UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D. C. 20549 FORM N-CSR Investment Company Act file number 811-2671 Scudder Municipal Trust ----------------------- (Exact Name of Registrant as Specified in Charter) Two International Place Boston, Massachusetts 02110-4103 -------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's Telephone Number, including Area Code: (617) 295-2572 -------------- John Millette Deutsche Investment Management Americas Inc. Two International Place Boston, Massachusetts 02110-4103 --------------------------------------- (Name and Address of Agent for Service) Date of fiscal year end: 5/31 Date of reporting period: 5/31/03ITEM 1. REPORT TO STOCKHOLDERS
[Scudder Investments logo]
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Annual Report to Shareholders | ||
May 31, 2003 | ||
Contents |
<Click Here> Performance Summary <Click Here> Portfolio Management Review <Click Here> Portfolio Summary <Click Here> Investment Portfolio <Click Here> Financial Statements <Click Here> Financial Highlights <Click Here> Notes to Financial Statements <Click Here> Report of Independent Auditors <Click Here> Tax Information <Click Here> Trustees and Officers <Click Here> Account Management Resources |
Scudder Investments is part of Deutsche Asset Management, which is the marketing name in the US for the asset management activities of Deutsche Bank AG, Deutsche Investment Management Americas Inc., Deutsche Asset Management Inc., Deutsche Asset Management Investment Services Ltd., Deutsche Bank Trust Company Americas and Scudder Trust Company.
This report must be preceded or accompanied by a prospectus. To obtain a prospectus for any of our funds, refer to the Account Management Resources information provided in the back of this booklet. The prospectus contains more complete information, including a description of the risks of investing in the fund, management fees and expenses. Please read it carefully before you invest or send money.
Fund shares are not FDIC-insured and are not deposits or other obligations of, or guaranteed by, any bank. Fund shares involve investment risk, including possible loss of principal.
Classes A, B, C and Institutional
Average Annual Total Returns* (Unadjusted for Sales Charge) | ||||
Scudder High Yield Tax-Free Fund | 1-Year | 3-Year | 5-Year | 10-Year |
Class A(a) | 8.13% | 8.51% | 5.50% | 6.10% |
Class B(a) | 7.19% | 7.68% | 4.63% | 5.18% |
Class C(a) | 7.30% | 7.70% | 4.64% | 5.18% |
Lehman Brothers Municipal Bond Index+ | 10.36% | 9.64% | 6.47% | 6.60% |
Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.
Scudder High Yield Tax-Free Fund | Life of Class** |
Institutional Class++ | 5.55% |
Lehman Brothers Municipal Bond Index+ | 6.54% |
++ Institutional Class shares are not subject to sales charge.
Net Asset Value and Distribution Information | ||||
Class A | Class B | Class C | Institutional Class | |
Net Asset Value: 5/31/03 | $ 12.86 | $ 12.86 | $ 12.87 | $ 12.87 |
5/31/02 | $ 12.55 | $ 12.56 | $ 12.56 | - |
8/19/2002 (Inception date for Institutional Class) | - | - | - | $ 12.73 |
Distribution Information: Twelve Months: Income Dividends | $ .68 | $ .58 | $ .59 | $ .55++ |
May Income Dividend | $ .0574 | $ .0488 | $ .0492 | $ .0582 |
SEC 30-day Yield+++ | 4.15% | 3.56% | 3.54% | 4.42% |
Current Annualized Distribution Rate+++ | 5.36% | 4.55% | 4.59% | 5.43% |
Tax Equivalent Yield+++ | 6.38% | 5.48% | 5.45% | 6.80% |
+++ Current annualized distribution rate is the latest monthly dividend shown as an annualized percentage of net asset value on May 31, 2003. Distribution rate simply measures the level of dividends and is not a complete measure of performance. The SEC yield is net investment income per share earned over the month ended May 31, 2003, shown as an annualized percentage of the net asset value on that date. The SEC yield is computed in accordance with a standardized method prescribed by the Securities and Exchange Commission. Tax equivalent yield is based on the Fund's yield and a marginal federal income rate of 35%. Yields and distribution rates are historical and will fluctuate. The SEC yields would have been 3.91%, 3.31% and 3.30% for the Class A, B and C shares, respectively, had certain expenses not been reduced.
++ Income dividends for ten-month period.
Class A Lipper Rankings* - High-Yield Municipal Debt Funds Category | ||||
Period | Rank | Number of Funds Tracked | Percentile Ranking | |
1-Year | 8 | of | 72 | 11 |
3-Year | 8 | of | 69 | 12 |
Rankings are historical and do not guarantee future results. Rankings are based on total return unadjusted for sales charges with distributions reinvested. If sales charges had been included, results might have been less favorable.
Source: Lipper Inc.
Growth of an Assumed $10,000 Investment(b)* (Adjusted for Sales Charge) |
[] Scudder High Yield Tax-Free Fund - Class A(c) [] Lehman Brothers Municipal Bond Index+ |
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Yearly periods ended May 31 |
Comparative Results* (Adjusted for Sales Charge) | |||||
Scudder High Yield Tax-Free Fund | 1-Year | 3-Year | 5-Year | 10-Year | |
Class A(c) | Growth of $10,000 | $10,326 | $12,200 | $12,481 | $17,270 |
Average annual total return | 3.26% | 6.85% | 4.53% | 5.62% | |
Class B(c) | Growth of $10,000 | $10,419 | $12,285 | $12,439 | $16,565 |
Average annual total return | 4.19% | 7.10% | 4.46% | 5.18% | |
Class C(c) | Growth of $10,000 | $10,623 | $12,369 | $12,422 | $16,410 |
Average annual total return | 6.23% | 7.34% | 4.43% | 5.08% | |
Lehman Brothers Municipal Bond Index+ | Growth of $10,000 | $11,036 | $13,181 | $13,679 | $18,941 |
Average annual total return | 10.36% | 9.64% | 6.47% | 6.60% |
The growth of $10,000 is cumulative.
Notes to Performance Summary - Classes A, B, C and Institutional |
* Returns and rankings during all periods shown reflect a fee waiver and/or expense reimbursement. Without this waiver/reimbursement, returns and rankings would have been lower.
** On August 19, 2002, the Fund commenced offering Institutional Class shares. Index comparisons begin August 31, 2002. Performance shown is not annualized.
a Returns shown for Class A, B and C shares for the periods prior to their inception on May 1, 2000 are derived from the historical performance of Class S shares of the Scudder High Yield Tax-Free Fund during such periods and have been adjusted to reflect the higher gross total annual operating expenses of each specific class. The difference in expenses will affect performance.
b The Fund's growth of an assumed $10,000 investment is adjusted for the maximum sales charge of 4.50%. This results in a net initial investment of $9,550.
c Returns shown for Class A, B and C shares for the periods prior to their inception on May 1, 2000 are derived from the historical performance of Class S shares of the Scudder High-Yield Tax-Free Fund during such periods and have been adjusted to reflect the higher gross total annual operating expenses and the current applicable sales charges of each specific class. Returns for Class A reflect the current maximum initial sales charge of 4.50%. Class B share performance is adjusted for the applicable contingent deferred sales charge ("CDSC"), which is 4% within the first year after purchase, declining to 0% after six years. Returns for Class C reflect an initial sales charge of 1%. Redemptions on Class C shares within one year of purchase may be subject to CDSC of 1%. The difference in expenses will affect performance.
+ The unmanaged Lehman Brothers Municipal Bond Index is a market-value-weighted measure of municipal bonds issued across the United States. Index issues have a credit rating of at least Baa and a maturity of at least two years. Index returns assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
All performance is historical, assumes reinvestment of all dividends and capital gains, and is not indicative of future results. Investment return and principal value will fluctuate, so an investor's shares, when redeemed, may be worth more or less than when purchased. Performance figures do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns and rankings may differ by share class.
Although the Fund seeks income that is federally tax free, a portion of the Fund's returns may be subject to federal, state, local and the alternative minimum tax.
Investments in funds involve risk. Some funds have more risk than others. These include funds that allow exposure to or otherwise concentrate investments in certain sectors, geographic regions, security types, market capitalization or foreign securities (e.g., political or economic instability, which can be accentuated in emerging market countries). Please read this fund's prospectus for specific details regarding its investments and risk profile.
Please call (800) 621-1048 for the fund's most up-to-date performance. On the Web, go to scudder.com.
Class AARP and Class S
Class AARP has been created especially for members of AARP. Class S is not available to new investors.
Average Annual Total Returns* | ||||
Scudder High Yield Tax-Free Fund | 1-Year | 3-Year | 5-Year | 10-Year |
Class S | 8.17% | 8.56% | 5.64% | 6.32% |
Class AARP(a) | 8.17% | 8.55% | 5.64% | 6.32% |
Lehman Brothers Municipal Bond Index+ | 10.36% | 9.64% | 6.47% | 6.60% |
Sources: Lipper Inc. and Deutsche Investment Management Americas Inc.
Net Asset Value and Distribution Information | ||
Class AARP | Class S | |
Net Asset Value: 5/31/03 | $ 12.87 | $ 12.87 |
5/31/02 | $ 12.56 | $ 12.56 |
Distribution Information: Twelve Months: Income Dividends | $ .69 | $ .69 |
May Income Dividend | $ .0578 | $ .0578 |
SEC 30-day Yield++ | 4.38% | 4.38% |
Current Annualized Distribution Rate++ | 5.39% | 5.39% |
Tax Equivalent Yield++ | 6.74% | 6.74% |
++ Current annualized distribution rate is the latest monthly dividend shown as an annualized percentage of net asset value on May 31, 2003. Distribution rate simply measures the level of dividends and is not a complete measure of performance. The SEC yield is net investment income per share earned over the month ended May 31, 2003, shown as an annualized percentage of the net asset value on that date. The SEC yield is computed in accordance with a standardized method prescribed by the Securities and Exchange Commission. Tax equivalent yield is based on the fund's yield and a marginal federal income rate of 35%. Yields and distribution rates are historical and will fluctuate.
Class S Lipper Rankings* - High-Yield Municipal Debt Funds Category | ||||
Period | Rank | Number of Funds Tracked | Percentile Ranking | |
1-Year | 6 | of | 72 | 9 |
3-Year | 7 | of | 69 | 10 |
5-Year | 2 | of | 50 | 4 |
10-Year | 1 | of | 19 | 5 |
Rankings are historical and do not guarantee future results. Rankings are based on total return with distributions reinvested.
Source: Lipper Inc.
Growth of an Assumed $10,000 Investment* |
[] Scudder High Yield Tax-Free Fund - Class S [] Lehman Brothers Municipal Bond Index+ |
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Yearly periods ended May 31 |
Comparative Results* | |||||
Scudder High Yield Tax-Free Fund | 1-Year | 3-Year | 5-Year | 10-Year | |
Class S | Growth of $10,000 | $10,817 | $12,796 | $13,158 | $18,459 |
Average annual total return | 8.17% | 8.56% | 5.64% | 6.32% | |
Class AARP(a) | Growth of $10,000 | $10,817 | $12,792 | $13,159 | $18,460 |
Average annual total return | 8.17% | 8.55% | 5.64% | 6.32% | |
Lehman Brothers Municipal Bond Index+ | Growth of $10,000 | $11,036 | $13,181 | $13,679 | $18,941 |
Average annual total return | 10.36% | 9.64% | 6.47% | 6.60% |
The growth of $10,000 is cumulative.
* Returns and rankings during the 3-, 5-, 10-year and Life of Class periods shown reflect a fee waiver and/or expense reimbursement. Without this waiver/reimbursement, returns and rankings would have been lower.
a Returns shown for Class AARP shares for the periods prior to its inception on October 2, 2000 are derived from the historical performance of Class S shares of Scudder High Yield Tax-Free Fund during such periods and have assumed the same expense structure during such periods. Any difference in expenses will affect performance.
+ The unmanaged Lehman Brothers Municipal Bond Index is a market-value-weighted measure of municipal bonds issued across the United States. Index issues have a credit rating of at least Baa and a maturity of at least two years. Index returns assume reinvestment of dividends and, unlike Fund returns, do not reflect any fees or expenses. It is not possible to invest directly into an index.
All performance is historical, assumes reinvestment of all dividends and capital gains, and is not indicative of future results. Investment return and principal value will fluctuate, so an investor's shares, when redeemed, may be worth more or less than when purchased. Performance figures do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Returns and rankings may differ by share class.
Although the Fund seeks income that is federally tax free, a portion of the Fund's returns may be subject to federal, state, local and the alternative minimum tax.
Investments in funds involve risk. Some funds have more risk than others. These include funds that allow exposure to or otherwise concentrate investments in certain sectors, geographic regions, security types, market capitalization or foreign securities (e.g., political or economic instability, which can be accentuated in emerging market countries). Please read this fund's prospectus for specific details regarding its investments and risk profile.
Please call (800) 728-3337 (Class AARP) or (800) SCUDDER (Class S) for the fund's most up-to-date performance. On the Web, go to aarp.scudder.com (Class AARP) or myScudder.com (Class S).
Scudder High Yield Tax-Free Fund: A Team Approach to Investing
Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor"), which is part of Deutsche Asset Management, is the investment advisor for Scudder High Yield Tax-Free Fund. DeIM and its predecessors have more than 80 years of experience managing mutual funds and DeIM provides a full range of investment advisory services to institutional and retail clients. DeIM is also responsible for selecting brokers and dealers and for negotiating brokerage commissions and dealer charges.
Deutsche Asset Management is a global asset management organization that offers a wide range of investing expertise and resources. This well-resourced global investment platform brings together a wide variety of experience and investment insight across industries, regions, asset classes and investing styles.
DeIM is an indirect, wholly owned subsidiary of Deutsche Bank AG. Deutsche Bank AG is a major global banking institution that is engaged in a wide range of financial services, including investment management, mutual funds, retail, private and commercial banking, investment banking and insurance.
Portfolio Management Team
Philip G. Condon
Managing Director of Deutsche Asset Management and Lead Manager of the fund.
• Joined Deutsche Asset Management in 1983 and the fund in 1987.
• Over 26 years of investment industry experience.
• MBA, University of Massachusetts at Amherst.
Rebecca L. Wilson
Vice President of Deutsche Asset Management and Portfolio Manager of the fund.
• Joined Deutsche Asset Management in 1986 and the fund in 1998.
• Over 16 years of investment industry experience.
Philip G. Condon serves as lead portfolio manager of Scudder High Yield Tax-Free Fund and Rebecca L. Wilson is portfolio manager. In the following interview, Scudder's municipal bond team discusses the fund's performance and the recent market environment for municipal bonds.
Q: Will you describe the general market environment during the annual period ended May 31, 2003?
A: The last year was a strong period for bonds. Overall, the bond market delivered positive returns and outpaced stocks. For the one-year period, the Lehman Brothers Aggregate Bond Index gained 11.58% and the S&P 500 index2 fell 8.06%. The municipal bond market, as measured by the Lehman Brothers Municipal Bond Index3, rose 10.36%.1 In general, on a pre-tax basis, municipal bonds lagged government bonds, while corporate bonds tended to outperform both municipal and taxable government issues.
1 Lehman Brothers Aggregate Bond Index is an unmanaged index representing domestic taxable investment-grade bonds, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities with average maturities of one year or more.The S&P 500 index is an unmanaged index, widely regarded as representative of the equity market in general.
The unmanaged Lehman Brothers Municipal Bond Index is a market-value-weighted measure of municipal bonds issued across the United States. Index issues have a credit rating of at least Baa and a maturity of at least two years.
The annual period began with investors concerned about the sluggish US economy and weak corporate earnings, as well as geopolitical concerns in the Middle East and the possibility of terrorist attacks. These worries abated toward the end of the annual period as the stock market began to anticipate a recovery in the economy and the war in Iraq came to a conclusion. Throughout the period, demand for municipal bonds remained strong among individual and institutional buyers. At the same time, the introduction of new municipal bonds continued to be heavy, as states issued more debt to make up for revenue shortfalls and to refinance old debt at new, lower rates.
Interest rates declined throughout the annual period. While the Federal Reserve Board acted just once during the period by lowering the federal funds rate4 by 50 basis points on November 6, general interest rates in the marketplace declined steadily over the 12-month period. In fact, by the end of the period, rates on US Treasuries were near the lowest levels they had seen since the late 1950s. At the same time, stock and lower-quality, higher-yielding bonds experienced a more turbulent time. Prior to the Federal Reserve Board's action last fall, stocks and lower-quality bonds generally produced negative returns. However, in December 2002, stocks and lower-quality bonds began to perform better. At the same time, municipal bond prices lagged as the interest rate cut shifted investor interest to stocks and lower-quality, higher-yielding bonds. Then, in January and February, worries about a war with Iraq and terrorist attacks heightened once again, sparking a renewed interest in higher-quality bonds. By the end of the period, equity markets began to rebound, while the bond market continued to benefit from generally declining interest rates.
4 The federal funds rate is the rate that banks charge each other on overnight loans. The Federal Reserve Board's Open Market Committee sets a target rate to either make credit more easily available or tighten monetary policy in an attempt to avoid economic imbalances such as high inflation.Q: How did municipal bond yields react during the period?
A: Municipal bond yields declined as a whole over the period, though not as much as Treasury bond yields. At the same time, the municipal bond yield curve steepened,
Municipal bond yield curve (as of 5/31/02 versus 5/31/03) (7-day yield) |
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Source: Deutsche Asset Management
This chart is not intended to represent the yield of any Scudder fund. Past performance is no guarantee of future results.
as intermediate-term (five to 10 years) municipal bond yields declined more than long-term yields. (The yield curve illustrates the relationship between the yield on bonds of the same credit quality but different maturities. A steepening of the curve means that the difference in yields between longer-term and shorter-term maturities increases.)
Q: How did Scudder High Yield Tax-Free Fund perform during the annual period?
A: Scudder High Yield Tax-Free Fund posted strong absolute results for the one-year period. The fund's cumulative total return of 8.13% (Class A shares unadjusted for sales charges) outpaced the 6.12% gain by its average peer in the Lipper High Yield Municipal Debt Funds category.5 The fund lagged the unmanaged Lehman Brothers Municipal Bond Index, which gained 10.36% for the 12-month period. (Please see pages 4 through 9 for performance of other share classes.)
5 As defined by Lipper, high yield municipal debt funds are those that invest at least 50% of their assets in lower-rated municipal debt issues. Lipper figures represent the average of the total returns reported by all mutual funds designated by Lipper Inc. as falling into the category indicated.Q: How was the fund positioned and how did this positioning contribute to its performance?
A: Solid credit selection and bonds with premium coupon structures aided results. Our exposure to high-yield municipal bonds (BBB-rated bonds) remained relatively unchanged during the period. High-yield municipal bonds remain inexpensive relative to AAA-rated bonds.
A slight overweight in bonds backed by expected tobacco-settlement payments hurt the fund's results in the first calendar quarter of 2003. Such tobacco-settlement bonds struggled in March, following an unfavorable ruling by an Illinois court against Philip Morris USA. However, in May, tobacco-settlement bonds regained some strength as concerns about such payments lessened.
Although we did have some exposure to airline bonds, which struggled throughout much of the period, our exposure was small enough that it did not impact results significantly. Airline bonds, like their stock counterparts, have been held back due to a lagging US economy, the war with Iraq, concerns about future terrorist attacks and recent bankruptcies by two major US airlines. The overall decline in strength of airline bonds led us to curb our stake in such issues.
We continue to focus our purchases on issues with maturities between 15 and 20 years, while keeping the fund's duration neutral. As a result, we believe the fund will be well-positioned when the yield curve normalizes toward its average historical steepness.
The views expressed in this report reflect those of the portfolio managers only through the end of the period of the report as stated on the cover. The managers' views are subject to change at any time based on market and other conditions and should not be construed as a recommendation.
Portfolio Composition | 5/31/03 | 5/31/02 |
Revenue Bonds | 71% | 68% |
General Obligation Bonds | 12% | 13% |
ETM/Prerefunded | 12% | 12% |
Lease Obligations | 3% | 4% |
Other | 2% | 3% |
100% | 100% |
Quality | 5/31/03 | 5/31/02 |
AAA | 34% | 35% |
AA | 9% | 6% |
A | 17% | 11% |
BBB | 17% | 16% |
BB | 1% | - |
B | 1% | 4% |
Not Rated | 21% | 28% |
100% | 100% |
Effective Maturity | 5/31/03 | 5/31/02 |
Less than 1 year | 6% | 6% |
1 < 5 years | 11% | 8% |
5 < 8 years | 21% | 12% |
8 < 15 years | 42% | 51% |
Greater than 15 years | 20% | 23% |
100% | 100% |
Top Five State Allocations | 5/31/03 | 5/31/02 |
California | 13% | 11% |
Texas | 11% | 10% |
Massachusetts | 7% | 7% |
Washington | 6% | 7% |
New York | 6% | 4% |
Weighted average effective maturity: 11.32 years and 11.94 years, respectively.
Portfolio Composition, quality, effective maturity and state allocations are subject to change.
For more complete details about the fund's investment portfolio, see page 16. A quarterly Fund Summary and Portfolio Holdings are available upon request.
Principal Amount ($) | Value ($) | |
Municipal Investments 100.0% | ||
Alabama 0.5% | ||
Huntsville, AL, Hospital & Healthcare Revenue, Health Care Authority, Series A, 5.75%, 6/1/2031 | 3,700,000 | 3,881,411 |
Alaska 1.3% | ||
Anchorage, AK, State GO, 5.5%, 7/1/2018 (b) (d) | 2,680,000 | 3,072,674 |
North Slope Borough, AK, Other GO, Zero Coupon, Series B, 6/30/2005 (b) | 7,600,000 | 7,390,088 |
10,462,762 | ||
Arizona 1.0% | ||
Arizona, Water & Sewer Revenue, Water Infrastructure Finance Authority, Series A, 5.375%, 10/1/2013 | 3,625,000 | 4,226,569 |
McDowell Mountain Ranch, AZ, Communities Facilities District, Prerefunded, 8.25%, 7/15/2019 | 3,000,000 | 3,291,870 |
7,518,439 | ||
California 13.0% | ||
California, Electric Revenue, Department of Water Resources and Power Supply, Series A, 5.875%, 5/1/2016 | 4,500,000 | 5,208,750 |
California, Electric Revenue, Department of Water Resources and Power Supply, Series 309, Inverse Floater, 9.32%, 5/1/2018** (b) | 1,875,000 | 2,383,069 |
California, Multi Family Housing Revenue, Community Development Authority, Irvine Apartment Communities, Series A-4, 5.25%, 5/15/2025 | 1,750,000 | 1,867,758 |
California, Special Assessment Revenue, Golden State TOB Securitization Corp., Series 2003-A-1, 6.75%, 6/1/2039 | 21,750,000 | 20,404,763 |
Foothill, CA, Eastern Corridor Agency: | ||
Series A, ETM, Step-up coupon, 0.0% to 1/1/2005, 7.05% to 1/1/2010 | 7,000,000 | 8,074,290 |
Series A, Prerefunded, Step-up coupon, 0.0% to 1/1/2005, 7.1% to 1/1/2011 | 4,415,000 | 5,176,543 |
Series A, Prerefunded, Step-up coupon, 0.0% to 1/1/2005, 7.1% to 1/1/2012 | 6,000,000 | 7,034,940 |
Series A, Prerefunded, Step-up coupon, 0.0% to 1/1/2005, 7.1% to 1/1/2014 | 2,875,000 | 3,377,320 |
Irvine, CA, Special Assessment Revenue, Improvement Bond Act 1915, 1.25%, 9/2/2024* (c) | 1,000,000 | 1,000,000 |
Long Beach, CA, Sales & Special Tax Revenue, Aquarium of the Pacific Project, Series A, Prerefunded, 6.1%, 7/1/2010 | 4,500,000 | 5,031,180 |
Los Angeles County, County (GO) Lease, Marina Del Rey, Series A, 6.25%, 7/1/2003 | 1,235,000 | 1,239,434 |
Los Angeles, CA, Airport Revenue, Regional Airports Improvement Corp. Lease, AMT, Series C, 7.5%, 12/1/2024 | 6,035,000 | 4,828,000 |
Millbrae, CA, Senior Care Revenue, Magnolia of Millbrae Project, AMT, Series A, 7.375%, 9/1/2027 | 990,000 | 1,028,551 |
Sacramento, CA, Project Revenue, City Financing Authority, Convention Center Hotel, Series A, 6.25%, 1/1/2030 | 4,000,000 | 3,978,680 |
San Joaquin Hills, CA, Transportation Corridor Agency: | ||
Prerefunded, 7.6%, 1/1/2011 | 5,000,000 | 6,349,050 |
Prerefunded, 7.65%, 1/1/2012 | 15,000,000 | 19,080,000 |
Prerefunded, 7.65%, 1/1/2013 | 4,000,000 | 5,088,000 |
101,150,328 | ||
Colorado 3.0% | ||
Colorado, Hospital & Healthcare Revenue, Health Facilities Authority, Hospital-Portercare Adventist Health, 6.625%, 11/15/2026 | 2,000,000 | 2,246,100 |
Colorado, Transportation/Tolls Revenue, Northwest Parkway Public Highway Authority, Series D, 7.125%, 6/15/2041 | 2,500,000 | 2,635,500 |
Denver, CO, Airport Revenue, AMT: Series A, Zero Coupon, 11/15/2003 | 3,050,000 | 3,020,720 |
Series D, 7.75%, 11/15/2013 | 9,775,000 | 12,477,103 |
Denver, CO, Sales & Special Tax Revenue, Urban Renewal Authority, AMT, 7.75%, 9/1/2016 | 2,500,000 | 2,715,100 |
23,094,523 | ||
Connecticut 2.0% | ||
Connecticut, Senior Care Revenue, State Health and Education Facilities Authority, Edgehill Project, Series A, Prerefunded, 6.875%, 7/1/2017 | 4,500,000 | 4,903,515 |
Mashantucket, CT, Project Revenue, Western Pequot Tribe: | ||
Series A, Prerefunded, 6.4%, 9/1/2011 | 1,490,000 | 1,761,001 |
Series B, Zero Coupon, 9/1/2010 | 2,000,000 | 1,452,100 |
Series B, Zero Coupon, 9/1/2011 | 2,000,000 | 1,363,080 |
Series B, Zero Coupon, 9/1/2012 | 2,000,000 | 1,284,500 |
Series B, Zero Coupon, 9/1/2013 | 2,000,000 | 1,208,540 |
Series B, Zero Coupon, 9/1/2014 | 2,000,000 | 1,132,300 |
Mashantucket, CT, Sports, Expo & Entertainment Revenue, Western Pequot Tribe: | ||
Series A, 6.4%, 9/1/2011 | 1,510,000 | 1,650,173 |
Series B, 5.7%, 9/1/2012 | 1,000,000 | 1,081,360 |
15,836,569 | ||
Delaware 0.3% | ||
Delaware, Industrial Development Revenue, 6.375%, 5/1/2027 | 2,000,000 | 2,030,700 |
District of Columbia 1.2% | ||
District of Columbia, State GO, General Fund Recovery, Series B-3, 1.3%, 6/1/2003* | 200,000 | 200,000 |
District of Columbia, Higher Education Revenue, American College of Obstetricians, 4.75%, 8/15/2018 (b) | 500,000 | 525,100 |
District of Columbia, Water & Sewer Revenue, Water and Sewer Authority, Inverse Floater, Rites: | ||
Series 612A, 10.537%, 10/1/2014** | 4,220,000 | 6,281,301 |
Series 612B, 10.556%, 10/1/2016** | 1,155,000 | 1,739,361 |
District of Columbia, State GO, Series B-1, 1.3%, 6/1/2023* | 650,000 | 650,000 |
9,395,762 | ||
Florida 3.1% | ||
Bayside, FL, Sales & Special Tax Revenue, Community Development District, Series A, 6.3%, 5/1/2018 | 980,000 | 1,000,551 |
Collier County, Hospital & Healthcare Revenue, Health Facilities Authority, Cleveland Clinic, Series C2, 1.35%, 1/1/2035* (c) | 425,000 | 425,000 |
Florida, Industrial Development Revenue, Capital Travel Agency, Seminole Tribe Convention, Series A, 10.0%, 10/1/2033 | 8,000,000 | 9,107,920 |
Highlands County, Hospital & Healthcare Revenue, Health Facilities Authority, Adventist Hospital, Series A, 6.0%, 11/15/2031 | 1,000,000 | 1,083,850 |
Hillsborough County, Hospital & Healthcare Revenue, Industrial Development Authority, University Community Hospital Project, Series A: 5.625%, 8/15/2019 | 3,425,000 | 3,484,321 |
5.625%, 8/15/2023 | 3,320,000 | 3,331,388 |
Indian Trace, FL, Special Assessment Revenue, Community Development District, Water Management, Series B, 8.25%, 5/1/2005 | 670,000 | 692,673 |
Jacksonville, FL, Electric Revenue, Series B, 1.30%, 10/1/2030* | 2,000,000 | 2,000,000 |
Palm Beach County, Hospital & Healthcare Revenue, Health Facilities Authority: | ||
1.30%, 12/1/2031* (c) | 1,100,000 | 1,100,000 |
5.125%, 11/15/2029 | 2,000,000 | 1,963,020 |
24,188,723 | ||
Georgia 1.4% | ||
Americus-Sumter County, Hospital & Healthcare Revenue, Hospital Authority, South George Methodist, Series A, 6.375%, 5/15/2029 | 3,000,000 | 2,923,830 |
Athens-Clarke County, Senior Care Revenue, Wesley Woods, 6.35%, 10/1/2017 | 1,515,000 | 1,422,691 |
Coweta County, Senior Care Revenue, Residential Care Facilities for the Elderly Authority, Wesley Woods, Series A, 8.25%, 10/1/2026 | 1,000,000 | 1,060,790 |
Georgia, Electric Revenue, Municipal Electric Authority: | ||
Series Z, 5.5%, 1/1/2012 | 1,295,000 | 1,477,971 |
Series Z, ETM, 5.5%, 1/1/2012 | 80,000 | 93,239 |
Rockdale County, Resource Recovery Revenue, Development Authority, Visy Paper, Inc. Project, AMT, 7.4%, 1/1/2016 | 4,040,000 | 4,076,966 |
11,055,487 | ||
Illinois 2.0% | ||
Hoffman Estates, IL, Sales & Special Tax Revenue, Zero Coupon, 5/15/2006 | 4,000,000 | 3,578,960 |
Illinois, Hospital & Healthcare Revenue, Development Finance Authority, Adventist Health System, 5.25%, 11/15/2029 | 5,000,000 | 5,130,700 |
Kane County, School District GO, School District Number 129 Aurora West Side, Series A, 5.75%, 2/1/2018 (b) | 4,370,000 | 5,072,958 |
Winnebago County, School District GO, School District No. 122, Series 3, 6.45%, 6/1/2008 (b) | 1,500,000 | 1,794,000 |
15,576,618 | ||
Indiana 1.1% | ||
Indiana, Hospital & Healthcare Revenue, Health Facilities Finance Authority, Greenwood Village South Project, 5.625%, 5/15/2028 | 2,000,000 | 1,742,060 |
Indiana, Senior Care Revenue, Health Facilities Finance Authority, Franciscan Eldercare Community Services, 5.875%, 5/15/2029 | 2,300,000 | 2,115,402 |
Indianapolis, IN, Senior Care Revenue, Industrial Economic Development, 7.625%, 10/1/2022 | 1,500,000 | 1,469,085 |
North Manchester, IN, Senior Care Revenue, 7.25%, 7/1/2033 | 3,000,000 | 3,000,360 |
8,326,907 | ||
Iowa 0.4% | ||
Wapello County, Hospital & Healthcare Revenue, Ottumwa Regional Health Center Project, 6.375%, 10/1/2031 | 3,000,000 | 3,168,090 |
Kansas 2.1% | ||
Lenexa, KS, Hospital & Healthcare Revenue, Series C, 6.875%, 5/15/2032 | 1,750,000 | 1,852,463 |
Manhattan, KS, Senior Care Revenue, Meadowlark Hills Retirement, Series A, 6.5%, 5/15/2028 | 1,000,000 | 1,000,570 |
Overland Park, KS, Industrial Development Revenue, Development Corp., Series A, 7.375%, 1/1/2032 (d) | 8,000,000 | 8,178,560 |
Wichita, KS, Hospital & Healthcare Revenue: | ||
Series 3, 5.5%, 11/15/2025 | 1,300,000 | 1,364,974 |
Series 3, 5.625%, 11/15/2031 | 3,750,000 | 3,952,275 |
16,348,842 | ||
Kentucky 1.2% | ||
Kentucky, Hospital & Healthcare Revenue, Economic Development Finance Authority, Norton Healthcare, Inc., Series A, 6.625%, 10/1/2028 | 5,500,000 | 5,838,910 |
Kentucky, Transportation/Tolls Revenue, State Turnpike Authority, Revitalization Project, Series A, 5.5%, 7/1/2014 (b) | 3,210,000 | 3,862,786 |
9,701,696 | ||
Louisiana 0.1% | ||
Louisiana, Transportation/Tolls Revenue, Offshore Terminal Authority Deepwater Port, Revenue Loop LLC Project, Series A, 1.30%, 9/1/2014* (c) | 1,000,000 | 1,000,000 |
Maine 0.1% | ||
Maine, Senior Care Revenue, Huntington Common Project, Series A, 7.5%, 9/1/2027 | 1,000,000 | 875,740 |
Maryland 2.2% | ||
Anne Arundel County, County GO, National Business Park Project, 7.375%, 7/1/2028 | 2,000,000 | 2,186,040 |
Maryland, Higher Education Revenue, Collegiate Housing Foundation, Series A, 5.75%, 6/1/2031 | 1,000,000 | 1,022,170 |
Maryland, Hospital & Healthcare Revenue, University of Maryland Medical System, 6.75%, 7/1/2030 | 2,500,000 | 2,818,075 |
Maryland, Project Revenue, Economic Development Corp., Chesapeake Bay, Series B, 7.625%, 12/1/2022 | 12,000,000 | 10,771,080 |
16,797,365 | ||
Massachusetts 6.7% | ||
Boston, MA, Industrial Development Finance Authority, Springhouse Project, Prerefunded, 9.25%, 7/1/2025 | 1,350,000 | 1,596,119 |
Boston, MA, Industrial Development Revenue, AMT: | ||
6.5%, 9/1/2035 | 4,000,000 | 4,000,440 |
8.0%, 9/1/2035 | 1,000,000 | 1,002,960 |
Massachusetts, Electric Revenue, Wholesale Electrical Co. Power Supply, Inverse Floater, Series 674, 17.2%, 7/1/2016 (b)** | 5,392,500 | 8,334,432 |
Massachusetts, Hospital & Healthcare Revenue, Health & Educational Facilities Authority, Civic Investments, Series A, 9.0%, 12/15/2015 | 4,000,000 | 4,405,600 |
Massachusetts, Hospital & Healthcare Revenue, Health & Educational Facilities Authority, Partners Healthcare System, Series B, 5.125%, 7/1/2019 | 1,185,000 | 1,248,243 |
Massachusetts, Hospital & Healthcare Revenue, Health & Educational Facilities Authority, South Shore Hospital: | ||
Series F, 5.625%, 7/1/2019 | 1,000,000 | 1,051,080 |
Series F, 5.75%, 7/1/2029 | 4,000,000 | 4,160,600 |
Massachusetts, Industrial Development Revenue, Development Finance Agency, Series A, 7.1%, 7/1/2032 | 4,000,000 | 4,026,480 |
Massachusetts, Project Revenue, Health & Educational Facilities Authority, Civic Investments, Series B, 9.15%, 12/15/2023 | 2,000,000 | 2,215,660 |
Massachusetts, Resource Recovery Revenue, Industrial Finance Agency, Solid Waste Disposal, Peabody Monofill Association, Inc., 9.0%, 9/1/2005 (e) | 960,000 | 976,253 |
Massachusetts, Senior Care Revenue, Industrial Finance Agency, Edgewood Retirement Community, Series A, Prerefunded, 9.0%, 11/15/2025 | 1,000,000 | 1,205,890 |
Massachusetts, State GO, Inverse Floater, Series A, 9.33%, 12/1/2016** | 5,000,000 | 6,892,250 |
Massachusetts, State GO, Rites-PA 647, Inverse Floater, 10.782%, 11/1/2010** | 8,000,000 | 11,279,840 |
52,395,847 | ||
Michigan 3.4% | ||
Delta County, Pollution Control Revenue, Economic Development Corp., Series A, 6.25%, 4/15/2027 | 5,000,000 | 5,182,000 |
Detroit, MI, Sales & Special Tax Revenue, Downtown Development Authority: | ||
Zero Coupon, 7/1/2011 | 3,150,000 | 2,320,605 |
Zero Coupon, 7/1/2012 | 3,150,000 | 2,205,851 |
Detroit, MI, School District GO: | ||
Series A, 5.5%, 5/1/2016 (b) (d) | 1,500,000 | 1,738,695 |
Series A, 5.5%, 5/1/2018 (b) | 1,565,000 | 1,790,736 |
Series A, 5.5%, 5/1/2019 (b) | 1,200,000 | 1,364,256 |
Kalamazoo, MI, Industrial Development Revenue, Economic Development Corp., Series A, 7.5%, 5/15/2029 | 2,000,000 | 2,036,380 |
Kentwood, MI, Industrial Development Revenue, Economic Development, Series A, 6.0%, 11/15/2032 | 1,750,000 | 1,789,830 |
Michigan, Hospital Finance Authority, Genesys Health System, Series A, Prerefunded, 7.5%, 10/1/2027 | 2,000,000 | 2,289,100 |
Michigan, Senior Care Revenue, Strategic Fund Limited, 5.75%, 11/15/2018 | 1,500,000 | 1,545,375 |
Michigan, Sports, Expo & Entertainment Revenue, Strategic Fund Limited, Detroit Symphony Project, Series B, 1.30%, 6/1/2031* (c) | 805,000 | 805,000 |
Michigan, State Agency (GO) Lease, Building Authority, Inverse Floater, Series B, 9.55%, 4/15/2009** | 1,145,000 | 1,512,785 |
Saginaw, MI, Hospital & Healthcare Revenue, Hospital Finance Authority, Covenant Medical Center, Series F, 6.5%, 7/1/2030 | 2,000,000 | 2,203,080 |
26,783,693 | ||
Mississippi 0.2% | ||
Mississippi, Sales & Special Tax Revenue, Development Bank, Diamond Lakes Utilities, Series A, 6.25%, 12/1/2017 | 1,600,000 | 1,586,912 |
Missouri 3.9% | ||
Florissant, MO, Industrial Development Revenue, Desmet Acquisition, Series A, 8.5%, 8/15/2030 | 6,925,000 | 7,298,327 |
Florissant, MO, Industrial Development Revenue, St. Catherine Acquisition, Series B, 9.0%, 8/15/2030 | 3,250,000 | 3,421,503 |
Missouri, Hospital & Healthcare Revenue, Health and Educational Facilities Authority, Washington University, Series A, 5.5%, 6/15/2016 | 7,600,000 | 9,193,872 |
St. Louis, MO, Industrial Development Revenue, St. Louis Convention, AMT, Series A, 7.25%, 12/15/2035 | 10,000,000 | 10,154,800 |
30,068,502 | ||
Nevada 2.1% | ||
Clark County, Airport Revenue, Nevada Airport, AMT, Series A, 1.33%, 7/1/2036* (b) (c) | 200,000 | 200,000 |
Clark County, County GO, 5.5%, 6/1/2015 (b) | 5,000,000 | 5,784,100 |
Henderson, NV, Hospital & Healthcare Revenue, Catholic Healthcare West, 5.375%, 7/1/2026 | 5,000,000 | 4,786,350 |
Las Vegas, NV, Transportation/Tolls Revenue, Las Vegas Monorail Project, 7.375%, 1/1/2030 | 6,000,000 | 5,607,540 |
16,377,990 | ||
New Hampshire 1.3% | ||
New Hampshire, Higher Education Revenue, Health & Educational Facilities Authority, New Hampshire College Issue, 7.4%, 1/1/2023 | 2,000,000 | 2,198,060 |
New Hampshire, Senior Care Revenue, Health & Educational Facilities Authority, New Hampshire Catholic Charities, 5.8%, 8/1/2022 | 2,760,000 | 2,726,742 |
New Hampshire, Senior Care Revenue, Health & Educational Facilities Authority, Rivermead at Peterborough: | ||
5.5%, 7/1/2013 | 2,425,000 | 2,359,089 |
5.625%, 7/1/2018 | 1,615,000 | 1,487,609 |
New Hampshire, Senior Care Revenue, Health & Educational Facilities Authority, Riverwoods at Exeter: | ||
Series A, 6.375%, 3/1/2013 | 725,000 | 740,095 |
Series A, 6.5%, 3/1/2023 | 1,000,000 | 1,007,490 |
10,519,085 | ||
New Jersey 2.6% | ||
Camden County, Public Housing Revenue, Import Authority, Series A, 1.25%, 7/1/2029* | 1,700,000 | 1,700,000 |
New Jersey, Economic Development Authority, United Methodist Homes, Prerefunded, 7.5%, 7/1/2025 | 1,000,000 | 1,143,150 |
New Jersey, Industrial Development Revenue, Economic Development Authority, Harrogate, Inc., Series A, 5.875%, 12/1/2026 | 1,425,000 | 1,434,548 |
New Jersey, Resource Recovery Revenue, Tobacco Settlement Financing Corp., 5.75%, 6/1/2032 | 4,600,000 | 4,171,602 |
New Jersey, Tobacco Settlement Financing Corp., 6.25%, 6/1/2043 | 13,500,000 | 11,691,540 |
20,140,840 | ||
New Mexico 0.1% | ||
Farmington, NM, Pollution Control Revenue, Arizona Public Service Co., Series C, 1.30%, 9/1/2024* (c) | 500,000 | 500,000 |
New York 5.9% | ||
Brookhaven, NY, Hospital & Healthcare Revenue, Industrial Development Authority, Memorial Hospital Medical Center, Series A, 8.25%, 11/15/2030 | 1,000,000 | 1,039,860 |
Glen Cove, NY, Senior Care Revenue, Housing Authority, The Mayfair at Glen Cove, AMT, 8.25%, 10/1/2026 | 1,475,000 | 1,581,318 |
Islip, NY, Higher Education Revenue, Community Development Agency, Institute of Technology, Prerefunded, 7.5%, 3/1/2026 | 2,500,000 | 2,957,075 |
New York, Senior Care Revenue, Dormitory Authority, Inverse Floater, Series 310, 10.879%, 2/15/2010 (b)** | 4,250,000 | 6,281,458 |
New York, State Agency (GO) Lease, Metropolitan Transportation Authority, Series O, 5.75%, 7/1/2013 | 2,750,000 | 3,287,158 |
New York, Transportation/Tolls Revenue, Inverse Floater, Securities Trust Certificates, 9.59%, 11/15/2016 (b)** | 5,000,000 | 6,708,350 |
New York, Transportation/Tolls Revenue, Transportation Authority, Series A, 5.75%, 7/1/2018 | 7,000,000 | 8,461,600 |
New York, NY, Transitional Finance Authority, Prerefunded, Series B, 5.5%, 2/1/2016 | 420,000 | 501,572 |
New York, NY, Core City GO: | ||
Series B, 1.30%, 10/1/2022* | 2,500,000 | 2,500,000 |
Series A, 7.0%, 8/1/2007 | 5,000,000 | 5,748,600 |
New York, NY, Core City GO, Transitional Finance Authority, Series B, 5.5%, 2/1/2016 | 1,580,000 | 1,805,829 |
New York, NY, Hospital & Healthcare Revenue, Industrial Development Agency, 6.45%, 7/1/2032 | 1,500,000 | 1,614,255 |
New York, NY, Hospital & Healthcare Revenue, Industrial Development Agency, British Airways PLC Project, 7.625%, 12/1/2032 | 1,500,000 | 1,252,575 |
New York, NY, Sales & Special Tax Revenue, Transitional Finance Authority, Series C, 1.35%, 5/1/2028* (c) | 1,000,000 | 1,000,000 |
Orange County, Senior Care Revenue, Industrial Development Agency, The Glen Arden Project, 5.7%, 1/1/2028 | 1,250,000 | 1,061,825 |
45,801,475 | ||
North Carolina 0.6% | ||
North Carolina, Electric Revenue, Municipal Power Agency: Series B, 6.375%, 1/1/2013 | 2,075,000 | 2,408,411 |
Series F, 5.5%, 1/1/2016 | 1,000,000 | 1,061,920 |
Series F, 5.5%, 1/1/2017 | 1,495,000 | 1,575,760 |
5,046,091 | ||
North Dakota 0.5% | ||
Grand Forks, ND, Hospital & Healthcare Revenue, Altru Health Care System, 7.125%, 8/15/2024 | 3,750,000 | 4,177,125 |
Ohio 1.9% | ||
Franklin County, Hospital & Healthcare Revenue, Health Care Facilities, Ohio Presbyterian Retirement Service, Series A, 7.125%, 7/1/2029 | 1,000,000 | 1,089,710 |
Lorain County, Hospital & Healthcare Revenue, Catholic Health Care Partners, Series A, 5.25%, 10/1/2033 | 3,000,000 | 3,110,040 |
Ohio, Industrial Development Revenue, Building Authority, Adult Correction Facilities, Series A, 5.5%, 10/1/2013 | 5,860,000 | 6,834,401 |
Ohio, Transportation/Tolls Revenue, Turnpike Authority, Series B, 5.5%, 2/15/2013 | 3,000,000 | 3,584,220 |
14,618,371 | ||
Oregon 0.3% | ||
Clackamas County, Hospital & Healthcare Revenue, Hospital Facilities Authority, Legacy Health System, 5.25%, 5/1/2021 | 2,000,000 | 2,106,880 |
Pennsylvania 5.7% | ||
Allegheny County, Hospital & Healthcare Revenue, Hospital Development Authority, West Pennsylvania Allegheny Health Services: 9.25%, 11/15/2022 | 2,000,000 | 2,247,660 |
Series B, 9.25%, 11/15/2030 | 4,630,000 | 5,179,164 |
Blair County, Industrial Development Revenue, Industrial Development Authority, Village at Penn State Project, Series A, 7.0%, 1/1/2034 | 1,000,000 | 1,020,890 |
Chester County, Senior Care Revenue, Health and Education Facilities Authority, Jenners Pond, Inc. Project, 7.625%, 7/1/2034 | 1,750,000 | 1,770,563 |
Delaware County, Project Revenue, Authority First Management, White Horse Village Project, Series A, 7.625%, 7/1/2030 | 1,000,000 | 1,065,190 |
Delaware County, Senior Care Revenue, Authority First Management, White Horse Village Project: | ||
Series A, 6.7%, 7/1/2007 | 1,000,000 | 1,035,090 |
Series A, 7.5%, 7/1/2018 | 2,000,000 | 2,095,800 |
Delaware Valley, PA, County GO, Regional Financial Authority, 5.75%, 7/1/2017 | 6,250,000 | 7,604,125 |
Montgomery County, Senior Care Revenue, Higher Education & Health Authority, Philadelphia Geriatric Center, Series A, 7.25%, 12/1/2027 | 3,125,000 | 3,144,656 |
Montgomery County, Senior Care Revenue, Industrial Development Authority, Retirement-Life Communities, 5.25%, 11/15/2028 | 4,000,000 | 3,997,120 |
Pennsylvania, State Higher Education Facilities Authority, Carnegie Mellon University, Series D, 1.30%, 11/1/2030* (c) | 1,800,000 | 1,800,000 |
Pennsylvania, Hospital & Healthcare Revenue, Economic Development Financing Authority, UPMC Health System, Series A, 6.0%, 1/15/2031 | 5,095,000 | 5,449,918 |
Pennsylvania, Sales & Special Tax Revenue, Economic Development Financing Authority, Amtrak Project, AMT, Series A, 6.125%, 11/1/2021 | 700,000 | 621,103 |
Philadelphia, PA, Industrial Development Revenue, Industrial Development Authority, Series A, 6.5%, 10/1/2027 | 4,500,000 | 4,455,540 |
Westmoreland County, Senior Care Revenue, Industrial Development Authority, Health Care Facilities-Redstone, Series B, 8.125%, 11/15/2030 | 3,000,000 | 3,179,100 |
44,665,919 | ||
Rhode Island 0.2% | ||
Rhode Island, Special Assessment Revenue, Series A, 6.125%, 6/1/2032 | 1,750,000 | 1,534,698 |
South Carolina 3.0% | ||
Berkeley County, County GO, School District, 5.5%, 1/15/2017 (b) | 8,970,000 | 10,372,011 |
Greenwood County, Hospital & Healthcare Revenue, South Carolina Memorial Hospital, 5.5%, 10/1/2031 | 1,500,000 | 1,544,835 |
South Carolina, Hospital & Healthcare Revenue, Jobs Economic Development Authority, Bon Secours Health System, Inc., Series A, 5.625%, 11/15/2030 | 5,000,000 | 5,242,700 |
South Carolina, Hospital & Healthcare Revenue, Jobs Economic Development Authority, Palmetto Health Alliance, Series A, 7.375%, 12/15/2021 | 3,500,000 | 3,937,325 |
South Carolina, Project Revenue, Jobs Economic Development Authority, Myrtle Beach Convention, Series A, 6.625%, 4/1/2036 | 2,000,000 | 2,042,340 |
23,139,211 | ||
South Dakota 0.1% | ||
South Dakota, Hospital & Healthcare Revenue, Health & Educational Facilities Authority, Prairie Lakes Health Care System: | ||
7.125%, 4/1/2010 | 320,000 | 327,146 |
7.25%, 4/1/2022 | 320,000 | 329,600 |
656,746 | ||
Tennessee 2.6% | ||
Clarksville, TN, Core City GO, Public Building Authority, 1.35%, 7/1/2031* (c) | 5,830,000 | 5,830,000 |
Elizabethton, TN, Hospital & Healthcare Revenue, Health and Educational Facilities Board, Series B, 8.0%, 7/1/2033 | 3,000,000 | 3,466,770 |
Johnson City, TN, Hospital & Healthcare Revenue, Health & Educational Facilities Board Hospital, Series A, 7.5%, 7/1/2033 | 5,000,000 | 5,599,250 |
Shelby County, Hospital & Healthcare Revenue, Health Education & Housing Facilities Board, 6.5%, 9/1/2026 | 5,000,000 | 5,501,050 |
20,397,070 | ||
Texas 11.0% | ||
Abilene, TX, Hospital & Healthcare Revenue, Health Facilities Development, Sears Methodist Retirement Facilities, Series A, 7.0%, 11/15/2033 | 3,000,000 | 3,003,600 |
Abilene, TX, Senior Care Revenue, Health Facilities Development, Sears Methodist Retirement Facilities, Series A, 5.9%, 11/15/2025 | 3,000,000 | 2,726,430 |
Austin, TX, Project Revenue, Bergstrom Landhost Enterprises, Inc. Airport Hotel Project, Series A, 6.75%, 4/1/2027 | 4,995,000 | 4,362,683 |
Dallas, TX, Industrial Development Revenue, Dallas-Fort Worth International Airport, Series A, 5.5%, 11/1/2019 (b) | 3,565,000 | 3,900,716 |
Harris County, Hospital & Healthcare Revenue, Health Facilities Development Corp., YMCA of Greater Houston Area, 1.30%, 7/1/2037* (c) | 4,400,000 | 4,400,000 |
Harris County, Hospital & Healthcare Revenue, Health Facilities Development Corp., Memorial Hermann Healthcare, Series A, 6.375%, 6/1/2029 | 4,460,000 | 4,907,472 |
Hidalgo County, Hospital & Healthcare Revenue, Health Services Mission Hospital, 6.875%, 8/15/2026 | 5,000,000 | 5,003,850 |
Hidalgo County, Hospital & Healthcare Revenue, Mission Hospital, Inc. Project, 6.75%, 8/15/2016 | 3,500,000 | 3,542,770 |
Houston, TX, Airport Revenue, Special Facilities, Continental Airlines, Inc., AMT: Series C, 6.125%, 7/15/2027 | 5,100,000 | 3,225,546 |
Series E, 6.75%, 7/1/2029 | 7,000,000 | 4,919,460 |
Jefferson County, County GO: | ||
5.75%, 8/1/2015 (b) | 3,075,000 | 3,665,400 |
5.75%, 8/1/2017 (b) | 1,185,000 | 1,394,058 |
Lubbock, TX, Senior Care Revenue, Health Facilities Development Corp., Carillon Project, Series A, 6.5%, 7/1/2019 | 3,000,000 | 2,635,800 |
Magnolia, TX, School District GO, Independent School District, 5.0%, 8/15/2017 | 2,400,000 | 2,617,248 |
Plano, TX, School District GO, Independent School District, 5.375%, 2/15/2016 | 5,000,000 | 5,654,650 |
Richardson, TX, Hospital & Healthcare Revenue, Hospital Authority, 5.625%, 12/1/2028 | 1,250,000 | 1,286,175 |
San Antonio, TX, Gas & Electric, 5.375%, 2/1/2020 | 2,500,000 | 2,779,600 |
Tarrant County, Hospital & Healthcare Revenue, Health Facilities Development Corp., 6.7%, 11/15/2030 | 2,500,000 | 2,746,525 |
Texas, Electric Revenue, Brazos River Authority, Reliant Energy, Inc. Project, Series A, 5.375%, 4/1/2019 | 2,500,000 | 2,231,025 |
Texas, Industrial Development Revenue, Waste Disposal Authority, AMT, Series A, 6.1%, 8/1/2024 | 5,000,000 | 5,120,000 |
Texas, Water & Sewer Revenue, Waste Disposal Authority, AMT, 6.65%, 4/1/2032 | 2,000,000 | 2,086,540 |
Tom Green County, Hospital & Healthcare Revenue, Health Facilities Development Corp., Shannon Health System Project, 6.75%, 5/15/2021 | 1,000,000 | 1,073,120 |
Travis County, Hospital & Healthcare Revenue, Health Facilities Development Corp., Ascension Health, Series A, 6.25%, 11/15/2015 (b) | 10,000,000 | 12,376,900 |
85,659,568 | ||
Utah 0.3% | ||
Salt Lake City, UT, Hospital & Healthcare Revenue, IHC Hospitals, Inc., 6.65%, 2/15/2012 | 2,000,000 | 2,413,780 |
Vermont 0.1% | ||
Vermont, Multi Family Housing Revenue, Housing Finance Agency, Northgate Project, 8.25%, 6/15/2020 (e) | 940,000 | 961,376 |
Virginia 1.5% | ||
Fairfax County, Hospital & Healthcare Revenue, Economic Development Authority, Greenspring Retirement Community, Series A, 7.25%, 10/1/2019 | 3,000,000 | 3,178,290 |
Pittsylvania County, Industrial Development Revenue, Industrial Development Authority, Multitrade of Pittsylvania, AMT: | ||
Series A, 7.45%, 1/1/2009 | 1,500,000 | 1,497,090 |
Series A, 7.5%, 1/1/2014 | 3,500,000 | 3,498,145 |
Virginia, Senior Care Revenue, 7.375%, 12/1/2032 | 3,500,000 | 3,633,105 |
11,806,630 | ||
Washington 6.3% | ||
Port Seattle, WA, Airport Revenue, AMT, Series B, 6.0%, 2/1/2014 (b) | 4,885,000 | 5,928,338 |
Seattle, WA, Airport Revenue, Northwest Airlines Project, AMT, 7.25%, 4/1/2030 | 2,800,000 | 2,136,456 |
Tacoma, WA, Electric Revenue, Series A, 5.75%, 1/1/2016 | 5,000,000 | 5,798,450 |
Washington, Electric Revenue, Energy Northeast Electric, Series A, 5.75%, 7/1/2018 (b) | 3,500,000 | 4,062,450 |
Washington, Electric Revenue, Public Power Supply System: Nuclear Project No. 2, Series A, 6.3%, 7/1/2012 | 10,000,000 | 12,311,800 |
Nuclear Project No. 2, Inverse Floater, 5.356%, 7/1/2012** | 3,000,000 | 3,966,690 |
Nuclear Project No. 3, Series B, 7.125%, 7/1/2016 | 2,500,000 | 3,381,125 |
Washington, Electric Revenue, Rites, Inverse Floater, 9.31%, 7/1/2015** | 6,250,000 | 8,025,000 |
Whatcom County, School District GO, Washington School District No. 503, 5.5%, 12/1/2014 | 3,375,000 | 3,934,913 |
49,545,222 | ||
West Virginia 0.8% | ||
West Virginia, Hospital Finance Authority, Charleston Medical Center, Prerefunded, 6.75%, 9/1/2030 | 4,020,000 | 5,129,480 |
West Virginia, Hospital & Healthcare Revenue, Hospital Finance Authority, Charleston Medical Center, 6.75%, 9/1/2030 | 980,000 | 1,099,854 |
6,229,334 | ||
Wisconsin 2.8% | ||
Wisconsin, Hospital & Healthcare Revenue, Health & Educational Facilities Authority, Aurora Health Care, Inc., Series A, 5.6%, 2/15/2029 | 6,500,000 | 6,559,020 |
Wisconsin, Hospital & Healthcare Revenue, Health & Educational Facilities Authority, Froedert and Community Health, 5.375%, 10/1/2030 | 3,750,000 | 3,849,413 |
Wisconsin, Senior Care Revenue, Health & Educational Facilities Authority, National Regency of New Berlin Project, 8.0%, 8/15/2025 | 1,435,000 | 1,500,666 |
Wisconsin, State GO, Series 1, 5.5%, 5/1/2014 (b) (d) | 8,410,000 | 10,081,730 |
21,990,829 | ||
Wyoming 0.1% | ||
Platte County, Pollution Control Revenue, Series B, 1.30%, 7/1/2014* | 800,000 | 800,000 |
Total Investment Portfolio - 100.0% (Cost $708,489,034) (a) | 780,333,156 |
* Variable rate demand notes are securities whose interest rates are periodically reset at market levels. These securities are often payable on demand and are shown at their current rate as of May 31, 2003.
** Inverse floating rate notes are derivative debt instruments with a floating rate of interest that bears an inverse relationship to changes in short-term market interest rates. Inverse floating rate notes exhibit added interest rate sensitivity compared to other bonds with a similar maturity. Investments in this type of security involve special risks as compared to investments in a fixed rate municipal security. These securities, amounting to $63,404,536 and aggregating 8.06% of net assets, are shown at their current rate as of May 31, 2003.
(a) The cost for federal income tax purposes was $708,020,322. At May 31, 2003, net unrealized appreciation for all securities based on tax cost was $72,312,834. This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $80,659,355 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $8,346,521.
(b) Bond is insured by one of these companies:
AMBAC | AMBAC Assurance Corp. |
Capital Guaranty | |
FGIC | Financial Guaranty Insurance Company |
FHA | Federal Housing Administration |
FSA | Financial Security Assurance |
MBIA | Municipal Bond Investors Assurance |
(c) Security incorporates a letter of credit or line of credit from a major bank.
(d) At May 31, 2003 these securities have been segregated, in whole or in part, to cover initial margin requirements for open futures contracts.
(e) Restricted securities are securities which have not been registered with the Securities and Exchange Commission under the Securities Act of 1933. The aggregate fair value of restricted securities at May 31, 2003 amounted to $1,937,629, which represents 0.24% of net assets. Information concerning such restricted securities at May 31, 2003 is as follows:
Security | Acquisition Date | Cost ($) |
Massachusetts, Resource Recovery Revenue, Industrial Finance Agency, Solid Waste Disposal, Peabody Monofil Association, Inc. | 12/30/1994 | 960,000 |
Vermont Multi-Family Housing Revenue, Housing Finance Agency, Northgate Project | 12/22/1989 | 922,153 |
Prerefunded: Bonds which are prerefunded are collateralized by US Treasury securities which are held in escrow and are used to pay principal and interest on tax-exempt issues and to retire the bonds in full at the earliest refunding date.
AMT: Subject to alternative minimum tax
ETM: Bonds bearing the description ETM (escrowed to maturity) are collateralized by US Treasury securities which are held in escrow by a Trustee and used to pay principal and interest on bonds so designated.
At May 31, 2003, open futures contracts sold short were as follows:Futures | Expiration Date | Contracts | Aggregate Face Value ($) | Value ($) | Unrealized Appreciation (Depreciation) ($) |
10 Year US Treasury Note | 9/19/2003 | 558 | 65,753,465 | 66,088,125 | (334,660) |
10 Year US Interest Rate Swap Future | 9/15/2003 | 9 | 1,053,227 | 1,060,594 | (7,367) |
Total net unrealized depreciation on open futures contracts | (342,027) |
At May 31, 2003, open interest rate swaps were as follows:
Effective/Expiration Dates | Notional Amount ($) | Cash Flows Paid by the Fund | Cash Flows Received by the Fund | Net Unrealized Appreciation (Depreciation) ($) |
10/9/2003 10/9/2011 | 25,000,000+ | Fixed - 3.459% | Floating - BMA | (1,052,500) |
10/14/2003 10/14/2011 | 20,000,000++ | Fixed - 3.431% | Floating - BMA | (780,000) |
11/6/2003 11/6/2011 | 50,000,000++ | Fixed - 3.313% | Floating - BMA | (1,465,000) |
6/10/2003 6/10/2013 | 5,500,000+ | Fixed - 4.126% | Floating - LIBOR | (194,150) |
6/10/2003 6/10/2013 | 5,500,000++++ | Fixed - 4.13% | Floating - LIBOR | (198,550) |
6/11/2003 6/11/2013 | 5,500,000+ | Fixed - 4.128% | Floating - LIBOR | (194,700) |
11/12/2003 11/12/2013 | 30,000,000+ | Fixed - 4.31% | Floating - LIBOR | (1,023,000) |
Total net unrealized depreciation on open interest rate swaps | (4,907,900) |
Counterparties:
+ Lehman Brothers, Inc.
++ Morgan Guaranty Trust Co.
++ Merrill Lynch Capital Services, Inc.
++++ Goldman, Sachs & Co.
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of May 31, 2003 | |
Assets | |
Investments in securities, at value (cost $708,489,034) | $ 780,333,156 |
Cash | 47,551 |
Receivable for investments sold | 110,000 |
Interest receivable | 13,505,156 |
Receivable for Fund shares sold | 1,834,072 |
Receivable for daily variation margin on open futures contracts | 35,718 |
Other receivable | 96,000 |
Total assets | 795,961,653 |
Liabilities | |
Payable for investments purchased | 2,591,225 |
Dividends payable | 551,818 |
Payable for Fund shares redeemed | 557,908 |
Unrealized depreciation on interest rate swaps | 4,907,900 |
Accrued management fee | 421,378 |
Other accrued expenses and payables | 160,113 |
Total liabilities | 9,190,342 |
Net assets, at value | $ 786,771,311 |
Net Assets | |
Net assets consist of: Undistributed net investment income | 317,871 |
Net unrealized appreciation (depreciation) on: Investments | 71,844,122 |
Other receivable | 96,000 |
Interest rate swaps | (4,907,900) |
Futures | (342,027) |
Accumulated net realized gain (loss) | (26,537,996) |
Paid-in capital | 746,301,241 |
Net assets, at value | $ 786,771,311 |
The accompanying notes are an integral part of the financial statements.
Statement of Assets and Liabilities as of May 31, 2003 (continued) | |
Net Asset Value | |
Class A Net Asset Value and redemption price per share ($102,237,038 / 7,951,894 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 12.86 |
Maximum offering price per share (100 / 95.50 of $12.86) | $ 13.47 |
Class B Net Asset Value, offering and redemption price per share (subject to contingent deferred sales charge) ($52,584,883 / 4,087,792 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 12.86 |
Class C Net Asset Value, offering and redemption price per share (subject to contingent deferred sales charge) ($41,628,452 / 3,235,346 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 12.87 |
Maximum offering price per share (100 / 99 of $12.87) | $ 13.00 |
Class AARP Net Asset Value, offering and redemption price per share ($39,347,567 / 3,058,238 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 12.87 |
Class S Net Asset Value, offering and redemption price per share ($550,461,855 / 42,778,954 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 12.87 |
Institutional Class Net Asset Value, offering and redemption price per share ($511,516 / 39,744 outstanding shares of beneficial interest, $.01 par value, unlimited number of shares authorized) | $ 12.87 |
The accompanying notes are an integral part of the financial statements.
Statement of Operations for the year ended May 31, 2003 | |
Investment Income | |
Income: Interest | $ 46,548,910 |
Expenses: Management fee | 4,567,042 |
Administrative fee | 1,184,931 |
Distribution service fees | 892,013 |
Trustees' fees and expenses | 20,822 |
Other | 21,288 |
Total expenses, before expense reductions | 6,686,096 |
Expense reductions | (369,918) |
Total expenses, after expense reductions | 6,316,178 |
Net investment income | 40,232,732 |
Realized and Unrealized Gain (Loss) on Investment Transactions | |
Net realized gain (loss) from investments | (2,046,731) |
Interest rate swaps | (2,791,191) |
Futures | (3,344,348) |
(8,182,270) | |
Net unrealized appreciation (depreciation) during the period on: Investments | 31,176,460 |
Other receivable | (96,000) |
Interest rate swaps | (4,907,900) |
Futures | (342,027) |
25,830,533 | |
Net gain (loss) on investment transactions | 17,648,263 |
Net increase (decrease) in net assets resulting from operations | $ 57,880,995 |
The accompanying notes are an integral part of the financial statements.
Statement of Changes in Net Assets | ||
Years Ended May 31, | ||
Increase (Decrease) in Net Assets | 2003 | 2002 |
Operations: Net investment income | $ 40,232,732 | $ 34,298,308 |
Net realized gain (loss) on investment transactions | (8,182,270) | 1,019,995 |
Net unrealized appreciation (depreciation) on investment transactions during the period | 25,830,533 | 6,370,028 |
Net increase (decrease) in net assets resulting from operations | 57,880,995 | 41,688,331 |
Distributions to shareholders from: Net investment income: Class A | (4,536,615) | (2,243,937) |
Class B | (1,865,575) | (815,991) |
Class C | (1,295,378) | (523,269) |
Class AARP | (1,549,543) | (617,467) |
Class S | (30,739,682) | (29,877,232) |
Institutional Class | (2,573) | - |
Fund share transactions: Proceeds from shares sold | 267,704,089 | 275,765,642 |
Reinvestment of distributions | 22,756,956 | 19,890,315 |
Cost of shares redeemed | (220,610,199) | (159,667,809) |
Net increase (decrease) in net assets from Fund share transactions | 69,850,846 | 135,988,148 |
Increase (decrease) in net assets | 87,742,475 | 143,598,583 |
Net assets at beginning of period | 699,028,836 | 555,430,253 |
Net assets at end of period (including undistributed net investment income of $317,871 and $123,741, respectively) | $ 786,771,311 | $ 699,028,836 |
The accompanying notes are an integral part of the financial statements.
Class A | ||||
Years Ended May 31, | 2003 | 2002a | 2001 | 2000b |
Selected Per Share Data | ||||
Net asset value, beginning of period | $ 12.55 | $ 12.39 | $ 11.86 | $ 12.02 |
Income (loss) from investment operations: Net investment income | .68 | .69 | .70 | .06 |
Net realized and unrealized gain (loss) on investment transactions | .31 | .16 | .53 | (.16) |
Total from investment operations | .99 | .85 | 1.23 | (.10) |
Less distributions from: Net investment income | (.68) | (.69) | (.70) | (.06) |
Net asset value, end of period | $ 12.86 | $ 12.55 | $ 12.39 | $ 11.86 |
Total Return (%)c,d | 8.13 | 6.97 | 10.44 | (.77)** |
Ratios to Average Net Assets and Supplemental Data | ||||
Net assets, end of period ($ millions) | 102 | 62 | 24 | .20 |
Ratio of expenses before expense reductions (%) | 1.04 | 1.05 | 1.13e | .11** |
Ratio of expenses after expense reductions (%) | .80 | .80 | .80e | .07** |
Ratio of net investment income (%) | 5.44 | 5.47 | 5.69 | .52** |
Portfolio turnover rate (%) | 16 | 21 | 12 | 62 |
a As required, effective June 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended May 31, 2002 was to increase net investment income per share by $.004, decrease net realized and unrealized gain (loss) per share by $.004, and increase the ratio of net investment income to average net assets from 5.44% to 5.47%. Per share data and ratios for periods prior to June 1, 2001 have not been restated to reflect this change in presentation. b For the period from May 1, 2000 (commencement of sales of Class A shares) to May 31, 2000. c Total return does not reflect the effect of any sales charges. d Total return would have been lower had certain expenses not been reduced. e The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 1.11% and .80%, respectively. ** Not annualized |
Class B | ||||
Years Ended May 31, | 2003 | 2002a | 2001 | 2000b |
Selected Per Share Data | ||||
Net asset value, beginning of period | $ 12.56 | $ 12.40 | $ 11.86 | $ 12.02 |
Income (loss) from investment operations: Net investment income | .58 | .59 | .60 | .05 |
Net realized and unrealized gain (loss) on investment transactions | .30 | .16 | .54 | (.16) |
Total from investment operations | .88 | .75 | 1.14 | (.11) |
Less distributions from: Net investment income | (.58) | (.59) | (.60) | (.05) |
Net asset value, end of period | $ 12.86 | $ 12.56 | $ 12.40 | $ 11.86 |
Total Return (%)c,d | 7.19 | 6.14 | 9.74 | (.92)** |
Ratios to Average Net Assets and Supplemental Data | ||||
Net assets, end of period ($ millions) | 53 | 27 | 8 | .20 |
Ratio of expenses before expense reductions (%) | 1.84 | 1.85 | 2.04e | .19** |
Ratio of expenses after expense reductions (%) | 1.60 | 1.60 | 1.60e | .14** |
Ratio of net investment income (%) | 4.64 | 4.67 | 4.88 | .45** |
Portfolio turnover rate (%) | 16 | 21 | 12 | 62 |
a As required, effective June 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended May 31, 2002 was to increase net investment income per share by $.004, decrease net realized and unrealized gain (loss) per share by $.004, and increase the ratio of net investment income to average net assets from 4.64% to 4.67%. Per share data and ratios for periods prior to June 1, 2001 have not been restated to reflect this change in presentation. b For the period from May 1, 2000 (commencement of sales of Class B shares) to May 31, 2000. c Total return does not reflect the effect of any sales charges. d Total return would have been lower had certain expenses not been reduced. e The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 1.99% and 1.60%, respectively. ** Not annualized |
Class C | ||||
Years Ended May 31, | 2003 | 2002a | 2001 | 2000b |
Selected Per Share Data | ||||
Net asset value, beginning of period | $ 12.56 | $ 12.40 | $ 11.86 | $ 12.02 |
Income (loss) from investment operations: Net investment income | .59 | .59 | .60 | .05 |
Net realized and unrealized gain (loss) on investment transactions | .31 | .16 | .54 | (.16) |
Total from investment operations | .90 | .75 | 1.14 | (.11) |
Less distributions from: Net investment income | (.59) | (.59) | (.60) | (.05) |
Net asset value, end of period | $ 12.87 | $ 12.56 | $ 12.40 | $ 11.86 |
Total Return (%)c,d | 7.30 | 6.16 | 9.68 | (.92)** |
Ratios to Average Net Assets and Supplemental Data | ||||
Net assets, end of period ($ millions) | 42 | 16 | 6 | .04 |
Ratio of expenses before expense reductions (%) | 1.82 | 1.82 | 1.91e | .20** |
Ratio of expenses after expense reductions (%) | 1.58 | 1.58 | 1.58e | .14** |
Ratio of net investment income (%) | 4.66 | 4.69 | 4.91 | .45** |
Portfolio turnover rate (%) | 16 | 21 | 12 | 62 |
a As required, effective June 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended May 31, 2002 was to increase net investment income per share by $.004, decrease net realized and unrealized gain (loss) per share by $.004, and increase the ratio of net investment income to average net assets from 4.66% to 4.69%. Per share data and ratios for periods prior to June 1, 2001 have not been restated to reflect this change in presentation. b For the period from May 1, 2000 (commencement of sales of Class C shares) to May 31, 2000. c Total return does not reflect the effect of any sales charges. d Total return would have been lower had certain expenses not been reduced. e The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were 1.86% and 1.58%, respectively. ** Not annualized |
Class AARP | |||
Years Ended May 31, | 2003 | 2002a | 2001b |
Selected Per Share Data | |||
Net asset value, beginning of period | $ 12.56 | $ 12.40 | $ 12.18 |
Income (loss) from investment operations: Net investment income | .69 | .69 | .46 |
Net realized and unrealized gain (loss) on investment transactions | .31 | .16 | .22 |
Total from investment operations | 1.00 | .85 | .68 |
Less distributions from: Net investment income | (.69) | (.69) | (.46) |
Net asset value, end of period | $ 12.87 | $ 12.56 | $ 12.40 |
Total Return (%) | 8.17 | 6.97 | 5.69c** |
Ratios to Average Net Assets and Supplemental Data | |||
Net assets, end of period ($ millions) | 39 | 18 | 4 |
Ratio of expenses before expense reductions (%) | .77 | .77 | .82* |
Ratio of expenses after expense reductions (%) | .77 | .77 | .79* |
Ratio of net investment income (%) | 5.47 | 5.50 | 5.68* |
Portfolio turnover rate (%) | 16 | 21 | 12 |
a As required, effective June 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended May 31, 2002 was to increase net investment income per share by $.004, decrease net realized and unrealized gain (loss) per share by $.004, and increase the ratio of net investment income to average net assets from 5.47% to 5.50%. Per share data and ratios for periods prior to June 1, 2001 have not been restated to reflect this change in presentation. b For the period from October 2, 2000 (commencement of sales of Class AARP shares) to May 31, 2001. c Total return would have been lower had certain expenses not been reduced. * Annualized ** Not annualized |
Class S | ||||||
Years Ended May 31, | 2003 | 2002a | 2001 | 2000 | 1999b | 1998c |
Selected Per Share Data | ||||||
Net asset value, beginning of period | $ 12.56 | $ 12.40 | $ 11.87 | $ 12.69 | $ 12.93 | $ 12.78 |
Income (loss) from investment operations: | ||||||
Net investment income | .69 | .69 | .70 | .66 | .26 | .65 |
Net realized and unrealized gain (loss) on investment transactions | .31 | .16 | .53 | (.82) | (.24) | .15 |
Total from investment operations | 1.00 | .85 | 1.23 | (.16) | .02 | .80 |
Less distributions from: | ||||||
Net investment income | (.69) | (.69) | (.70) | (.66) | (.26) | (.65) |
Net asset value, end of period | $ 12.87 | $ 12.56 | $ 12.40 | $ 11.87 | $ 12.69 | $ 12.93 |
Total Return (%) | 8.17 | 6.99 | 10.56d | (1.28)d | .18** | 6.38 |
Ratios to Average Net Assets and Supplemental Data | ||||||
Net assets, end of period ($ millions) | 550 | 576 | 514 | 436 | 450 | 432 |
Ratio of expenses before expense reductions (%) | .77 | .77 | .82 | .89e | .83* | .84 |
Ratio of expenses after expense reductions (%) | .77 | .77 | .79 | .87e | .83* | .84 |
Ratio of net investment income (%) | 5.47 | 5.50 | 5.69 | 5.42 | 4.91* | 5.03 |
Portfolio turnover rate (%) | 16 | 21 | 12 | 62 | 7* | 14 |
a As required, effective June 1, 2001, the Fund has adopted the provisions of the AICPA Audit and Accounting Guide for Investment Companies and began accreting market discount on debt securities. The effect of this change for the year ended May 31, 2002 was to increase net investment income per share by $.004, decrease net realized and unrealized gain (loss) per share by $.004, and increase the ratio of net investment income to average net assets from 5.47% to 5.50%. Per share data and ratios for periods prior to June 1, 2001 have not been restated to reflect this change in presentation. b For the five months ended May 31, 1999. On August 10, 1998, the Fund changed the fiscal year end from December 31 to May 31. c For the year ended December 31. d Total returns would have been lower had certain expenses not been reduced. e The ratios of operating expenses excluding costs incurred in connection with a fund complex reorganization before and after expense reductions were .86% and .85%, respectively. * Annualized ** Not annualized |
Institutional Class | |
2003a | |
Selected Per Share Data | |
Net asset value, beginning of period | $ 12.73 |
Income (loss) from investment operations: Net investment income | .55 |
Net realized and unrealized gain (loss) on investment transactions | .14 |
Total from investment operations | .69 |
Less distributions from: Net investment income | (.55) |
Net asset value, end of period | $ 12.87 |
Total Return (%) | 5.55** |
Ratios to Average Net Assets and Supplemental Data | |
Net assets, end of period ($ millions) | .5 |
Ratio of expenses (%) | .74* |
Ratio of net investment income (%) | 5.60* |
Portfolio turnover rate (%) | 16 |
a For the period from August 19, 2002, (commencement of sales of Institutional Class shares) to May 31, 2003. * Annualized ** Not annualized |
A. Significant Accounting Policies
Scudder High Yield Tax-Free Fund (the "Fund") is a diversified series of Scudder Municipal Trust (the "Trust") which is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end management investment company organized as a Massachusetts business trust.
The Fund offers multiple classes of shares which provide investors with different purchase options. Class A shares are offered to investors subject to an initial sales charge. Class B shares are offered without an initial sales charge but are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions. Class B shares automatically convert to Class A shares six years after issuance. Class C shares are offered to investors subject to an initial sales charge and are subject to higher ongoing expenses than Class A shares and a contingent deferred sales charge payable upon certain redemptions within one year of purchase. Prior to February 3, 2003, Class C shares were offered without an initial sales charge. Class C shares do not convert into another class. On August 19, 2002 the Fund commenced offering Institutional Class shares which are offered to a limited group of investors, are not subject to initial or contingent deferred sales charges and have lower ongoing expenses than other classes. Shares of Class AARP are designed for members of AARP. Class S shares of the Fund are generally not available to new investors. Class AARP and S shares are not subject to initial or contingent deferred sales charges.
Investment income, realized and unrealized gains and losses, and certain fund-level expenses and expense reductions, if any, are borne pro rata on the basis of relative net assets by the holders of all classes of shares, except that each class bears certain expenses unique to that class such as distribution service fees, administrative fees and certain other class-specific expenses. Differences in class-level expenses may result in payment of different per share dividends by class. All shares of the Fund have equal rights with respect to voting subject to class-specific arrangements.
The Fund's financial statements are prepared in accordance with accounting principles generally accepted in the United States of America which require the use of management estimates. Actual results could differ from those estimates. The policies described below are followed consistently by the Fund in the preparation of its financial statements.
Security Valuation. Investments are stated at value determined as of the close of regular trading on the New York Stock Exchange on each day the exchange is open for trading. Debt securities are valued by independent pricing services approved by the Trustees of the Fund, whose valuations are intended to reflect the mean between the bid and asked prices. If the pricing services are unable to provide valuations, the securities are valued at the average of the means based on the most recent bid and asked quotations or evaluated prices obtained from two broker dealers. Such services may use various pricing techniques which take into account appropriate factors such as yield, quality, coupon rate, maturity, type of issue, trading characteristics and other data, as well as broker quotes.
Securities and other assets for which market quotations are not readily available or for which the above valuation procedures are deemed not to reflect fair value are valued in a manner that is intended to reflect their fair value as determined in accordance with procedures approved by the Trustees.
Futures Contracts. A futures contract is an agreement between a buyer or seller and an established futures exchange or its clearinghouse in which the buyer or seller agrees to take or make a delivery of a specific amount of a financial instrument at a specified price on a specific date (settlement date). The Fund may enter into futures contracts as a hedge against anticipated interest rate, currency or equity market changes, and for duration management, risk management and return enhancement purposes.
Upon entering into a futures contract, the Fund is required to deposit with a financial intermediary an amount ("initial margin") equal to a certain percentage of the face value indicated in the futures contract. Subsequent payments ("variation margin") are made or received by the Fund depending upon the daily fluctuations in the value of the underlying security and are recorded for financial reporting purposes as unrealized gains or losses by the Fund. When entering into a closing transaction, the Fund will realize a gain or loss equal to the difference between the value of the futures contract to sell and the futures contract to buy. Futures contracts are valued at the most recent settlement price.
Certain risks may arise upon entering into futures contracts, including the risk that an illiquid secondary market will limit the Fund's ability to close out a futures contract prior to the settlement date and that a change in the value of a futures contract may not correlate exactly with the changes in the value of the securities or currencies hedged. When utilizing futures contracts to hedge, the Fund gives up the opportunity to profit from favorable price movements in the hedged positions during the term of the contract.
Swap Agreements. The Fund may enter into swap agreements. A swap is an exchange of cash payments between the Fund and another party, which is based on a specific financial index. Commencing after the effective date, cash payments are exchanged at specific intervals. The value of the swap is adjusted daily and the change in value is recorded as unrealized appreciation or depreciation. When entering into a closing transaction, the Fund will realize a gain or loss. Risks may arise upon entering into these agreements from the potential inability of counterparties to meet the terms of their contract and from unanticipated changes in the value of the financial index on which the swap agreement is based. The Fund uses swaps for both hedging and non-hedging purposes. For hedging purposes, the Fund may use swaps to reduce exposure to interest rate fluctuations. For non-hedging purposes, the Fund may use swaps to take advantage of future changes in interest rates.
Federal Income Taxes. The Fund's policy is to comply with the requirements of the Internal Revenue Code, as amended, which are applicable to regulated investment companies and to distribute all of its taxable and tax-exempt income to its shareholders. Accordingly, the Fund paid no federal income taxes and no federal income tax provision was required.
At May 31, 2003, the Fund had a net tax basis capital loss carryforward of approximately $13,730,000, which may be applied against any realized net taxable capital gains of each succeeding year, until fully utilized or until May 31, 2005 ($3,396,000), May 31, 2008 ($2,691,000), May 31, 2009 ($3,117,000) and May 31, 2010 ($4,526,000), the respective expiration dates, whichever occurs first.
In addition, from November 1, 2002 through May 31, 2003, the Fund incurred approximately $9,674,000 of net realized capital losses. As permitted by tax regulations, the Fund intends to elect to defer these losses and treat them as arising in the fiscal year ending May 31, 2004.
Distribution of Income and Gains. All of the net investment income of the Fund is declared as a daily dividend and is distributed to shareholders monthly. Net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Fund if not distributed, and, therefore, will be distributed to shareholders at least annually.
The timing and characterization of certain income and capital gains distributions are determined annually in accordance with federal tax regulations which may differ from accounting principles generally accepted in the United States of America. These differences primarily relate to investments in futures contracts and accretion of market discount on debt securities. As a result, net investment income (loss) and net realized gain (loss) on investment transactions for a reporting period may differ significantly from distributions during such period. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting the net asset value of the Fund.
At May 31, 2003, the Fund's components of distributable earnings (accumulated losses) on a tax basis are as follows:
Undistributed tax-exempt income | $ 687,645 |
Undistributed taxable income | $ 182,044 |
Undistributed net long-term capital gains | $ - |
Capital loss carryforwards | $ (13,730,000) |
Unrealized appreciation (depreciation) on investments | $ 72,312,834 |
In addition, during the years ended May 31, 2003 and May 31, 2002 the tax character of distributions paid to shareholders by the Fund is summarized as follows:
2003 | 2002 | |
Distributions from tax-exempt income | $ 39,989,366 | $ 34,077,896 |
For tax purposes, short-term capital gains distributions are considered taxable income distributions.
Other. Investment transactions are accounted for on the trade date. Interest income is recorded on the accrual basis. Realized gains and losses from investment transactions are recorded on an identified cost basis. All premiums and discounts are amortized/accreted for financial reporting purposes.
At May 31, 2003, the other receivable of $96,000 (0.01% of net assets) has been valued in good faith as determined in accordance with procedures approved by the Trustees.
B. Purchases and Sales of Securities
During the year ended May 31, 2003, purchases and sales of investment securities (excluding short-term investments) aggregated $176,222,901 and $114,438,877, respectively.
C. Related Parties
Management Agreement. Under the Management Agreement with Deutsche Investment Management Americas Inc. ("DeIM" or the "Advisor"), the Advisor directs the investments of the Fund in accordance with its investment objectives, policies and restrictions. The Advisor determines the securities, instruments and other contracts relating to investments to be purchased, sold or entered into by the Fund. In addition to portfolio management services, the Advisor provides certain administrative services in accordance with the Management Agreement. The management fee payable under the Management Agreement is equal to an annual rate of 0.65% of the first $300,000,000 of the Fund's average daily net assets, 0.60% on the next $200,000,000 of such net assets, and 0.575% of such net assets in excess of $500,000,000, computed and accrued daily and payable monthly. Accordingly, for the year ended May 31, 2003, the fee pursuant to the Management Agreement was equivalent to an annual effective rate of 0.61% of the Fund's average daily net assets.
Administrative Fee. Under the Administrative Agreement (the "Administrative Agreement"), the Advisor provides or pays others to provide substantially all of the administrative services required by the Fund (other than those provided by the Advisor under its Management Agreement with the Fund, as described above) in exchange for the payment by each class of the Fund of an administrative services fee (the "Administrative Fee") of 0.175%, 0.225%, 0.200%, 0.15%, 0.15% and 0.125% of the average daily net assets for Class A, B, C, AARP, S and Institutional Class shares, respectively, computed and accrued daily and payable monthly.
Various third-party service providers, some of which are affiliated with the Advisor, provide certain services to the Fund under the Administrative Agreement. Scudder Fund Accounting Corporation, a subsidiary of the Advisor, computes the net asset value for the Fund and maintains the accounting records of the Fund. Scudder Investments Service Company, an affiliate of the Advisor, is the transfer, shareholder service and dividend-paying agent for Class A, B, C and Institutional Class shares of the Fund. Scudder Service Corporation, also a subsidiary of the Advisor, is the transfer, shareholder service and dividend-paying agent for Class S and AARP shares of the Fund. These affiliated entities have in turn entered into various agreements with third-party service providers to provide these services. In addition, other service providers, not affiliated with the Advisor provide certain services (i.e., custody, legal and audit) to the Fund under the Administrative Agreement. The Advisor pays the service providers for the provision of their services to the Fund and pays other Fund expenses, including insurance, registration, printing, postage and other costs. Certain expenses of the Fund will not be borne by the Advisor under the Administrative Agreement, such as taxes, brokerage, interest and extraordinary expenses, and the fees and expenses of the Independent Trustees (including the fees and expenses of their independent counsel). For the year ended May 31, 2003, the Administrative Fee was as follows:
Administrative Fee | Total Aggregated | Unpaid at May 31, 2003 |
Class A | $ 146,738 | $ 297 |
Class B | 91,015 | 5,235 |
Class C | 55,897 | 3,933 |
Class AARP | 42,741 | 3,902 |
Class S | 848,482 | 73,579 |
Institutional Class | 58 | 55 |
$ 1,184,931 | $ 87,001 |
The Administrative Agreement between the Advisor and the Fund will terminate effective September 30, 2003 and the Fund will directly bear the cost of those expenses formerly covered under the Administrative Agreement. Effective October 1, 2003 through September 30, 2005, the Advisor has agreed to contractually waive all or a portion of its management fee and reimburse or pay certain operating expenses of the Fund to the extent necessary to maintain the operating expenses of each class at 0.90%, for Class A, B, C, AARP and S and 0.75% for Institutional Class shares, respectively (excluding certain expenses such as extraordinary expenses, taxes, brokerage, interest, Rule 12b-1 and/or service fees, trustee and trustee counsel fees).
Distribution Service Agreement. Under the Distribution Service Agreement, in accordance with Rule 12-1 under the 1940 Act, Scudder Distributors, Inc. ("SDI"), a subsidiary of the Advisor, receives a fee ("Distribution Fee") of 0.75% of average daily net assets of Class B and C shares. Pursuant to the agreement, SDI enters into related selling group agreements with various firms at various rates for sales of Class B and C shares. For the year ended May 31, 2003, the Distribution Fee was as follows:
Distribution Fee | Total Aggregated | Unpaid at May 31, 2003 |
Class B | $ 303,382 | $ 34,256 |
Class C | 209,610 | 27,130 |
$ 512,992 | $ 61,386 |
In addition, SDI provides information and administrative services ("Service Fee") to Class A, B and C shareholders at an annual rate of up to 0.25% of average daily net assets for each such class. SDI in turn has various agreements with financial services firms that provide these services and pay these fees based upon the assets of shareholder accounts the firms service. For the year ended May 31, 2003, the Advisor and certain of its subsidiaries voluntarily maintained the annualized expenses of the Class A, B and C shares at no more than 0.80%, 1.60% and 1.58%, respectively, of average daily net assets by not imposing any service fees. For the year ended May 31, 2003, the Service Fee was as follows:
Service Fee | Total Aggregated | Amount Waived by SDI | Effective Rate |
Class A | $ 208,040 | $ 202,540 | .01% |
Class B | 101,111 | 98,611 | .01% |
Class C | 69,870 | 66,870 | .01% |
$ 379,021 | $ 368,021 |
Underwriting Agreement and Contingent Deferred Sales Charge. SDI is the principal underwriter for Class A, B and C Shares. Underwriting commissions paid to SDI in connection with the distribution of Class A and C shares for the year ended May 31, 2003 aggregated $102,758 and $25, respectively.
In addition, SDI receives any contingent deferred sales charge ("CDSC") from Class B share redemptions occurring within six years of purchase and Class C share redemptions occurring within one year of purchase. There is no such charge upon redemption of any share appreciation or reinvested dividends. The CDSC is based on declining rates ranging from 4% to 1% for Class B and 1% for Class C, of the value of the shares redeemed. For the year ended May 31, 2003, the CDSC for Class B and Class C aggregated $71,614 and $10,118, respectively. A deferred sales charge of up to 1% is assessed on certain redemptions of Class A shares. For the year ended May 31, 2003, SDI received $43,505.
Trustees' Fees and Expenses. The Fund pays each Trustee not affiliated with the Advisor retainer fees plus specified amounts for attended board and committee meetings.
Other Related Parties. AARP through its affiliates, monitors and approves the AARP Investments Program from the Advisor. The Advisor has agreed to pay a fee to AARP and/or its affiliates in return for the use of the AARP trademark and services relating to investments by AARP members in Class AARP shares of the Fund. This fee is calculated on a daily basis as a percentage of the combined assets of the AARP classes of all funds managed by the Advisor. The fee rates, which decrease as the aggregate net assets of the AARP classes become larger, are as follows: 0.07% of the first $6,000,000,000 of net assets, 0.06% of the next $10,000,000,000 of such net assets and 0.05% of such net assets thereafter. These amounts are used for the general purposes of AARP and its members.
D. Investing in High-Yield Securities
Investing in high-yield securities may involve greater risks and considerations not typically associated with investing in US Government bonds and other high quality fixed-income securities. These securities are non-investment grade securities, often referred to as "junk bonds." Economic downturns may disrupt the high-yield market and impair the ability of issuers to repay principal and interest. Also, an increase in interest rates would likely have an adverse impact on the value of such obligations. Moreover, high-yield securities may be less liquid due to the extent that there is no established retail secondary market and because of a decline in the value of such securities.
E. Expense Off-Set Arrangement
The Fund has entered into an arrangement with its custodian whereby credits realized as a result of uninvested cash balances were used to reduce a portion of the Fund's custodian expenses. During the year ended May 31, 2003, pursuant to the Administrative Agreement, the Administrative Fee was reduced by $1,897 for custodian credits earned.
F. Line of Credit
The Fund and several other affiliated funds (the "Participants") share in a $1.25 billion revolving credit facility administered by J.P. Morgan Chase Bank for temporary or emergency purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. The Participants are charged an annual commitment fee which is allocated pro rata based upon net assets among each of the Participants. Interest is calculated at the Federal Funds Rate plus 0.5 percent. The Fund may borrow up to a maximum of 33 percent of its net assets under the agreement.
G. Share Transactions
The following table summarizes share and dollar activity in the Fund:
Year Ended May 31, 2003 | Year Ended May 31, 2002 | |||
Shares | Dollars | Shares | Dollars | |
Shares sold | ||||
Class A | 5,269,076 | $ 66,844,192 | 4,245,877 | $ 53,278,977 |
Class B | 2,285,902 | 29,027,136 | 1,638,251 | 20,566,499 |
Class C | 2,334,050 | 29,669,292 | 999,473 | 12,553,384 |
Class AARP | 2,204,095 | 27,951,087 | 1,326,079 | 16,646,882 |
Class S | 8,958,191 | 113,711,489 | 13,785,966 | 172,719,900 |
Institutional Class* | 39,573 | 500,893 | - | - |
$ 267,704,089 | $ 275,765,642 | |||
Shares issued to shareholders in reinvestment of distributions | ||||
Class A | 197,929 | $ 2,508,817 | 91,913 | $ 1,150,792 |
Class B | 70,962 | 899,932 | 31,893 | 399,451 |
Class C | 55,602 | 705,351 | 24,093 | 302,004 |
Class AARP | 82,766 | 1,049,880 | 33,489 | 419,370 |
Class S | 1,386,675 | 17,590,775 | 1,404,872 | 17,618,698 |
Institutional Class* | 171 | 2,201 | - | - |
$ 22,756,956 | $ 19,890,315 | |||
Shares redeemed | ||||
Class A | (2,429,023) | $ (30,799,613) | (1,352,095) | $ (16,944,077) |
Class B | (404,109) | (5,124,115) | (172,965) | (2,163,328) |
Class C | (450,704) | (5,724,714) | (196,620) | (2,471,345) |
Class AARP | (689,648) | (8,731,182) | (233,594) | (2,924,006) |
Class S | (13,420,327) | (170,230,575) | (10,752,852) | (135,165,053) |
Institutional Class* | - | - | - | - |
$ (220,610,199) | $ (159,667,809) | |||
Net increase (decrease) | ||||
Class A | 3,037,982 | $ 38,553,396 | 2,985,695 | $ 37,485,692 |
Class B | 1,952,755 | 24,802,953 | 1,497,179 | 18,802,622 |
Class C | 1,938,948 | 24,649,929 | 826,946 | 10,384,043 |
Class AARP | 1,597,213 | 20,269,785 | 1,125,974 | 14,142,246 |
Class S | (3,075,461) | (38,928,311) | 4,437,986 | 55,173,545 |
Institutional Class* | 39,744 | 503,094 | - | - |
$ 69,850,846 | $ 135,988,148 |
* For the period from August 19, 2002 (commencement of sales of Institutional Class shares) to May 31, 2003.
To the Trustees of Scudder Municipal Trust and the Shareholders of Scudder High Yield Tax-Free Fund:
In our opinion, the accompanying statement of assets and liabilities, including the investment portfolio, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of Scudder High Yield Tax-Free Fund (the "Fund") at May 31, 2003, and the results of its operations, the changes in its net assets and the financial highlights for each of the periods indicated therein, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as "financial statements") are the responsibility of the Fund's management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with auditing standards generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at May 31, 2003 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
Boston, Massachusetts | PricewaterhouseCoopers LLP |
Of the dividends paid from net investment income for the taxable year ended May 31, 2003, 100% are designated as exempt interest dividends for federal income tax purposes.
Please consult a tax advisor if you have questions about federal or state income tax laws, or on how to prepare your tax returns. If you have specific questions about your account, please call 1-800-SCUDDER.
The following table presents certain information regarding the Trustees and Officers of the fund as of May 31, 2003. Each individual's age is set forth in parentheses after his or her name. Unless otherwise noted, (i) each individual has engaged in the principal occupation(s) noted in the table for at least the most recent five years, although not necessarily in the same capacity, and (ii) the address of each individual is c/o Deutsche Asset Management, Two International Place, Boston, Massachusetts 02110-4103. Each Trustee's term of office extends until the next shareholder's meeting called for the purpose of electing Trustees and until the election and qualification of a successor, or until such Trustee sooner dies, resigns or is removed as provided in the governing documents of the fund.
Non-Interested Trustees | ||
Name, Age, Position(s) Held with the Fund and Length of Time Served1 | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen |
Henry P. Becton, Jr. (59) Trustee, 1990-present | President, WGBH Educational Foundation. Directorships: American Public Television; New England Aquarium; Becton Dickinson and Company (medical technology company); Mass Corporation for Educational Telecommunications; The A.H. Belo Company (media company); Committee for Economic Development; Concord Academy; Public Broadcasting Service; Boston Museum of Science | 47 |
Dawn-Marie Driscoll (56) Trustee, 1987-present | President, Driscoll Associates (consulting firm); Executive Fellow, Center for Business Ethics, Bentley College; formerly, Partner, Palmer & Dodge (1988-1990); Vice President of Corporate Affairs and General Counsel, Filene's (1978-1988). Directorships: CRS Technology (technology service company); Advisory Board, Center for Business Ethics, Bentley College; Board of Governors, Investment Company Institute; former Chairman, ICI Directors Services Committee | 47 |
Keith R. Fox (49) Trustee, 1996-present | Managing Partner, Exeter Capital Partners (private equity funds). Directorships: Facts on File (school and library publisher); Progressive Holding Corporation (kitchen importer and distributor); Cloverleaf Transportation Inc. (trucking); K-Media, Inc. (broadcasting); Natural History, Inc. (magazine publisher); National Association of Small Business Investment Companies (trade association) | 47 |
Louis E. Levy (70) Trustee, 2002-present | Retired. Formerly, Chairman of the Quality Control Inquiry Committee, American Institute of Certified Public Accountants (1992-1998); Partner, KPMG LLP (1958-1990). Directorships: Household International (banking and finance); ISI Family of Funds (registered investment companies; 4 funds overseen); Kimberly-Clark Corporation (personal consumer products) | 47 |
Jean Gleason Stromberg (59) Trustee, 1999-present | Retired. Formerly, Consultant (1997-2001); Director, U.S. General Accounting Office (1996-1997); Partner, Fulbright & Jaworski, L.L.P. (law firm) (1978-1996). Directorships: The William and Flora Hewlett Foundation; Service Source, Inc. | 47 |
Jean C. Tempel (60) Trustee, 1994-present | Managing Partner, First Light Capital (venture capital group) (2000-present); formerly, Special Limited Partner, TL Ventures (venture capital fund) (1996-1998); General Partner, TL Ventures (1994-1996); President and Chief Operating Officer, Safeguard Scientifics, Inc. (public technology business incubator company) (1991-1993). Directorships: Sonesta International Hotels, Inc.; Aberdeen Group (technology research); The Reference, Inc. (IT consulting for financial services); United Way of Mass Bay. Trusteeships: Connecticut College, Chair, Finance Committee; Northeastern University, Chair, Funds and Endowment Committee | 47 |
Carl W. Vogt (67) Trustee, 2002-present | Senior Partner, Fulbright & Jaworski, L.L.P. (law firm); formerly, President (interim) of Williams College (1999-2000); President, certain funds in the Deutsche Asset Management Family of Funds (formerly, Flag Investors Family of Funds) (registered investment companies) (1999-2000). Directorships: Yellow Corporation (trucking); American Science & Engineering (x-ray detection equipment); ISI Family of Funds (registered investment companies, 4 funds overseen); National Railroad Passenger Corporation (Amtrak); formerly, Chairman and Member, National Transportation Safety Board | 47 |
Interested Trustees and Officers2 | ||
Name, Age, Position(s) Held with the Fund and Length of Time Served1 | Principal Occupation(s) During Past 5 Years and Other Directorships Held | Number of Funds in Fund Complex Overseen |
Richard T. Hale3 (57) Chairman and Trustee, 2002-present President, 2003-present | Managing Director, Deutsche Investment Management Americas Inc. (2003-present); Managing Director, Deutsche Bank Securities Inc. (formerly Deutsche Banc Alex. Brown Inc.) and Deutsche Asset Management (1999 to present); Director and President, Investment Company Capital Corp. (registered investment advisor) (1996 to present); Director, Deutsche Global Funds, Ltd. (2000 to present), CABEI Fund (2000 to present), North American Income Fund (2000 to present) (registered investment companies); Director, Scudder Global Opportunities Fund (since 2003); Director/Officer Deutsche/Scudder Mutual Funds (various dates); President, Montgomery Street Income Securities, Inc. (2002 to present) (registered investment companies); Vice President, Deutsche Asset Management, Inc. (2000 to present); formerly, Director, ISI Family of Funds (registered investment companies; 4 funds overseen) (1992-1999) | 200 |
Daniel O. Hirsch3 (49) Vice President and Assistant Secretary, 2002-present | Managing Director, Deutsche Asset Management (2002-present) and Director, Deutsche Global Funds Ltd. (2002-present); formerly, Director, Deutsche Asset Management (1999-2002); Principal, BT Alex. Brown Incorporated (now Deutsche Bank Securities Inc.) (1998-1999); Assistant General Counsel, United States Securities and Exchange Commission (1993-1998) | n/a |
John Millette (40) Vice President and Secretary, 1999-present | Director, Deutsche Asset Management | n/a |
Philip G. Condon (52) Vice President, 1997-present | Managing Director, Deutsche Asset Management | n/a |
Ashton P. Goodfield (39) Vice President, 1999-present | Managing Director, Deutsche Asset Management | n/a |
Kenneth Murphy (39) Vice President, 2002-present | Vice President, Deutsche Asset Management (2000-present); Vice President, Scudder Distributors, Inc. (December 2002-present); formerly, Director, John Hancock Signature Services (1992-2000) | n/a |
Charles A. Rizzo (45) Treasurer, 2002-present | Director, Deutsche Asset Management (April 2000- present). Formerly, Vice President and Department Head, BT Alex. Brown Incorporated (now Deutsche Bank Securities Inc.) (1998-1999); Senior Manager, Coopers & Lybrand L.L.P. (now PricewaterhouseCoopers LLP) (1993-1998) | n/a |
Salvatore Schiavone (37) Assistant Treasurer, 2003-present | Director, Deutsche Asset Management | n/a |
Lucinda H. Stebbins (57) Assistant Treasurer, 2003-present | Director, Deutsche Asset Management | n/a |
Kathleen Sullivan D'Eramo (46) Assistant Treasurer, 2003-present | Director, Deutsche Asset Management | n/a |
Caroline Pearson (41) Assistant Secretary, 1997-present | Managing Director, Deutsche Asset Management | n/a |
1 Length of time served represents the date that each Trustee was first elected to the common board of trustees which oversees a number of investment companies, including the fund, managed by the Advisor. For the Officers of the fund, length of time served represents the date that each Officer was first elected to serve as an officer of any fund overseen by the aforementioned common board of trustees.
2 As a result of their respective positions held with the Advisor, these individuals are considered "interested persons" of the Advisor within the meaning of the 1940 Act, as amended. Interested persons receive no compensation from the fund.
3 Address: One South Street, Baltimore, Maryland
The fund's Statement of Additional Information ("SAI") includes additional information about the Trustees. The SAI is available, without charge, upon request. If you would like to request a copy of the SAI, you may do so by calling the following toll-free number: 1-800-SCUDDER.
For shareholders of Classes A, B, C and Institutional
Automated Information Lines | ScudderACCESS (800) 972-3060 Personalized account information, information on other Scudder funds and services via touchtone telephone and for Classes A, B, and C only, the ability to exchange or redeem shares. |
Web Site | scudder.com View your account transactions and balances, trade shares, monitor your asset allocation, and change your address, 24 hours a day.Obtain prospectuses and applications, blank forms, interactive worksheets, news about Scudder funds, subscription to fund updates by e-mail, retirement planning information, and more. |
For more information | (800) 621-1048 To speak with a Scudder service representative. |
Written correspondence | Scudder Investments PO Box 219356Kansas City, MO 64121-9356 |
Principal Underwriter | If you have questions, comments or complaints, contact: Scudder Distributors, Inc. 222 South Riverside PlazaChicago, IL 60606 (800) 621-1148 |
Class A | Class B | Class C | Institutional | |
Nasdaq Symbol | NOTAX | NOTBX | NOTCX | NOTIX |
CUSIP Number | 811170-307 | 811170-406 | 811170-505 | 81118T-105 |
Fund Number | 152 | 252 | 352 | 512 |
For shareholders of Class AARP and Class S
AARP Investment Program Shareholders | Scudder Class S Shareholders | |
Automated Information Lines | Easy-Access Line (800) 631-4636 | SAIL™ (800) 343-2890 |
Personalized account information, the ability to exchange or redeem shares, and information on other Scudder funds and services via touchtone telephone. | ||
Web Sites | aarp.scudder.com | myScudder.com |
View your account transactions and balances, trade shares, monitor your asset allocation, and change your address, 24 hours a day. Obtain prospectuses and applications, blank forms, interactive worksheets, news about Scudder funds, subscription to fund updates by e-mail, retirement planning information, and more. | ||
For more information | (800) 253-2277 To speak with an AARP Investment Program service representative | (800) SCUDDER To speak with a Scudder service representative. |
Written correspondence | AARP Investment Program from Scudder Investments PO Box 219735Kansas City, MO 64121-9735 | Scudder Investments PO Box 219669Kansas City, MO 64121-9669 |
Principal Underwriter | If you have questions, comments or complaints, contact: Scudder Distributors, Inc. 222 South Riverside PlazaChicago, IL 60606 (800) 621-1148 | |
Class AARP | Class S | |
Nasdaq Symbol | SHYFX | SHYTX |
Fund Number | 108 | 008 |
Notes |
Notes |
ITEM 2. CODE OF ETHICS. Not currently applicable. ITEM 3. AUDIT COMMITTEE FINANCIAL EXPERT. Not currently applicable. ITEM 4. PRINCIPAL ACCOUNTANT FEES AND SERVICES. Not currently applicable. ITEM 5. [RESERVED] ITEM 6. [RESERVED] ITEM 7. DISCLOSURE OF PROXY VOTING POLICIERS AND PROCEDURES FOR CLOSED-END MANAGEMENT INVESTMENT COMPANIES. ITEM 8. [RESERVED] ITEM 9. CONTROLS AND PROCEDURES. (a) The Chief Executive and Financial Officers concluded that the Registrant's Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report. (b) During the six month period ended May 31, 2003, management identified an issue related to a different registrant within the Scudder fund complex. Management discussed the issue with the Registrant's Audit Committee and auditors and instituted additional procedures to enhance its internal controls over financial reporting.Form N-CSR Item F SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Registrant: Scudder High Yield Tax Free Fund By: /s/Richard T. Hale --------------------------- Richard T. Hale Chief Executive Officer Date: July 25, 2003 Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Registrant: Scudder High Yield Tax Free Fund By: /s/Richard T. Hale --------------------------- Richard T. Hale Chief Executive Officer Date: July 25, 2003 By: /s/Charles A. Rizzo --------------------------- Charles A. Rizzo Chief Financial Officer Date: July 25, 2003