities include:
Call/Prepayment Risk, Credit Risk, Currency Risk, Interest Rate Risk, and
Management Risk.
Illiquid and Restricted Securities
The Fund may invest in illiquid securities (i.e., securities that are not
readily marketable). These securities may include, but are not limited to,
certain securities that are subject to legal or contractual restrictions on
resale, certain repurchase agreements, and derivative instruments.
To the extent the Fund invests in illiquid or restricted securities, it may
encounter difficulty in determining a market value for such securities.
Disposing of illiquid or restricted securities may involve time-consuming
negotiations and legal expense, and it may be difficult or impossible for the
Fund to sell such an investment promptly and at an acceptable price.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with illiquid and restricted securities include:
Liquidity Risk and Management Risk.
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 and they may be less liquid than the securities
represented by the index. (See also Derivative Instruments.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with indexed securities include: Liquidity Risk,
Management Risk, and Market Risk.
<PAGE>
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. (See also Derivative Instruments.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with inverse floaters include: Interest Rate Risk and
Management Risk.
Investment Companies
The Fund may invest in securities issued by registered and unregistered
investment companies. These investments may involve the duplication of advisory
fees and certain other expenses.
Although one or more of the other risks described in this SAI may apply, the
largest risk associated with the securities of other investment companies
includes: Management Risk and Market Risk.
Lending of Portfolio Securities
The Fund may lend certain of its portfolio securities to broker-dealers. The
current policy of the Fund's board is to make these loans, either long- or
short-term, to broker-dealers. In making loans, the Fund 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 Fund 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 Fund receives cash payments equivalent to
all interest or other distributions paid on the loaned securities. The Fund may
pay reasonable administrative and custodial fees in connection with a loan and
may pay a negotiated portion of the interest earned on the cash or money market
instruments held as collateral to the borrower or placing broker. The Fund will
receive reasonable interest on the loan or a flat fee from the borrower and
amounts equivalent to any dividends, interest, or other distributions on the
securities loaned.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with the lending of portfolio securities include:
Credit Risk and Management Risk.
Loan Participations
Loans, loan participations, and interests in securitized loan pools are
interests in amounts owed by a corporate, governmental, or other borrower to a
lender or consortium of lenders (typically banks, insurance companies,
investment banks, government agencies, or international agencies). Loans involve
a risk of loss in case of default or insolvency of the borrower and may offer
less legal protection to an investor in the event of fraud or misrepresentation.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with loan participations include: Credit Risk and
Management Risk.
<PAGE>
Mortgage- and Asset-Backed Securities
Mortgage-backed securities represent direct or indirect participations in, or
are secured by and payable from, mortgage loans secured by real property, and
include single- and multi-class pass-through securities and Collateralized
Mortgage Obligations (CMOs). These securities may be issued or guaranteed by
U.S. government agencies or instrumentalities (see also Agency and Government
Securities), or by private issuers, generally originators and investors in
mortgage loans, including savings associations, mortgage bankers, commercial
banks, investment bankers, and special purpose entities. Mortgage-backed
securities issued by private lenders may be supported by pools of mortgage loans
or other mortgage-backed securities that are guaranteed, directly or indirectly,
by the U.S. government or one of its agencies or instrumentalities, or they may
be issued without any governmental guarantee of the underlying mortgage assets
but with some form of non-governmental credit enhancement.
Stripped mortgage-backed securities are a type of mortgage-backed security that
receive differing proportions of the interest and principal payments from the
underlying assets. Generally, there are two classes of stripped mortgage-backed
securities: Interest Only (IO) and Principal Only (PO). IOs entitle the holder
to receive distributions consisting of all or a portion of the interest on the
underlying pool of mortgage loans or mortgage-backed securities. POs entitle the
holder to receive distributions consisting of all or a portion of the principal
of the underlying pool of mortgage loans or mortgage-backed securities. The cash
flows and yields on IOs and POs are extremely sensitive to the rate of principal
payments (including prepayments) on the underlying mortgage loans or
mortgage-backed securities. A rapid rate of principal payments may adversely
affect the yield to maturity of IOs. A slow rate of principal payments may
adversely affect the yield to maturity of POs. If prepayments of principal are
greater than anticipated, an investor in IOs may incur substantial losses. If
prepayments of principal are slower than anticipated, the yield on a PO will be
affected more severely than would be the case with a traditional mortgage-backed
security.
CMOs are hybrid mortgage-related instruments secured by pools of mortgage loans
or other mortgage-related securities, such as mortgage pass through securities
or stripped mortgage-backed securities. CMOs may be structured into multiple
classes, often referred to as "tranches," with each class bearing a different
stated maturity and entitled to a different schedule for payments of principal
and interest, including prepayments. Principal prepayments on collateral
underlying a CMO may cause it to be retired substantially earlier than its
stated maturity.
The yield characteristics of mortgage-backed securities differ from those of
other debt securities. Among the differences are that interest and principal
payments are made more frequently on mortgage-backed securities, usually
monthly, and principal may be repaid at any time. These factors may reduce the
expected yield.
Asset-backed securities have structural characteristics similar to
mortgage-backed securities. Asset-backed debt obligations represent direct or
indirect participation in, or secured by and payable from, assets such as motor
vehicle installment sales contracts, other installment loan contracts, home
equity loans, leases of various types of property, and receivables from credit
card or other revolving credit arrangements. The credit quality of most
asset-backed securities depends primarily on the credit quality of the assets
underlying such securities, how well the entity issuing the security is
insulated from the credit risk of the originator or any other affiliated
entities, and the amount and quality of any credit enhancement of the
securities. Payments or distributions of principal and interest on asset-backed
debt obligations may be supported by non-governmental credit enhancements
including letters of credit, reserve funds, overcollateralization, and
guarantees by third parties. The market for privately issued asset-backed debt
obligations is smaller and less liquid than the market for government sponsored
mortgage-backed securities. (See also Derivative Instruments.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with mortgage- and asset-backed securities include:
Call/Prepayment Risk, Credit Risk, Interest Rate Risk, Liquidity Risk, and
Management Risk.
<PAGE>
Mortgage Dollar Rolls
Mortgage dollar rolls are investments whereby an investor would sell
mortgage-backed securities for delivery in the current month and simultaneously
contract to purchase substantially similar securities on a specified future
date. While an investor would forego principal and interest paid on the
mortgage-backed securities during the roll period, the investor would be
compensated by the difference between the current sales price and the lower
price for the future purchase as well as by any interest earned on the proceeds
of the initial sale. The investor also could be compensated through the receipt
of fee income equivalent to a lower forward price.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with mortgage dollar rolls include: Credit Risk,
Interest Rate Risk, and Management Risk.
Municipal Obligations
Municipal obligations include debt obligations issued by or on behalf of states,
territories, possessions, or sovereign nations within territorial boundaries of
the United States (including the District of Columbia and Puerto Rico). The
interest on these obligations is generally exempt from federal income tax.
Municipal obligations are generally classified as either "general obligations"
or "revenue obligations."
General obligation bonds are secured by the issuer's pledge of its full faith,
credit, and taxing power for the payment of interest and principal. Revenue
bonds are payable only from the revenues derived from a project or facility or
from the proceeds of a specified revenue source. Industrial development bonds
are generally revenue bonds secured by payments from and the credit of private
users. Municipal notes are issued to meet the short-term funding requirements of
state, regional, and local governments. Municipal notes include tax anticipation
notes, bond anticipation notes, revenue anticipation notes, tax and revenue
anticipation notes, construction loan notes, short-term discount notes,
tax-exempt commercial paper, demand notes, and similar instruments.
Municipal lease obligations may take the form of a lease, an installment
purchase, or a conditional sales contract. They are issued by state and local
governments and authorities to acquire land, equipment, and facilities. An
investor may purchase these obligations directly, or it may purchase
participation interests in such obligations. Municipal leases may be subject to
greater risks than general obligation or revenue bonds. State constitutions and
statutes set forth requirements that states or municipalities must meet in order
to issue municipal obligations. Municipal leases may contain a covenant by the
state or municipality to budget for and make payments due under the obligation.
Certain municipal leases may, however, provide that the issuer is not obligated
to make payments on the obligation in future years unless funds have been
appropriated for this purpose each year.
Yields on municipal bonds and notes depend on a variety of factors, including
money market conditions, municipal bond market conditions, the size of a
particular offering, the maturity of the obligation, and the rating of the
issue. The municipal bond market has a large number of different issuers, many
having smaller sized bond issues, and a wide choice of different maturities
within each issue. For these reasons, most municipal bonds do not trade on a
daily basis and many trade only rarely. Because many of these bonds trade
infrequently, the spread between the bid and offer may be wider and the time
needed to develop a bid or an offer may be longer than other security markets.
See the appendix for a discussion of securities ratings. (See also Debt
Obligations.)
<PAGE>
Taxable Municipal Obligations. There is another type of municipal obligation
that is subject to federal income tax for a variety of reasons. These municipal
obligations do not qualify for the federal income exemption because (a) they did
not receive necessary authorization for tax-exempt treatment from state or local
government authorities, (b) they exceed certain regulatory limitations on the
cost of issuance for tax-exempt financing or (c) they finance public or private
activities that do not qualify for the federal income tax exemption. These
non-qualifying activities might include, for example, certain types of
multi-family housing, certain professional and local sports facilities,
refinancing of certain municipal debt, and borrowing to replenish a
municipality's underfunded pension plan.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with municipal obligations include: Credit Risk, Event
Risk, Inflation Risk, Interest Rate Risk, Legal/Legislative Risk, and Market
Risk.
Preferred Stock
Preferred stock is a type of stock that pays dividends at a specified rate and
that has preference over common stock in the payment of dividends and the
liquidation of assets. Preferred stock does not ordinarily carry voting rights.
The price of a preferred stock is generally determined by earnings, type of
products or services, projected growth rates, experience of management,
liquidity, and general market conditions of the markets on which the stock
trades.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with preferred stock include: Issuer Risk, Management
Risk, and Market Risk.
Real Estate Investment Trusts
Real estate investment trusts (REITs) are entities that manage a portfolio of
real estate to earn profits for their shareholders. REITs can make investments
in real estate such as shopping centers, nursing homes, office buildings,
apartment complexes, and hotels. REITs can be subject to extreme volatility due
to fluctuations in the demand for real estate, changes in interest rates, and
adverse economic conditions. Additionally, the failure of a REIT to continue to
qualify as a REIT for tax purposes can materially affect its value.
Although one or more of the other risks described in this SAI may apply, the
largest associated with REITs include: Issuer Risk, Management Risk, and Market
Risk.
Repurchase Agreements
The Fund may enter into repurchase agreements with certain banks or non-bank
dealers. In a repurchase agreement, the Fund buys a security at one price, and
at the time of sale, the seller agrees to repurchase the obligation at a
mutually agreed upon time and price (usually within seven days). The repurchase
agreement thereby determines the yield during the purchaser's holding period,
while the seller's obligation to repurchase is secured by the value of the
underlying security. Repurchase agreements could involve certain risks in the
event of a default or insolvency of the other party to the agreement, including
possible delays or restrictions upon the Fund's ability to dispose of the
underlying securities.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with repurchase agreements include: Credit Risk and
Management Risk.
<PAGE>
Reverse Repurchase Agreements
In a reverse repurchase agreement, the investor would sell a security and enter
into an agreement to repurchase the security at a specified future date and
price. The investor generally retains the right to interest and principal
payments on the security. Since the investor receives cash upon entering into a
reverse repurchase agreement, it may be considered a borrowing. (See also
Derivative Instruments.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with reverse repurchase agreements include: Credit
Risk, Interest Rate Risk, and Management Risk.
Short Sales
With short sales, an investor sells a security that it does not own in
anticipation of a decline in the market value of the security. To complete the
transaction, the investor must borrow the security to make delivery to the
buyer. The investor is obligated to replace the security that was borrowed by
purchasing it at the market price at the time of replacement. The price at such
time may be more or less than the price at which the investor sold the security.
A fund that is allowed to utilize short sales will designate cash or liquid
securities to cover its open short positions. Those funds also may engage in
"short sales against the box," a form of short-selling that involves selling a
security that an investor owns (or has an unconditioned right to purchase) for
delivery at a future date. This technique allows an investor to hedge
protectively against anticipated declines in the market of its securities. If
the value of the securities sold short increased between the date of the short
sale and the date on which the borrowed security is replaced, the investor loses
the opportunity to participate in the gain. A "Short Sale against the box" will
result in a constructive sale of appreciated securities thereby generating
capital gains to the Fund.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with short sales include: Management Risk and Market
Risk.
Sovereign Debt
A sovereign debtor's willingness or ability to repay principal and pay interest
in a timely manner may be affected by a variety of factors, including its cash
flow situation, the extent of its reserves, the availability of sufficient
foreign exchange on the date a payment is due, the relative size of the debt
service burden to the economy as a whole, the sovereign debtor's policy toward
international lenders, and the political constraints to which a sovereign debtor
may be subject. (See also Foreign Securities.)
With respect to sovereign debt of emerging market issuers, investors should be
aware that certain emerging market countries are among the largest debtors to
commercial banks and foreign governments. At times, certain emerging market
countries have declared moratoria on the payment of principal and interest on
external debt.
Certain emerging market countries have experienced difficulty in servicing their
sovereign debt on a timely basis that led to defaults and the restructuring of
certain indebtedness.
Sovereign debt includes Brady Bonds, which are securities issued under the
framework of the Brady Plan, an initiative announced by former U.S. Treasury
Secretary Nicholas F. Brady in 1989 as a mechanism for debtor nations to
restructure their outstanding external commercial bank indebtedness.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with sovereign debt include: Credit Risk,
Foreign/Emerging Markets Risk, and Management Risk.
<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. (See
also Derivative Instruments.)
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with structured products include: Credit Risk,
Liquidity Risk, and Management Risk.
Variable- or Floating-Rate Securities
The Fund may invest in securities that offer a variable- or floating-rate of
interest. Variable-rate securities provide for automatic establishment of a new
interest rate at fixed intervals (e.g., daily, monthly, semi-annually, etc.).
Floating-rate securities generally provide for automatic adjustment of the
interest rate whenever some specified interest rate index changes.
Variable- or floating-rate securities frequently include a demand feature
enabling the holder to sell the securities to the issuer at par. In many cases,
the demand feature can be exercised at any time. Some securities that do not
have variable or floating interest rates may be accompanied by puts producing
similar results and price characteristics.
Variable-rate demand notes include master demand notes that are obligations that
permit the Fund to invest fluctuating amounts, which may change daily without
penalty, pursuant to direct arrangements between the Fund as lender, and the
borrower. The interest rates on these notes fluctuate from time to time. The
issuer of such obligations normally has a corresponding right, after a given
period, to prepay in its discretion the outstanding principal amount of the
obligations plus accrued interest upon a specified number of days' notice to the
holders of such obligations. Because these obligations are direct lending
arrangements between the lender and borrower, it is not contemplated that such
instruments generally will be traded. There generally is not an established
secondary market for these obligations. Accordingly, where these obligations are
not secured by letters of credit or other credit support arrangements, the
Fund's right to redeem is dependent on the ability of the borrower to pay
principal and interest on demand. Such obligations frequently are not rated by
credit rating agencies and may involve heightened risk of default by the issuer.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with variable- or floating-rate securities include:
Credit Risk and Management Risk.
Warrants
Warrants are securities giving the holder the right, but not the obligation, to
buy the stock of an issuer at a given price (generally higher than the value of
the stock at the time of issuance) during a specified period or perpetually.
Warrants may be acquired separately or in connection with the acquisition of
securities. Warrants do not carry with them the right to dividends or voting
rights and they do not represent any rights in the assets of the issuer.
Warrants may be considered to have more speculative characteristics than certain
other types of investments. In addition, the value of a warrant does not
necessarily change with the value of the underlying securities, and a warrant
ceases to have value if it is not exercised prior to its expiration date.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with warrants include: Management Risk and Market Risk.
<PAGE>
When-Issued Securities
These instruments are contracts to purchase securities for a fixed price at a
future date beyond normal settlement time (when-issued securities or forward
commitments). The price of debt obligations purchased on a when-issued basis,
which may be expressed in yield terms, generally is fixed at the time the
commitment to purchase is made, but delivery and payment for the securities take
place at a later date. Normally, the settlement date occurs within 45 days of
the purchase although in some cases settlement may take longer. The investor
does not pay for the securities or receive dividends or interest on them until
the contractual settlement date. Such instruments involve a risk of loss if the
value of the security to be purchased declines prior to the settlement date,
which risk is in addition to the risk of decline in value of the investor's
other assets. In addition, when the Fund engages in forward commitment and
when-issued transactions, it relies on the counterparty to consummate the
transaction. The failure of the counterparty to consummate the transaction may
result in the Fund losing the opportunity to obtain a price and yield considered
to be advantageous.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with when-issued securities include: Credit Risk and
Management Risk.
Zero-Coupon, Step-Coupon, and Pay-in-Kind Securities
These securities are debt obligations that do not make regular cash interest
payments (see also Debt Obligations). Zero-coupon and step-coupon securities are
sold at a deep discount to their face value because they do not pay interest
until maturity. Pay-in-kind securities pay interest through the issuance of
additional securities. Because these securities do not pay current cash income,
the price of these securities can be extremely volatile when interest rates
fluctuate. See the appendix for a discussion of securities ratings.
Although one or more of the other risks described in this SAI may apply, the
largest risks associated with zero-coupon, step-coupon, and pay-in-kind
securities include: Credit Risk, Interest Rate Risk, and Management Risk.
<PAGE>
SECURITY TRANSACTIONS
- --------------------------------------------------------------------------------
Subject to policies set by the board, the Advisor is authorized to determine,
consistent with the Fund'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 the most favorable execution except where otherwise
authorized by the board. In selecting broker-dealers to execute transactions,
the Advisor may consider the price of the security, including commission or
mark-up, the size and difficulty of the order, the reliability, integrity,
financial soundness, and general operation and execution capabilities of the
broker, the broker's expertise in particular markets, and research services
provided by the broker.
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.
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 with respect 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, a Fund'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.
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 Fund to pay a
<PAGE>
commission in excess of the amount another broker might have charged. The
Advisor has advised the Fund that 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 will be placed on the basis of obtaining the best
available price and the 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 Fund is made independently from any
decision made for another portfolio, fund, or other account advised by the
Advisor or any of its subsidiaries. When the Fund buys or sells the same
security as another portfolio, fund, or account, the Advisor carries out the
purchase or sale in a way the Fund agrees in advance is fair. Although sharing
in large transactions may adversely affect the price or volume purchased or sold
by the Fund, the Fund hopes to gain an overall advantage in execution.
On a periodic basis, the Advisor makes a comprehensive review of the
broker-dealers and the overall reasonableness of their commissions. The review
evaluates execution, operational efficiency, and research services.
The Fund paid total brokerage commissions of $16,304 for fiscal year ended Nov.
30, 1999, $0 for fiscal year 1998, and $0 for fiscal year 1997. Substantially
all firms through whom transactions were executed provide research services.
No transactions were directed to brokers because of research services they
provided to the Fund.
As of the end of the most recent fiscal year, the Fund held no securities of its
regular brokers or dealers or of the parent of those brokers or dealers that
derived more than 15% of gross revenue from securities-related activities.
The portfolio turnover rate was 16% in the most recent fiscal year, and 14% in
the year before.
BROKERAGE COMMISSIONS PAID TO BROKERS AFFILIATED WITH THE ADVISOR
- --------------------------------------------------------------------------------
Affiliates of American Express Company (of which the Advisor is a wholly-owned
subsidiary) may engage in brokerage and other securities transactions on behalf
of the Fund 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 Fund will receive prices and executions at least as
favorable as those offered by qualified independent brokers performing similar
brokerage and other services for the Fund and (ii) the affiliate charges the
Fund 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.
No brokerage commissions were paid to brokers affiliated with the Advisor for
the three most recent fiscal years.
<PAGE>
PERFORMANCE INFORMATION
- --------------------------------------------------------------------------------
The Fund may quote various performance figures to illustrate past performance.
Average annual total return and current yield quotations, if applicable, 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 30-day period by the net asset value per share
on the last day of the period and annualizing the results.
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 = 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 3.21% for Tax-Free High Yield Fund for the
30-day period ended Nov. 30, 1999.
<PAGE>
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 Fund'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 POPF 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 6.95% for Tax-Free High Yield Fund for the
30-day period ended Nov. 30, 1999.
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, 1999.
Marginal Income Tax-Equivalent Tax Equivalent
Tax Bracket Distribution Yield Annualized Yield
- ----------------------- ---------------------------- ---------------------------
15.0% 8.18% 3.78%
28.0% 9.65% 4.46%
31.0% 10.07% 4.65%
36.0% 10.86% 5.02%
39.6% 11.51% 5.31%
On May 13, 1996, AXP High Yield Tax-Exempt Fund (the American Express 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 American Express Fund converted to a multiple class
structure pursuant to which three classes of shares are offered: Class A, Class
B and Class Y. Prior to July 1, 1999, Class A shares were sold with a 5% sales
charge, a 0.175% service fee and no 12b-1 fee. Effective July 1, 1999, Class A
shares are sold with a 5% sales charge and a 12b-1 fee of up to 0.25%.
Performance for periods prior to May 13, 1996 is based on the performance of the
American Express fund adjusted for differences in sales charges. For the period
from March 20, 1995 to May 13, 1996, performance is based on the performance of
Class A shares of the American Express fund. 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
American Express fund.
<PAGE>
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, CDA Technologies, Donoghue's Money Market Fund
Report, Financial Services Week, Financial Times, Financial World, Forbes,
Fortune, Global Investor, Institutional Investor, Investor's Business Daily,
Kiplinger's Personal Finance, Lipper Analytical Services, Money, Morningstar,
Mutual Fund Forecaster, Newsweek, The New York Times, Personal Investor,
Shearson Lehman Aggregate Bond Index, Stanger Report, Sylvia Porter's Personal
Finance, USA Today, U.S. News and World Report, The Wall Street Journal, and
Wiesenberger Investment Companies Service. The Fund also may compare its
performance to a wide variety of indexes or averages. There are similarities and
differences between the investments that the Fund may purchase and the
investments measured by the indexes or averages and the composition of the
indexes or averages will differ from that of the Fund.
VALUING FUND SHARES
- --------------------------------------------------------------------------------
As of the end of the most recent fiscal year, the computations looked like this:
Fund Net assets Shares Net asset value
outstanding of one share
- ------------- ------------ ---------- ------------- -------- -----------------
Tax-Free High $796,352 divided by 187,645 equals $4.24
---------- ------
Yield
In determining net assets before shareholder transactions, the securities held
by the Fund's securities are valued as follows as of the close of business of
the New York Stock Exchange (the Exchange):
o 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.
o 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.
o Securities included in the NASDAQ National Market System are valued at the
last-quoted sales price in this market.
o 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.
o Futures and options traded on major exchanges are valued at the last-quoted
sales price on their primary exchange.
o 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.
<PAGE>
o 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 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.
o 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.
SELLING SHARES
- --------------------------------------------------------------------------------
You have a right to sell your shares at any time. For an explanation of sales
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
to redeem shares for more than seven days. Such emergency situations would occur
if:
o The Exchange closes for reasons other than the usual weekend and holiday
closings or trading on the Exchange is restricted, or
o Disposal of the Fund'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
o 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.
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.
The Fund 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.
<PAGE>
Rejection of Business
The Fund reserves the right to reject any business, in its sole discretion.
CAPITAL LOSS CARRYOVER
- --------------------------------------------------------------------------------
For federal income tax purposes, the Fund had total capital loss carryovers of
$35,006 at the end of the most recent fiscal year, that if not offset by
subsequent capital gains will expire as follows:
2004 2005 2006 2007
$1,194 $2,743 $2,104 $28,965
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.
TAXES
- --------------------------------------------------------------------------------
You may be able to defer taxes on current income from a Fund by investing
through an IRA 401(k) plan account or other qualified retirement account. If you
move all or part of a non-qualified investment in a Fund to a qualified account,
this type of exchange is considered a redemption of shares. You pay no sales
charge, but the exchange may result in a gain or loss for tax purposes, or
excess contributions under IRA or qualified plan regulations.
Net investment income dividends received should be treated as dividend income
for federal income tax purposes. Corporate shareholders are generally entitled
to a deduction equal to 70% of that portion of the Fund's dividend that is
attributable to dividends the Fund received from domestic (U.S.) securities.
The Fund may be subject to U.S. taxes resulting from holdings in a passive
foreign investment company (PFIC). A foreign corporation is a PFIC when 75% or
more of its gross income for the taxable year is passive income or 50% or more
of the average value of its assets consists of assets that produce or could
produce passive income.
Income earned by the Fund may have had foreign taxes imposed and withheld on it
in foreign countries. Tax conventions between certain countries and the U.S. may
reduce or eliminate such taxes. If more than 50% of the Fund's total assets at
the close of its fiscal year consists of securities of foreign corporations, the
Fund will be eligible to file an election with the Internal Revenue Service
under which shareholders of the Fund would be required to include their pro rata
portions of foreign taxes withheld by foreign countries as gross income in their
federal income tax returns. These pro rata portions of foreign taxes withheld
may be taken as a credit or deduction in computing the shareholders' federal
income taxes. If the election is filed, the Fund will report to its shareholders
the per share amount of such foreign taxes withheld and the amount of foreign
tax credit or deduction available for federal income tax purposes.
Capital gain distributions, if any, received by shareholders should be treated
as long-term capital gains regardless of how long they owned their shares.
Short-term capital gains earned by the Fund are paid to shareholders as part of
their ordinary income dividend and are taxable. A special 28% rate on capital
gains may apply to sales of precious metals, if any, owned directly by the Fund.
A special 25% rate on capital gains may apply to investments in REITs.
<PAGE>
Under the Internal Revenue Code of 1986 (the Code), gains or losses attributable
to fluctuations in exchange rates that occur between the time the Fund accrues
interest or other receivables, or accrues expenses or other liabilities
denominated in a foreign currency and the time the Fund actually collects such
receivables or pays such liabilities generally are treated as ordinary income or
ordinary loss. Similarly, gains or losses on disposition of debt securities
denominated in a foreign currency attributable to fluctuations in the value of
the foreign currency between the date of acquisition of the security and the
date of disposition also are treated as ordinary gains or losses. These gains or
losses, referred to under the Code as "section 988" gains or losses, may
increase or decrease the amount of the Fund's investment company taxable income
to be distributed to its shareholders as ordinary income.
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.
For purposes of the excise tax distributions, "section 988" ordinary gains and
losses are distributable based on an Nov. 30 year end. This is an exception to
the general rule that ordinary income is paid based on a calendar year end.
If a mutual fund is the holder of record of any share of stock on the record
date for any dividend payable with respect to such stock, such dividend shall be
included in gross income by the Fund as of the later of (1) the date such share
became ex-dividend or (2) the date the Fund acquired such share. Because the
dividends on some foreign equity investments may be received some time after the
stock goes ex-dividend, and in certain rare cases may never be received by the
Fund, this rule may cause the Fund to take into income dividend income that it
has not received and pay such income to its shareholders. To the extent that the
dividend is never received, the Fund will take a loss at the time that a
determination is made that the dividend will not be received.
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
AEFC, a wholly-owned subsidiary of American Express Company, is the investment
manager for the Fund. Under the Investment Management Services Agreement, the
Advisor, subject to the policies set by the board, provides investment
management services.
For its services, the Advisor is paid a fee based on 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
<PAGE>
On the last day of the most recent fiscal year, the daily rates applied to the
Fund's net assets on an annual basis were equal to 0.443% for the Fund. 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 fiscal year noted below, the Portfolio
paid the following management fees. The amount is allocated among the Fund.
- ---------------------------- --------------------------
Nov. 30, Tax-Free High Yield
- ---------------------------- --------------------------
- ---------------------------- --------------------------
1999 $25,735,619
- ---------------------------- --------------------------
- ---------------------------- --------------------------
1998 26,484,165
- ---------------------------- --------------------------
- ---------------------------- --------------------------
1997 26,174,871
- ---------------------------- --------------------------
Under the Agreement, the Fund 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 securities; and expenses properly payable by the Fund, approved by
the board. For fiscal years noted below, the Fund and corresponding Portfolio
paid the following nonadvisory expenses. All fees are net of earnings credits
and expenses voluntarily reimbursed by AEFC.
- ---------------------------- --------------------------
Nov. 30, Tax-Free High Yield
- ---------------------------- --------------------------
- ---------------------------- --------------------------
1999 $381,492
- ---------------------------- --------------------------
- ---------------------------- --------------------------
1998 316,051
- ---------------------------- --------------------------
- ---------------------------- --------------------------
1997 396,734
- ---------------------------- --------------------------
Administrative Services Agreement
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 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 the last day of the most recent fiscal year the daily rates applied to the
Fund's net assets on an annual basis were equal to 0.040%. 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. Under the
agreement, the Fund paid fees of $363 for fiscal year 1999, $316 for fiscal year
1998 and $258 for fiscal year 1997.
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.
<PAGE>
Transfer Agency Agreement
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 by the board without shareholder approval.
Distribution Agreement/Plan and Agreement of Distribution
American Express Financial Advisors Inc. (Distributor) is the Fund's principal
underwriter. The Fund's shares are offered on a continuous basis.
Under a prior agreement (a Plan and Agreement of Distribution pursuant to Rule
12b-1 under the 1940 Act), the Fund paid a fee to the Distributor to help defray
the costs of distribution and servicing. Under the Plan, the Fund pays a fee at
an annual rate of 0.25% of the Fund's average daily net assets. For the most
recent fiscal year, the Fund paid a fee of $1,904. These costs covered almost
all aspects of distributing shares of the Fund.
<PAGE>
Custodian Agreement
The Fund'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 custodian is permitted to deposit some or all of its
securities in central depository systems as allowed by federal law. For its
services, the Fund 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 agreement with Bank of New York,
90 Washington Street, New York, NY 10286. As part of this arrangement,
securities purchased outside the United Stated are maintained in the custody of
various foreign branches of Bank of New York or in other financial institutions
as permitted by law and by the Fund's sub-custodian agreement.
ORGANIZATIONAL INFORMATION
- --------------------------------------------------------------------------------
The Fund is an open-end management investment company. The Fund headquarters are
at P.O. Box 59196, Minneapolis, MN 55459-0196.
SHARES
The shares of the Fund represent an interest in that fund's assets only (and
profits or losses), and, in the event of liquidation, each share of the Fund
would have the same rights to dividends and assets as every other share of that
Fund.
VOTING RIGHTS
As a shareholder in the Fund, you have voting rights over the Fund's management
and fundamental policies. You are entitled to one vote for each share you own.
Each class, if applicable, has exclusive voting rights with respect to matters
for which separate class voting is appropriate under applicable law. All shares
have cumulative voting rights with respect to the election of board members.
This means that you have as many votes as the number of shares you own,
including fractional shares, multiplied by the number of members to be elected.
Dividend Rights
Dividends paid by the Fund, if any, with respect to each class of shares, if
applicable, will be calculated in the same manner, at the same time, on the same
day, and will be in the same amount, except for differences resulting from
differences in fee structures.
<PAGE>
Fund History Table for All Publicly Offered Funds in the Strategist Fund Group
<TABLE>
<CAPTION>
Date of Form of Inception State of Fiscal Diversified
Organization Organization Date Organization Year End
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Strategist Growth Fund, Inc. 9/1/95 Corporation MN
Strategist Growth Fund 5/13/96 7/31 Yes
Strategist Growth Trends Fund 5/13/96 7/31 Yes
Strategist Special Growth Fund 8/19/96 7/31 Yes
- --------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Strategist Growth & Income Fund, Inc. 9/1/95 Corporation MN
Strategist Balanced Fund 5/13/96 9/30 Yes
Strategist Equity Fund 5/13/96 9/30 Yes
Strategist Equity Income Fund 5/13/96 9/30 Yes
Strategist Total Return Fund 5/13/96 9/30 Yes
- --------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Strategist Income Fund, Inc. 5/25/95 Corporation MN
Strategist Government Income Fund 6/10/96 5/31 Yes
Strategist High Yield Fund 6/10/96 5/31 Yes
Strategist Quality Income Fund 6/10/96 5/31 Yes
- --------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Strategist Tax-Free Income Fund, Inc. 9/1/95 Corporation MN
Strategist Tax-Free High Yield Fund 5/13/96 11/30 Yes
- --------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
Strategist World Fund, Inc. 9/1/95 Corporation MN
Strategist Emerging Markets Fund 11/13/96 10/31 Yes
Strategist World Growth Fund 5/13/96 10/31 Yes
Strategist World Income Fund 5/13/96 10/31 No
- --------------------------------------- ------------ ------------ ------------ ------------ ------------ ------------
</TABLE>
BOARD MEMBERS AND OFFICERS
- --------------------------------------------------------------------------------
Directors of Strategist Fund Group
Shareholders elect a board that oversees the Fund's operations. The board
appoints officers who are responsible for day-to-day business decisions based on
policies set by the board.
The following is a list of the Fund's board members who are board members of all
15 funds in the Strategist Fund Group.
Rodney P. Burwell
Born in 1939
Xerxes Corporation
7901 Xerxes Ave. S.
Minneapolis, MN
Chairman, Xerxes Corporation (fiberglass storage tanks). Director, Fairview
Corporation.
Jean B. Keffeler
Born in 1945
3424 Zenith Avenue South
Minneapolis, MN
Independent management consultant. Director, National Computer Systems.
<PAGE>
Thomas R. McBurney
Born in 1938
McBurney Management Advisors
1700 Foshay Tower
821 Marquette Ave.
Minneapolis, MN
President, McBurney Management Advisors. Director, The Valspar Corporation
(paints), Wenger Corporation, 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. Chairman of the board, IDS
Life Insurance Company.
John R. Thomas*
Born in 1937
2900 IDS Tower
Minneapolis, MN
Vice president of all funds in the Strategist Fund Group. President and board
member of the American Express funds. Senior vice president of the Advisor.
*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, and Mr. Thomas, who is vice
president, the Fund's other officers are:
John M. Knight
Born in 1952
IDS Tower 10
Minneapolis, MN
Treasurer of all funds in the Strategist Fund Group. Vice president - investment
accounting of the Advisor.
Eileen J. Newhouse
Born in 1955
IDS Tower 10
Minneapolis, MN
Secretary of all funds in the Strategist Fund Group. Counsel of the Advisor.
<PAGE>
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 58 American Express funds.
H. Brewster Atwater, Jr.'
Born in 1931
4900 IDS Tower
Minneapolis, MN
Retired chairman and chief executive officer, General Mills, Inc. Director,
Merck & Co., Inc.
Arne H. Carlson+'*
Born in 1934
901 S. Marquette Ave.
Minneapolis, MN
Chairman and chief executive officer of the Trust. Chairman, Board Services
Corporation (provides administrative services to boards). Former Governor of
Minnesota.
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, and Union
Pacific Resources.
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, chief executive officer and director of the Advisor.
Heinz F. Hutter'
Born in 1929
P.O. Box 2187
Minneapolis, MN
Retired president and chief operating officer, Cargill, Incorporated (commodity
merchants and processors).
<PAGE>
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. (electronics), C-Cor
Electronics, Inc., and Amnex, Inc. (communications).
William R. Pearce'+
Born in 1927
2050 One Financial Plaza
Minneapolis, MN
RII Weyerhaeuser World Timberfund, L.P. (develops timber resources) - management
committee. Retired vice chairman of the board, Cargill, Incorporated (commodity
merchants and processors). Former chairman, American Express Funds.
Alan K. Simpson
Born in 1931
1201 Sunshine Ave.
Cody, WY
Visiting lecturer and Director of The Institute of Politics, Harvard University.
Former three-term United States Senator for Wyoming. Former Assistant Republican
Leader, U.S. Senate. Director, Biogen (bio-pharmaceuticals).
John R. Thomas+'**
Born in 1937
2900 IDS Tower
Minneapolis, MN
Senior vice president of the Advisor.
C. Angus Wurtele'
Born in 1934
Valspar Corporation
Suite 1700
Foshay Tower
Minneapolis, MN
Retired chairman of the board and retired chief executive officer, The Valspar
Corporation (paints). Director, Valspar, Bemis Corporation (packaging) and
General Mills, Inc. (consumer foods).
+ Member of executive committee.
' Member of joint audit committee.
* Interested person by reason of being an officer and employee of the Trust.
**Interested person by reason of being an officer, board member, employee and/or
shareholder of the Advisor or American Express.
<PAGE>
The board has appointed officers who are responsible for day-to-day business
decisions based on policies it has established. In addition to Mr. Carlson, 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 of Board Services Corporation. Vice president, general counsel and
secretary for the Trust.
Officers who also are officers and 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.
Frederick C. Quirsfeld
Born in 1947
IDS Tower 10
Minneapolis, MN
Vice president - taxable mutual fund investments of the Advisor. Vice president
- - fixed income investments for the Trust.
John M. Knight
Born in 1952
IDS Tower 10
Minneapolis, MN
Vice president - investment accounting of the Advisor. Treasurer for the Trust.
COMPENSATION FOR BOARD MEMBERS
- --------------------------------------------------------------------------------
Compensation for Fund Board Members
During the most recent fiscal year, the independent members of the Fund board,
for attending up to four meetings, received the following compensation:
Compensation Table
for Tax-Free High Yield Fund
Aggregate Total cash compensation from the
Board member compensation from the Fund Strategist Fund Group
Rodney P. Burwell $267 $18,000
- ------------------
Jean B. Keffeler 267 18,000
- ------------------
Thomas R. McBurney 267 18,000
As of 30 days prior to the date of this SAI, the Fund's board members and
officers as a group owned less than 1% of the outstanding shares of the Fund.
<PAGE>
Compensation for Portfolio Board Members
During the most recent fiscal year, the independent members of the board for
Tax-Free High Yield Portfolio, for attending up to 26 meetings, received the
following compensation:
Compensation Table
for Tax-Free High Yield Portfolio
Total cash compensation from the
Preferred Master Trust Group and
Board member Aggregate American Express Funds
compensation from the Portfolio
H. Brewster Atwater, Jr. $3,175 $118,275
- -------------------------
Lynne V. Cheney 2,989 102,225
- -------------------------
Heinz F. Hutter 2,900 101,700
- -------------------------
Anne P. Jones 3,070 106,625
- -------------------------
William R. Pearce 2,008 74,475
- -------------------------
Alan K. Simpson 2,989 102,225
- -------------------------
C. Angus Wurtele 3,275 124,275
PRINCIPAL HOLDERS OF SECURITIES
- --------------------------------------------------------------------------------
As of 30 days prior to the date of this SAI, American Express Financial
Corporation held 75.65% of Fund shares, and John L. Warren and Rosana L. Warren
held 8.96% of 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 financial statements contained in the Annual Report were audited by
independent auditors, KPMG 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.
<PAGE>
APPENDIX
DESCRIPTION OF RATINGS
Standard & Poor's Debt Ratings
A Standard & Poor's corporate or municipal debt rating is a current assessment
of the creditworthiness of an obligor with respect to a specific obligation.
This assessment may take into consideration obligors such as guarantors,
insurers, or lessees.
The debt rating is not a recommendation to purchase, sell, or hold a security,
inasmuch as it does not comment as to market price or suitability for a
particular investor.
The ratings are based on current information furnished by the issuer or obtained
by S&P from other sources it considers reliable. S&P does not perform an audit
in connection with any rating and may, on occasion, rely on unaudited financial
information. The ratings may be changed, suspended, or withdrawn as a result of
changes in, or unavailability of such information or based on other
circumstances.
The ratings are based, in varying degrees, on the following considerations:
o Likelihood of default capacity and willingness of the obligor as
to the timely payment of interest and repayment of principal in
accordance with the terms of the obligation.
o Nature of and provisions of the obligation.
o Protection afforded by, and relative position of, the obligation
in the event of bankruptcy, reorganization, or other arrangement
under the laws of bankruptcy and other laws affecting creditors'
rights.
Investment Grade
Debt rated AAA has the highest rating assigned by Standard & Poor's. Capacity to
pay interest and repay principal is extremely strong.
Debt rated AA has a very strong capacity to pay interest and repay principal and
differs from the highest rated issues only in a small degree.
Debt rated A has a strong capacity to pay interest and repay principal, although
it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
Debt rated BBB is regarded as having an adequate capacity to pay interest and
repay principal. Whereas it normally exhibits adequate protection parameters,
adverse economic conditions or changing circumstances are more likely to lead to
a weakened capacity to pay interest and repay principal for debt in this
category than in higher-rated categories.
<PAGE>
Speculative grade
Debt rated BB, B, CCC, CC, and C is regarded as having predominantly speculative
characteristics with respect to capacity to pay interest and repay principal. BB
indicates the least degree of speculation and C the highest. While such debt
will likely have some quality and protective characteristics, these are
outweighed by large uncertainties or major exposures to adverse conditions.
Debt rated BB has less near-term vulnerability to default than other speculative
issues. However, it faces major ongoing uncertainies or exposure to adverse
business, financial, or economic conditions that could lead to inadequate
capacity to meet timely interest and principal payments. The BB rating category
also is used for debt subordinated to senior debt that is assigned an actual or
implied BBB- rating.
Debt rated B has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The B rating category also is used for debt
subordinated to senior debt that is assigned an actual or implied BB or BB-
rating.
Debt rated CCC has a currently identifiable vulnerability to default and is
dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The CCC rating category also is
used for debt subordinated to senior debt that is assigned an actual or implied
B or B- rating.
Debt rated CC typically is applied to debt subordinated to senior debt that is
assigned an actual or implied CCC rating.
Debt rated C typically is applied to debt subordinated to senior debt that is
assigned an actual or implied CCC rating. The C rating may be used to cover a
situation where a bankruptcy petition has been filed, but debt service payments
are continued.
The rating CI is reserved for income bonds on which no interest is being paid.
Debt rated D is in payment default. The D rating category is used when interest
payments or principal payments are not made on the date due, even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The D rating also will be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
Moody's Long-Term Debt Ratings
Aaa - Bonds that are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk. Interest payments are protected by a
large or by an exceptionally stable margin and principal is secure. While the
various protective elements are likely to change, such changes as can be
visualized are most unlikely to impair the fundamentally strong position of such
issues.
Aa - Bonds that are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present that make the
long-term risk appear somewhat larger than in Aaa securities.
A - Bonds that are rated A possess many favorable investment attributes and are
to be considered as upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but elements may be present that
suggest a susceptibility to impairment some time in the future.
<PAGE>
Baa - Bonds that are rated Baa are considered as medium-grade obligations (i.e.,
they are neither highly protected nor poorly secured). Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba - Bonds that are rated Ba are judged to have speculative elements--their
future cannot be considered as well-assured. Often the protection of interest
and principal payments may be very moderate, and thereby not well safeguarded
during both good and bad times over the future. Uncertainty of position
characterizes bonds in this class.
B - Bonds that are rated B generally lack characteristics of a desirable
investment. Assurance of interest and principal payments or maintenance of other
terms of the contract over any long period of time may be small.
Caa - Bonds that are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca - Bonds that are rated Ca represent obligations that are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C - Bonds that are rated C are the lowest rated class of bonds, and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
SHORT-TERM RATINGS
Standard & Poor's Commercial Paper Ratings
A Standard & Poor's commercial paper rating is a current assessment of the
likelihood of timely payment of debt considered short-term in the relevant
market.
Ratings are graded into several categories, ranging from A-1 for the highest
quality obligations to D for the lowest. These categories are as follows:
A-1 This highest category indicates that the degree of safety
regarding timely payment is strong. Those issues determined to
possess extremely strong safety characteristics are denoted
with a plus sign (+) designation.
A-2 Capacity for timely payment on issues with this designation is
satisfactory. However, the relative degree of safety is not as
high as for issues designated A-1.
A-3 Issues carrying this designation have adequate capacity for
timely payment. They are, however, more vulnerable to the
adverse effects of changes in circumstances than obligations
carrying the higher designations.
B Issues are regarded as having only speculative capacity for
timely payment.
C This rating is assigned to short-term debt obligations with
doubtful capacity for payment.
D Debt rated D is in payment default. The D rating category is
used when interest payments or principal payments are not made
on the date due, even if the applicable grace period has not
expired, unless S&P believes that such payments will be made
during such grace period.
<PAGE>
Standard & Poor's Note Ratings
An S&P note rating reflects the liquidity factors and market-access risks unique
to notes. Notes maturing in three years or less will likely receive a note
rating. Notes maturing beyond three years will most likely receive a long-term
debt rating.
Note rating symbols and definitions are as follows:
SP-1 Strong capacity to pay principal and interest. Issues
determined to possess very strong characteristics are given a
plus (+) designation.
SP-2 Satisfactory capacity to pay principal and interest, with some
vulnerability to adverse financial and economic changes over
the term of the notes.
SP-3 Speculative capacity to pay principal and interest.
Moody's Short-Term Ratings
Moody's short-term debt ratings are opinions of the ability of issuers to repay
punctually senior debt obligations. These obligations have an original maturity
not exceeding one year, unless explicitly noted.
Moody's employs the following three designations, all judged to be investment
grade, to indicate the relative repayment ability of rated issuers:
Issuers rated Prime-l (or supporting institutions) have a superior
ability for repayment of senior short-term debt obligations. Prime-l
repayment ability will often be evidenced by many of the following
characteristics: (i) leading market positions in well-established
industries, (ii) high rates of return on funds employed, (iii)
conservative capitalization structure with moderate reliance on debt
and ample asset protection, (iv) broad margins in earnings coverage of
fixed financial charges and high internal cash generation, and (v) well
established access to a range of financial markets and assured sources
of alternate liquidity.
Issuers rated Prime-2 (or supporting institutions) have a strong
ability for repayment of senior short-term debt obligations. This will
normally be evidenced by many of the characteristics cited above, but
to a lesser degree. Earnings trends and coverage ratios, while sound,
may be more subject to variation. Capitalization characteristics, while
still appropriate, may be more affected by external conditions. Ample
alternate liquidity is maintained.
Issuers rated Prime-3 (or supporting institutions) have an acceptable
ability for repayment of senior short-term obligations. The effect of
industry characteristics and market compositions may be more
pronounced. Variability in earnings and profitability may result in
changes in the level of debt protection measurements and may require
relatively high financial leverage. Adequate alternate liquidity is
maintained.
Issuers rated Not Prime do not fall within any of the Prime rating
categories.
<PAGE>
Moody's & S&P's
Short-Term Muni Bonds and Notes
Short-term municipal bonds and notes are rated by Moody's and by S&P. The
ratings reflect the liquidity concerns and market access risks unique to notes.
Moody's MIG 1/VMIG 1 indicates the best quality. There is present strong
protection by established cash flows, superior liquidity support or demonstrated
broad-based access to the market for refinancing.
Moody's MIG 2/VMIG 2 indicates high quality. Margins of protection are ample
although not so large as in the preceding group.
Moody's MIG 3/VMIG 3 indicates favorable quality. All security elements are
accounted for but there is lacking the undeniable strength of the preceding
grades. Liquidity and cash flow protection may be narrow and market access for
refinancing is likely to be less well established.
Moody' s MIG 4/VMIG 4 indicates adequate quality. Protection commonly regarded
as required of an investment security is present and although not distinctly or
predominantly speculative, there is specific risk.
Standard & Poor's rating SP-1 indicates very strong or strong capacity to pay
principal and interest. Those issues determined to possess overwhelming safety
characteristics will be given a plus (+) designation.
Standard & Poor's rating SP-2 indicates satisfactory capacity to pay principal
and interest.
Standard & Poor's rating SP-3 indicates speculative capacity to pay principal
and interest.
<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, 1999, and the related statement of operations for
the year then ended and the statements of changes in net assets for each of the
years in the two-year period ended November 30, 1999 and the financial
highlights for the three-year period ended November 30, 1999 and for 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 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. 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 as of November 30, 1999, 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.
/s/ KPMG LLP
KPMG LLP
Minneapolis, Minnesota
January 7, 2000
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
Strategist Tax-Free High Yield Fund
Nov. 30, 1999
Assets
<S> <C> <C>
Investment in Tax-Free High Yield Portfolio (Note 1) $803,976
Expense reimbursement receivable from AEFC 1,633
-----
Total assets 805,609
-------
Liabilities
Dividends payable to shareholders 1
Accrued tranfer agency fee 1
Accrued administrative services fee 1
Other accrued expenses 9,254
-----
Total liabilities 9,257
-----
Net assets applicable to outstanding capital stock $796,352
========
Represented by
Capital stock-- $.01 par value (Note 1) $ 1,876
Additional paid-in capital 825,780
Accumulated net realized gain (loss) (Note 4) (37,298)
Unrealized appreciation (depreciation) on investments 5,994
-----
Total-- representing net assets applicable to outstanding capital stock $796,352
========
Shares outstanding 187,645
-------
Net asset value per share of outstanding capital stock $ 4.24
--------
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Strategist Tax-Free High Yield Fund
Year ended Nov. 30, 1999
Investment income
Income:
<S> <C>
Interest $ 59,521
---------
Expenses (Note 2):
Expenses allocated from Tax-Free High Yield Portfolio 4,114
Distribution fee 1,904
Transfer agency fee 412
Administrative services fees and expenses 363
Registration fees 14,320
Audit fees 3,600
Other 4,748
-----
Total expenses 29,461
Less expenses voluntarily reimbursed by AEFC (Note 2) (20,840)
-------
Total net expenses 8,621
-----
Investment income (loss) -- net 50,900
------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (26,144)
Financial futures contracts (729)
----
Net realized gain (loss) on investments (26,873)
Net change in unrealized appreciation (depreciation) on investments (42,683)
-------
Net gain (loss) on investments (69,556)
-------
Net increase (decrease) in net assets resulting from operations $ (18,656)
=========
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Strategist Tax-Free High Yield Fund
Year ended Nov. 30, 1999 1998
Operations and distributions
<S> <C> <C>
Investment income (loss)-- net $ 50,900 $ 43,777
Net realized gain (loss) on investments (26,873) (3,317)
Net change in unrealized appreciation (depreciation) on investments (42,683) 10,887
------- ------
Net increase (decrease) in net assets resulting from operations (18,656) 51,347
------- ------
Distributions to shareholders from:
Net investment income (52,780) (44,314)
Tax return of capital (16,275) --
------- -------
Total distributions (69,055) (44,314)
------- -------
Capital share transactions (Note 3)
Proceeds from sales 117,249 101,260
Reinvestment of distributions at net asset value 68,437 43,846
Payments for redemptions (164,259) (23,880)
-------- -------
Increase (decrease) in net assets from capital share transactions 21,427 121,226
------ -------
Total increase (decrease) in net assets (66,284) 128,259
Net assets at beginning of year 862,636 734,377
------- -------
Net assets at end of year $796,352 $862,636
======== ========
Undistributed net investment income $ -- $ 604
-------- --------
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.
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 (the Trust), an
open-end investment company that has the same objectives as the Fund. The
Portfolio invests primarily in medium- and lower-quality tax-exempt bonds (junk
bonds) and other debt obligations.
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 the value that is equal to
the Fund's proportionate ownership interest in the Portfolio's net assets. The
percentage of the Portfolio owned by the Fund as of Nov. 30, 1999 was 0.01%.
Valuation of securities held by the Portfolio is discussed in Note 1 of the
Portfolio's "Notes to financial statements" (included elsewhere in this report).
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
Federal taxes
The Fund's policy is to comply with all sections of the Internal Revenue Code
that apply to regulated investment companies and to distribute substantially all
of its taxable income to the shareholders. No provision for income or excise
taxes is thus required.
Net investment income (loss) and net realized gains (losses) may differ for
financial statement and tax purposes primarily because of deferred 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 $1,276
and additional paid-in capital has been decreased by $1,276.
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
As of Nov. 30, 1999, AEFC owned 141,123 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 has an agreement with AEFC to provide administrative services. Under an
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, American Express Client Service
Corporation (AECSC) maintains shareholder accounts and records. The Fund pays
AECSC 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 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, 1999. 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 years indicated are as follows:
Year ended Nov. 30, 1999
Sold 25,139
Issued for reinvested distributions 15,262
Redeemed (36,956)
-------
Net increase (decrease) 3,445
Year ended Nov. 30, 1998
Sold 21,706
Issued for reinvested distributions 9,380
Redeemed (5,146)
------
Net increase (decrease) 25,940
4. CAPITAL LOSS CARRYOVER
For federal income tax purposes, Tax-Free High Yield Fund has a capital loss
carryover as of Nov. 30, 1999 of $35,006 that if not offset by subsequent
capital gains, will expire in 2004 through 2007. 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.
<PAGE>
<TABLE>
<CAPTION>
5. FINANCIAL HIGHLIGHTS
The table below shows certain important financial information for evaluating the
Fund's results.
Fiscal period ended Nov. 30,
Per share income and capital changesa
1999 1998 1997 1996b
<S> <C> <C> <C> <C>
Net asset value, beginning of period $4.68 $4.64 $4.56 $4.46
Income from investment operations:
Net investment income (loss) .25 .26 .28 .15
Net gains (losses) (both realized and unrealized) (.34) .04 .08 .10
Total from investment operations (.09) .30 .36 .25
Less distributions:
Dividends from net investment income (.25) (.26) (.28) (.15)
Tax return of capital (.10) -- -- --
Total distributions (.35) (.26) (.28) (.15)
Net asset value, end of period $4.24 $4.68 $4.64 $4.56
Ratios/supplemental data
Net assets, end of period (in thousands) $796 $863 $734 $535
Ratio of expenses to average daily net assetsc .95% .94% .95% .95%d
Ratio of net investment income (loss) to average daily net assets 5.61% 5.54% 6.02% 6.22%d
Portfolio turnover rate (excluding short-term securities) 16% 14% 4% 4%
Total return (2.25%) 6.65% 8.26% 5.60%
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 3.25%, 1.76%, 2.96% and
24.16% for the periods ended 1999, 1998, 1997 and 1996, respectively.
d Adjusted to an annual basis.
</TABLE>
<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, 1999, the related statement
of operations for the year then ended and the statements of changes in net
assets for each of the years in the two-year period ended November 30, 1999.
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. Our procedures included
confirmation of securities owned as of November 30, 1999, by correspondence with
the custodian and brokers. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Tax-Free High Yield Portfolio
as of November 30, 1999, 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.
/s/ KPMG LLP
KPMG LLP
Minneapolis, Minnesota
January 7, 2000
<PAGE>
<TABLE>
<CAPTION>
Financial Statements
Statement of assets and liabilities
Tax-Free High Yield Portfolio
Nov. 30, 1999
Assets
Investments in securities, at value (Note 1)
<S> <C> <C>
(identified cost $5,078,490,354) $5,298,793,350
Accrued interest receivable 107,840,921
Receivable for investment securities sold 108,162,361
-----------
Total assets 5,514,796,632
-------------
Liabilities
Disbursements in excess of cash on demand deposit 20,022,442
Payable for investment securities purchased 60,767,096
Accrued investment management services fee 66,191
Other accrued expenses 40,986
------
Total liabilities 80,896,715
----------
Net assets $5,433,899,917
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statement of operations
Tax-Free High Yield Portfolio
Year ended Nov. 30, 1999
Investment income
Income:
<S> <C>
Interest $ 376,929,579
-------------
Expenses (Note 2):
Investment management services fee 25,735,619
Compensation of board members 23,565
Custodian fees 249,607
Audit fees 36,000
Other 98,696
------
Total expenses 26,143,487
Earnings credits on cash balances (Note 2) (28,204)
-------
Total net expenses 26,115,283
----------
Investment income (loss) -- net 350,814,296
-----------
Realized and unrealized gain (loss) -- net Net realized gain (loss) on:
Security transactions (Note 3) (29,764,364)
Financial futures contracts (4,549,924)
----------
Net realized gain (loss) on investments (34,314,288)
Net change in unrealized appreciation (depreciation) on investments (400,370,743)
------------
Net gain (loss) on investments (434,685,031)
------------
Net increase (decrease) in net assets resulting from operations $ (83,870,735)
==============
See accompanying notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Statements of changes in net assets
Tax-Free High Yield Portfolio
Year ended Nov. 30, 1999 1998
Operations
<S> <C> <C>
Investment income (loss)-- net $ 350,814,296 $ 348,535,304
Net realized gain (loss) on investments (34,314,288) (5,085,468)
Net change in unrealized appreciation (depreciation) on investments (400,370,743) 61,787,273
------------ ----------
Net increase (decrease) in net assets resulting from operations (83,870,735) 405,237,109
Net contributions (withdrawals) from partners (487,924,306) (387,941,646)
------------ ------------
Total increase (decrease) in net assets (571,795,041) 17,295,463
Net assets at beginning of year 6,005,694,958 5,988,399,495
------------- -------------
Net assets at end of year $5,433,899,917 $6,005,694,958
============== ==============
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 tax-exempt bonds
and other debt obligations. The declaration of Trust permits the Trustees to
issue non-transferable interests in the Portfolio.
The Portfolio's significant accounting policies are summarized below:
Use of estimates
Preparing financial statements that conform to generally accepted accounting
principles requires management to make estimates (e.g., on assets and
liabilities) that could differ from actual results.
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 that reflects fair value
as quoted by dealers 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
To produce incremental earnings, protect gains and facilitate buying and selling
of securities for investments, the Portfolio may buy and sell put and call
options and write covered call options on portfolio securities as well as write
cash-secured put options. The risk in writing a call option is that the
Portfolio gives up the opportunity for 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 being unable to enter into a closing transaction if a liquid secondary
market does not exist. The Portfolio may write over-the-counter options where
completing the obligation depends 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 when the option transaction expires or closes. 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
To gain exposure to or protect itself from market changes, the Portfolio may buy
and sell financial futures contracts. Risks of entering into futures contracts
and related options include the possibility of 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.
Securities purchased on a when-issued basis
Delivery and payment for securities that have been purchased by the Portfolio on
a forward-commitment or when-issued basis can take place one month or more after
the transaction date. During this period, such securities are subject to market
fluctuations, and they may affect the Portfolio's net assets the same as owned
securities. The Portfolio designates cash or liquid high-grade debt securities
at least equal to the amount of its commitment. As of Nov. 30, 1999, the
Portfolio had entered into outstanding when-issued or forward-commitments of
$7,669,520.
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. As a "pass-through" entity, the Portfolio therefore
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 an Investment Management Services
Agreement with AEFC to manage 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, 1999, the Portfolio's custodian fees were reduced
by $28,204 as a result of earnings credits from overnight cash balances. The
Portfolio also pays custodian fees to American Express Trust Company, an
affiliate of AEFC.
According to a Placement Agency Agreement, American Express Financial Advisors
Inc. acts as placement agent of the Trust's units.
3. SECURITIES TRANSACTIONS
Cost of purchases and proceeds from sales of securities (other than short-term
obligations) aggregated $930,880,531 and $1,021,532,823, respectively, for the
year ended Nov. 30, 1999. For the same period, the portfolio turnover rate was
16%. Realized gains and losses are determined on an identified cost basis.
4. INTEREST RATE FUTURES CONTRACTS
As of Nov. 30, 1999, investments in securities included securities valued at
$1,852,510 that were pledged as collateral to cover initial margin deposits on
970 open purchase contracts. The market value of the open purchase contracts as
of Nov. 30, 1999 was $101,226,313 with a net unrealized loss of $1,817,255. See
"Summary of significant accounting policies."
<PAGE>
<TABLE>
<CAPTION>
Investments in Securities
Tax-Free High Yield Portfolio Nov. 30, 1999
(Percentages represent value of investments compared to net assets)
Municipal bonds (97.5%)
Name of issuer and Coupon Principal Value(a)
title of issue(b,e) rate amount
Alabama (0.3%)
Baldwin County Eastern Shore Health Care Authority
Hospital Revenue Bonds Thomas Hospital Series 1991
<S> <C> <C> <C> <C> <C>
04-01-16 8.50% $4,765,000 $5,099,789
Camden Industrial Development Board Solid Waste Disposal
Revenue Bonds MacMillan
Bloedel Series 1991A A.M.T.
04-01-19 7.75 8,500,000 8,850,965
Total 13,950,754
Alaska (0.2%)
Industrial Development & Exploration Authority
Electric Power Revenue Bonds
Upper Lynn Canal Regional Power
Series 1997 A.M.T.
01-01-18 5.80 830,000 726,723
01-01-32 5.88 1,800,000 1,527,372
North Slope Borough General Obligation Bonds
Zero Coupon Series 1994B (CGIC Insured)
06-30-04 7.05 7,000,000(d) 5,594,540
06-30-05 7.15 7,000,000(d) 5,298,650
Total 13,147,285
Arizona (1.3%)
Chandler Industrial Development Authority
Beverly Enterprises Series 1994
09-01-08 7.63 2,540,000 2,589,174
Flagstaff Industrial Development Authority
Lifecare Revenue Bonds Northern Arizona
Senior Living Community Series 1998
09-01-28 6.20 5,020,000 4,388,785
09-01-38 6.30 6,165,000 5,340,616
Maricopa County Hospital System Revenue Bonds
Samaritan Health Services Series 1981
01-01-08 12.00 255,000 372,231
Maricopa County Industrial Development Authority
Multi-family Housing Revenue Bonds Series B
07-01-26 7.38 2,270,000 2,540,811
Maricopa County Industrial Development Authority
Senior Living Facilities Revenue Bonds Series 1997A
04-01-27 7.88 15,000,000 15,320,100
Maricopa County Pollution Control Refunding
Revenue Bonds Palo Verde Public Service
08-15-23 6.38 3,500,000 3,373,405
Navajo Industrial Development Authority Revenue Bonds
Stone Container Corporation Series 1997 A.M.T.
06-01-27 7.20 3,000,000 3,136,770
Peoria Industrial Development Authority
Refunding Revenue Bonds
Sierra Winds Lifecare Community Series 1999A
08-15-29 6.38 5,700,000 5,108,112
Phoenix Industrial Development Authority
Refunding Revenue Bonds Christian Care Apartments
01-01-26 6.50 9,525,000 9,316,117
PimaCounty Industrial Development Authority
Multi-family Housing Revenue Bonds
Las Villas De Kino Apartments Series 1997 A.M.T.
08-01-29 6.90 7,000,000 6,826,750
PimaCounty Industrial Development Authority
Multi-family Housing Revenue Bonds
Las Villas Kino Apartments Series 1998 A.M.T.
08-01-30 6.25 3,920,000 3,582,488
Pima County Industrial Development Authority
Revenue Bonds LaPosada Park Centre Series 1996A
05-15-27 7.00 5,750,000 5,643,223
Scottsdale Industrial Development Authority
Beverly Enterprises Series 1994
09-01-08 7.63 2,805,000 2,861,072
Total 70,399,654
Arkansas (0.2%)
PopeCounty Solid Waste Disposal Revenue Bonds
Arkansas Power & Light Series 1991 A.M.T.
01-01-21 8.00 3,250,000 3,377,628
Washington County District 5
General Obligation Refunding Improvement Bonds
02-01-09 7.00 7,135,000 6,764,907
Total 10,142,535
California (9.0%)
ABAG Financial Authority for Nonprofit Corporations
Certificate of Participation International School
Series 1996
05-01-26 7.38 8,000,000 8,249,280
Anaheim Public Financing Authority Lease
Capital Appreciation Revenue Bonds
Zero Coupon (FSA Insured)
09-01-23 5.94 25,865,000(d) 6,149,662
09-01-26 5.65 20,000,000(d) 3,945,800
09-01-29 5.95 12,800,000(d) 2,105,088
09-01-31 5.77 24,500,000(d) 3,554,460
09-01-36 5.73 10,000,000(d) 1,057,600
Community Development Authority Health Facilities
Unihealth America Certificate of Participation
Series 1993 Inverse Floater (AMBAC Insured)
10-01-11 7.77 22,400,000(c) 24,164,000
Contra Costa County Residential Rent Facility
Multi-family Housing Revenue Bonds Cypress Meadows
Series 1998E A.M.T.
09-01-28 7.00 5,000,000 4,429,550
East Bay Municipal Utility District
Water Systems Revenue Bonds Inverse Floater
(MBIA Insured)
06-01-08 6.42 15,500,000(c) 15,639,500
Foothill/Eastern Transportation Corridor Agency
Toll Road Revenue Bonds Series 1995A (MBIA Insured)
01-01-35 5.00 41,070,000 34,909,499
Fresno Health Facility Refunding Revenue Bonds
Holy Cross Health System (MBIA Insured)
12-01-13 5.63 3,000,000 3,031,140
Irwindale Redevelopment Agency Subordinate Lien
Tax Allocation Bonds
12-01-26 7.05 5,750,000 6,037,443
Lake Elsinore Public Finance Authority
Local Agency Revenue Bonds Series 1997F
09-01-20 7.10 11,930,000 12,189,000
Los Angeles County Pre-refunded Certificates of
Participation
05-01-15 6.71 20,000,000 21,049,400
Los Angeles International Airport Regional Airports
Improvement Corporation Refunding Revenue Bonds
Delta Airlines
11-01-25 6.35 13,000,000 12,893,010
Los Angeles International Airport Regional Airports
Improvement Corporation Refunding Revenue Bonds
United Airlines Series 1984
11-15-21 8.80 11,650,000 12,281,081
Los Angeles Water & Power Electric Plant
Refunding Revenue Bonds Series 1992
02-01-20 6.38 10,000,000 10,374,500
Millbrae Residential Facility Revenue Bonds
Magnolia of Millbrae Series 1997A A.M.T.
09-01-27 7.38 2,500,000 2,516,175
Northern California Power Agency Geothermal 3
Revenue Bonds
07-01-09 5.00 49,635,000 49,537,172
Novato Community Facility District 1 Vintage Oaks
Public Improvement Special Tax Refunding Bonds
08-01-21 7.25 5,000,000 5,201,100
Oceanside Certificate of Participation Refunding Bonds
Oceanside Civic Center (MBIA Insured)
08-01-19 5.25 7,000,000 6,543,390
Orange County Special Tax Community Facilities Bonds
Aliso Veijo District 88-1 Series 1992A
08-15-18 7.35 6,000,000 6,579,300
Pleasanton Joint Powers Financing Authority Reassessment
Revenue Bonds Series 1993A
09-02-12 6.15 4,350,000 4,431,650
Sacramento Cogeneration Authority
Pre-refunded Revenue Bonds Procter & Gamble Series 1995
07-01-14 6.50 3,800,000 4,208,880
Sacramento Cogeneration Authority
Revenue Bonds Procter & Gamble Series 1995
07-01-21 6.50 8,000,000 8,860,800
Sacramento Municipal Utility District Electric
Refunding Revenue Bonds Series 1993D
Inverse Floater (FSA Insured)
11-15-05 7.12 15,800,000(c) 16,767,750
11-15-06 7.32 16,400,000(c) 17,425,000
Sacramento Municipal Utility District Electric
Refunding Revenue Bonds Series 1993D
Inverse Floater (MBIA Insured)
11-15-15 7.77 15,000,000(c) 14,812,500
Sacramento Power Authority Cogeneration
Revenue Bonds Campbell Soup Series 1995
07-01-22 6.00 25,000,000 24,043,000
San Joaquin Hills Orange County Transportation
Corridor Agency Senior Lien Toll Road Revenue Bonds
01-01-32 6.75 14,785,000 16,062,128
San Joaquin Hills Transportation Corridor Agency
Capital Appreciation Toll Road Refunding Revenue
Bonds Zero Coupon Series 1997A (MBIA Insured)
01-15-24 5.62 9,000,000(d) 2,082,420
01-15-25 5.03 43,510,000(d) 9,451,677
01-15-26 5.51 30,000,000(d) 6,132,900
01-15-27 5.51 6,670,000(d) 1,283,108
01-15-32 5.41 21,500,000(d) 3,032,360
San Joaquin Hills Transportation Corridor Agency
Senior Lien Toll Road Revenue Bonds
Zero Coupon Escrowed to Maturity
01-01-17 5.35 34,860,000(d) 12,994,065
San Jose Redevelopment Agency Merged Area
Tax Allocation Bonds Series 1993 Inverse Floater
(MBIA Insured)
08-01-14 7.41 33,600,000(c) 32,634,000
Santa Nella County Water District Improvement
Limited Obligation Refunding Improvement Bonds
Series 1998
09-02-28 6.25 2,760,000 2,559,238
Sierra Unified School District Fresno County
Certificate of Participation Capital Funding
Refunding Bonds Series 1993
03-01-18 6.13 6,470,000 6,333,742
South Tahoe Joint Powers Financing Authority
Refunding Revenue Bonds South Tahoe Area 1
Series 1995B
10-01-28 6.00 9,900,000 9,455,886
Southern California Public Power Authority
Power Revenue Bonds Palo Verde
Series 1993 Inverse Floater (FGIC Insured)
07-01-17 6.92 20,000,000(c) 20,225,000
Ukiah Unified School District
Mendocino County Certificates of Participation
Series 1993
09-01-10 6.00 5,000,000 5,202,300
University of California Refunding Revenue Bonds
Multiple Purpose Project (AMBAC Insured)
09-01-16 5.25 6,000,000 5,766,840
West Sacramento Financing Authority
Special Tax Revenue Bonds Series 1999F
09-01-29 6.10 9,500,000 8,621,060
Total 484,823,454
Colorado (7.5%)
Arapahoe County Industrial Development Revenue Bonds
Dillion Real Estate-Kroger
04-01-09 8.00 4,000,000 4,288,720
Arapahoe County Public Highway Authority Capital
Improvement Trust Fund E-470 Highway
Pre-refunded Revenue Bonds
08-31-26 7.00 22,000,000 24,990,899
Aurora Centretech Metropolitan District
Arapahoe County Series 1987B
12-01-23 10.53 5,699,785 6,083,210
Bowles Metropolitan District General Obligation Bonds
Series 1995
12-01-15 7.75 15,500,000 17,598,080
Briargate Public Building Authority
Landowner Assessment Lien Bonds Series 1985A
12-15-00 10.25 3,880,190(f) 3,565,507
Castle Rock Ranch Public Facility Improvement
Revenue Bonds Series 1996
12-01-17 6.25 10,000,000 10,038,600
Colorado Springs Hospital Revenue Bonds
Memorial Hospital Series 1990
12-15-10 7.88 5,000,000 5,189,750
Colorado Springs Utilities System
Pre-refunded Revenue Bonds Series 1991C
11-15-15 6.50 1,505,000 1,595,676
Colorado Springs Utilities System
Refunding Revenue Bonds Series 1991C
11-15-15 6.50 24,895,000 26,259,743
11-15-21 6.75 30,000,000 31,851,677
Dawson Ridge Metropolitan District
Refunding Revenue Bonds
Zero Coupon Series B Escrowed to Maturity
10-01-22 5.21 40,000,000(d) 8,881,200
Denver City & County Airport Systems Revenue Bonds
Series 1991A A.M.T.
11-15-23 8.75 10,000,000 10,871,741
Denver City & County Airport Systems Revenue Bonds
Series 1991D A.M.T.
11-15-21 7.75 8,650,000 9,236,541
Denver City & County Airport Systems Revenue Bonds
Series 1992A
11-15-25 7.25 20,975,000 22,953,781
Denver City & County Airport Systems Revenue Bonds
Series 1992B A.M.T.
11-15-23 7.25 20,500,000 21,954,421
Denver City & County Airport Systems Revenue Bonds
Series 1994A
11-15-12 7.50 5,000,000 5,510,400
Denver City & County Airport Systems Revenue Bonds
Series 1994A A.M.T.
11-15-23 7.50 19,340,000 21,315,016
Denver City & County GVR Metropolitan District
General Obligation Refunding Bonds Series 1991
12-01-06 8.00 1,385,000 1,594,412
Denver City & County GVR Metropolitan District
General Obligation Refunding Bonds Series 1995B
12-01-06 11.00 730,000 695,924
Denver Special Facility Airport Revenue Bonds
United Air Lines Series A A.M.T.
10-01-32 6.88 25,400,000 25,281,889
Denver Urban Renewal Authority Tax Increment Revenue
Bonds Downtown Denver Redevelopment Adams Mark Hotel
Series 1989 A.M.T.
09-01-15 8.00 15,800,000 17,535,156
09-01-16 8.00 1,785,000 1,981,029
09-01-17 8.00 1,930,000 2,141,953
Denver Urban Renewal Authority Tax Increment
Revenue Bonds South Broadway Montgomery Ward
Urban Renewal Series 1992
05-01-16 8.50 13,415,000 14,478,810
Denver West Metropolitan District
General Obligation Bonds Series 1996
06-01-16 6.50 2,560,000 2,632,218
Denver West Metropolitan District
General Obligation Refunding Improvement Bonds
Series 1995
12-01-14 7.00 4,230,000 4,512,014
Eagle Bend Metropolitan District 2
Limited General Obligation Bonds
12-01-18 6.88 7,500,000 7,480,275
Edgewater Redevelopment Authority
Tax Increment Refunding Revenue Bonds
Edgewater Redevelopment Series 1999
12-01-08 5.50 3,615,000 3,392,605
Educational & Cultural Facilities Authority Revenue Bonds
Bolder County Day School Series 1999
09-01-24 6.75 4,720,000 4,589,539
Hotchkiss Industrial Development Revenue Bonds
Dillion Real Estate-Kroger
09-01-09 8.00 1,500,000 1,610,145
Housing Finance Authority Single Family Program
Senior Bonds Series 1991B (FGIC Insured)
08-01-11 7.25 1,295,000(g) 1,334,174
02-01-18 7.30 1,180,000 1,213,960
Lowry Economic Redevelopment Authority
Revenue Bonds Series 1996
12-01-10 7.50 19,000,000 20,978,659
Lowry Economic Redevelopment Authority
Series A
12-01-10 7.00 3,600,000 3,872,628
Saddle Rock Metropolitan District Limited Tax
General Obligation Bonds Series 1997
12-01-16 7.63 5,300,000 5,383,793
State Health Facilities Authority Retirement Facilities
Revenue Bonds Liberty Heights Zero Coupon
Escrowed to Maturity
07-15-22 7.50 81,465,000(d) 19,373,192
State Health Facility Authority Hospital Improvement
Refunding Revenue Bonds
Parkview Episcopal Medical Center Series 1995
09-01-25 6.13 7,000,000 6,685,700
Superior Metropolitan District 2 Limited Tax
General Obligation Refunding Bonds
MDC Holdings Series 1994B
12-01-13 8.25 2,580,000 2,989,317
12-01-13 8.50 12,000,000 12,901,560
Thornton Industrial Development Revenue Bonds
Dillion Real Estate-Kroger
09-01-09 8.00 4,500,000 4,824,810
Trailmark Metropolitan District
General Obligation Bonds
Series 1999B
12-01-18 5.80 5,000,000 4,585,550
Westminster Industrial Development Revenue Bonds
Dillion Real Estate-Kroger
04-01-09 8.00 3,500,000 3,757,005
Total 408,011,279
Connecticut (0.2%)
State Development Authority Pollution Control
Refunding Revenue Bonds Conneticut Light & Power
Series 1993B A.M.T.
09-01-28 5.95 10,000,000 8,954,600
District of Columbia (0.7%)
General Obligation Refunding Bonds Series 1994A
(MBIA Insured)
06-01-10 6.00 27,875,000 29,817,887
06-01-11 6.10 7,580,000 8,138,722
Housing Finance Agency Multi-family Mortgage
Revenue Bonds Temple Courts Section 8
Series 1985 (FHA Insured)
02-01-22 12.00 1,300,000 1,446,133
Total 39,402,742
Florida (4.8%)
Arbor Greene Community Development District
Special Assessment Revenue Bonds Series 1996
05-01-18 7.60 4,880,000 5,078,226
Arbor Greene Community Development District
Special Assessment Revenue Bonds Series 1998
05-01-19 6.30 1,390,000 1,315,593
Brooks of Bonita Springs Community
Development District Special Assessment
District Capital Improvement Revenue Bonds
Series 1998A
05-01-19 6.20 11,200,000 10,480,736
Brooks of Bonita Springs Community
Development District Special Assessment
District Capital Improvement Revenue Bonds
Series 1998B
05-01-06 5.65 1,070,000 1,030,945
Championsgate Community Development District
Capital Improvement Revenue Bonds Series 1998A
05-01-20 6.25 2,840,000 2,653,923
Championsgate Community Development District
Capital Improvement Revenue Bonds Series 1998B
05-01-05 5.70 1,515,000 1,470,338
Charlotte County Development Authority 1st Mortgage
Refunding Revenue Bonds
Royal Palm Retirement Centre Series 1991
03-01-14 9.50 3,830,000 4,032,416
Crossings at Fleming Island Community Development
District Special Assessment Bonds Series 1995
05-01-16 8.25 9,810,000 10,430,090
Crossings at Fleming Island Community Development
District Utility Revenue Bonds Series 1994
10-01-19 7.38 12,945,000 13,379,564
Crossings at Fleming Island Community Development
District Utility Revenue Bonds Series 1999
10-01-25 6.75 6,000,000 5,884,320
Department of Transportation Turnpike Revenue Bonds
Series 1991A (AMBAC Insured)
07-01-20 6.25 20,000,000 20,612,599
Grand Haven Community Development District
Special Assessment Bonds Flagler County
Series 1997A
05-01-02 6.30 4,400,000 4,407,524
Grand Haven Community Development District
Special Assessment Revenue Bonds
Series 1998A
05-01-19 6.90 1,000,000 998,860
Heritage Harbor Community Development District
Special Assessment Revenue Bonds
Series 1997B
05-01-03 6.00 1,135,000 1,124,842
05-01-05 5.75 1,650,000 1,617,644
Heritage Palms Community Development District
Capital Improvement Revenue Bonds
Series 1998
11-01-03 5.40 3,635,000 3,534,965
Hillsborough County Housing Finance Authority
Multi-family Housing Revenue Bonds
Park Springs Apartments A.M.T. V.R.
07-01-39 6.00 9,300,000 8,591,619
Hillsborough County Utility Refunding Revenue Bonds
Series 1991A
08-01-14 7.00 24,000,000 25,106,230
Hillsborough County Utility Refunding Revenue Bonds
Series 1991A (MBIA Insured)
08-01-16 6.50 24,760,000 25,993,295
Lakewood Ranch Community Development District 1
Manatec County Benefit Special Assessment Bonds
Series 1998
05-01-17 7.30 3,180,000 3,082,469
Lakewood Ranch Community Development District 1
Special Assessment Bonds Series 1994
05-01-14 8.25 2,175,000 2,292,820
Miami Health Facility Authorization Revenue Bonds
Inverse Floater (AMBAC Insured)
08-15-15 7.04 3,500,000(c) 3,097,500
North Springs Improvement Special Assessment
District Revenue Bonds Heron Bay Series 1997
05-01-19 7.00 3,000,000 3,045,420
North Springs Improvement Special Assessment
District Revenue Bonds Parkland Isles Series 1997B
05-01-05 6.25 2,500,000 2,473,900
Orange County Housing Finance Authority
Multi-family Housing Revenue Bonds
Dunwoodie Apartments Series 1999E A.M.T.
07-01-35 6.50 6,020,000 5,545,985
Palm Beach County Health Facilities Authority Hospital
Revenue Bonds Good Samaritan Health Series 1993
10-01-22 6.30 3,750,000 4,020,825
Palm Beach County Housing Finance Authority
Multi-family Revenue Bonds Lake Delray
Series A A.M.T.
01-01-31 6.40 14,000,000 13,023,500
Polk County Industrial Development Authority 1st Mortgage
Refunding Revenue Bonds Spring Haven II
12-01-14 8.75 5,760,000 6,114,874
Port Everglades Port Authority Revenue Bonds Junior Lien
09-01-16 5.00 18,635,000 17,161,903
River Ridge Community Development District
Special Assessment Revenue Bonds Series 1998
05-01-08 5.75 3,100,000 2,974,109
Riverwood Community Development District
Charlotte County Special Assessment Revenue Bonds
Series 1992A-B
05-01-12 8.50 460,000 477,324
05-01-14 8.50 4,925,000 5,110,476
State Housing Finance
Revenue Bonds Westbrook Apartments
Series U-1 A.M.T.
01-01-39 6.45 4,880,000 4,432,504
Stoneybrook Community Development District
Capital Improvement Revenue Bonds
Lee County Series 1998A
05-01-19 6.10 1,660,000 1,537,326
Stoneybrook Community Development District
Capital Improvement Revenue Bonds
Lee County Series 1998B
05-01-08 5.70 1,180,000 1,129,024
Sumter County Industrial Development Authority
Industrial Development Revenue
Bonds Little Sumter Utility Company Series 1997 A.M.T.
10-01-27 7.25 4,200,000 4,027,422
Sumter County Industrial Development Authority
Industrial Development Water &
Sewer Revenue Bonds Little Sumter Utility Company
Series 1998 A.M.T.
10-01-27 6.75 2,915,000 2,695,005
Sumter County Village Community Development
District 1 Capital Improvement Revenue Bonds
Series 1992
05-01-12 8.40 535,000 558,230
Sunrise Utility System Refunding & Improvement
Revenue Bonds
10-01-18 10.75 5,000,000 5,271,250
Village Center Community Development District
Sub Recreational Revenue Bonds
Series 1998C
01-01-19 7.38 2,640,000 2,524,236
Village Center Community District Recreational
Revenue Bonds Series 1996B
01-01-17 8.25 2,695,000 2,802,800
Village Community Development District 2
Special Assessment District Revenue Bonds
Series 1996
05-01-17 7.63 4,830,000 4,963,646
Volusia County Industrial Development Authority
1st Mortgage Refunding Revenue Bonds Series 1996
11-01-26 7.63 10,925,000 12,690,917
Total 258,797,194
Georgia (2.6%)
Americus-Sumter County Hospital Authority
Refunding Revenue Bonds South Georgia
Methodist Home for the Aging Obligated Group
Magnolia Manor Series 1999
05-15-29 6.38 5,500,000 4,957,205
Atlanta Special Purpose Facility Revenue Bonds
Delta Air Lines Series 1989B A.M.T.
12-01-18 7.90 13,500,000 13,794,435
12-01-19 6.25 8,685,000 8,458,061
Atlanta Water & Wastewater Refunding Revenue
Bonds Series 1999A (FGIC Insured)
11-01-38 5.00 29,275,000 24,466,288
Colquitt County Development Authority Revenue Bonds
Zero Coupon Escrowed to Maturity
12-01-21 6.87 46,350,000(d) 10,308,704
Effingham County Pollution Control Revenue Bonds
Fort Howard Series 1988
10-01-05 7.90 19,850,000 20,330,569
Fulco Hospital Authority Revenue Anticipation Certificate
Georgia Baptist Health Care Systems Series 1992A
09-01-22 6.38 20,300,000 21,594,531
George L. Smith II World Congress Center Authority
Miscellaneous Revenue Bonds
Dome Stadium Series 2000 (MBIA Insured) A.M.T.
07-01-20 5.50 8,000,000(h) 7,368,560
Municipal Electric Authority Power Revenue Bonds
Series L
01-01-20 5.00 1,150,000 993,830
Rockdale County Development Authority Solid
Waste Disposal Revenue Bonds Visy
Paper Series 1993 A.M.T.
01-01-26 7.50 10,000,000 10,348,300
Savannah Economic Development Authority
1st Mortgage Revenue Bonds Zero Coupon Series 1991A
12-01-21 5.40 13,730,000(d) 3,053,689
Savannah Economic Development Authority
Revenue Bonds Zero Coupon Escrowed to Maturity
12-01-21 6.87 64,220,000(d) 14,283,170
Total 139,957,342
Hawaii (0.4%)
City & County of Honolulu Refunding & Improvement
General Obligation Bonds Series 1993B Inverse Floater
09-07-06 6.52 10,000,000(c) 10,300,000
09-11-08 6.82 10,000,000(c) 10,300,000
Total 20,600,000
Illinois (8.4%)
Bradley Kankakee County Tax Increment
Refunding Revenue Bonds Series 1993
12-01-12 8.40 5,590,000 6,063,138
Broadview Cook County Senior Lien Tax Increment
Revenue Bonds Series 1993
07-01-13 8.25 10,995,000 12,576,851
Chicago Board of Education Unlimited General
Obligation Bonds Capital Appreciation School Reform
Zero Coupon Series B-1 (FGIC Insured)
12-01-29 5.20 25,000,000 3,798,500
Chicago Board of Education Unlimited General
Obligation Bonds School Reform Series 1997A
(AMBAC Insured)
12-01-22 5.25 5,000,000 4,529,650
Chicago Board of Education School Reform
Unlimited Tax General Obligation Refunding Bonds
Zero Coupon Series 1999A (FGIC Insured)
12-01-28 5.30 31,500,000(d) 5,097,645
12-01-29 5.30 30,500,000(d) 4,634,170
12-01-30 5.30 36,135,000(d) 5,140,565
Chicago Capital Appreciation Unlimited
General Obligation Bonds City Colleges
Zero Coupon (FGIC Insured)
01-01-36 6.26 32,670,000(d) 3,447,338
Chicago General Obligation Bonds
Series 1991 (AMBAC Insured)
01-01-16 6.00 6,170,000 6,478,377
Chicago General Obligation Bonds
Series 1994A (AMBAC Insured)
01-01-22 5.88 17,850,000 18,698,232
Chicago General Obligation Refunding Bonds
Series 1995A (AMBAC Insured)
01-01-18 5.50 20,000,000 19,419,400
Chicago O'Hare International Airport
General Airport Refunding Revenue Bonds Series 1993A
01-01-16 5.00 14,450,000 12,930,149
Chicago O'Hare International Airport
General Airport Revenue Bonds Series 1990A A.M.T.
01-01-16 7.50 21,000,000 21,479,009
01-01-18 6.00 29,000,000 29,625,239
Chicago O'Hare International Airport
Special Facility Revenue Bonds United Airlines
Series 1999A
09-01-16 5.35 5,000,000 4,355,550
Chicago O'Hare International Airport
Special Revenue Bonds (FGIC Insured) A.M.T.
11-01-25 7.88 17,750,000 18,453,788
Chicago O'Hare International Airport
Special Revenue Bonds A.M.T.
01-01-17 7.50 32,250,000 32,988,202
Chicago O'Hare International Airport
Special Revenue Facility Bonds Delta Airlines
Series 1992
05-01-18 6.45 10,000,000 9,997,200
Chicago Ridge Special Service Area 1 Unlimited
Ad Valorem Tax Bonds Series 1990
12-01-08 9.00 2,700,000 2,881,143
Chicago Wastewater Transmission Revenue Bonds
Series 1994 (MBIA Insured)
01-01-24 6.38 22,500,000 24,509,474
Cook County Bedford Park Senior Lien Tax Increment
Revenue Bonds
01-01-06 7.00 990,000 1,021,838
01-01-12 7.38 1,700,000 1,762,458
Cook County Bedford Park Senior Lien Tax Increment
Revenue Bonds Mark IV Series 1992
03-01-12 9.75 1,675,000 1,873,136
Development Finance Authority Lifecare Revenue Bonds
Presbyterian Homes Series 1996B
09-01-31 6.40 6,700,000 6,829,444
Development Finance Authority Pollution Control
Refunding Revenue Bonds Central Illinois
Public Service 2nd Series 1993B
06-01-28 5.90 2,500,000 2,414,175
Development Finance Authority Pollution Control
Refunding Revenue Bonds Commonwealth Edison
Series 1994
01-15-09 5.70 2,000,000 2,077,680
01-15-14 5.85 4,500,000 4,626,180
DuPage County Tax Increment Revenue Bonds
Series 1997
01-01-17 7.88 4,690,000 5,020,926
Educational Facilities Authority Refunding Revenue Bonds
Lewis University Series 1996
10-01-26 6.13 8,780,000 8,307,197
Educational Facilities Authority Refunding Revenue Bonds
Loyola University of Chicago Series 1993
Inverse Floater (FGIC Insured)
07-01-12 7.57 11,000,000(c) 11,745,580
Granite City Madison County Hospital
Refunding Revenue Bonds St. Elizabeth Medical Center
Series 1989A
06-01-08 8.13 2,920,000 2,899,210
Health Facilities Authority Refunding Revenue Bonds
Morris Hospital
12-01-23 6.13 3,005,000 2,909,681
Health Facilities Authority Refunding Revenue Bonds
University of Chicago Series 1993 Inverse Floater
(MBIA Insured)
08-15-14 8.02 10,000,000(c) 9,850,000
Health Facilities Authority Revenue Bonds
Sarah Bush Lincoln Health Center Series 1992
05-15-12 7.25 2,000,000 2,164,400
05-15-22 7.25 2,000,000 2,164,400
Health Facilities Authority Revenue Bonds
Sarah Bush Lincoln Health Center Series 1996B
02-15-22 5.75 2,915,000 2,653,233
Health Facility Authority Revenue Bonds
South Suburban Hospital Series 1992
02-15-09 7.00 4,000,000 4,357,743
02-15-18 7.00 5,000,000 5,504,594
Hodgkins General Obligation Tax Increment Bonds
Series 1991
12-01-09 9.50 11,200,000 12,453,216
Hodgkins General Tax Increment Bonds
Series 1995A
12-01-13 7.63 9,000,000 9,557,280
Huntley Special Tax Bonds
Series 1998
02-01-25 6.75 2,450,000 2,352,539
Huntley Special Tax Bonds
Series 1999
03-01-28 6.30 2,305,000 2,107,185
Lakemoor Special Tax Revenue Bonds
Series 1997
03-01-27 7.80 9,000,000 9,240,750
Lansing Tax Increment Refunding Revenue Bonds
Landings Redevelopment Area Limited Sales
Tax Pledge Series 1992
12-01-08 7.00 10,000,000 10,590,400
Marion General Obligation Hospital Alternate
Revenue Source Bonds Series 1991
12-01-16 7.50 3,800,000 4,093,892
Metropolitan Pier & Exposition Authority
Dedicated State Tax Refunding Revenue Bonds
McCormick Place Zero Coupon (FGIC Insured)
06-15-19 6.37 6,000,000(d) 1,822,980
Metropolitan Pier & Exposition Authority
Dedicated State Tax Refunding Revenue Bonds
McCormick Place Zero Coupon (MBIA Insured)
06-15-17 6.61 11,210,000(d) 3,920,249
06-15-28 6.61 41,900,000(d) 7,143,950
Metropolitan Pier & Exposition Authority
Sales Tax & Miscellaneous Tax Revenue
Capital Appreciation Refunding Bonds
Zero Coupon Series 1996A (MBIA Insured)
12-15-22 6.05 16,225,000(d) 3,947,056
Regional Transportation Authority General
Obligation Bonds Counties of Cook, DuPage, Kane, Lake,
McHenry & Will Series 1992A (AMBAC Insured)
06-01-22 6.13 7,200,000 7,489,584
Schaumburg Special Assessment District
Revenue Bonds Woodfield Road
Series 1998
12-01-28 6.75 3,403,000 3,088,120
State Development Finance Authority Pollution Control
Refunding Revenue Bonds Illinois Power
Series 1991A
07-01-21 7.38 19,250,000 20,849,868
State Development Finance Authority Regency Park
Retirement Housing Revenue Bonds Zero Coupon
Series 1991B Escrowed to Maturity
07-15-25 5.49 10,000,000(d) 1,833,800
State Development Finance Authority Retirement Housing
Revenue Bonds Zero Coupon Escrowed to Maturity
04-15-20 7.75 68,000,000(d) 17,651,440
State Health Facilities Authority Refunding Revenue Bonds
Edwards Hospital Series 1993A
02-15-19 6.00 6,350,000 6,097,842
State Health Facilities Authority Refunding Revenue Bonds
Masonic Medical Center Series 1993
10-01-19 5.50 2,000,000 1,784,760
Tinley Park Cook & Will Counties Limited Sales Tax
Revenue Bonds Series 1988
11-01-99 10.25 895,000(f) 321,520
Tinley Park Cook & Will Counties Unlimited Ad Valorem
Tax Bonds of Special Service
12-01-99 10.65 80,000 79,921
12-01-00 10.65 90,000 83,601
12-01-01 10.65 100,000 91,890
12-01-02 10.65 110,000 101,079
12-01-03 10.65 120,000 110,268
12-01-04 10.65 135,000 124,052
12-01-05 10.65 150,000 137,835
12-01-06 10.65 165,000 151,619
12-01-07 10.65 185,000 169,997
Total 452,682,188
Indiana (2.3%)
Brazil 1st Mortgage Revenue Bonds Hoosier Care II
Series 1990
06-01-20 10.38 4,025,000 4,177,990
Carmel Retirement Rental Housing Refunding
Revenue Bonds Beverly Enterprises Series 1992
12-01-08 8.75 6,275,000 6,743,554
Development Finance Authority Environmental
Improvement Refunding Revenue Bonds USX Corporation
Series 1996
07-15-30 6.25 2,000,000 1,889,520
East Chicago Elementary School Building Lake County
1st Mortgage Refunding Bonds Series 1996
01-05-16 6.25 8,000,000 8,472,160
Hanover 1st Mortgage Revenue Bonds Hoosier Care II
Series 1990
06-01-20 10.38 6,590,000 6,837,125
Health Facility Authority Hospital Revenue Bonds
Community Hospital of Anderson Series 1993
01-01-23 6.00 10,000,000 9,417,100
Health Facility Authority Hospital Revenue Bonds
Union Hospital Series 1993 (MBIA Insured)
09-01-18 5.13 10,000,000 8,949,500
Health Facility Finance Authority Hospital Revenue Bonds
Hancock Memorial Series 1996
08-15-17 6.13 2,295,000 2,239,576
La Porte County Hospital Authority Hospital Refunding
Revenue Bonds La Porte Hospital Series 1993
03-01-12 6.25 5,070,000 5,083,993
03-01-23 6.00 2,990,000 2,809,912
Lawrenceburg Pollution Control Refunding Revenue Bonds
Methodist Hospital Series 1989
09-01-08 6.50 15,555,000 15,897,988
Marion County Hospital Authority Refunding Revenue Bonds
Methodist Hospital Series 1989 (MBIA Insured)
09-01-13 6.50 4,115,000 4,164,709
Rockport Pollution Control Refunding Revenue Bonds
Indiana Michigan Electric Series B
03-01-16 7.60 5,500,000 5,726,105
St. Joseph County Hospital Facility Revenue Bonds
Memorial Hospital of South Bend
06-01-10 9.40 1,770,000 2,154,302
Vincennes Economic Development
Improvement Refunding Revenue Bonds
Southwest Regional Youth Facilities Series 1999
01-01-24 6.25 24,535,000 22,659,546
Vincennes Economic Development
Revenue Bonds Southwest Indiana
Regional Youth Village Facility Series 1993
01-01-24 8.50 16,575,000 18,276,092
Total 125,499,172
Iowa (0.6%)
Keokuk Hospital Facilities Refunding Revenue Bonds
Keokuk Area Hospital Series 1991
12-01-21 7.63 5,350,000 5,770,029
Muscatine Electric Refunding Revenue Bonds Series 1986
01-01-05 6.00 10,845,000 10,859,315
01-01-06 6.00 11,330,000 11,344,955
01-01-07 5.00 2,250,000 2,231,393
01-01-08 5.00 5,100,000 5,019,930
Total 35,225,622
Kansas (0.2%)
Manhattan Health Care Facility Revenue Bonds
Meadowlark Hills Retirement Community
Series 1999A
05-15-28 6.50 1,500,000 1,378,305
State Development Financing Authority
Multi-family Revenue Bonds
Tiffany Gardens Apartments A.M.T.
09-01-29 6.75 5,100,000 4,795,683
Wyandotte County Kansas City Multi-family
Housing Revenue Bonds Park Victoria Apartments
Series 1998 A.M.T.
08-01-28 6.25 4,980,000 4,591,859
Total 10,765,847
Kentucky (1.0%)
Development Finance Authority Hospital Facility
Revenue Bonds St. Luke Hospital Series 1989B
10-01-19 6.00 22,695,000 23,184,985
Economic Development Finance Authority Hospital
Refunding Revenue & Improvement Bonds
Appalachian Regional Hospital Series 1997
10-01-22 5.88 5,000,000 4,043,600
Jefferson County Student Housing Industrial Building
Revenue Bonds Collegiate Housing Foundation
Series 1999A
09-01-29 7.13 4,000,000 3,943,480
Muhlenberg County Hospital Refunding Revenue Bonds
Muhlenberg Community Hospital Series 1996
07-01-10 6.75 8,535,000 8,382,224
Turnpike Authority Economic Road Development
Refunding Revenue Bonds Series 1993 Inverse Floater
(AMBAC Insured)
06-06-12 7.84 15,000,000(c) 15,112,500
Total 54,666,789
Louisiana (2.7%)
Calcasieu Parish Industrial Development Pollution Control
Refunding Revenue Bonds Gulf State Utilities
Series 1992
10-01-12 6.75 10,500,000 10,657,710
Energy & Power Authority Refunding Revenue Bonds
Rodemacher Unit 2 Series 1991 (FGIC Insured)
01-01-13 6.00 28,000,000 28,335,160
Hodge Village Combined Utility System Revenue Bonds
Stone Container Series 1990 A.M.T.
03-01-10 9.00 23,000,000 23,591,560
New Orleans Audubon Park Commission Aquarium
Revenue Bonds Series 1992A
04-01-12 8.00 7,100,000 7,764,205
Public Facilities Authority Revenue Bonds
Glen Retirement Systems Series 1995
12-01-15 6.50 1,000,000 995,570
12-01-25 6.70 1,500,000 1,510,035
Southern Louisiana Port Commission Terminal
Refunding Revenue Bonds GATX Terminal Series 1993
03-01-23 7.00 13,180,000 13,668,714
St. Charles Parish Pollution Control Revenue Bonds
Louisiana Power & Light 2nd Series 1984
12-01-14 8.00 29,155,000 30,032,566
St. Charles Parish Pollution Control Revenue Bonds
Louisiana Power & Light Series 1991 A.M.T.
06-01-21 7.50 20,700,000 21,511,026
West Feliciana Parish Demand Pollution Control
Revenue Bonds Gulf State Utilities Series 1985B
05-01-15 9.00 6,000,000 6,260,520
Total 144,327,066
Maine (0.2%)
Finance Authority Multi-family Housing Revenue
Obligation Securities Huntington Common
Series 1997A
09-01-27 7.50 5,000,000 4,756,600
Kennebunk Special Obligation Revenue Bonds
Series 1999A
07-01-24 7.00 4,750,000 4,402,300
Total 9,158,900
Maryland (0.8%)
Frederick County Economic Refunding Revenue Bonds
Alumax Series 1992
04-01-17 7.25 9,880,000 10,325,292
Frederick County Obligation Special Tax Revenue Bonds
Urbana Community Development Authority Series 1998
07-01-25 6.63 6,000,000 5,719,680
Harford County Industrial Development Revenue Bonds
Dorsey
04-16-05 8.00 449,000 450,248
Prince George's County Hospital Revenue Bonds
Dimensions Health Series 1992
07-01-17 7.25 11,400,000 12,377,436
07-01-22 7.00 7,000,000 7,557,900
State Transportation Authority Facility
Capital Appreciation Revenue Bonds
Zero Coupon Series 1992 (FGIC Insured)
07-01-10 6.33 3,000,000(d) 1,708,440
07-01-11 6.33 6,700,000(d) 3,589,391
State Transportation Authority Facility
Revenue Bonds Zero Coupon
Series 1992 (FGIC Insured)
07-01-12 6.35 5,000,000(d) 2,507,300
Total 44,235,687
Massachusetts (2.7%)
Bay Transportation Authority Refunding Revenue Bonds
Series 1994A (MBIA Insured)
03-01-12 6.00 8,000,000 8,277,781
Health & Educational Facilities Authority
Revenue Bonds Berkshire Health Systems
Series C
10-01-11 5.90 1,700,000 1,623,245
10-01-20 6.00 4,000,000 3,764,360
Health & Educational Facilities Authority
Revenue Bonds Beverly Hospital Inverse Floater
(MBIA Insured)
06-18-20 7.92 8,000,000(c) 7,380,000
Health & Educational Facilities Authority
Revenue Bonds Charlton Memorial Hospital
Series 1991B
07-01-13 7.25 6,455,000 6,848,884
Health & Educational Facilities Authority
Revenue Bonds Holyoke Hospital
Series B
07-01-15 6.50 500,000 493,515
Industrial Finance Agency Pollution Control
Refunding Revenue Bonds Eastern Edison
Series 1993
08-01-08 5.88 4,250,000 4,124,795
Industrial Finance Agency Resource Recovery
Revenue Bonds SEMASS Series 1991A
07-01-15 9.00 18,885,000 20,284,756
Industrial Finance Agency Resource Recovery
Revenue Bonds SEMASS Series 1991B A.M.T.
07-01-15 9.25 24,700,000 26,532,247
Municipal Wholesale Electric Power
Supply System Pre-refunded Revenue Bonds
Series 1992B
07-01-17 6.75 10,130,000 10,886,407
Municipal Wholesale Electric Power
Supply System Revenue Bonds
Series 1993A Inverse Floater (AMBAC Insured)
07-01-18 7.12 6,500,000(c) 5,703,750
State Health & Educational Facilities Authority
Refunding Revenue Bonds Christopher House Series 1999A
01-01-29 6.88 5,000,000 4,718,850
State Industrial Finance Agency Assisted Living
Facility Revenue Bonds Marina Bay LLC
Series 1997 A.M.T.
12-01-27 7.50 2,000,000 2,038,220
State Industrial Finance Agency Assisted Living
Facility Revenue Bonds Newton Group Properties LLC
Series 1997 A.M.T.
09-01-27 8.00 4,300,000 4,538,865
Water Resource Authority General
Refunding Revenue Bonds Series 1992B
11-01-15 5.50 22,175,000 21,488,462
Water Resource Authority General
Revenue Bonds Series 1992A
07-15-19 6.50 3,500,000 3,770,550
Water Resource Authority General
Revenue Bonds Series 1993B-95B
(MBIA Insured)
12-01-25 5.00 9,000,000 7,780,140
Water Resource Authority General
Revenue Bonds Series B (MBIA Insured)
03-01-22 5.00 10,000,000 8,779,600
Total 149,034,427
Michigan (4.0%)
Chippewa Valley Schools Unlimited Tax
General Obligation Refunding Bonds
Series 1998 (AMBAC Insured)
05-01-23 4.75 14,240,000 11,916,886
Concord Academy Certificate of Participation Series 1998
10-01-19 7.00 1,000,000 918,830
Countryside Charter School
Full Term Certificates of Participation
Berrien County Series 1999
04-01-29 7.00 2,635,000 2,426,888
Crawford County Economic Development Corporation
Environmental Improvement Revenue Bonds
Weyerhaeuser Series 1991A
07-15-07 7.13 10,800,000 11,798,676
Detroit Unlimited Tax General Obligation Bonds
Series 1993
04-01-14 6.35 5,510,000 5,757,179
Detroit Unlimited Tax General Obligation Bonds
Series 1995A
04-01-15 6.80% $1,375,000 1,518,853
Lincoln Consolidated School District Unlimited Tax
General Obligation Refunding Bonds (FGIC Insured)
05-01-18 5.85 6,455,000 6,817,425
Livingston Academy Certificate of Participation
Series 1999
05-01-27 7.00 3,080,000 2,863,661
Midland County Economic Development Corporation
Pollution Control Limited Obligation
Refunding Revenue Bonds Midland Cogeneration
Series 1990 A.M.T.
07-23-09 9.50 35,200,000 36,470,367
Midland County Economic Development Corporation
Pollution Control Limited Obligation Refunding Revenue
Bonds Midland Cogeneration Series 1990C
07-23-09 8.50 18,900,000 19,488,168
Plymouth Educational Center Certificates of Participation
07-01-29 7.00 7,875,000 7,498,181
State Hospital Finance Authority
Hospital Pre-refunded Revenue Bonds
McLaren Obligated Group Series 1991A
09-15-21 7.50 7,500,000 8,047,875
State Hospital Finance Authority
Hospital Refunding Revenue Bonds
Sinai Hospital of Greater Detroit Series 1995
01-01-26 6.70 3,000,000 2,820,990
State Hospital Finance Authority
Refunding Revenue Bonds
Detroit Medical Center
Series 1993A
08-15-18 6.50 10,000,000 9,343,500
State Hospital Finance Authority
Refunding Revenue Bonds
Greater Detroit Sinai Hospital Series 1995
01-01-16 6.63 2,750,000 2,615,580
State Hospital Finance Authority
Revenue Bonds Central Michigan Community Hospital
10-01-27 6.25 2,095,000 1,957,819
State Strategic Fund Limited Tax Obligation Refunding
Revenue Bonds Ford Motor
Series 1991A
02-01-06 7.10 16,400,000 18,277,308
Strategic Fund Environmental Improvement Limited
Obligation Refunding Revenue Bonds
Crown Paper Company Series 1997B
08-01-12 6.25 1,100,000 923,604
Strategic Fund Limited Obligation Refunding
Revenue Bonds Detroit Edison
Series 1995AA (MBIA Insured)
09-01-25 6.40 12,000,000 12,227,280
Strategic Fund Limited Obligation Refunding
Revenue Bonds Great Lakes Pulp & Fibre
Series 1994 A.M.T.
12-01-27 5.00 23,933,770 16,753,639
Summit Academy Certificates of Participation
Junior High School Facility Series 1999
09-01-29 7.00 4,000,000 3,669,760
Summit Academy Certificates of Participation Series 1998
09-01-18 7.00 2,500,000 2,325,100
Troy City Downtown Development Authority
County of Oakland Development Bonds
Series 1995A (Asset Guaranty)
11-01-18 6.38 1,000,000 1,022,040
Van Buren Township Tax Increment Revenue Bonds
Series 1994
10-01-16 8.40 3,955,000 4,341,483
Wayne Charter County Special Airport Facilities Revenue
Bonds Northwest Airlines
Series 1999 A.M.T.
12-01-29 6.00 8,235,000 7,401,289
Wayne County Special Airport Facilities
Refunding Revenue Bonds Northwest Airlines Series 1995
12-01-15 6.75 11,265,000 11,325,718
Wayne Charter County Airport Facilities
Revenue Bonds Detroit Metropolitan Wayne County Airport
Series 1998B (MBIA Insured)
12-01-23 4.88 9,940,000 8,382,700
Total 218,910,799
Minnesota (4.6%)
Anoka County Housing & Redevelopment Authority
Revenue Bonds Epiphany Assisted Living LLC
12-01-29 7.40 4,000,000 3,952,520
Becker Solid Waste Disposal Facility Revenue Bonds
Liberty Paper Series 1994B A.M.T.
08-01-15 9.00 16,800,000 17,175,480
Bloomington Health Care Facility Revenue Bonds
Friendship Village of Bloomington Series 1992
04-01-02 8.50 2,385,000(g) 2,452,519
Brainerd Economic Development Authority
Health Care Facility Revenue Bonds
Benedictine Health System St. Joseph Medical Center
Series 1990
02-15-20 8.38 4,670,000 4,804,823
Duluth Economic Development Authority Health Care
Facilities Pre-refunded Revenue Bonds Benedictine
Health System St. Mary's Medical Center
Series 1990
02-15-20 8.38 8,300,000 8,539,621
Fergus Falls Health Care Facilities Revenue Bonds
LRHC Long-term Care Facility Series 1995
12-01-25 6.50 1,530,000 1,531,408
Fridley Senior Housing Revenue Bonds
Banfill Crossing Homes Series 1999
09-01-34 6.75 7,000,000 6,590,430
International Falls Solid Waste Disposal Revenue
Bonds Boise Cascade Series 1990 A.M.T.
01-01-15 7.75 10,000,000 10,208,100
Little Canada Multi-family Housing Revenue Bonds
Housing Alternatives Development Company
Series 1997A
12-01-27 6.25 1,755,000 1,655,737
Mahtomedi Multi-family Housing Revenue Bonds
Briarcliff A.M.T.
06-01-36 7.35 1,995,000 2,002,481
Maplewood Elder Care Facilities Revenue Bonds Care
Institute Series 1994
01-01-24 7.75 8,000,000 7,884,320
Maplewood Multi-family Housing Refunding Revenue
Bonds Carefree Cottages of Maplewood III
Series 1995 A.M.T.
11-01-32 7.20 4,905,000 4,784,729
Mille Lacs Capital Improvement Authority Infrastructure
Revenue Bonds Series 1992A
11-01-12 9.25 4,150,000 4,756,855
Minneapolis Housing & Healthcare Facility Revenue Bonds
Augustana Chapel View Homes Incorporated Series 1997
06-01-22 6.70 1,885,000 1,792,786
06-01-27 6.75 2,640,000 2,510,666
Richfield Multi-family Housing Refunding Revenue
Bonds Village Shores Apartments Series 1996
08-01-31 7.63 4,895,000 4,859,511
Robbinsdale Multi-family Housing Revenue Bonds
Copperfield Hill Series 1996A
12-01-31 7.35 3,500,000 3,407,705
Rochester Multi-family Housing Development
Revenue Bonds Wedum Shorewood Campus
06-01-36 6.60 10,000,000 9,302,100
Roseville Housing Facilities Nursing Home
Refunding Revenue Bonds College Properties
Series 1998
10-01-28 5.88 7,500,000 6,346,125
Sartell Health Care & Housing Facilities Revenue Bonds
The Foundation for Health Care Continuums
Series 1999A
09-01-29 6.63 4,000,000 3,721,200
Southern Minnesota Municipal Power Agency
Power Supply System Refunding Revenue Bonds
Series 1992
01-01-18 5.75 32,210,000 31,223,085
Southern Minnesota Municipal Power Agency
Power Supply System Refunding Revenue Bonds
Zero Coupon Series 1994A (MBIA Insured)
01-01-21 6.87 13,500,000(d) 3,794,715
Southern Minnesota Municipal Power Agency
Power Supply System Revenue Bonds
Zero Coupon Series 1994A (MBIA Insured)
01-01-22 6.73 17,500,000(d) 4,621,925
01-01-23 6.74 27,500,000(d) 6,822,750
01-01-24 6.75 19,960,000(d) 4,651,079
01-01-25 6.75 27,500,000(d) 6,017,275
01-01-26 6.75 27,500,000(d) 5,649,325
01-01-27 6.75 12,450,000(d) 2,407,083
St. Louis Park Health Care Facilities
Revenue Bonds Healthsystem Minnesota
Obligated Group Series 1993 Inverse Floater
(AMBAC Insured)
07-01-05 5.43 10,200,000(c) 9,881,250
St. Louis Park Health Care Facilities
Revenue Bonds Healthsystem Minnesota Obligated Group
Series 1993B Inverse Floater (AMBAC Insured)
07-01-13 5.73 18,000,000(c) 16,132,500
St. Louis Park Multi-family Housing Refunding
Revenue Bonds Park Boulevard Towers
Series 1996A
04-01-31 7.00 11,350,000 11,334,224
St. Paul Housing & Redevelopment Authority Health
Care Facilities Revenue Bonds Lyngblomsten
Care Center Series 1993A
11-01-06 7.13 1,465,000 1,460,942
11-01-17 7.13 2,550,000 2,573,282
St. Paul Housing & Redevelopment Authority Health
Care Facilities Revenue Bonds Lyngblomsten
Multi-family Rental Housing Series 1993B
11-01-24 7.00 2,665,000 2,588,461
St. Paul Port Authority Redevelopment Multi-family
Refunding Revenue Bonds Burlington Apartments
Series A (GNMA Insured)
05-01-31 5.75 14,355,000 13,655,194
St. Paul Port Authority Redevelopment Multi-family
Subordinate Refunding Revenue Bonds
Burlington Apartments Series A
02-01-31 8.63 3,770,000 3,683,705
St. Paul Port Authority Revenue Bonds
Hotel Facilities Radisson Kellogg 2nd Series 1999
08-01-29 7.38 6,500,000 6,428,045
Vadnais Heights Multi-family Housing Refunding
Revenue Bonds Cottages of Vadnais Heights
Series 1995 A.M.T.
12-01-31 7.00 1,980,000 1,928,302
Washington County Housing & Redevelopment
Authority Refunding Revenue Bonds Woodbury
Multi-family Housing Series 1996
12-01-23 6.95 4,740,000 4,658,614
Total 247,790,872
Mississippi (0.9%)
Gulfport Urban Renewal
Multi-family Housing Revenue Bonds
Woodchase Apartments Series 1998 A.M.T.
12-01-28 6.75 3,075,000 2,754,216
Harrison County Waste Water Management District
Refunding Bonds Series 1986
02-01-15 5.00 4,250,000 4,003,755
Jackson Industrial Development Revenue Bonds Dorsey
04-16-05 8.00 392,000 394,952
Long Beach Urban Renewal Multi-family Housing
Revenue Bonds Long Beach Square Apartments
Series 1998 A.M.T.
08-01-28 6.75 3,830,000 3,484,534
Lowndes County Solid Waste Disposal Pollution Control
Refunding Revenue Bonds Weyerhaeuser Series 1989
Inverse Floater
04-01-22 8.80 4,000,000(c) 4,259,760
Lowndes County Solid Waste Disposal Pollution Control
Revenue Bonds Weyerhaeuser
Series 1989 A.M.T.
12-01-05 7.88 12,250,000 12,642,734
State Business Finance Pollution Control Revenue Bonds
System Energy Resources Series 1999
05-01-22 5.90 12,900,000 11,398,053
State Hospital Refunding Revenue Bonds University
of Mississippi Medical Center Educational Building
Series 1998B (AMBAC Insured)
12-01-23 5.50 12,650,000 11,896,693
Total 50,834,697
Missouri (0.5%)
Regional Convention & Sports Complex Authority Bonds
St. Louis Sponsor Series 1991B
08-15-21 7.00 5,810,000 6,294,322
Sikeston Electric System Refunding Revenue Bonds
Series 1992 (MBIA Insured)
06-01-02 5.80 4,165,000 4,303,778
St. Louis Industrial Development Authority
Refunding Revenue Bonds Kiel Center
Multi-purpose Arena Series 1992 A.M.T.
12-01-24 7.88 15,400,000 16,204,957
St. Louis Regional Convention & Sports Complex Authority
Pre-refunded Revenue Bonds Series 1991C
08-15-21 7.90 125,000 132,588
St. Louis Regional Convention & Sports Complex Authority
Refunding Revenue Bonds Series 1991C
08-15-21 7.90 2,575,000 2,867,340
Total 29,802,985
Nebraska (--%)
Omaha Public Power District Electric System
Revenue Bonds Series 1986A
02-01-15 6.00 1,370,000 1,389,509
Nevada (0.8%)
Clark County Collateralized Pollution Control Revenue Bonds
Nevada Power A.M.T.
10-01-09 7.80 11,850,000 12,187,014
Clark County Industrial Development Revenue Bonds
Nevada Power Series 1990 A.M.T.
06-01-20 7.80 5,000,000 5,150,550
Clark County Passenger Facility Charge Airport
Refunding Revenue Bonds
Las Vegas McCarran International Airport
Series 1998 (MBIA Insured)
07-01-22 4.75 9,000,000 7,539,750
Las Vegas Redevelopment Agency Tax Increment
Subordinate Lien Revenue Bonds Series 1994A
06-15-10 6.00 2,000,000 2,016,040
06-15-14 6.10 2,750,000 2,731,603
Las Vegas Special Improvement District 707
Local Improvement Bonds
Summerlin Area Series 1996
06-01-16 7.10 5,925,000 6,155,186
Washoe County Hospital Revenue Bonds
Washoe Medical Center Series 1993A
06-01-15 6.00 7,250,000 7,228,250
Total 43,008,393
New Hampshire (2.2%)
Business Financial Authority Pollution Control
& Solid Waste Disposal Refunding Revenue Bonds
Crown Paper Company Series 1996
01-01-22 7.75 4,255,000 3,865,327
Business Financial Authority Pollution Control
Refunding Revenue Bonds United Illuminating
Series 1993A
10-01-33 5.88 13,200,000 11,942,568
Higher Education & Health Facilities Authority
Lifecare Revenue Bonds Rivermead at Peterborough
Retirement Community Series 1998
07-01-18 5.63 1,365,000 1,167,635
07-01-28 5.75 2,500,000 2,078,625
Industrial Development Authority Pollution Control
Revenue Bonds State Public Service Series 1991B
05-01-21 7.50 51,485,000 53,006,382
Industrial Development Authority Pollution Control
Revenue Bonds State Public
Service Series 1991C A.M.T.
05-01-21 7.65 25,000,000 25,771,500
Industrial Development Authority Pollution Control
Revenue Bonds United Illuminating Series 1989A A.M.T.
12-01-14 8.00 8,000,000 8,251,040
State Higher Education & Health Facility Authority Hospital
Revenue Bonds Hitchcock Clinic Series 1994
(MBIA Insured)
07-01-24 6.00 13,000,000 12,834,640
State Turnpike System Refunding Revenue Bonds
Series 1999A (FGIC Insured)
04-01-29 4.75 3,000,000 2,446,260
Total 121,363,977
New Jersey (0.2%)
Health Care Facility Finance Authority Revenue Bonds
St. Peter Medical Center Series 1994F (MBIA Insured)
07-01-16 5.00 10,000,000 9,174,500
New Mexico (1.9%)
Albuquerque Health Care System Revenue Bonds
Lovelace Medical Fund
03-01-11 10.25 55,000 55,769
Bernalillo County Muti-family Housing Revenue Bonds
Series 1997D
04-01-27 7.70 14,770,000 14,568,833
Farmington Pollution Control Refunding Revenue Bonds
Series 1996A-B
12-01-16 6.30 10,000,000 9,874,900
Farmington Pollution Control Refunding Revenue Bonds
Series 1997A
10-01-20 6.95 4,000,000 4,042,000
Farmington Pollution Control Refunding Revenue Bonds
State Public Service San Juan Series 1994A
08-15-23 6.40 30,650,000 30,096,461
Farmington Power Refunding Revenue Bonds
Generating Division
01-01-13 9.88 5,000,000 6,200,500
Las Vegas Hospital Facility Refunding Revenue Bonds
Northeastern Regional Hospital Series 1987
08-01-13 9.63 5,195,000 5,234,482
Lordsberg Pollution Control Refunding Revenue Bonds
Phelps Dodge
04-01-13 6.50 20,000,000 20,239,800
Sandoval County Multi-family Housing
Refunding Revenue Bonds Meadowlark Apartments
Series 1998A A.M.T.
07-01-38 6.38 11,300,000 10,537,815
Sandoval County Multi-family Housing
Refunding Revenue Bonds Meadowlark Apartments
Series 1998B A.M.T.
07-01-01 6.38 1,000,000 992,530
Santa Fe County Lifecare Revenue Bonds
El Castillo Retirement Series 1998A
05-15-15 5.50 1,000,000 879,140
05-15-25 5.63 2,500,000 2,058,350
Total 104,780,580
New York (7.2%)
Battery Park City Authority Refunding Revenue Bonds
Series 1993A
11-01-10 5.50 9,940,000 10,074,687
Dormitory Authority New York City University System
Consolidated 2nd Generation Resource Revenue Bonds
Series 1990C
07-01-16 6.00 27,230,000 27,115,089
07-01-17 5.00 20,820,000 18,226,869
Dormitory Authority New York City University System
Consolidated 2nd Generation Resource Revenue Bonds
Series 1990D
07-01-09 7.00 5,000,000 5,491,400
Dormitory Authority New York Court Facility Lease
Revenue Bonds Series 1993A
05-15-16 5.38 11,000,000 10,254,200
Dormitory Authority New York State
University Education Facility Revenue Bonds
Series 1993A
05-15-13 5.50 24,530,000 24,552,322
Huntington Housing Authority Senior Housing
Facilities Revenue Bonds Gurwin Jewish Senior
Residences Series 1999A
05-01-39 6.00 2,000,000 1,793,880
Long Island Power Authority
Revenue Bonds Series A
12-01-26 5.25 8,445,000 7,439,876
12-01-29 5.50 1,000,000 914,020
New York & New Jersey Port Authority Special
Obligation Revenue Bonds KIAC Partners
4th Series 1996 A.M.T.
10-01-19 6.75 3,500,000 3,600,310
New York City General Obligation Bonds Series 1992B
02-01-00 7.40 30,000,000 30,166,500
New York City General Obligation Bonds Series 1996F-G
02-01-19 5.75 5,500,000 5,325,870
02-01-20 5.75 2,325,000 2,238,905
New York City General Obligation Bonds Series 1998H
08-01-22 5.00 15,000,000 12,904,350
New York City Industrial Development Agency
Civic Facilities Revenue Bonds Touro College
Series 1999A
06-01-29 6.35 6,250,000 5,893,875
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds
Series 1994B Inverse Floater (MBIA Insured)
06-15-09 6.42 15,500,000(c) 15,383,750
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds Series A
06-15-21 6.25 55,500,000 56,537,849
New York City Municipal Water Finance Authority
Water & Sewer System Revenue Bonds Series B
06-15-17 5.00 6,255,000 5,676,538
New York City Unlimited Tax General Obligation
Bonds Series 1996G
02-01-17 5.75 20,000,000 19,592,600
New York City Unlimited Tax General Obligation
Bonds Series 1998F
08-01-23 5.00 7,235,000 6,196,054
New York City Unlimited Tax General Obligation
Pre-refunded Bonds Series 1994B-1
08-15-16 7.00 16,500,000 18,276,225
North Hempstead Unlimited Tax General Obligation
Various Purpose Bonds Series 1998A
(FGIC Insured)
01-15-23 4.75 3,100,000 2,598,172
PortAuthority Special Project Bonds La Guardia Airport
Passenger Terminal Continental & Eastern Airlines A.M.T.
12-01-06 9.00 2,645,000 2,782,223
PortAuthority Special Project Bonds La Guardia Airport
Passenger Terminal Continental & Eastern Airlines
Series 2 A.M.T.
12-01-10 9.00 8,800,000 9,256,544
12-01-15 9.13 17,500,000 18,437,825
State Dormitory Authority New York City University System
Consolidated 2nd Generation Resource Revenue Bonds
Series 1994A
07-01-18 5.75 5,500,000 5,395,445
State Housing Finance Agency Service Contract Obligation
Revenue Bonds Series 1995A
03-15-25 6.50 12,475,000 13,729,484
State Housing Finance Agency State University Construction
Refunding Bonds Series 1986A
05-01-13 6.50 3,500,000 3,880,625
State Medical Facilities Finance Agency
Mental Health Services Improvement Refunding
Revenue Bonds Series 1993D
08-15-23 5.25 15,000,000 13,173,150
State Medical Facilities Finance Agency
Mental Health Services Improvement Refunding
Revenue Bonds Series 1993F
02-15-19 5.25 5,790,000 5,182,803
State Urban Development Capital Correctional
Facilities Refunding Revenue Bonds Series 1994A
01-01-21 5.25 12,110,000 10,752,832
State Urban Development Correctional Facility
Refunding Revenue Bonds Series A
01-01-16 5.50 2,750,000 2,598,393
State Urban Development Correctional Facility
Revenue Bonds Series 6
01-01-25 5.38 9,000,000 8,060,760
State Urban Development Correctional Facility
Sub Lien Revenue Bonds Series 1996
07-01-26 5.60 6,630,000 6,138,850
Total 389,642,275
North Carolina (3.7%)
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1986A
01-01-17 5.00 6,500,000 6,006,630
01-01-18 4.00 8,675,000 6,906,428
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1988A
01-01-26 6.00 1,940,000 1,985,415
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1989A
01-01-10 7.50 29,160,000 33,487,842
01-01-11 5.50 37,800,000 36,077,454
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1991A
01-01-19 5.75 55,000,000 49,743,099
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1993B
01-01-12 6.25 24,655,000 24,727,732
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series 1994B
01-01-07 7.25 5,000,000 5,441,750
Eastern Municipal Power Agency Power System
Refunding Revenue Bonds Series B
01-01-09 6.13 10,000,000 10,191,100
Eastern Municipal Power Agency Power System
Revenue Bonds Series 1993D
01-01-13 5.88 2,300,000 2,225,526
Municipal Power Agency 1 Catawba Electric
Revenue Bonds Series 1993
Inverse Floater (MBIA Insured)
01-01-12 7.22 7,400,000(c) 7,326,000
01-01-20 7.42 15,000,000(c) 13,462,500
State Medical Care Community Hospital Refunding
Revenue Bonds Pitt County Memorial Hospital
Series 1998A (MBIA Insured)
12-01-28 4.75 5,730,000 4,650,755
Total 202,232,231
North Dakota (0.3%)
Fargo Hospital Refunding Revenue & Improvement Bonds
Dakota Hospital Series 1992
11-15-12 6.88 3,000,000 3,235,650
11-15-22 7.00 4,250,000 4,597,140
Ward County Health Care Facilities
Refunding Revenue Bonds Trinity Group Series 1996A
07-01-26 6.25 6,110,000 5,880,142
Ward County Health Care Facilities Refunding
Revenue Bonds Trinity Obligated Group
Series 1996B
07-01-21 6.25 4,000,000 3,876,440
Total 17,589,372
Ohio (2.7%)
Air Quality Development Authority
Pollution Control Refunding Revenue Bonds
Cleveland Electric Company Series 1997B
08-01-20 6.00 10,000,000 9,242,700
Bellefontaine Hospital Facility
Refunding Revenue Bonds
Mary Rutan Health Association of Logan County
Series 1993
12-01-13 6.00 5,330,000 4,985,256
Butler County Hospital Facility Improvement
Refunding Revenue Bonds
Fort Hamilton-Hughes Memorial Center
Series 1991
01-01-10 7.50 9,800,000 10,182,396
Carroll Water & Sewer District
Unlimited Tax General Obligation Bonds
12-01-10 6.25 1,795,000 1,798,303
Carroll Water & Sewer District
Water System Improvement Unlimited Tax
General Obligation Bonds
12-01-10 6.25 7,855,000 7,940,541
Cleveland Parking Facilities Improvement
Revenue Bonds Series 1992
09-15-22 8.10 15,000,000 16,651,800
Coshocton County Solid Waste Disposal
Refunding Revenue Bonds
Stone Container Series 1992
08-01-13 7.88 17,500,000 18,553,150
Cuyahoga County Health Care Facilities
Lifecare Refunding Revenue Bonds
Judson Retirement Community Series 1996A
11-15-13 7.25 2,080,000 2,092,126
Cuyahoga County Health Care Facilities
Refunding Revenue Bonds
Judson Retirement Community Series A
11-15-18 7.25 4,130,000 4,154,078
Erie County Hospital Improvement Refunding
Revenue Bonds Firelands Community Hospital
Series 1992
01-01-15 6.75 6,540,000 6,736,396
Franklin County Health Care Facilities
Refunding Revenue Bonds
Lutheran Senior City Incorporated
Series 1999
12-15-28 6.13 4,705,000 4,079,658
Franklin County Multi-family Housing
Refunding Revenue Bonds
Jefferson Chase Apartments Series 1998B A.M.T.
11-01-35 6.40 1,465,000 1,341,032
Franklin County Multi-family Housing
Refunding Revenue Bonds
West Bay Apartments A.M.T.
12-01-25 6.38 8,365,000 7,904,925
Lorain County Independent Living & Hospital Facilities
Refunding Revenue Bonds Elyria United Methodist
Series 1996C
06-01-22 6.88 3,100,000 3,089,460
Marion County Health Care Facilities
Improvement Refunding Revenue Bonds
United Church Homes Series 1993
11-15-10 6.38 1,880,000 1,840,144
Marion County Health Care Facilities
Refunding & Improvement Revenue Bonds
United Church Homes Series 1993
11-15-15 6.30 1,800,000 1,730,016
State Water & Air Quality Development Authority
Pollution Control Refunding Revenue Bonds
Cleveland Electric Illuminating Series 1995
08-01-25 7.70 13,000,000 13,960,440
State Water & Air Quality Development Authority
Pollution Control Refunding Revenue Bonds
Ohio Edison Series 1993A
05-15-29 5.95 13,300,000 12,135,053
State Water Development Authority Pollution Control
Refunding Revenue Bonds Toledo Edison
Series 1994A A.M.T.
10-01-23 8.00 10,000,000 10,789,700
Water Development Authority Pollution Control
Revenue Bonds Ohio Edison A.M.T.
10-01-23 8.10 10,000,000 10,220,200
Total 149,427,374
Oklahoma (1.1%)
Grand River Dam Authority Refunding Revenue Bonds
Series 1987
06-01-12 5.00 10,105,000 9,749,809
Hinton Economic Development Authority
Certificate of Participation
Dominion Leasing Series 1990A
07-01-15 9.75 19,090,000 20,722,958
Hinton Economic Development Authority
Certificate of Participation
Series 1994
07-01-15 8.75 11,135,000 11,958,545
Jackson County Hospital Authority
Refunding Revenue Bonds
Jackson County Memorial Hospital Series 1994
08-01-15 7.30 6,580,000 6,609,939
Midwest City Memorial Hospital Authority Hospital
Revenue Bonds Series 1992
04-01-22 7.38 7,815,000 8,431,838
Stillwater Medical Center Authority
Hospital Revenue Bonds Series 1997B
05-15-19 6.50 1,750,000 1,690,990
Total 59,164,079
Oregon (0.6%)
Clackamas County Hospital Facilities Authority
Revenue Bonds Senior Living Facility
Mary's Woods at Marylhurst Series 1999A
05-15-29 6.63 4,000,000 3,752,480
State Health Housing Educational & Cultural Facilities
Authority Revenue Bonds Oregon Baptist Retirement
Homes-Weidler Retirement Center Series 1995
11-15-26 8.00 7,565,000 7,947,411
Western Generation Agency Revenue Bonds
Wauna Cogeneration Series 1994A
01-01-21 7.13 13,600,000 14,066,072
Western Generation Agency Revenue Bonds
Wauna Cogeneration Series 1994B A.M.T.
01-01-16 7.40 9,000,000 9,426,150
Total 35,192,113
Pennsylvania (3.6%)
Allegheny County Industrial Development Authority
Environment Improvement Revenue Bonds
USX Corporation Series 1994A
12-01-20 6.70 6,000,000 6,067,260
Beaver County Industrial Development Authority
Collateralized Pollution Control Refunding Revenue Bonds
Cleveland Electric Illuminating Series 1995
05-01-25 7.63 7,500,000 8,046,150
Beaver County Industrial Development Authority
Collateralized Pollution Control Refunding Revenue Bonds
Cleveland Electric Illuminating Series 1995A
07-15-25 7.75 21,150,000 22,848,556
Beaver County Industrial Development Authority
Collateralized Pollution Control Refunding Revenue Bonds
Toledo Edison Series 1995A
05-01-20 7.75 14,000,000 15,161,300
Beaver County Industrial Development Authority
Pollution Control Revenue Bonds
Toledo Edison-Beaver Valley Series 1995
05-01-20 7.63 11,700,000 12,551,994
Butler County Industrial Development Authority Health Care
Refunding Revenue Bonds Pittsburgh Lifetime Care
Community Sherwood Oaks Series 1993
06-01-11 5.75 2,000,000 1,965,380
06-01-16 5.75 3,000,000 2,841,000
Convention Center Authority Refunding Revenue Bonds
Philadelphia Series 1994A
09-01-19 6.75 5,300,000 5,554,188
Delaware County Authority 1st Mortgage Revenue Bonds
Riddle Village Series 1996
06-01-26 7.00 10,000,000 9,811,100
Delaware County Authority Revenue Bonds
Health Systems Catholic Health East Series 1998A
(AMBAC Insured)
11-15-26 4.88 20,600,000 16,976,048
Harrisburg Dauphin County General Obligation Bonds
Zero Coupon Series 1997F (AMBAC Insured)
09-15-20 5.50 3,000,000(d) 842,910
09-15-21 5.52 1,000,000(d) 263,210
09-15-22 5.52 1,000,000(d) 247,030
Montgomery County Higher Education & Health Authority
Retirement Community Revenue Bonds G.D.L. Farms
Series A
01-01-20 9.50 3,000,000 3,073,260
Montgomery County Higher Education & Health Authority
Revenue Bonds Temple Continuing Care Center
Series 1999
07-01-29 6.75 10,000,000 9,128,800
Philadelphia Gas Works Revenue Bonds Series 13
06-15-21 7.70 4,150,000 4,438,176
Philadelphia Municipal Authority Lease
Refunding Revenue Bonds Series 1993D
07-15-13 6.25 2,500,000 2,523,325
07-15-17 6.30 1,550,000 1,551,457
Philadelphia Water & Sewer Revenue Bonds Series 16
08-01-10 7.50 13,200,000 14,124,924
08-01-18 7.00 14,000,000 14,610,680
Philadelphia Water & Wastewater Revenue Bonds
Series 1993 (FSA Insured)
06-15-15 5.50 11,000,000 11,058,196
State Department of General Services
Certificate of Participation
Series 1994A (AMBAC Insured)
07-01-15 5.00 25,000,000 22,490,250
Wilkins Industrial Development Authority Revenue Bonds
Retirement Community Longwood at Oakmont
Series 1991A
01-01-21 10.00 8,495,000 9,229,903
Total 195,405,097
South Carolina (1.0%)
Cherokee County Spring City Industrial Development
Revenue Bonds Knitting Cluett Peabody
09-01-09 7.40 5,200,000 5,932,160
Jobs Economic Development Authority
1st Mortgage Health Facilities Nursing Home Refunding
Revenue Bonds Lutheran Homes Series 1998
05-01-26 5.70 5,235,000 4,403,839
Piedmont Municipal Power Agency Electric
Refunding Revenue Bonds Series 1986B
01-01-24 5.75 7,550,000 6,568,500
Piedmont Municipal Power Agency Electric
Refunding Revenue Bonds Series 1998A
01-01-25 4.75 5,000,000 4,077,700
Public Service Authority Electric System
Expansion Revenue Bonds Santee Cooper
Series 1991D
07-01-31 6.63 14,975,000 16,055,596
Public Service Authority Electric System
Revenue Bonds Santee Cooper
Series 1993A Inverse Floater (MBIA Insured)
06-28-13 7.55 17,700,000(c) 17,346,000
Total 54,383,795
South Dakota (0.6%)
Heartland Consumers Power District Electric System
Refunding Revenue Bonds Series 1986
01-01-10 6.00 10,205,000 10,673,410
Sioux Falls Multi-family Housing Revenue Bonds
Series 1996A
12-01-34 7.50 12,200,000 12,370,922
State Lease Revenue Trust Certificates Series 1993
(CGIC Insured)
09-01-17 6.70 7,260,000 8,054,607
Total 31,098,939
Tennessee (0.4%)
Nashville & Davidson Counties Health & Education
Facilities 1st Mortgage Revenue Bonds
Blakeford at Green Hills CCRC
07-01-24 9.25 12,230,000 14,583,785
Nashville & Davidson Counties Health & Education
Facilities Board Revenue Bonds
Zero Coupon Escrowed to Maturity
06-01-21 5.38 29,109,000(d) 7,356,718
Total 21,940,503
Texas (7.4%)
Alliance Airport Authority Special Facility Revenue Bonds
American Airlines Series 1990 A.M.T.
12-01-29 7.50 37,400,000 38,916,195
Austin Combined Utilities System Refunding Revenue Bonds
Series 1986
11-15-13 5.00 19,985,000 18,632,016
Board of Regents of the University System General
Refunding Revenue Bonds Series 1986
08-15-07 6.50 2,565,000 2,757,272
Brazos River Authority Collateralized Pollution Control
Revenue Bonds Texas Utility Electric
Series 1990A A.M.T.
02-01-20 8.13 13,205,000 13,518,223
Brazos River Authority Collateralized Pollution Control
Revenue Bonds Texas Utility Electric
Series 1991A A.M.T.
03-01-21 7.88 24,450,000 25,595,972
Carrol Independent School District
Unlimited General Obligation Bonds Series 1998A
(Permanent School Fund Guarantee)
02-15-23 4.50 5,825,000 4,669,320
Castlewood Municipal Utility District Water &
Sewer Systems Unlimited Tax & Refunding Revenue Bonds
Series 1997
04-01-14 6.75 2,820,000 2,839,063
Colony Municipal Utility District 1 Denton County
Series 1980
08-01-07 9.25 1,000,000 1,272,630
Crowley Independent School District
Unlimited General Obligation Bonds
(Permanent School Fund Guarantee)
08-01-27 5.13 6,000,000 5,257,020
Cypress Hill Municipal Utility District 1
General Obligation Bonds
09-01-22 5.30 2,045,000 1,783,751
Dallas & Fort Worth International Airport Special
Facility Revenue Bonds
American Airlines Series 1990 A.M.T.
11-01-25 7.50 26,200,000 27,163,898
Dallas & Fort Worth International Airport Special
Facility Revenue Bonds
American Airlines Series 1999 A.M.T.
05-01-35 6.38 11,415,000 11,018,785
Dallas & Fort Worth International Airport Special
Facility Revenue Bonds Delta
Air Lines Series 1991 A.M.T.
11-01-26 7.13 13,500,000 13,779,180
Denison Hospital Authority Hospital Revenue Bonds
Texoma Medical Center Series 1994
08-15-24 7.10 3,950,000 4,224,771
Harris County Health Facilities Hospital Revenue Bonds
Memorial Hospital Series 1992
06-01-15 7.13 16,000,000 17,092,960
Harris County Industrial Development Marine Terminal
Refunding Revenue Bonds GATX Terminal Series 1992
02-01-22 6.95 15,000,000 15,444,750
Hidalgo County Health Services Corporation
Hospital Revenue Bonds Mission Hospital
Series 1996
08-15-26 6.88 7,880,000 7,981,731
Houston Water & Sewer System Junior Lien
Capital Appreciation Refunding Revenue Bonds
Zero Coupon Series 1998A (FSA Insured)
12-01-25 5.34 30,000,000(d) 6,039,900
Interstate Municipal Utility District
Unlimited Tax Bonds Harris County Series 1996
09-01-21 6.75 3,020,000 3,095,077
Karnes County Public Facility Lease Revenue Bonds
03-01-15 9.20 15,270,000 18,458,834
Katy Development Authority Metro Contract
Revenue Bonds Sales Tax
Series 1999A
06-01-09 5.75 14,755,000 14,089,992
Keller Independent School District
Unlimited General Obligation Bonds
(Permanent School Fund Guarantee)
08-15-30 5.00 8,345,000 7,117,951
Kings Manor Municipal Utility District
Waterworks & Sewer Systems Combination
Unlimited Tax & Revenue Bonds Series 1995
03-01-18 6.88 2,470,000 2,590,882
Lubbock Health Facilities Development
Corporation Fixed Rate 1st Mortgage Revenue Bonds
Carillon Series 1999A
07-01-29 6.50 20,145,000 17,945,770
Midland County Hospital District Revenue Bonds Series 1992
06-01-16 7.50 3,025,000 3,257,169
Mineral Wells Independent School Districts Palo Pinto &
Parker Counties Unlimited Tax General Obligation School
Building & Refunding Bonds Series 1998
(Permanent School Fund Guarantee)
02-15-22 4.75 5,430,000 4,567,445
Montgomery County Municipal Utility District 42
Unlimited General Obligation Bonds
Waterworks & Sewer Systems
09-01-23 6.88 2,035,000 2,035,163
Municipal Power Agency
Refunding Revenue Bonds (MBIA Insured)
09-01-09 5.25 8,000,000 8,090,640
Municipal Power Agency
Revenue Bonds
09-01-13 5.50 7,410,000 7,324,933
North Central Health Facilities Development Revenue
Bonds Retirement Facility Northwest Senior Housing
Series 1999A
11-15-29 7.50 15,000,000 14,463,750
North Tollway Authority Revenue Bonds
Dallas North Tollway System (FGIC Insured)
01-01-29 4.75 5,000,000 4,080,100
Rio Grande City Consolidated Independent School District
Public Facilities Lease Revenue Bonds Series 1995
07-15-10 6.75 4,000,000 4,198,440
Sabine River Authority Collateralized Pollution Control
Revenue Bonds Texas
Utilities Electric Series 1990A A.M.T.
02-01-20 8.13 30,500,000 31,224,070
WestSide Calhoun County Navigation District Solid Waste
Disposal Revenue Bonds
Union Carbide Chemical & Plastics Series 1991 A.M.T.
03-15-21 8.20 17,550,000 18,399,420
Wichita County Health Facilities Development
Refunding Revenue Bonds
Rolling Meadows Series 1998A
01-01-28 6.25 23,425,000 20,833,024
Total 399,760,097
Utah (1.9%)
Carbon County Solid Waste Disposal
Refunding Revenue Bonds Sunnyside
Cogeneration Series 1999A A.M.T.
08-15-23 7.10 12,840,000 12,757,952
Carbon County Solid Waste Disposal Refunding Revenue Bonds
Sunnyside Cogeneration Zero Coupon Series 1999B A.M.T.
08-15-24 6.82 3,920,000(d) 645,546
Eagle Mountain Special Assessment
Revenue Bonds Special Improvement
District 98-1 Series 1999
12-15-12 6.25 12,105,000 11,204,146
Housing Finance Agency Single Family Mortgage
Senior Bonds Series 1991C (FGIC Insured)
07-01-11 7.30 235,000 241,625
07-01-16 7.35 185,000 190,062
Hurricane Health Facilities Development Revenue Bonds
Mission Health Services Series 1990
07-01-20 10.50 7,500,000 7,870,725
Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series 1993B Inverse Floater
07-01-11 7.57 7,600,000(c) 7,619,000
Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series 1996C (MBIA Insured)
07-01-17 5.70 46,000,000 45,374,859
Intermountain Power Agency Power Supply
Refunding Revenue Bonds Series F (AMBAC Insured)
07-01-13 5.00 5,000,000 4,744,350
Intermountain Power Agency Power Supply
Revenue Bonds Series 1987A (MBIA Insured)
07-01-12 5.00 8,000,000 7,688,880
Tooele County Pollution Control Refunding Revenue Bonds
Laidlaw Environmental Services Incorporated
Series 1997A A.M.T.
07-01-27 7.55 4,000,000 4,198,080
Total 102,535,225
Virginia (0.8%)
Fairfax County Economic Development Authority
Educational Facilities Revenue Bonds
Browne Academy Series 1998
10-01-08 6.00 1,385,000 1,323,645
10-01-23 6.45 5,200,000 4,781,244
Fairfax County Redevelopment & Housing Authority
Multi-family Housing Revenue Bonds
Burkeshire Commons Series 1996
10-01-36 7.60 13,055,000 13,659,054
Hopewell City Industrial Development Authority
Pollution Control Refunding Revenue Bonds
Stone Container Series 1992
05-01-10 8.25 3,170,000 3,385,877
Housing Development Authority Commonwealth
Mortgage Bonds Series 1992A
01-01-33 7.15 11,890,000 12,197,951
Prince William County Service Authority Water & Sewer
Systems Refunding Revenue Bonds
Series 1997 (FGIC Insured)
07-01-29 4.75 1,875,000 1,532,269
Upper Occoquan Sewer Authority Regional Sewer
Revenue Bonds Series 1995A (MBIA Insured)
07-01-29 4.75 9,500,000 7,763,495
Total 44,643,535
Washington (2.7%)
Central Puget Sound Regional Transit Authority
Sales Tax Revenue Bonds (FGIC Insured)
02-01-28 4.75 12,000,000 9,756,360
Chelan County Public Utility District 1
Capital Appreciation Bonds
Columbia River Rock Island Highway
Zero Coupon Series 1997A
06-01-27 5.74 22,685,000(d) 4,137,290
06-01-29 5.74 24,595,000(d) 3,945,284
King County Housing Authority Pooled Housing
Refunding Revenue Bonds Series 1995A
03-01-26 7.20 4,000,000 4,003,840
Longview Industrial Development Corporation Solid Waste
Revenue Bonds Weyerhauser Series 1991 A.M.T.
02-01-13 7.45 20,000,000 20,832,200
Public Power Supply System Nuclear Project 1
Refunding Revenue Bonds Bonneville Power Administration
Series 1993A Inverse Floater (FSA Insured)
07-01-11 7.72 25,000,000(c) 26,250,000
Public Power Supply System Nuclear Project 1
Revenue Bonds Series 1990A
07-01-17 6.00 38,875,000 39,332,947
Public Power Supply System Nuclear Project 2
Revenue Bonds Series 1994A
07-01-11 5.38 10,000,000 9,935,700
Snohomish County Public Utilitiy District 1
Generation System Revenue Bonds Series 1986A
01-01-20 5.00 17,750,000 15,999,318
State General Obligation
Refunding Revenue Bonds
Zero Coupn Series 1997A
07-01-19 5.95 16,260,000(d) 4,945,642
State Housing Finance Commission
Refunding Revenue Bonds Horizon House
Series 1995A (Asset Guaranty)
07-01-17 6.00 3,700,000 3,751,763
07-01-27 6.13 3,845,000 3,927,014
Total 146,817,358
West Virginia (1.3%)
Kanawha County Pollution Control
Revenue Bonds Union Carbide Series 1984
08-01-04 7.35 3,000,000 3,273,540
Mason County Pollution Control
Refunding Revenue Bonds Appalachian Power
Series 1992J
10-01-22 6.60 25,000,000 25,231,251
Pea Ridge Public Service District Sewer
Refunding Revenue Bonds Series 1990
05-01-20 9.25 2,505,000 2,632,404
Princeton Hospital Revenue Bonds
Community Hospital Association
Series 1999
05-01-29 6.10 5,095,000 4,616,681
Putnam County Pollution Control Revenue Bonds
Appalachian Power Series C
07-01-19 6.60 10,600,000 10,808,502
School Building Authority Capital Improvement
Revenue Bonds Series 1991A
07-01-21 6.00 20,785,000 21,336,426
South Charleston Pollution Control Refunding
Revenue Bonds Union Carbide Series 1985
08-01-05 7.63 3,000,000 3,330,900
Total 71,229,704
Wisconsin (0.8%)
Health & Educational Facilities Authority
Revenue Bonds FH Healthcare Development
Series 1999
11-15-28 6.25 10,000,000 9,230,600
Health & Educational Facilities Authority
Revenue Bonds St. Clare Hospital
02-15-22 7.00 12,115,000 12,939,547
Madison Industrial Development
Refunding Revenue Bonds Madison Gas & Electric
Series 1992B
10-01-27 6.70 19,300,000 20,224,469
State Health & Education Facilities Authority
Lifecare Revenue Bonds United Lutheran
Program for the Aging - Luther Manor Series 1998
03-01-28 5.70 3,250,000 2,677,708
Total 45,072,324
Wyoming (0.2%)
Natrona County Hospital Revenue Bonds
Wyoming Medical Center
09-15-10 8.13 6,500,000 6,833,580
State Farm Loan Board Capital Facilities
Revenue Bonds Series 1994
04-01-24 6.10 5,000,000 4,986,900
Total 11,820,480
Total municipal bonds
(Cost: $5,078,490,354) $5,298,793,350
Total investments in securities
(Cost: $5,078,490,354)(i) $5,298,793,350
See accompanying notes to investments in securities.
</TABLE>
<PAGE>
Notes to investments in securities
(a) Securities are valued by procedures described in Note 1 to the financial
statements.
(b) The following abbreviations may be used in portfolio descriptions to
identify the insurer of the issue:
ACA -- ACA Financial Guaranty Corporation
AMBAC -- American Municipal Bond Association Corporation
BIG -- Bond Investors Guarantee
CGIC -- Capital Guaranty Insurance Company
FGIC -- Financial Guarantee Insurance Corporation
FHA -- Federal Housing Authority
FNMA -- Federal National Mortgage Association
FSA -- Financial Security Assurance
GNMA -- Government National Mortgage Association
MBIA -- Municipal Bond Investors Assurance
(c) 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, 1999. Inverse floaters in the aggregate represent 6.12% of
the Portfolio's net assets as of Nov. 30, 1999.
(d) For zero coupon bonds, the interest rate disclosed represents the annualized
effective yield on the date of acquisition.
(e) The following abbreviations may be used in the portfolio descriptions:
A.M.T. -- Alternative Minimum Tax-- As of Nov. 30, 1999, the value of
securities subject to alternative minimum tax represented
16.73% of net assets.
B.A.N. -- Bond Anticipation Note
C.P. -- Commercial Paper
R.A.N. -- Revenue Anticipation Note
T.A.N. -- Tax Anticipation Note
T.R.A.N. -- Tax & Revenue Anticipation Note
V.R. -- Variable Rate
V.R.D.B. -- Variable Rate Demand Bond
V.R.D.N. -- Variable Rate Demand Note
(f) Non-income producing. Item identified is in default as to payment of
interest and/or principal.
(g) Partially pledged as initial deposit on the following open interest rate
futures contracts (see Note 4 to the financial statements):
Type of security Notional amount
Purchase contracts
Municipal Bonds, December 1999 $63,700,000
Municipal Bonds, March 2000 33,300,000
(h) At Nov. 30, 1999, the cost of securities purchased, including interest
purchased, on a when-issued basis was $7,669,520.
(i) At Nov. 30, 1999, the cost of securities for federal income tax purposes was
$5,078,735,893 and the aggregate gross unrealized appreciation and depreciation
based on that cost was:
Unrealized appreciation $318,804,534
Unrealized depreciation (98,747,077)
-----------
Net unrealized appreciation $220,057,457
<PAGE>
PART C. OTHER INFORMATION
Item 23. Exhibits
(a)(1) Articles of Incorporation, dated August 31, 1995, filed electronically
on or about September 1, 1995, as Exhibit 1 to Registration Statement
No. 33-63909, are incorporated by reference.
(a)(2) 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 by reference.
(b) By-laws effective April 24, 1996, filed electronically on or about
April 17, 1996, as Exhibit 2 to Registrant's Pre-Effective Amendment
No. 1 are incorporated by reference.
(c) Instruments Defining Rights of Security Holders: Not Applicable.
(d) Investment Advisory contracts: Not Applicable.
(e) Distribution Agreement between Strategist Tax-Free Income Fund, Inc. on
behalf of Strategist Tax-Free High Yield Fund and American Express
Financial Advisors Inc. dated October 1, 1999, is filed electronically
herewith.
(f) Bonus or Profit Sharing Contracts: Not Applicable.
g(1) Custodian Agreement between Strategist Tax-Free Income Fund, Inc. on
behalf of Strategist Tax-Free High Yield 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 by reference.
g(2) Addendum to the Custodian Agreement among Strategist Tax-Free Income
Fund, Inc. on behalf of Strategist Tax-Free High Yield Fund, American
Express Trust Company and American Express Financial Corporation
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 by reference.
h(1) Administrative Services Agreement between Strategist Tax-Free Income
Fund, Inc. on behalf of Strategist Tax Free High Yield 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 by
reference.
h(2) Agreement and Declaration of Unitholders between Strategist Tax-Free
Income Fund, Inc. and IDS High Yield Tax-Exempt Fund, Inc. 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 by reference.
h(3) Transfer Agency Agreement between Strategist Tax-Free Income Fund, Inc.
on behalf of Strategist Tax-Free High Yield Fund and American Express
Client Service Corporation dated Jan. 1, 1998, filed electronically as
Exhibit h(3) to Registrant's Post-Effective Amendment No. 4 to
Registration Statement No.33-63909, is incorporated by reference.
(i) Opinion and consent of counsel as to the legality of securities being
registered is filed electronically herewith.
(j) Independent Auditors Consent is filed electronically herewith.
<PAGE>
(k) Omitted Financial Statements: Not Applicable.
(l) 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 by
reference.
(m) Plan and Agreement of Distribution: Not Applicable.
(n) Financial Data Schedules: Not Applicable.
(o) Rule 18f-3 Plan: Not Applicable.
(p)(1) Directors' Power of Attorney to sign Amendments to this Registration
Statement dated April 19, 1999 is filed electronically herewith.
(p)(2) Officers' Power of Attorney to sign Amendments to this Registration
Statement dated April 20, 1999 is filed electronically herewith.
(p)(3) Trustees' Power of Attorney to sign amendments to this Registration
Statement dated January 13, 2000 is filed electronically herewith.
(p)(4) Officers' Power of Attorney to sign Amendments to this Registration
Statement dated January 13, 2000 is filed electronically herewith.
Item 24. Persons Controlled by or Under Common Control with Registrant
None.
Item 25. 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.
American Express Financial Corporation is the investment advisor of the
Portfolios of the Trust.
<TABLE>
<CAPTION>
Item 26. Business and Other Connections of Investment Adviser (American Express Financial Corporation)
Directors and officers of American Express Financial Corporation who are
directors and/or officers of one or more other companies:
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Name and Title Other company(s) Address Title within other
company(s)
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
Ronald G. Abrahamson, American Express Client IDS Tower 10 Director and Vice President
Vice President Service Corporation Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
Public Employee Payment Director and Vice President
Company
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Douglas A. Alger, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Peter J. Anderson, Advisory Capital IDS Tower 10 Director
Director and Senior Vice Strategies Group Inc. Minneapolis, MN 55440
President
American Express Asset Director and Chairman of
Management Group Inc. the Board
American Express Asset Director, Chairman of the
Management International, Board and Executive Vice
Inc. President
American Express Financial Senior Vice President
Advisors Inc.
IDS Capital Holdings Inc. Director and President
IDS Futures Corporation Director
NCM Capital Management 2 Mutual Plaza Director
Group, Inc. 501 Willard Street
Durham, NC 27701
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Ward D. Armstrong, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
American Express Service Vice President
Corporation
American Express Trust Director and Chairman of
Company the Board
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
John M. Baker, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
American Express Trust Senior Vice President
Company
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Joseph M. Barsky III, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Timothy V. Bechtold, American Centurion Life IDS Tower 10 Director and President
Vice President Assurance Company Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
IDS Life Insurance Company Executive Vice President
IDS Life Insurance Company P.O. Box 5144 Director and President
of New York Albany, NY 12205
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
John C. Boeder, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Life Insurance Company P.O. Box 5144 Director
of New York Albany, NY 12205
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Douglas W. Brewers, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Karl J. Breyer, American Express Financial IDS Tower 10 Senior Vice President
Director, Corporate Senior Advisors Inc. Minneapolis, MN 55440
Vice President
American Express Financial Director
Advisors Japan Inc.
American Express Minnesota Director
Foundation
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Cynthia M. Carlson, American Enterprise IDS Tower 10 Director, President and
Vice President Investment Services Inc. Minneapolis, MN 55440 Chief Executive Officer
American Express Financial Vice President
Advisors Inc.
American Express Service Vice President
Corporation
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Mark W. Carter, American Express Financial IDS Tower 10 Senior Vice President and
Director, Senior Vice Advisors Inc. Minneapolis, MN 55440 Chief Marketing Officer
President and Chief Marketing
Officer
IDS Life Insurance Company Executive Vice President
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
James E. Choat, American Centurion Life IDS Tower 10 Executive Vice President
Director and Senior Vice Assurance Company Minneapolis, MN 55440
President
American Enterprise Life Director, President and
Insurance Company Chief Executive Officer
American Express Financial Senior Vice President
Advisors Inc.
American Express Insurance Vice President
Agency of Idaho Inc.
American Express Insurance Vice President
Agency of Nevada Inc.
American Express Insurance Vice President
Agency of Oregon Inc.
American Express Property Vice President
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Vice President
Casualty Insurance Agency
of Maryland Inc.
American Express Property Vice President
Casualty Insurance Agency
of Pennsylvania Inc.
IDS Insurance Agency of Vice President
Alabama Inc.
IDS Insurance Agency of Vice President
Arkansas Inc.
IDS Insurance Agency of Vice President
Massachusetts Inc.
IDS Insurance Agency of Vice President
New Mexico Inc.
IDS Insurance Agency of Vice President
North Carolina Inc.
IDS Insurance Agency of Vice President
Ohio Inc.
IDS Insurance Agency of Vice President
Wyoming Inc.
IDS Life Insurance Company P.O. Box 5144 Executive Vice President
of New York Albany, NY 12205
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Kenneth J. Ciak, AMEX Assurance Company IDS Tower 10 Director and President
Vice President and General Minneapolis, MN 55440
Manager
American Express Financial Vice President and General
Advisors Inc. Manager
IDS Property Casualty 1 WEG Blvd. Director and President
Insurance Company DePere, WI 54115
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Paul A. Connolly, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
Colleen Curran, American Express Financial IDS Tower 10 Vice President and
Vice President and Assistant Advisors Inc. Minneapolis, MN 55440 Assistant General Counsel
General Counsel
American Express Service Vice President and Chief
Corporation Legal Counsel
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Luz Maria Davis American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Douglas K. Dunning, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Gordon L. Eid, American Express Financial IDS Tower 10 Senior Vice President,
Director, Senior Vice Advisors Inc. Minneapolis, MN 55440 General Counsel and Chief
President, General Counsel Compliance Officer
and Chief Compliance Officer
American Express Financial Vice President and Chief
Advisors Japan Inc. Compliance Officer
American Express Insurance Director and Vice President
Agency of Arizona Inc.
American Express Insurance Director and Vice President
Agency of Idaho Inc.
American Express Insurance Director and Vice President
Agency of Nevada Inc.
American Express Insurance Director and Vice President
Agency of Oregon Inc.
American Express Property Director and Vice President
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Director and Vice President
Casualty Insurance Agency
of Maryland Inc.
American Express Property Director and Vice President
Casualty Insurance Agency
of Pennsylvania Inc.
IDS Insurance Agency of Director and Vice President
Alabama Inc.
IDS Insurance Agency of Director and Vice President
Arkansas Inc.
IDS Insurance Agency of Director and Vice President
Massachusetts Inc.
IDS Insurance Agency of Director and Vice President
New Mexico Inc.
IDS Insurance Agency of Director and Vice President
North Carolina Inc.
IDS Insurance Agency of Director and Vice President
Ohio Inc.
IDS Insurance Agency of Director and Vice President
Wyoming Inc.
IDS Real Estate Services, Vice President
Inc.
Investors Syndicate Director
Development Corp.
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Robert M. Elconin, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Life Insurance Company Vice President
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Gordon M. Fines, American Express Asset IDS Tower 10 Senior Vice President and
Vice President Management Group Inc. Minneapolis, MN 55440 Chief Investment Officer
American Express Financial Vice President
Advisors Inc.
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Douglas L. Forsberg, American Centurion Life IDS Tower 10 Director
Vice President Assurance Company Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
American Express Financial Director, President and
Advisors Japan Inc. Chief Executive Officer
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Jeffrey P. Fox, American Enterprise Life IDS Tower 10 Vice President and
Vice President and Corporate Insurance Company Minneapolis, MN 55440 Controller
Controller
American Express Financial Vice President and
Advisors Inc. Corporate Controller
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Harvey Golub, American Express Company American Express Tower Chairman and Chief
Director World Financial Center Executive Officer
New York, NY 10285
American Express Travel Chairman and Chief
Related Services Company, Executive Officer
Inc.
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
David A. Hammer, American Express Financial IDS Tower 10 Vice President and
Vice President and Marketing Advisors Inc. Minneapolis, MN 55440 Marketing Controller
Controller
IDS Plan Services of Director and Vice President
California, Inc.
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Lorraine R. Hart, AMEX Assurance Company IDS Tower 10 Vice President
Vice President Minneapolis, MN 55440
American Centurion Life Vice President
Assurance Company
American Enterprise Life Vice President
Insurance Company
American Express Financial Vice President
Advisors Inc.
American Partners Life Director and Vice
Insurance Company President
IDS Certificate Company Vice President
IDS Life Insurance Company Vice President
IDS Life Series Fund, Inc. Vice President
IDS Life Variable Annuity Vice President
Funds A and B
Investors Syndicate Director and Vice
Development Corp. President
IDS Life Insurance Company P.O. Box 5144 Vice President
of New York Albany, NY 12205
IDS Property Casualty 1 WEG Blvd. Vice President
Insurance Company DePere, WI 54115
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Scott A. Hawkinson, American Express Financial IDS Tower 10 Vice President and
Vice President and Controller Advisors Inc. Minneapolis, MN 55440 Controller
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Janis K. Heaney, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Darryl G. Horsman, American Express Trust IDS Tower 10 Director and President
Vice President Company Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Jeffrey S. Horton, AMEX Assurance Company IDS Tower 10 Vice President, Treasurer
Vice President and Corporate Minneapolis, MN 55440 and Assistant Secretary
Treasurer
American Centurion Life Vice President and
Assurance Company Treasurer
American Enterprise Vice President and
Investment Services Inc. Treasurer
American Enterprise Life Vice President and
Insurance Company Treasurer
American Express Asset Vice President and
Management Group Inc. Treasurer
American Express Asset Vice President and
Management International Treasurer
Inc.
American Express Client Vice President and
Service Corporation Treasurer
American Express Vice President and
Corporation Treasurer
American Express Financial Vice President and
Advisors Inc. Treasurer
American Express Financial Vice President and
Advisors Japan Inc. Treasurer
American Express Insurance Vice President and
Agency of Arizona Inc. Treasurer
American Express Insurance Vice President and
Agency of Idaho Inc. Treasurer
American Express Insurance Vice President and
Agency of Nevada Inc. Treasurer
American Express Insurance Vice President and
Agency of Oregon Inc. Treasurer
American Express Minnesota Vice President and
Foundation Treasurer
American Express Property Vice President and
Casualty Insurance Agency Treasurer
of Kentucky Inc.
American Express Property Vice President and
Casualty Insurance Agency Treasurer
of Maryland Inc.
American Express Property Vice President and
Casualty Insurance Agency Treasurer
of Pennsylvania Inc.
American Partners Life Vice President and
Insurance Company Treasurer
IDS Cable Corporation Director, Vice President
and Treasurer
IDS Cable II Corporation Director, Vice President
and Treasurer
IDS Capital Holdings Inc. Vice President, Treasurer
and Assistant Secretary
IDS Certificate Company Vice President and
Treasurer
IDS Insurance Agency of Vice President and
Alabama Inc. Treasurer
IDS Insurance Agency of Vice President and
Arkansas Inc. Treasurer
IDS Insurance Agency of Vice President and
Massachusetts Inc. Treasurer
IDS Insurance Agency of Vice President and
New Mexico Inc. Treasurer
IDS Insurance Agency of Vice President and
North Carolina Inc. Treasurer
IDS Insurance Agency of Vice President and
Ohio Inc. Treasurer
IDS Insurance Agency of Vice President and
Wyoming Inc. Treasurer
IDS Life Insurance Company Vice President, Treasurer
and Assistant Secretary
IDS Life Insurance Company P.O. Box 5144 Vice President and
of New York Albany, NY 12205 Treasurer
IDS Life Series Fund Inc. Vice President and
Treasurer
IDS Life Variable Annuity Vice President and
Funds A & B Treasurer
IDS Management Corporation Director, Vice President
and Treasurer
IDS Partnership Services Vice President and
Corporation Treasurer
IDS Plan Services of Vice President and
California, Inc. Treasurer
IDS Real Estate Services, Vice President and
Inc. Treasurer
IDS Realty Corporation Vice President and
Treasurer
IDS Sales Support Inc. Vice President and
Treasurer
Investors Syndicate Vice President and
Development Corp. Treasurer
IDS Property Casualty 1 WEG Blvd. Vice President, Treasurer
Insurance Company DePere, WI 54115 and Assistant Secretary
Public Employee Payment Vice President and
Company Treasurer
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
David R. Hubers, AMEX Assurance Company IDS Tower 10 Director
Director, President and Chief Minneapolis, MN 55440
Executive Officer
American Express Financial Chairman, President and
Advisors Inc. Chief Executive Officer
American Express Service Director and President
Corporation
IDS Certificate Company Director
IDS Life Insurance Company Director
IDS Plan Services of Director and President
California, Inc.
IDS Property Casualty 1 WEG Blvd. Director
Insurance Company DePere, WI 54115
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Martin G. Hurwitz, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Debra A. Hutchinson American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
James M. Jensen, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Life Insurance Company Vice President
IDS Life Series Fund, Inc. Director
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Marietta L. Johns, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Nancy E. Jones, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
American Express Service Vice President
Corporation
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Ora J. Kaine, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Linda B. Keene, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
G. Michael Kennedy, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Susan D. Kinder, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Richard W. Kling, AMEX Assurance Company IDS Tower 10 Director
Director and Senior Vice Minneapolis, MN 55440
President
American Centurion Life Director and Chairman of
Assurance Company the Board
American Enterprise Life Director and Chairman of
Insurance Company the Board
American Express Director and President
Corporation
American Express Financial Senior Vice President
Advisors Inc.
American Express Insurance Director and President
Agency of Arizona Inc.
American Express Insurance Director and President
Agency of Idaho Inc.
American Express Insurance Director and President
Agency of Nevada Inc.
American Express Insurance Director and President
Agency of Oregon Inc.
American Express Property Director and President
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Director and President
Casualty Insurance Agency
of Maryland Inc.
American Express Property Director and President
Casualty Insurance Agency
of Pennsylvania Inc.
American Express Service Vice President
Corporation
American Partners Life Director and Chairman of
Insurance Company the Board
IDS Certificate Company Director and Chairman of
the Board
IDS Insurance Agency of Director and President
Alabama Inc.
IDS Insurance Agency of Director and President
Arkansas Inc.
IDS Insurance Agency of Director and President
Massachusetts Inc.
IDS Insurance Agency of Director and President
New Mexico Inc.
IDS Insurance Agency of Director and President
North Carolina Inc.
IDS Insurance Agency of Director and President
Ohio Inc.
IDS Insurance Agency of Director and President
Wyoming Inc.
IDS Life Insurance Company Director and President
IDS Life Series Fund, Inc. Director and President
IDS Life Variable Annuity Manager, Chairman of the
Funds A and B Board and President
IDS Property Casualty 1 WEG Blvd. Director
Insurance Company DePere, WI 54115
IDS Life Insurance Company P.O. Box 5144 Director and Chairman of
of New York Albany, NY 12205 the Board
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
John M. Knight American Express Financial IDS Tower 10 Vice President
Advisors Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Paul F. Kolkman, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Life Insurance Company Director and Executive
Vice President
IDS Life Series Fund, Inc. Vice President and Chief
Actuary
IDS Property Casualty 1 WEG Blvd. Director
Insurance Company DePere, WI 54115
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Claire Kolmodin, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Steve C. Kumagai, American Express Financial IDS Tower 10 Director and Senior Vice
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440 President
President
Kurt A Larson, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Lori J. Larson, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Daniel E. Laufenberg, American Express Financial IDS Tower 10 Vice President and Chief
Vice President and Chief U.S. Advisors Inc. Minneapolis, MN 55440 U.S. Economist
Economist
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Peter A. Lefferts, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
American Express Trust Director
Company
IDS Plan Services of Director
California, Inc.
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Douglas A. Lennick, American Express Financial IDS Tower 10 Director and Executive
Director and Executive Vice Advisors Inc. Minneapolis, MN 55440 Vice President
President
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Mary J. Malevich, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Fred A. Mandell, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Timothy J. Masek American Express Financial IDS Tower 10 Vice President and
Vice President and Director Advisors Inc. Minneapolis, MN 55440 Director of Global Research
of Global Research
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Sarah A. Mealey, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Paula R. Meyer, American Enterprise Life IDS Tower 10 Vice President
Vice President Insurance Company Minneapolis, MN 55440
American Express Director
Corporation
American Express Financial Vice President
Advisors Inc.
American Partners Life Director and President
Insurance Company
IDS Certificate Company Director and President
IDS Life Insurance Company Director and Executive
Vice President
Investors Syndicate Director, Chairman of the
Development Corporation Board and President
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
William P. Miller, Advisory Capital IDS Tower 10 Vice President
Vice President and Senior Strategies Group Inc. Minneapolis, MN 55440
Portfolio Manager
American Express Asset Senior Vice President and
Management Group Inc. Chief Investment Officer
American Express Financial Vice President and Senior
Advisors Inc. Portfolio Manager
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Shashank B. Modak American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Pamela J. Moret, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
American Express Trust Vice President
Company
IDS Life Insurance Company Executive Vice President
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Barry J. Murphy, American Express Client IDS Tower 10 Director and President
Director and Senior Vice Service Corporation Minneapolis, MN 55440
President
American Express Financial Senior Vice President
Advisors Inc.
IDS Life Insurance Company Director and Executive
Vice President
Mary Owens Neal, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Michael J. O'Keefe, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
James R. Palmer, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Life Insurance Company Vice President
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Carla P. Pavone, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
Public Employee Payment Director and President
Company
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Thomas P. Perrine, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Susan B. Plimpton, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Ronald W. Powell, American Express Financial IDS Tower 10 Vice President and
Vice President and Assistant Advisors Inc. Minneapolis, MN 55440 Assistant General Counsel
General Counsel
IDS Cable Corporation Vice President and
Assistant Secretary
IDS Cable II Corporation Vice President and
Assistant Secretary
IDS Management Corporation Vice President and
Assistant Secretary
IDS Partnership Services Vice President and
Corporation Assistant Secretary
IDS Plan Services of Vice President and
California, Inc. Assistant Secretary
IDS Realty Corporation Vice President and
Assistant Secretary
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
James M. Punch, American Express Financial IDS Tower 10 Vice President and Project
Vice President and Project Advisors Inc. Minneapolis, MN 55440 Manager
Manager
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Frederick C. Quirsfeld, American Express Asset IDS Tower 10 Senior Vice President and
Director and Senior Vice Management Group Inc. Minneapolis, MN 55440 Senior Portfolio Manager
President
American Express Financial Senior Vice President
Advisors Inc.
Rollyn C. Renstrom, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
ReBecca K. Roloff, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Stephen W. Roszell, Advisory Capital IDS Tower 10 Director
Director and Senior Vice Strategies Group Inc. Minneapolis, MN 55440
President
American Express Asset Director, President and
Management Group Inc. Chief Executive Officer
American Express Asset Director
Management International,
Inc.
American Express Asset Director
Management Ltd.
American Express Financial Senior Vice President
Advisors Inc.
American Express Trust Director
Company
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Erven A. Samsel, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
American Express Insurance Vice President
Agency of Idaho Inc.
American Express Insurance Vice President
Agency of Nevada Inc.
American Express Insurance Vice President
Agency of Oregon Inc.
American Express Property Vice President
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Vice President
Casualty Insurance Agency
of Maryland Inc.
American Express Property Vice President
Casualty Insurance Agency
of Pennsylvania Inc.
IDS Insurance Agency of Vice President
Alabama Inc.
IDS Insurance Agency of Vice President
Arkansas Inc.
IDS Insurance Agency of Vice President
Massachusetts Inc.
IDS Insurance Agency of Vice President
New Mexico Inc.
IDS Insurance Agency of Vice President
North Carolina Inc.
IDS Insurance Agency of Vice President
Ohio Inc.
IDS Insurance Agency of Vice President
Wyoming Inc.
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Theresa M. Sapp American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Stuart A. Sedlacek, AMEX Assurance Company IDS Tower 10 Director
Director, Senior Vice Minneapolis, MN 55440
President and Chief Financial
Officer
American Enterprise Life Executive Vice President
Insurance Company
American Express Financial Senior Vice President and
Advisors Inc. Chief Financial Officer
American Express Trust Director
Company
American Partners Life Director and Vice President
Insurance Agency
IDS Certificate Company Director and President
IDS Life Insurance Company Executive Vice President
and Controller
IDS Property Casualty 1 WEG Blvd. Director
Insurance Company DePere, WI 54115
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Donald K. Shanks, AMEX Assurance Company IDS Tower 10 Senior Vice President
Vice President Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
IDS Property Casualty 1 WEG Blvd. Senior Vice President
Insurance Company DePere, WI 54115
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
F. Dale Simmons, AMEX Assurance Company IDS Tower 10 Vice President
Vice President Minneapolis, MN 55440
American Centurion Life Vice President
Assurance Company
American Enterprise Life Vice President
Insurance
American Express Financial Vice President
Advisors Inc.
American Partners Life Vice President
Insurance Company
IDS Certificate Company Vice President
IDS Life Insurance Company Vice President
IDS Partnership Services Director and Vice President
Corporation
IDS Real Estate Services Chairman of the Board and
Inc. President
IDS Realty Corporation Director and Vice President
IDS Life Insurance Company P.O. Box 5144 Vice President
of New York Albany, NY 12205
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Judy P. Skoglund, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Bridget Sperl, American Express Client IDS Tower 10 Vice President
Vice President Service Corporation Minneapolis, MN 55440
American Express Financial Vice President
Advisors Inc.
Public Employee Payment Director and President
Company
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Lisa A. Steffes, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
William A. Stoltzmann, American Enterprise Life IDS Tower 10 Director, Vice President,
Vice President and Assistant Insurance Company Minneapolis, MN 55440 General Counsel and
General Counsel Secretary
American Express Director, Vice President
Corporation and Secretary
American Express Financial Vice President and
Advisors Inc. Assistant General Counsel
American Partners Life Director, Vice President,
Insurance Company General Counsel and
Secretary
IDS Life Insurance Company Vice President, General
Counsel and Secretary
IDS Life Series Fund Inc. General Counsel and
Assistant Secretary
IDS Life Variable Annuity General Counsel and
Funds A & B Assistant Secretary
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
James J. Strauss, American Express Financial IDS Tower 10 Vice President
Vice President and General Advisors Inc. Minneapolis, MN 55440
Auditor
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Jeffrey J. Stremcha, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
Barbara Stroup Stewart, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Keith N. Tufte American Express Financial IDS Tower 10 Vice President and
Vice President and Director Advisors Inc. Minneapolis, MN 55440 Director of Equity Research
of Equity Research
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Norman Weaver Jr., American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
American Express Insurance Vice President
Agency of Arizona Inc.
American Express Insurance Vice President
Agency of Idaho Inc.
American Express Insurance Vice President
Agency of Nevada Inc.
American Express Insurance Vice President
Agency of Oregon Inc.
American Express Property Vice President
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Vice President
Casualty Insurance Agency
of Maryland Inc.
American Express Property Vice President
Casualty Insurance Agency
of Pennsylvania Inc.
IDS Insurance Agency of Vice President
Alabama Inc.
IDS Insurance Agency of Vice President
Arkansas Inc.
IDS Insurance Agency of Vice President
Massachusetts Inc.
IDS Insurance Agency of Vice President
New Mexico Inc.
IDS Insurance Agency of Vice President
North Carolina Inc.
IDS Insurance Agency of Vice President
Ohio Inc.
IDS Insurance Agency of Vice President
Wyoming Inc.
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Michael L. Weiner, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
IDS Capital Holdings Inc. Vice President
IDS Futures Brokerage Group Vice President
IDS Futures Corporation Vice President, Treasurer
and Secretary
IDS Sales Support Inc. Director, Vice President
and Assistant Treasurer
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Lawrence J. Welte, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Jeffry F. Welter, American Express Financial IDS Tower 10 Vice President
Vice President Advisors Inc. Minneapolis, MN 55440
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Edwin M. Wistrand, American Express Financial IDS Tower 10 Vice President and
Vice President and Assistant Advisors Inc. Minneapolis, MN 55440 Assistant General Counsel
General Counsel
American Express Financial Vice President and Chief
Advisors Japan Inc. Legal Officer
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Michael D. Wolf, American Express Asset IDS Tower 10 Executive Vice President
Vice President Management Group Inc. Minneapolis, MN 55440 and Senior Portfolio
Manager
American Express Financial Vice President
Advisors Inc.
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
Michael R. Woodward, American Express Financial IDS Tower 10 Senior Vice President
Director and Senior Vice Advisors Inc. Minneapolis, MN 55440
President
American Express Insurance Vice President
Agency of Idaho Inc.
American Express Insurance Vice President
Agency of Nevada Inc.
American Express Insurance Vice President
Agency of Oregon Inc.
American Express Property Vice President
Casualty Insurance Agency
of Kentucky Inc.
American Express Property Vice President
Casualty Insurance Agency
of Maryland Inc.
American Express Property Vice President
Casualty Insurance Agency
of Pennsylvania Inc.
IDS Insurance Agency of Vice President
Alabama Inc.
IDS Insurance Agency of Vice President
Arkansas Inc.
IDS Insurance Agency of Vice President
Massachusetts Inc.
IDS Insurance Agency of Vice President
New Mexico Inc.
IDS Insurance Agency of Vice President
North Carolina Inc.
IDS Insurance Agency of Vice President
Ohio Inc.
IDS Insurance Agency of Vice President
Wyoming Inc.
IDS Life Insurance Company P.O. Box 5144 Director
of New York Albany, NY 12205
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
</TABLE>
<TABLE>
<CAPTION>
Item 27. Principal Underwriters.
(a) American Express Service Corporation acts as principal underwriter for
the following investment companies:
Strategist Income Fund, Inc.; Strategist Growth Fund, Inc.; Strategist
Growth and Income Fund, Inc.; Strategist World Fund, Inc.; Strategist
Tax-Free Income Fund, Inc., APL Variable Annuity Account 1, ACL
Variable Annuity Account 1 and IDS Certificate Company.
(b) As to each director, officer or partner of the principal underwriter:
Name and Principal Business Address Position and Offices with Offices with Registrant
Underwriter
- -------------------------------------- ----------------------------------- -----------------------------------
<S> <C> <C>
Ward D. Armstrong Vice President None
IDS Tower 10
Minneapolis, MN 55440
John C. Boeder Vice President None
IDS Tower 10
Minneapolis, MN 55440
Cynthia M. Carlson Vice President None
IDS Tower 10
Minneapolis, MN 55440
John R. Cattau Vice President None
American Express Tower
World Financial Center
New York, NY 10285
Colleen Curran Vice President and Chief Legal None
IDS Tower 10 Counsel
Minneapolis, MN 55440
David R. Hubers Director and President None
IDS Tower 10
Minneapolis, MN 55440
James A. Jacobs Vice President None
IDS Tower 10
Minneapolis, MN 55440
Nancy E. Jones Vice President None
IDS Tower 10
Minneapolis, MN 55440
Verna J. Kaufman Vice President None
IDS Tower 10
Minneapolis, MN 55440
Richard W. Kling Vice President None
IDS Tower 10
Minneapolis, MN 55440
Timothy S. Meehan Secretary None
IDS Tower 10
Minneapolis, MN 55440
Julia K. Morton Vice President and Chief None
IDS Tower 10 Financial Officer
Minneapolis, MN 55440
Ann M. Richter Vice President and Chief None
IDS Tower 10 Compliance Officer
Minneapolis, MN 55440
</TABLE>
Item 27(c). Not applicable.
Item 28. Location of Accounts and Records
American Express Financial Corporation
IDS Tower 10
Minneapolis, MN 55440
Item 29. Management Services
Not Applicable.
Item 30. Undertakings
Not Applicable.
<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 all of the requirements for effectiveness pursuant to
Rule 485(b) under the Securities Act 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 the State of Minnesota on the
26th day of January, 2000.
STRATEGIST TAX-FREE INCOME FUND, INC.
By /s/ James A. Mitchell**
James A. Mitchell
President
By /s/ John M. Knight
John M. Knight
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, 2000.
Signature Title
/s/ Rodney P. Burwell* Director
Rodney P. Burwell
/s/ Jean B. Keffeler* Director
Jean B. Keffeler
/s/ Thomas R. McBurney* Director
Thomas R. McBurney
/s/ James A. Mitchell* President
James A. Mitchell
/s/ John R. Thomas* Director
John R. Thomas
*Signed pursuant to Directors' Power of Attorney dated April 19, 1999, filed
electronically herewith as Exhibit (p)(1), by:
/s/ Eileen J. Newhouse
Eileen J. Newhouse
**Signed pursuant Officers' Power of Attorney dated April 20, 1999, filed
electronically herewith as Exhibit (p)(2), by:
/s/ Eileen J. Newhouse
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, 1999.
TAX-FREE INCOME TRUST
By /s/Arne H. Carlson****
Arne H. Carlson
Chief Executive Officer
By /s/John M. Knight
John M. Knight
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, 2000.
Signatures Capacity
/s/ H. Brewster Atwater, Jr.*** Trustee
H. Brewster Atwater, Jr.
/s/ Arne H. Carlson*** Chairman of the Board
Arne H. Carlson
/s/ Lynne V. Cheney*** Trustee
Lynne V. Cheney
/s/ William H. Dudley*** Trustee
William H. Dudley
/s/ David R. Hubers*** Trustee
David R. Hubers
/s/ Heinz F. Hutter*** Trustee
Heinz F. Hutter
/s/ Anne P. Jones*** Trustee
Anne P. Jones
/s/ William R. Pearce*** Trustee
William R. Pearce
/s/ Alan K. Simpson*** Trustee
Alan K. Simpson
/s/ John R. Thomas*** Trustee
John R. Thomas
<PAGE>
/s/ C. Angus Wurtele*** Trustee
C. Angus Wurtele
***Signed pursuant to Trustees' Power of Attorney dated January 13, 2000, filed
electronically herewith as Exhibit (p)(3), by:
/s/ Leslie L. Ogg
Leslie L. Ogg
****Signed pursuant to Officers' Power of Attorney dated January 13, 2000, filed
electronically herewith as Exhibit (p)(4), by:
/s/ Leslie L. Ogg
Leslie L. Ogg
<PAGE>
CONTENTS OF THIS POST-EFFECTIVE AMENDMENT NO. 6 TO REGISTRATION STATEMENT
NO. 33-63909
This post-effective amendment comprises the following papers and documents:
The facing sheet.
Part A.
The prospectus.
Part B.
Statement of Additional Information.
Financial Statements
Part C.
Other Information.
The signatures.
Strategist Tax-Free Income Fund, Inc.
File No. 33-63909/811-07407
EXHIBIT INDEX
Exhibit (e) Distribution Agreement, dated October 1, 1999
Exhibit (i) Opinion and Consent of Counsel.
Exhibit (j) Independent Auditors Consent.
Exhibit (p)(1) Directors' Power of Attorney, dated April 19, 1999.
Exhibit (p)(2) Officers' Power of Attorney, dated April 20, 1999.
Exhibit (p)(3) Trustees' Power of Attorney, dated January 13, 2000.
Exhibit (p)(4) Officers' Power of Attorney, dated January 13, 2000.
DISTRIBUTION AGREEMENT
Agreement made as of the 1st day of October, 1999, by and between Strategist
Tax-Free Income Fund, Inc. (the Fund), a Minnesota corporation, on behalf of
each class of its underlying series fund, and American Express Financial
Advisors Inc. (AEFA), a Delaware corporation.
Part One: DISTRIBUTION OF SECURITIES
(1) The Fund covenants and agrees that, during the term of this agreement and
any renewal or extension, AEFA shall have the exclusive right to act as
principal underwriter for the Fund and to offer for sale and to distribute
either directly or through any affiliated or unaffiliated entity any and all
shares of each class of capital stock issued or to be issued by the Fund.
(2) AEFA hereby covenants and agrees to act as the principal underwriter of each
class of capital shares issued and to be issued by the Fund during the period of
this agreement and agrees during such period to offer for sale such shares as
long as such shares remain available for sale, unless AEFA is unable or
unwilling to make such offer for sale or sales or solicitations therefor legally
because of any federal, state, provincial or governmental law, rule or agency or
for any financial reason.
(3) With respect to the offering for sale and sale of shares of each class to be
issued by the Fund, it is mutually understood and agreed that such shares are to
be sold on the following terms:
(a) All sales shall be made by means of an application, and every
application shall be subject to acceptance or rejection by the Fund at its
principal place of business. Shares are to be sold for cash, payable at the time
the application and payment for such shares are received at the principal place
of business of the Fund.
(b) No shares shall be sold at less than the net asset value (computed
in the manner provided by the currently effective prospectus or Statement of
Additional Information and the Investment Company Act of 1940, and rules
thereunder). The number of shares or fractional shares to be acquired by each
applicant shall be determined by dividing the amount of each accepted
application by the public offering price of one share of the capital stock of
the appropriate class as of the close of business on the day when the
application, together with payment, is received by the Fund at its principal
place of business. The computation as to the number of shares and fractional
shares shall be carried to three decimal points of one share with the
computation being carried to the nearest 1/1000th of a share. If the day of
receipt of the application and payment is not a full business day, then the
asset value of the share for use in such computation shall be determined as of
the close of business on the next succeeding full business day. In the event of
a period of emergency, the computation of the asset value for the purpose of
determining the number of shares or fractional shares to be acquired by the
applicant may be deferred until the close of business on the first full business
day following the termination of the period of emergency. A period of emergency
shall have the definition given thereto in the Investment Company Act of 1940,
and rules thereunder.
(4) The Fund agrees to make prompt and reasonable effort to do any and all
things necessary, in the opinion of AEFA to have and to keep the Fund and the
shares properly registered or qualified in all appropriate jurisdictions and, as
to shares, in such amounts as AEFA may from time to time designate in order that
the Fund's shares may be offered or sold in such jurisdictions.
(5) The Fund agrees that it will furnish AEFA with information with respect to
the affairs and accounts of the Fund, and in such form, as AEFA may from time to
time reasonably require and further agrees that AEFA, at all reasonable times,
shall be permitted to inspect the books and records of the Fund.
(6) AEFA or its agents may prepare or cause to be prepared from time to time
circulars, sales literature, broadcast material, publicity data and other
advertising material to be used in the sales of shares issued by the Fund,
including material which may be deemed to be a prospectus under rules
promulgated by the Securities and Exchange Commission (each separate promotional
piece is referred to as an "Item of Soliciting Material"). At its option, AEFA
may submit any Item of Soliciting Material to the Fund for its prior approval.
Unless a particular Item of Soliciting Material is approved in writing by the
Fund prior to its use, AEFA agrees to indemnify the Fund and its directors and
officers against any and all claims, demands, liabilities and expenses which the
Fund or such persons may incur arising out of or based upon the use of any Item
of Soliciting Material. The term "expenses" includes amounts paid in
satisfaction of judgments or in settlements. The foregoing right of
indemnification shall be in addition to any other rights to which the Fund or
any director or officer may be entitled as a matter of law. Notwithstanding the
foregoing, such indemnification shall not be deemed to abrogate or diminish in
any way any right or claim AEFA may have against the Fund or its officers or
directors in connection with the Fund's registration statement, prospectus,
Statement of Additional Information or other information furnished by or caused
to be furnished by the Fund.
(7) AEFA agrees to submit to the Fund each application for shares immediately
after the receipt of such application and payment therefor by AEFA at its
principal place of business.
(8) AEFA agrees to cause to be delivered to each person submitting an
application a prospectus to be furnished by the Fund in the form required by the
applicable federal laws or by the acts or statutes of any applicable state,
province or country.
(9) The Fund shall have the right to extend to shareholders of each class the
right to use the proceeds of any cash dividend paid by the Fund to that
shareholder to purchase shares of the same class at the net asset value at the
close of business upon the day of purchase, to the extent set forth in the
currently effective prospectus or Statement of Additional Information.
(10) Shares of each class issued by the Fund may be offered and sold at their
net asset value to the shareholders of the same class of other companies in the
Strategist Fund Group who wish to exchange their investments in shares of the
other funds in the Strategist Fund Group to investments in shares of the Fund,
to the extent set forth in the currently effective prospectus or Statement of
Additional Information, such net asset value to be computed as of the close of
business on the day of sale of such shares of the Fund.
(11) AEFA and the Fund agree to use their best efforts to conform with all
applicable state and federal laws and regulations relating to any rights or
obligations under the term of this agreement.
Part Two: ALLOCATION OF EXPENSES
Except as provided by any other agreements between the parties, AEFA covenants
and agrees that during the period of this agreement it will pay or cause to be
paid all expenses incurred by AEFA or any of its affiliates, in the offering for
sale or sale of each class of the Fund's shares.
Part Three: COMPENSATION
(1) It is covenanted and agreed that AEFA shall be paid:
(i) for a class of shares imposing a front-end sales charge, by the
purchasers of Fund shares in an amount equal to the difference between the total
amount received upon each sale of shares issued by the Fund and the net asset
value of such shares at the time of such sale; and
(ii) for a class of shares imposing a deferred sales charge, by owners
of Fund shares at the time the sales charge is imposed in an amount equal to any
deferred sales charge, as described in the Fund's prospectus.
Such sums as are received by the Fund shall be received as Agent for AEFA and
shall be remitted to AEFA daily as soon as practicable after receipt.
(2) The net asset value of any share of each class of the Fund shall be
determined in the manner provided by the classes' currently effective prospectus
and Statement of Additional Information and the Investment Company Act of 1940,
and rules thereunder.
Part Four: MISCELLANEOUS
(1) AEFA shall be deemed to be an independent contractor and, except as
expressly provided or authorized in this agreement, shall have no authority to
act for or represent the Fund.
(2) AEFA shall be free to render to others services similar to those rendered
under this agreement.
(3) Neither this agreement nor any transaction had pursuant hereto shall be
invalidated or in any way affected by the fact that directors, officers, agents
and/or shareholders of the Fund are or may be interested in AEFA as directors,
officers, shareholders or otherwise; that directors, officers, shareholders or
agents of AEFA are or may be interested in the Fund as directors, officers,
shareholders or otherwise; or that AEFA is or may be interested in the Fund as
shareholder or otherwise; provided, however, that neither AEFA nor any officer
or director of AEFA or any officers or directors of the Fund shall sell to or
buy from the Fund any property or security other than a security issued by the
Fund, except in accordance with a rule, regulation or order of the federal
Securities and Exchange Commission.
(4) For the purposes of this agreement, a "business day" shall have the same
meaning as is given to the term in the By-laws of the Fund.
(5) Any notice under this agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the parties to this agreement at each
company's principal place of business in Minneapolis, Minnesota, or to such
other address as either party may designate in writing mailed to the other.
(6) AEFA agrees that no officer, director or employee of AEFA will deal for or
on behalf of the Fund with himself as principal or agent, or with any
corporation or partnership in which he may have a financial interest, except
that this shall not prohibit:
(a) Officers, directors and employees of AEFA from having a financial
interest in the Fund or in AEFA.
(b) The purchase of securities for the Fund, or the sale of securities
owned by the Fund, through a security broker or dealer, one or more of whose
partners, officers, directors or employees is an officer, director or employee
of AEFA provided such transactions are handled in the capacity of broker only
and provided commissions charged do not exceed customary brokerage charges for
such services.
(c) Transactions with the Fund by a broker-dealer affiliate of AEFA if
allowed by rule or order of the Securities and Exchange Commission and if made
pursuant to procedures adopted by the Fund's Board of Directors (the "Board").
(7) AEFA agrees that, except as otherwise provided in this agreement, or as may
be permitted consistent with the use of a broker-dealer affiliate of AEFA under
applicable provisions of the federal securities laws, neither it nor any of its
officers, directors or employees shall at any time during the period of this
agreement make, accept or receive, directly or indirectly, any fees, profits or
emoluments of any character in connection with the purchase or sale of
securities (except securities issued by the Fund) or other assets by or for the
Fund.
Part Five: TERMINATION
(1) This agreement shall continue from year to year unless and until terminated
by AEFA or the Fund, except that such continuance shall be specifically approved
at least annually by a vote of a majority of the Board who are not parties to
this agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and by a majority of
the Board or by vote of a majority of the outstanding voting securities of the
Fund. As used in this paragraph, the term "interested person" shall have the
meaning as set forth in the Investment Company Act of 1940, as amended.
(2) This agreement may be terminated by AEFA or the Fund at any time by giving
the other party sixty (60) days written notice of such intention to terminate.
(3) This agreement shall terminate in the event of its assignment, the term
"assignment" for this purpose having the same meaning as set forth in the
Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, The parties hereto have executed the foregoing agreement on
the date and year first above written.
STRATEGIST TAX-FREE INCOME FUND, INC.
Strategist Tax-Free High Yield Fund
By /s/ James A. Mitchell
James A. Mitchell
President
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
By /s/ Pamela J. Moret
Pamela J. Moret
Vice President
January 26, 2000
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 Strategist
Tax-Free Income Fund, Inc. (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 that the shares sold in
accordance with applicable federal and state securities laws will be legally
issued, fully paid, and nonassessable.
This opinion may be used in connection with the Post-Effective Amendment.
Sincerely,
/s/ Eileen J. Newhouse
Eileen J. Newhouse
Group Counsel
EJN/BS/jt
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 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.
/s/ KPMG LLP
KPMG LLP
Minneapolis, Minnesota
January 26, 2000
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, or Heidi
S. Brommer as her or his attorney-in-fact and agent, to sign for 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 19th day of April, 1999.
/s/ Rodney P. Burwell
Rodney P. Burwell
/s/ Jean B. Keffeler
Jean B. Keffeler
/s/ Thomas R. McBurney
Thomas R. McBurney
/s/ James A. Mitchell
James A. Mitchell
/s/ John R. Thomas
John R. Thomas
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, or Heidi
S. Brommer 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 20th day of April, 1999.
/s/ James A. Mitchell
James A. Mitchell
/s/ John M. Knight
John M. Knight
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, Arne H. Carlson 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 13th day of January, 2000.
/s/ H. Brewster Atwater, Jr. /s/ Anne P. Jones
H. Brewster Atwater, Jr. Anne P. Jones
/s/ Arne H. Carlson /s/ William R. Pearce
Arne H. Carlson William R. Pearce
/s/ Lynne V. Cheney /s/ Alan K. Simpson
Lynne V. Cheney Alan K. Simpson
/s/ William H. Dudley /s/ John R. Thomas
William H. Dudley John R. Thomas
/s/ David R. Hubers /s/ C. Angus Wurtele
David R. Hubers C. Angus Wurtele
/s/ Heinz F. Hutter
Heinz F. Hutter
OFFICERS' POWER OF ATTORNEY
City of Minneapolis
State of Minnesota
Each of the undersigned, as officers of the below listed open-end,
diversified 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:
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 the other 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 the 13th day of January, 2000.
/s/ Arne H. Carlson /s/ Leslie L. Ogg
Arne H. Carlson Leslie L. Ogg
/s/ John R. Thomas /s/ Peter J. Anderson
John R. Thomas Peter J. Anderson
/s/ Frederick C. Quirsfeld /s/ John M. Knight
Frederick C. Quirsfeld John M. Knight
